<SEC-DOCUMENT>0001206774-14-003054.txt : 20141017
<SEC-HEADER>0001206774-14-003054.hdr.sgml : 20141017
<ACCEPTANCE-DATETIME>20141017161537
ACCESSION NUMBER:		0001206774-14-003054
CONFORMED SUBMISSION TYPE:	497
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20141017
DATE AS OF CHANGE:		20141017
EFFECTIVENESS DATE:		20141017

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HERZFELD CARIBBEAN BASIN FUND INC
		CENTRAL INDEX KEY:			0000880406
		IRS NUMBER:				650396889
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		497
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-196458
		FILM NUMBER:		141162073

	BUSINESS ADDRESS:	
		STREET 1:		119 WASHINGTON AVENUE, SUITE 504
		CITY:			MIAMI BEACH
		STATE:			FL
		ZIP:			33139
		BUSINESS PHONE:		3052711900

	MAIL ADDRESS:	
		STREET 1:		119 WASHINGTON AVENUE, SUITE 504
		CITY:			MIAMI BEACH
		STATE:			FL
		ZIP:			33139

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FIRST CUBA FUND INC
		DATE OF NAME CHANGE:	19920929
</SEC-HEADER>
<DOCUMENT>
<TYPE>497
<SEQUENCE>1
<FILENAME>herzfeld_497.htm
<DESCRIPTION>DEFINITIVE MATERIALS
<TEXT>

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<DIV align=center><IMG src="herzfeld1x1x1.jpg" border=0> </DIV>
<P align=justify><B><FONT face="Times New Roman" size=2>PROSPECTUS <BR>October
15, 2014</FONT></B></P>
<P align=center><B><FONT face="Times New Roman" size=2>1,237,690
Shares</FONT></B></P>
<P align=center><B><FONT face="Times New Roman" size=4>THE HERZFELD CARIBBEAN
BASIN FUND, INC.</FONT></B></P>
<P align=center><B><FONT face="Times New Roman" size=2>Common Stock
</FONT></B></P>
<P align=center><B><FONT face="Times New Roman" size=2>Issuable Upon Exercise of
Rights <BR>to Subscribe for Such Shares of Common Stock</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Herzfeld Caribbean
Basin Fund, Inc. (the &#147;Fund&#148;) is issuing non-transferable rights the (&#147;Rights&#148;)
to its stockholders of record on October 9, 2014 (the &#147;Record Date&#148;), entitling
the holders of Rights to subscribe for an aggregate of approximately 1,237,690
shares of the Fund&#146;s common stock (the &#147;Offer&#148;). Each stockholder of record on
the Record Date will receive one Right for each full share of the Fund&#146;s common
stock owned on the Record Date. The Rights will entitle the holders to purchase
one share of the Fund&#146;s common stock, par value $0.001 per share (&#147;Common
Stock&#148;) for every three Rights held, and stockholders of record on the Record
Date who fully exercise their Rights will be entitled to subscribe for
additional shares of Common Stock (&#147;Over-Subscription Shares&#148;) subject to the
limitations set forth in this prospectus. The Over-Subscription Shares will be
allocated pro rata to stockholders who over-subscribe based on the number of
Rights originally issued to them. The Fund may increase the number of shares of
Common Stock subject to subscription by up to 50% of the shares, or up to
618,845 additional shares of Common Stock, for an aggregate total of 1,856,535
shares of Common Stock.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The rights are
non-transferable and, therefore, may not be purchased or sold. The Fund&#146;s Common
Stock is listed, and the shares of Common Stock issued pursuant to this Offer
will be listed on the NASDAQ Capital Market under the symbol &#147;CUBA.&#148; </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Offer will expire at
5:00 p.m., Eastern Time, on November 6, 2014 (the &#147;Expiration Date&#148;), unless
extended as described herein. The Fund announced its intention to make the Offer
on June 2, 2014. The net asset values (&#147;NAV&#148;) per share of common stock at the
close of business on June 2, 2014 and on October 9, 2014 were $8.92 and $ 8.51,
respectively, and the last reported sale prices of a share of Common Stock on
the NASDAQ Capital Market on those dates were $8.21 and $7.04, respectively.
</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The subscription price per
share (the &#147;Subscription Price&#148;) will be 95% of the average volume-weighted
closing sale price at which the Common Stock trades on the NASDAQ Capital Market
on the Expiration Date and the four preceding trading days.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Once you subscribe for
shares of Common Stock pursuant to the Offer and the Fund receives payment or
guarantee of payment, you will not be able to change your investment
decision.</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund is a
non-diversified, closed-end management investment company organized in the State
of Maryland on March 10, 1992. Its investment adviser is HERZFELD/CUBA, a
division of Thomas J. Herzfeld Advisors, Inc. (the &#147;Adviser&#148;). The Fund&#146;s
investment objective is long-term capital appreciation. To achieve its
objective, the Fund invests in issuers that are likely, in the Adviser&#146;s view,
to benefit from economic, political, structural and technological developments
in the countries in the Caribbean Basin, which include, among others, Cuba,
Jamaica, Trinidad and Tobago, the Bahamas, the Dominican Republic, Barbados,
Aruba, Haiti, the Netherlands Antilles, the Commonwealth of Puerto Rico, Mexico,
Honduras, Guatemala, Belize, Costa Rica, Panama, Colombia, the United States and
Venezuela (&#147;Caribbean Basin Countries&#148;). The Fund invests at least 80% of its
total assets in a broad range of securities of issuers, including U.S.-based
companies which engage in substantial trade with, and derive substantial revenue
from, operations in the Caribbean Basin Countries. An investment in the Fund is
not appropriate for all investors and should not constitute a complete
investment program. No assurances can be given that the Fund&#146;s objective will be
achieved.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Neither the Securities
and Exchange Commission (&#147;SEC&#148;) nor any state securities commission has approved
or disapproved these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.</FONT></B></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="83%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap style="text-align: center" width="5%"><B><FONT face="Times New Roman" size=2>Estimated</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="3%"><B><FONT face="Times New Roman" size=2>Estimated</FONT></B></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap style="text-align: center" width="5%"><B><FONT face="Times New Roman" size=2>Estimated</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="83%"></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%"><B><FONT face="Times New Roman" size=2>Subscription Price
      1</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="3%"><B><FONT face="Times New Roman" size=2>Sales
    Load</FONT></B></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="5%"><B><FONT face="Times New Roman" size=2>Proceeds to the Fund
      2</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="83%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Per
      Share</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap style="text-align: center" width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$6.91</FONT></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap style="text-align: center" width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>None</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap style="text-align: center" width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$6.91</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="83%"><FONT face="Times New Roman" size=2>Total</FONT></TD>
    <TD noWrap align=right width="1%">&nbsp;</TD>
    <TD noWrap style="text-align: center" width="5%"><FONT face="Times New Roman" size=2>$8,552,438</FONT></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;</TD>
    <TD noWrap style="text-align: center" width="3%"><FONT face="Times New Roman" size=2>None</FONT></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap style="text-align: center" width="5%"><FONT face="Times New Roman" size=2>$8,552,438</FONT></TD></TR></TABLE><BR>
<P align=justify><B><FONT face="Times New Roman" size=2>AS A RESULT OF THE TERMS
OF THE OFFER, STOCKHOLDERS WHO DO NOT FULLY EXERCISE THEIR RIGHTS, INCLUDING THE
OVER-SUBSCRIPTION PRIVILEGE DESCRIBED IN THE SECTION OF THIS PROSPECTUS ENTITLED
&#147;THE OFFERING OVER-SUBSCRIPTION PRIVILEGE,&#148; WILL, UPON THE COMPLETION OF THE
OFFER, OWN A SMALLER PROPORTIONAL INTEREST IN THE FUND THAN THEY OWNED BEFORE
THE OFFER. THE OFFER WILL RESULT IN EITHER A DILUTION OR ACCRETION OF NAV FOR
ALL STOCKHOLDERS, WHETHER OR NOT THEY EXERCISE SOME OR ALL OF THEIR RIGHTS,
BECAUSE THE SUBSCRIPTION PRICE PER SHARE MAY BE LESS THAN OR GREATER THAN THE
THEN-CURRENT NAV. BECAUSE THE ESTIMATED SUBSCRIPTION PRICE IS BELOW THE NAV,
THERE IS A LIKELIHOOD THAT THE COMPLETION OF THE OFFERING WILL RESULT IN AN
IMMEDIATE DILUTION OF THE NAV FOR ALL EXISTING STOCKHOLDERS. SUCH DILUTION IS
NOT CURRENTLY DETERMINABLE BECAUSE IT IS NOT KNOWN HOW MANY SHARES WILL BE
SUBSCRIBED FOR, WHAT THE NAV OR MARKET PRICE OF THE SHARES WILL BE ON THE
EXPIRATION DATE OR WHAT THE SUBSCRIPTION PRICE WILL BE. THE AMOUNT OF DILUTION
OR ACCRETION MIGHT BE SIGNIFICANT. IF DILUTION OCCURS, STOCKHOLDERS WILL
EXPERIENCE A DECREASE IN THE NAV OF SHARES HELD BY THEM, IRRESPECTIVE OF WHETHER
THEY EXERCISE ALL OR ANY PORTION OF THEIR RIGHTS. SEE &#147;RISK FACTORS AND SPECIAL
CONSIDERATIONS-DILUTION&#148; ON PAGE 17.</FONT></B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2><B>Investing in the Fund involves risks. See &#147;Risk Factors and Special
Considerations&#148; on page 17 of this prospectus.</B></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The employees of the Fund&#146;s
Adviser and the Directors and Officers of the Fund (see, &#147;Management of the
Fund&#148;) may purchase shares of Common Stock through the Primary Subscription
described in the section of this prospectus entitled &#147;The Offering &#150; Terms of
the Offer &#148; and the Over-Subscription Privilege on the same terms as other
stockholders.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>This prospectus sets forth
concisely certain information about the Fund that a prospective investor should
know before investing. Please read this prospectus carefully before investing
and keep it for future reference. All subscription questions and inquiries
relating to the Offer should be directed to the subscriptions agent, Boston
Financial Data Services, Inc. Event Center, 30 Dan Road, Canton, MA 02021,
described in the section of this prospectus entitled &#147;The Offering &#150;
Subscription Agent.&#148;</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Stockholders may also contact the Fund for information
about the Offer by writing to The Herzfeld Caribbean Basin Fund, Inc., 119
Washington Avenue, Suite 504, Miami Beach, FL 33139 or by calling (305) 271-1900
or (800) TJH-FUND. Stockholders may also contact their brokers or nominees for
information with respect to the Offer.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Stockholders may request
copies of the Fund&#146;s Annual Report and Semi-Annual Report free of charge, make
inquiries or request other information about the Fund by writing to The Herzfeld
Caribbean Basin Fund, Inc., 119 Washington Avenue, Suite 504 Miami Beach, FL
33139, by calling (800) TJH-FUND or (305) 271-1900, or on the Fund&#146;s website at
http://herzfeld.com/cuba.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Information about the Fund
can be also be reviewed and copied at the SEC&#146;s Public Reference Room in
Washington, D.C. Information on the operation of the Public Reference Room may
be obtained by calling the SEC at (202) 551-8090 or toll free at (800) 732-0330.
This information is also available on the EDGAR database on the SEC&#146;s internet
site at: http://www.sec.gov, and copies may be obtained, after paying a
duplicating fee, by electronic request at the following e-mail address:
publicinfo@sec.gov or by writing the Public Reference Section of the Securities
and Exchange Commission, 100 F Street, NE, Washington, D.C. 20549.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" width="100%">&nbsp;&nbsp;
  </TD></TR></TABLE>
<div align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><SUP>1</SUP> Since the Subscription Price
will not be determined until after printing and distribution of this prospectus,
the Subscription Price above is estimated based on the closing price of a share
of common stock of the Fund on October 9, 2014 and applying the pricing formula
set forth on the cover page of this prospectus and described below under
&#147;Subscription Price&#148; (i.e., 95% of the average volume-weighted closing sales
price of the Fund&#146;s shares on the NASDAQ Capital Market on October 9, 2014, and
the four preceding trading days) (the &#147;Estimated Subscription Price&#148;). The
average volume-weighted closing sale price of the Fund&#146;s shares on the NASDAQ
Capital Market on October 9, 2014 and the four preceding trading days was $
7.27. See &#147;The Offering - Subscription Price, and, Payment For
Shares&#148;.</FONT></div>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><SUP>2</SUP> Proceeds to the Fund before
deduction of expenses incurred by the Fund in connection with the Offer which
are estimated to be $8,552,438. Amounts received by check prior to the final due
date of this Offer will be deposited in a segregated interest-bearing account
pending allocation and distribution of Common Stock. Interest on subscription
monies will be paid to the Fund regardless of whether Common Stock is issued by
the Fund.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><B><FONT face="Times New Roman" size=2>No dealer, salesperson
or other person is authorized to give any information or to represent anything
not contained in this prospectus. You must not rely on any unauthorized
information or representations not contained in this prospectus as if the Fund
had authorized it. The Fund is offering to sell, and seeking offers to buy,
shares of common stock only in jurisdictions where offers and sales are
permitted. This prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any security other than the shares of common
stock offered by this prospectus, nor does it constitute an offer to sell or the
solicitation of an offer to buy shares of common stock by anyone in any
jurisdiction in which such offer or solicitation would be unlawful. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or any sale of
common stock.</FONT></B></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=center><B><FONT face="Times New Roman" size=2>TABLE OF
CONTENTS</FONT></B></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>PROSPECTUS SUMMARY</FONT></B></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>1</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
      Offer</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>1</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Important
      Terms of the Offer</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>1</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Important
      Dates for the Offer</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>2</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Key
      Elements of the Offer</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>2</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Information Regarding the Fund</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>5</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Information Regarding the Adviser and Custodian</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>5</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Risk
      Factors and Special Considerations</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>5</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fee
      Table</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>8</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><B><FONT face="Times New Roman" size=2>FINANCIAL
      HIGHLIGHTS</FONT></B></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>9</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>THE FUND</FONT></B></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>10</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share
      Price Data</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>10</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>THE OFFERING</FONT></B></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>11</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Terms of
      the Offer</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>11</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purpose of
      the Offer</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>12</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Subscription Price</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>13</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Over-Subscription Privilege</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>13</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Expiration
      of the Offer</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>13</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Subscription Agent</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>14</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Method of
      Exercising Rights</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>14</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment
      for Shares</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>14</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Delivery
      of Stock Certificates</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>15</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign
      Restrictions</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>16</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal
      Income Tax Consequences Associated With the Offer</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>16</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employee
      Plan Considerations</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>16</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><B><FONT face="Times New Roman" size=2>USE OF
      PROCEEDS</FONT></B></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>16</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>RISK FACTORS AND SPECIAL
      CONSIDERATIONS</FONT></B></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>17</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dilution
      of Net Asset Value and Effect of Non-Participation in the Offer</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>17</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Discount
      From Net Asset Value</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>18</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Risks of
      Investing in Caribbean Basin Countries</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>18</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Geographic Concentration Risk</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>19</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Foreign Securities Risk</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>19</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Foreign Economy Risk</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>19</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Currency Risk</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>19</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Governmental Supervision and Regulation/Accounting Standards</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>20</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Certain Risks of Holding Fund Assets Outside the United States</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>20</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Settlement Risk</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>20</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Emerging Markets Risk</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>21</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>INVESTMENT OBJECTIVE AND POLICIES</FONT></B></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>21</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment
      Policies - General</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>21</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Temporary Defensive Positions</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>23</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Special
      Leverage Considerations</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>23</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Hedging Transactions</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>23</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Forward Foreign Currency Exchange Contracts</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>23</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Options on Foreign Currencies</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>24</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Futures Contracts</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>24</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Options on Securities and Options on Indices</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>25</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>Repurchase Agreements</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>25</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Debt
      Securities</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>26</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>Securities Lending</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>26</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Portfolio Turnover</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>26</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="100%"><FONT face="Times New Roman" size=2>Investment Restrictions</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>27</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>MANAGEMENT OF THE FUND</FONT></B></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>28</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Board of
      Directors</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>28</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Information About Directors and Officers</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>28</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Committees of the Board</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>31</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Ownership of the Fund By Directors</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>31</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Director Compensation</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>32</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment
      Adviser and Portfolio Manager</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>32</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Investment Adviser</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>32</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Portfolio Manager</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>32</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment
      Advisory Agreement</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>33</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Benefit to
      the Adviser</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>34</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Expenses
      of the Fund</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>35</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>PORTFOLIO TRANSACTIONS AND
    BROKERAGE</FONT></B></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>35</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%"><B><FONT face="Times New Roman" size=2>CODE OF
      ETHICS</FONT></B></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>36</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>PROXY VOTING POLICIES AND
    PROCEDURES</FONT></B></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>36</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%"><B><FONT face="Times New Roman" size=2>SECURITY OWNERSHIP OF
      CERTAIN BENEFICIAL OWNERS</FONT></B></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>36</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>DESCRIPTION OF COMMON STOCK</FONT></B></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>36</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share
      Repurchases and Tender Offers</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>36</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Certain
      Provisions of Articles of Incorporation and Bylaws</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>38</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%"><B><FONT face="Times New Roman" size=2>DIVIDENDS AND
      DISTRIBUTIONS; DIVIDEND REINVESTMENT PLAN</FONT></B></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>38</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>TAXATION</FONT></B></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>41</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal
      Taxation of the Fund and its Distributions</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>41</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>DETERMINATION OF NET ASSET VALUE</FONT></B></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>47</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%"><B><FONT face="Times New Roman" size=2>CUSTODIAN, TRANSFER
      AGENT, DIVIDEND DISBURSING AGENT, AND REGISTRAR</FONT></B></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>48</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>LEGAL MATTERS</FONT></B></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>48</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%"><B><FONT face="Times New Roman" size=2>INDEPENDENT
      REGISTERED PUBLIC ACCOUNTING FIRM</FONT></B></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>48</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>FINANCIAL STATEMENTS</FONT></B></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>48</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%"><B><FONT face="Times New Roman" size=2>APPENDIX
    A</FONT></B></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>A-1</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="98%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>APPENDIX B</FONT></B></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>B-1</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P STYLE="text-align: center"><B><FONT face="Times New Roman" size=2>PROSPECTUS
SUMMARY</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>This summary highlights
some information that is described more fully elsewhere in this prospectus and
is qualified in its entirety by the more detailed information included elsewhere
in the prospectus. The summary may not contain all of the information that is
important to you. To understand the Offer fully you should read the entire
document carefully, including the risk factors.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>The Offer</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Board of Directors of
the Fund (the &#147;Board&#148;) has determined that it is in the best interests of the
Fund and its existing stockholders to increase the assets of the Fund so that
the Fund may be in a better position to take advantage of investment
opportunities that may arise. In addition, the Board believes that increasing
the size of the Fund may lower the Fund&#146;s expenses as a proportion of average
net assets because the Fund&#146;s fixed costs would be spread over a larger asset
base. There can be no assurance, however, that an increase in the size of the
Fund will lower the Fund&#146;s expense ratio. Further, to the extent the Fund
realizes gains (as it has in the past), any net realized gains of the Fund are
required to be distributed to stockholders in order to maintain its &#147;regulated
investment company&#148; status under Subchapter M of the U.S. Internal Revenue Code
of 1986, as amended (the &#147;Code&#148;). Accordingly, in the future the Fund may be
required to make large distributions to stockholders to maintain its regulated
investment company status, thereby reducing the net assets of the Fund.
Additionally, if the Fund is fully invested when it is required to make a
distribution it may need to sell some of its portfolio holdings at an
inopportune time in order to raise the necessary funds to satisfy the
distribution requirement. For the calendar year ended December 31, 2013, the
Fund paid a year-end distribution of $1.14 per share. If successful, the Offer
may reduce the need of the Fund to sell its portfolio positions in order to
satisfy its distribution requirements. The Board also believes that a larger
number of outstanding shares could increase the level of market interest in and
visibility of the Fund and improve the trading liquidity of the Fund&#146;s common
stock on the NASDAQ Capital Market. The Offer seeks to reward existing
stockholders by giving them the right to purchase additional shares at a price
below market without incurring any direct commission or other transaction
charges. Please note that stockholders that arrange to exercise Rights through a
broker, bank, trust company or other financial intermediary may be charged for
this service by such institution. See &#147;The Offering - Purpose of the Offer.&#148;</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>At
Board meetings held February 11, 2014, May 7, 2014, August 6, 2014 and September
11, 2014</FONT><B><FONT face="Times New Roman" size=2>,</FONT></B><FONT face="Times New Roman" size=2> the Board discussed at length with the Adviser
and counsel to the Fund the proposed rights offering. At the September 11, 2014
meeting, the Board approved the final terms of the Offer, which permit
stockholders to acquire one new share of the Fund for every three Rights held
(i.e., a One-for-Three rights offering) for a Subscription Price, equal to 95%
of the volume-weighted average market price of a share of common stock on the
Expiration Date and the four immediately preceding trading days.</FONT></P>
<div align=center>
<DIV style="BORDER-RIGHT: #000000 1pt solid; PADDING-RIGHT: 4pt; BORDER-TOP: #000000 1pt solid; PADDING-LEFT: 4pt; PADDING-BOTTOM: 4pt; BORDER-LEFT: #000000 1pt solid; WIDTH: 98%; PADDING-TOP: 4pt; BORDER-BOTTOM: #000000 1pt solid">

<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="26%" colSpan=2><B><FONT face="Times New Roman" size=2>Important Terms of the
      Offer</FONT></B></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
    <TD noWrap align=left width="25%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Total number of shares of Common
Stock</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
    <TD noWrap align=left width="73%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="25%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>available for Primary Subscription:</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="73%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>1,237,690</FONT></TD></TR>
  <TR>
    <TD STYLE="width: 1%; background-color: Silver"></TD>
    <TD COLSPAN="3" STYLE="width: 99%; background-color: Silver">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 25%"><FONT face="Times New Roman" size=2>Number of Rights you will receive for
      each</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 73%"></TD></TR>
  <TR vAlign=bottom>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 25%"><FONT face="Times New Roman" size=2>outstanding share of Common Stock you
    own</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 73%"></TD></TR>
  <TR vAlign=bottom>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 25%"><FONT face="Times New Roman" size=2>on
      the Record Date:</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 73%"><FONT face="Times New Roman" size=2>One
      Right for every one Share *</FONT></TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="99%" colSpan=3>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="25%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Number of shares of Common Stock you</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="73%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="25%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>may
      purchase with your Rights at the</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="73%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="25%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Subscription Price per share</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="73%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>One
      share for every three Rights **</FONT></TD></TR>
  <TR>
    <TD STYLE="width: 1%; background-color: Silver"></TD>
    <TD COLSPAN="3" STYLE="width: 99%; background-color: Silver">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: left; width: 25%"><FONT face="Times New Roman" size=2>Subscription Price:</FONT></TD>
    <TD NOWRAP STYLE="vertical-align: top; text-align: left; width: 1%"></TD>
    <TD STYLE="vertical-align: top; text-align: left; width: 73%">
      <P align=justify><FONT face="Times New Roman" size=2>95% of the average volume-weighted sales price
      per share of the Fund&#146;s Common Stock on the NASDAQ Capital Market on
      November 6, 2014 and the four preceding trading days.</FONT></P></TD></TR>
  <TR>
    <TD width="1%"></TD>
    <TD width="99%" colSpan=3>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="25%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Estimated Subscription Price</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="73%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$6.91</FONT></TD></TR></TABLE><BR>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>*</FONT></TD>
    <TD vAlign=top>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>The number
      of Rights to be issued to a stockholder on the Record Date will be rounded
      up to the nearest whole number of Rights; no fractional Rights will be
      issued.</FONT></TD></TR>
  <TR>
    <TD vAlign=top colSpan=3>&nbsp;&nbsp; </TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>**</FONT></TD>
    <TD vAlign=top></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Stockholders will be able to acquire additional shares of Common
      Stock pursuant to an over-subscription privilege in certain circumstances,
      described in the section of this prospectus entitled &#147;The Offering &#150; Terms
      of the Offer.&#148;</FONT></TD></TR></TABLE></DIV></DIV><BR>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="100%" colSpan=2><FONT face="Times New Roman" size=2>-1-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<div align=center>
<DIV style="BORDER-RIGHT: #000000 1pt solid; PADDING-RIGHT: 4pt; BORDER-TOP: #000000 1pt solid; PADDING-LEFT: 4pt; PADDING-BOTTOM: 4pt; BORDER-LEFT: #000000 1pt solid; WIDTH: 98%; PADDING-TOP: 4pt; BORDER-BOTTOM: #000000 1pt solid">
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="100%" colSpan=4><B><FONT face="Times New Roman" size=2>Important Dates for the
      Offer</FONT></B> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD></TR>
  <TR>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="25%">&nbsp;
</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
    <TD noWrap align=left width="25%"><FONT face="Times New Roman" size=2>Record Date:</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
    <TD noWrap align=left width="73%"><FONT face="Times New Roman" size=2>October 9, 2014</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%">&nbsp;
</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%"><FONT face="Times New Roman" size=2>Subscription Period:</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"><FONT face="Times New Roman" size=2>October 16, 2014 to November 6,
  2014</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%">&nbsp;
</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%"><FONT face="Times New Roman" size=2>Expiration Date :</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"><FONT face="Times New Roman" size=2>November 6, 2014*</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%">&nbsp;
</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%"><FONT face="Times New Roman" size=2>Pricing Date:</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"><FONT face="Times New Roman" size=2>November 6, 2014*</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%">&nbsp;
</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%"><FONT face="Times New Roman" size=2>Subscription Certificate and</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%"><FONT face="Times New Roman" size=2>Payment for Shares Due**</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"><FONT face="Times New Roman" size=2>November 6, 2014*</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%">&nbsp;
</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%"><FONT face="Times New Roman" size=2>Notice of Guaranteed Delivery Due**</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"><FONT face="Times New Roman" size=2>November 6, 2014*</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%">&nbsp;
</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%"><FONT face="Times New Roman" size=2>Final Payment for Shares (if any)
    Due***</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"><FONT face="Times New Roman" size=2>November 11, 2014*</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%">&nbsp;&nbsp; </TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="25%"><FONT face="Times New Roman" size=2>Confirmation Mailed to Participants</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="73%"><FONT face="Times New Roman" size=2>November 20,
2014*</FONT></TD></TR></TABLE><BR>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>*</FONT></TD>
    <TD vAlign=top>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Unless the
      Offer is extended.</FONT></TD></TR>
  <TR>
    <TD vAlign=top colSpan=3>&nbsp; </TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>**</FONT></TD>
    <TD vAlign=top></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Record
      Date Stockholders exercising Rights must deliver to the Subscription Agent
      by the Expiration Date either (i) the Subscription Certificate together
      with the estimated payment or (ii) a Notice of Guaranteed
    Delivery.</FONT></TD></TR>
  <TR>
    <TD vAlign=top colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>***</FONT></TD>
    <TD vAlign=top></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Additional
      amounts may be due at settlement for additional shares purchased upon
      exercising Rights because the Estimated Subscription Price may be less
      than the actual Subscription Price. See &#147;The Offering - Payment for
      Shares.&#148;</FONT></TD></TR></TABLE>
<P align=center><I><FONT face="Times New Roman" size=2>(Capitalized terms used
in this section are defined elsewhere in this prospectus.)</FONT></I></P></DIV></DIV>
<P align=justify><B><FONT face="Times New Roman" size=2>Key Elements of the
Offer</FONT></B></P>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="20%"><B><I><FONT face="Times New Roman" size=2>One-for-Three
      Offering</FONT></I></B></TD>
    <TD vAlign=top align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD vAlign=top align=left width="79%">
      <P align=justify><FONT face="Times New Roman" size=2>The Offer will give stockholders on the Record
      Date (&#147;Record Date Stockholders&#148;) the right to purchase one share of
      Common Stock for every three Rights received. For example, if you own 100
      shares of common stock on the Record Date, you will receive 100 Rights
      entitling you to purchase 34 shares of Common Stock of the Fund. Record
      Date Stockholders may exercise all or some of their Rights. However,
      stockholders who do not exercise all of their Rights will not be able to
      participate in the Over-Subscription Privilege. See &#147;Over-Subscription
      Privilege&#148; below.</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top width="100%" colSpan=3>&nbsp;&nbsp;&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="20%"><B><I><FONT face="Times New Roman" size=2>Non-Transferable
      Rights</FONT></I></B></TD>
    <TD vAlign=top align=left width="1%"></TD>
    <TD vAlign=top align=left width="79%">
      <P align=justify><FONT face="Times New Roman" size=2>The Rights issued in the Offer will be
      &#147;non-transferable&#148; and, therefore, may not be purchased or sold. Rights
      not exercised will expire without residual value at the Expiration Date.
      The Rights will not be listed for trading on the NASDAQ Capital Market or
      any other securities exchange. However, the shares of Common Stock to be
      issued pursuant to the Offer will be listed for trading on the NASDAQ
      Capital Market, subject to the NASDAQ Capital Market being officially
      notified of the issuance of those
shares.</FONT></P></TD></TR></TABLE><BR>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="99%"><FONT face="Times New Roman" size=2>-2-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>
<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<!--PART B-->
<TABLE style="BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="20%"><B><I><FONT face="Times New Roman" size=2>Dilution/Non-Participation in
      Offer</FONT></I></B></TD>
    <TD vAlign=top noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top align=left width="79%" colSpan=2>
      <P align=justify><FONT face="Times New Roman" size=2>Record Date
      Stockholders who do not fully exercise their Rights including the
      Over-Subscription Privilege will, at the completion of the Offer, own a
      smaller proportional interest in the Fund than if they exercised their
      Rights. If the Subscription Price per share is below the then current NAV
      per share, stockholders will experience immediate perhaps substantial
      dilution of the aggregate NAV of their shares of Common Stock if they do
      not participate in the Offer and will experience a reduction in the NAV
      per share whether or not they participate in the Offer. The Fund cannot
      state precisely the extent of this dilution (if any) if stockholders do
      not exercise their Rights because the Fund does not know what the NAV and
      price per share will be at the time of the Offer or what proportion of the
      Rights will be exercised. Because the Estimated Subscription Price is
      below the NAV, there is a likelihood that the completion of the Offering
      will result in an immediate dilution of the NAV for all existing
      stockholders. If the Subscription Price is greater than the then current
      NAV per share, the NAV will experience some accretion. See &#147;Risk Factors
      and Special Considerations - Dilution of Net Asset Value and Effect of
      Non-Participation in the Offer.&#148;</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%">&nbsp;</TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="79%" colSpan=2></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"><P align=justify><B><I><FONT face="Times New Roman" size=2>Subscription Price</FONT></I></B></P></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="79%" colSpan=2>
      <P align=justify><FONT face="Times New Roman" size=2>Shares of Common
      Stock issued upon exercise of Rights will be sold at a price equal to 95%
      of the volume-weighted average closing sales price of a share of Common
      Stock on the NASDAQ Capital Market on the Expiration Date and the four
      preceding trading days. The Subscription Price is discussed further under
      &#147;The Offering - Subscription Price.&#148; In addition, information with respect
      to the quarterly high and low sale prices of the Fund&#146;s Common Stock on
      the NASDAQ Capital Market and the corresponding NAVs per share of Common
      Stock is provided under &#147;The Fund&#148;.</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%">&nbsp;</TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="79%" colSpan=2></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"><P align=justify><B><I><FONT face="Times New Roman" size=2>Over-Subscription Privilege</FONT></I></B></P></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="79%" colSpan=2>
      <P align=justify><FONT face="Times New Roman" size=2>Each Record Date
      Stockholder who fully exercises all Rights issued to him is entitled to
      subscribe for shares which were not otherwise subscribed for by others in
      the Primary Subscription. If enough shares are available, all of these
      requests will be honored in full. If these requests for shares exceed the
      shares available, the Fund may determine after the expiration of the
      Offer, at the discretion of the Fund, to issue additional Common Stock up
      to an amount equal to 50% of the shares available pursuant to the Offer
      (up to an additional 618,845 shares of Common Stock) in order to cover
      these requests. Regardless of whether the Fund issues such additional
      shares, to the extent shares are not available to honor all requests, the
      available shares will be allocated pro rata among those Record Date
      Stockholders who over-subscribe based on the number of Rights originally
      issued to them by the Fund.</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%">&nbsp;</TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="79%" colSpan=2></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"><P align=justify><B><I><FONT face="Times New Roman" size=2>Exercising Rights</FONT></I></B></P></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="79%" colSpan=2>
      <P align=justify><FONT face="Times New Roman" size=2>Except as described
      below, subscription certificates evidencing the Rights (&#147;Subscription
      Certificates&#148;) will be sent to Record Date Stockholders or their nominees.
      There is no minimum number of Rights which must be exercised for the Offer
      to close. If you wish to exercise your Rights, you may do so in the
      following ways:</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%">&nbsp;</TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="79%" colSpan=2></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="1%"><FONT size=2 face="Times New Roman">1.&nbsp;</FONT></TD>
    <TD vAlign=top align=left width="78%">
      <P align=justify><FONT face="Times New Roman" size=2>Complete,sign and date       the Subscription Certificate. Enclose it in
      the envelope       provided, together with payment in full and mail or deliver the       envelope        to the Subscription
      Agent (described in the       section of this prospectus        entitled &#147;The       Offering &#150; Terms of the
      Offer&#148;) at the address indicated on       the Subscription Certificate calculating the       total payment on the basis
      of        the Estimated Subscription Price of $6.91       per share (i.e., the estimated       Subscription Price based on
      the Fund&#146;s market price on October 9, 2014).             Your Subscription Certificate and       payment must be
      received by the        Expiration Date. Payment pursuant to this method       must be in United States       dollars by money
      order or check drawn on a bank located in the United        States and must       be payable to </FONT><B><FONT face="Times New Roman" size=2>&#147;The
      Herzfeld Caribbean Basin Fund,       Inc.&#148;</FONT></B></P></TD></TR></TABLE><BR>
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  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=center width="20%">&nbsp;</TD>
    <TD vAlign=top noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap align=center width="1%"><FONT size=2 face="Times New Roman">2.&nbsp;</FONT></TD>
    <TD vAlign=top align=left width="77%">
      <P align=justify><FONT size=2 face="Times New Roman">Contact your broker, banker or trust
      company, which can arrange, on your behalf, to guarantee delivery of
      payment and delivery of a properly completed and executed Subscription
      Certificate pursuant to a notice of guaranteed delivery (&#147;Notice of
      Guaranteed Delivery&#148;) by the close of business on the third Business Day
      after the Expiration Date. For purposes of this prospectus, a &#147;Business
      Day&#148; shall mean any day on which trading is conducted on the NASDAQ
      Capital Market. A fee may be charged for this service. The Notice of
      Guaranteed Delivery must be received by the Expiration Date. Rights
      holders will have no right to rescind a purchase after the Subscription
      Agent has received the Subscription Certificate or Notice of Guaranteed
      Delivery. See &#147;The Offering - Method of Exercising Rights,&#148; and, &#151;&#147;Payment
      for Shares.&#148; The Subscription Agent will deposit all checks received by it
      prior to the final due date into a segregated interest bearing account at
      Boston Financial Data Services, Inc. (see, &#147;The Offering &#150; Subscription
      Agent&#148;) pending distribution of the shares from the Offer. All interest
      will accrue to the benefit of the Fund and investors will not earn
      interest on payments submitted.</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=center width="20%">&nbsp;</TD>
    <TD vAlign=top noWrap align=center width="1%"></TD>
    <TD vAlign=top noWrap align=left width="78%" colSpan=2></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=center width="20%">
      <P align=justify><B><I><FONT face="Times New Roman" size=2>Restrictions on
      Foreign Stockholders</FONT></I></B></P></TD>
    <TD vAlign=top noWrap align=center width="1%"></TD>
    <TD vAlign=top align=left width="78%" colSpan=2>
      <P align=justify><FONT face="Times New Roman" size=2>The Fund will not
      mail Subscription Certificates to stockholders whose record addresses are
      outside the United States or who have an APO or FPO address. Stockholders
      whose addresses are outside the United States or who have an APO or FPO
      address and who wish to subscribe to the Offer either partially or in full
      should contact the Subscription Agent by written instruction or recorded
      telephone conversation no later than three (3) Business Days prior to the
      Expiration Date.</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=center width="20%">&nbsp;</TD>
    <TD vAlign=top noWrap align=center width="1%"></TD>
    <TD vAlign=top align=left width="78%" colSpan=2></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=center width="20%">
      <P align=justify><B><I><FONT face="Times New Roman" size=2>Purpose of the
      Offer</FONT></I></B></P></TD>
    <TD vAlign=top noWrap align=center width="1%"></TD>
    <TD vAlign=top align=left width="78%" colSpan=2>
      <P align=justify><FONT face="Times New Roman" size=2>The Board of the Fund
      has determined that it is in the best interests of the Fund and its
      stockholders to increase the assets of the Fund available for investment
      so that the Fund will be in a better position to take full advantage of
      investment opportunities. The Board believes that increasing the size of
      the Fund may increase the trading liquidity of the Fund&#146;s shares of Common
      Stock and also may reduce the Fund&#146;s expenses as a proportion of average
      net assets. The Offer also may allow the Fund to make capital gain
      distributions required to maintain its tax status as a regulated
      investment company without causing a reduction in the net assets of the
      Fund. Any such reduction will reduce the amount of cash available for
      additional investment opportunities. The Board also believes that a larger
      number of outstanding shares could increase the level of market interest
      in and visibility of the Fund and improve the trading liquidity of the
      Fund&#146;s common stock on the NASDAQ Capital Market.</FONT></P>
      <P align=justify><FONT face="Times New Roman" size=2>In addition, the
      Offer seeks to reward the Fund&#146;s stockholders by giving them the right to
      purchase additional shares of Common Stock at a price that will be below
      the market price without incurring any direct transaction costs. Please
      note that stockholders that arrange to exercise Rights through a broker,
      bank, trust company or other financial intermediary may be charged for
      this service by such institution. The Offer will benefit both the Fund and
      its stockholders by providing the Fund with the ability to make additional
      investments without selling current investments if otherwise not
      desirable. Moreover, if the Subscription Price is greater than the NAV per
      share of Common Stock of the Fund on the Expiration Date (less offering
      expenses), the Offer will increase the NAV per share. See &#147;The Offering -
      Purpose of the Offer.&#148;</FONT></P></TD></TR></TABLE><BR>
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  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="20%"><B><I><FONT face="Times New Roman" size=2>Use of Proceeds :</FONT></I></B></TD>
    <TD vAlign=top noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top align=left width="78%">
      <P align=justify><FONT face="Times New Roman" size=2>The net proceeds of
      the Offer are estimated to be approximately $ 8,404,740. This figure is
      based on the Estimated Subscription Price per share of $6.91 and assumes
      all shares offered are sold and that the expenses related to the Offer
      estimated at approximately $147,698 are paid. The Adviser anticipates that
      it will take no longer than three to six months for the Fund to invest
      these proceeds in accordance with its investment objective and policies
      under current market conditions. Pending investment, the proceeds will be
      invested in short-term cash-equivalent instruments. Although the Adviser
      anticipates that a substantial portion of the proceeds will be invested
      pursuant to its investment objective and policies, some of the proceeds
      may be used to make capital gain distributions required to maintain its
      tax status as a regulated investment company. As of June 30, 2014, the
      aggregate capital gains were $3,563,497. Distributions of net realized
      gains are paid on a calendar year basis; accordingly, the Fund&#146;s calendar
      year-end distribution for 2014 is not known at this time. See &#147;Use of
      Proceeds&#148;.</FONT></P></TD></TR></TABLE><BR>
<P align=justify><B><FONT face="Times New Roman" size=2>Information Regarding
the Fund</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Herzfeld Caribbean
Basin Fund, Inc. is a non-diversified, closed-end management investment company
organized in the State of Maryland on March 10, 1992. The Fund&#146;s investment
objective is long-term capital appreciation. To achieve its objective, the Fund
invests in issuers that are likely, in the Adviser&#146;s view, to benefit from
economic, political, structural and technological developments in the countries
in the Caribbean Basin, which includes, among others, Cuba, Jamaica, Trinidad
and Tobago, the Bahamas, the Dominican Republic, Barbados, Aruba, Haiti, the
Netherlands Antilles, the Commonwealth of Puerto Rico, Mexico, Honduras,
Guatemala, Belize, Costa Rica, Panama, Colombia, the United States and
Venezuela. The Fund invests at least 80% of its total assets in equity and
equity-linked securities of issuers, which engage in substantial trade with, and
derive substantial revenue from, operations in the Caribbean Basin Countries
(&#147;Caribbean Basin Companies&#148;). See &#147;Investment Objective and Policies.&#148; Such
securities include, but are not limited to, common stock, preferred stock, debt
securities convertible into equity, warrants, options and futures. An investment
in the Fund is not appropriate for all investors and should not constitute a
complete investment program. No assurances can be given that the Fund&#146;s
objective will be achieved.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>As of the Record Date, the
Fund had 3,713,071 shares of common stock outstanding. The Fund&#146;s common stock
trades on the NASDAQ Capital Market under the symbol &#147;CUBA.&#148; The average weekly
trading volume of the common stock on the NASDAQ Capital Market during the
fiscal year ended June 30, 2014 was approximately 48,570 shares. As of October
9, 2014, the aggregate net assets of the Fund were approximately $31.6
million.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Information Regarding
the Adviser and Custodian, Transfer Agent, Dividend Disbursing Agent, and
Registrar</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>HERZFELD/CUBA, a division
of Thomas J. Herzfeld Advisors, Inc. has acted as the investment adviser to the
Fund since the Fund&#146;s inception in 1993. The Fund pays the Adviser a monthly fee
at the annual rate of 1.45% of the Fund&#146;s average daily net assets. See
&#147;Management of the Fund - Investment Adviser.&#148;</FONT></P>

<P STYLE="text-align: justify"><FONT face="Times New Roman" size=2>State Street Bank and Trust
Company acts as custodian for the Fund&#146;s assets. State Street Bank and Trust
Company also serves as the Fund&#146;s transfer agent, dividend/distribution
disbursing agent, dividend reinvestment plan agent and as registrar for the
Fund&#146;s common stock. For its services as custodian, the Fund currently pays
State Street Bank and Trust Company a monthly fee of $7,000. For its services as
transfer agent, dividend reinvestment plan agent and registrar for the Fund&#146;s
Common Stock, the Fund currently pays State Street Bank and Trust Company a
monthly fee of $2,000 plus related expenses.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Risk Factors and Special
Considerations</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Risk is inherent in all
investing. The following discussion summarizes some of the risks that a
potential holder of the Fund&#146;s Common Stock should consider before deciding
whether to invest in the Fund&#146;s Common Stock. For additional information about
the risks associated with investing in the Fund&#146;s Common Stock, see &#147;Risk
Factors and Special Considerations.&#148; </FONT><I><FONT face="Times New Roman" size=2></FONT></I></P>

<P STYLE="text-align: justify"><I><FONT face="Times New Roman" size=2>General</FONT></I><FONT face="Times New Roman" size=2>. The Fund is a
non-diversified, closed-end investment company designed primarily as a long-term
investment and not as a trading tool. The Fund invests generally in a portfolio
of Caribbean Basin Companies. An investment in the Fund may be speculative and
involves a high degree of risk. The Fund should not constitute a complete
investment program. Due to the uncertainty in all investments, there can be no
assurance that the Fund will achieve its investment objective.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund&#146;s shares do not
represent a deposit or obligation of, and are not guaranteed or endorsed by, any
bank or other insured depository institution, and are not federally insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
governmental agency.</FONT></P>
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  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="20%"><B><I><FONT face="Times New Roman" size=2>Dilution/Non-Participation in
      Offer</FONT></I></B></TD>
    <TD vAlign=top noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top align=left width="78%">
      <P align=justify><FONT face="Times New Roman" size=2>Record Date
      Stockholders who do not fully exercise their Rights including the
      Over-Subscription Privilege described in the section of this prospectus
      entitled &#147;The Offering - Over-Subscription Privilege,&#148; will, at the
      completion of the Offer, own a smaller proportional interest in the Fund
      than if they exercised their Rights. If the Subscription Price per share
      is below the then current NAV per share, stockholders will experience an
      immediate perhaps substantial dilution of the aggregate NAV of their
      shares of Common Stock if they do not participate in the Offer and will
      experience a reduction in the NAV per share whether or not they
      participate in the Offer. The Fund cannot state precisely the extent of
      this dilution (if any) if stockholders do not exercise their Rights
      because the Fund does not know what the NAV and price per share will be at
      the time of the Offer or what proportion of the Rights will be exercised.
      Because the Estimated Subscription Price is below the NAV, there is a
      likelihood that the completion of the Offering will result in an immediate
      dilution of the NAV for all existing stockholders. Assuming, for example,
      that all Rights are exercised, the Estimated Subscription Price is $6.91
      and the Fund&#146;s NAV per share is $8.51, the Fund&#146;s NAV per share (after
      payment of estimated offering expenses) would be reduced by approximately
      $0.43 per share. See &#147;Risk Factors and Special Considerations- Dilution of
      Net Asset Value and Effect of Non-Participation in the
  Offer&#148;</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%">&nbsp;</TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%"></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"><STRONG><EM><FONT size=2 face="Times New Roman">Discount From
      NAV</FONT></EM></STRONG></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%">
      <P align=justify><FONT face="Times New Roman" size=2>Shares of closed-end
      funds frequently trade at a market price that is less than the value of
      the net assets attributable to those shares (a &#147;discount&#148;). The
      possibility that the Fund&#146;s shares will trade at a discount from NAV is a
      risk separate and distinct from the risk that the Fund&#146;s NAV will
      decrease. The risk of purchasing shares of a closed-end fund that might
      trade at a discount or unsustainable premium is more pronounced for
      investors who wish to sell their shares in a relatively short period of
      time after purchasing them because, for those investors, realization of a
      gain or loss on their investments is likely to be more dependent upon the
      existence of a premium or discount than upon portfolio
      performance.</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%">&nbsp;</TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%"></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"><STRONG><EM><FONT size=2 face="Times New Roman">Caribbean Basin
      Countries</FONT></EM></STRONG></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%">
      <P align=justify><FONT face="Times New Roman" size=2>Investing in the
      securities of non-U.S. issuers involves certain risks and considerations
      not typically associated with investing in securities of U.S. issuers.
      These risks include currency fluctuations, political and economic risks,
      including nationalization and expropriation, reduced levels of publicly
      available information concerning issuers and reduced levels of government
      regulation of foreign securities markets. Also, investment in Caribbean
      Basin Countries may involve special considerations, such as limited
      liquidity and small market capitalization of the Caribbean Basin
      securities markets, currency devaluations, high inflation and repatriation
      restrictions.</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%">&nbsp;</TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%"></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"><P align=justify><B><I><FONT face="Times New Roman" size=2>Equity Securities Risk</FONT></I></B></P></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%">
      <P align=justify><FONT face="Times New Roman" size=2>Consistent with its
      objective, the Fund invests a substantial portion of its assets in equity
      securities of Caribbean Basin Companies. Equity securities, such as common
      stock, generally represent an ownership interest in a company. An adverse
      event, such as an unfavorable earnings report, may depress the value of a
      particular equity security held by the Fund. Also, the prices of equity
      securities, particularly common stocks, are sensitive to general movements
      in the stock market. The Fund&#146;s share price can fall because of weakness
      in the markets in which it invests, a particular industry or specific
      holdings. Markets as a whole can decline for many reasons, including
      adverse political or economic developments, changes in investor
      psychology, or heavy institutional selling. The prospects for an industry
      or company may deteriorate because of a variety of factors, including
      disappointing earnings or changes in the competitive environment.
      Investments in futures and options, if any, are subject to additional
      volatility and potential losses.</FONT></P></TD></TR></TABLE><BR>
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    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="99%"><FONT face="Times New Roman" size=2>-6</FONT><FONT face="Times New Roman" size=2>-</FONT></TD></TR></TABLE><BR>
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  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="20%"><B><I><FONT face="Times New Roman" size=2>Cuba Specific Issues</FONT></I></B></TD>
    <TD vAlign=top noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top align=left width="78%">
      <P align=justify><FONT face="Times New Roman" size=2>Investment in Cuban
      securities or any investment in Cuba directly or indirectly is currently
      prohibited under U.S. law. There can be no assurances that the U.S. trade
      embargo against Cuba will ever be lifted or eased or, if and when such a
      normalization commences, that the Adviser will be able to identify direct
      investments in issuers domiciled in Cuba that are acceptable for the
      Fund.</FONT></P>
      <P align=justify><FONT face="Times New Roman" size=2>However, if
      investment in securities issued by companies domiciled in Cuba were to be
      permitted under U.S. law, certain considerations not typically associated
      with investing in securities of U.S. companies should be considered,
      including: (1) restrictions on foreign investment and on repatriation of
      capital invested in Cuba; (2) unstable currency exchange and fluctuation;
      (3) the cost of converting foreign currency into U.S. Dollars; (4)
      potential price volatility and lesser or lack of liquidity of shares
      listed on a securities market (if one is established); (5) continued
      political and economic risks including a new government that if not
      properly stabilized may lead to the risk of nationalization or
      expropriation of assets and the risk of civil war; (6) the absence of a
      developed legal structure governing private property; (7) the absence of a
      capital market structure or market oriented economy; and (8) the
      difficulty of assessing the financial status of particular
      companies.</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"><STRONG><EM><FONT size=2 face="Times New Roman">&#147;Non-diversified&#148; Investment
      Company</FONT></EM></STRONG></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%">
      <P align=justify><FONT face="Times New Roman" size=2>As a
      &#147;non-diversified&#148; investment company, the Fund&#146;s investments involve
      greater risks than would be the case for a similar diversified investment
      company because the Fund is not limited by the Investment Company Act of
      1940, as amended (the &#147;1940 Act&#148;), in the proportion of its assets that
      may be invested in the assets of a single issuer. Although the Fund is not
      diversified for the purposes of the 1940 Act, it must maintain a certain
      degree of diversification in order to comply with certain requirements of
      the Code, applicable to regulated investment companies. See &#147;Risk
      Factors/Special Considerations&#148; and &#147;Taxation.&#148;</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"><STRONG><EM><FONT size=2 face="Times New Roman">Management
      Risk</FONT></EM></STRONG></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%">
      <P align=justify><FONT face="Times New Roman" size=2>The Adviser&#146;s
      judgment about the attractiveness, relative value or potential
      appreciation of a particular security or investment strategy may prove to
      be incorrect.</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"><STRONG><EM><FONT size=2 face="Times New Roman">Dividends and
      Distributions</FONT></EM></STRONG></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%">
      <P align=justify><FONT face="Times New Roman" size=2>The Fund distributes
      annually to its stockholders substantially all of its net investment
      income and net short-term capital gains. The Fund determines annually
      whether to distribute any net realized long-term capital gains in excess
      of net realized short-term capital losses. See &#147;Dividends and
      Distributions: Dividend Reinvestment Plan&#148; and
&#147;Taxation.&#148;</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"><STRONG><EM><FONT size=2 face="Times New Roman">Certain Charter
      Provisions</FONT></EM></STRONG></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%">
      <P align=justify><FONT face="Times New Roman" size=2>The Fund&#146;s Articles
      of Incorporation include provisions that could have the effect of:
      inhibiting the Fund&#146;s possible conversion to open-end status; limiting the
      ability of other entities or persons to acquire control of the Fund or to
      change the composition of its Board; and depriving stockholders of an
      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. See &#147;Description of Common Stock.&#148;</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap align=left width="20%"><P align=justify><B><I><FONT face="Times New Roman" size=2>Market Disruption Risk</FONT></I></B></P></TD>
    <TD vAlign=top noWrap align=left width="1%"></TD>
    <TD vAlign=top align=left width="78%">
      <P align=justify><FONT face="Times New Roman" size=2>Certain events have
      had a disruptive effect on the securities markets, such as terrorist
      attacks, war and other geopolitical events, hurricanes, droughts, floods
      and other disasters. The Fund cannot predict the effects of similar events
      in the future on the markets or economies of Caribbean Basin
      Countries.</FONT></P></TD></TR></TABLE><BR>
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    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="99%"><FONT face="Times New Roman" size=2>-7</FONT><FONT face="Times New Roman" size=2>-</FONT></TD></TR></TABLE><BR>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2><B>Fee Table</B></FONT></P>
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  <TR vAlign=bottom>
    <TD noWrap align=left width="97%"><I><FONT face="Times New Roman" size=2>Stockholder Transaction Expenses:</FONT></I></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="2%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="97%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Sales Load</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD NOWRAP ALIGN="RIGHT" WIDTH="2%" BGCOLOR="#c0c0c0" STYLE="text-align: left"><FONT face="Times New Roman" size=2>None</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="97%"><FONT face="Times New Roman" size=2>Expenses of the Offer (as a percentage of
      offering price)</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD NOWRAP ALIGN="RIGHT" WIDTH="2%" STYLE="text-align: left"><FONT face="Times New Roman" size=2>1.73%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="97%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Dividend Reinvestment Plan Fees</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD NOWRAP ALIGN="RIGHT" WIDTH="2%" BGCOLOR="#c0c0c0" STYLE="text-align: left"><FONT face="Times New Roman" size=2>None</FONT></TD></TR>
  <TR>
    <TD width="100%" bgColor=#c0c0c0 colSpan=3>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="97%"><I><FONT face="Times New Roman" size=2>Annual Expenses (as a percentage of net assets
      attributable to common shares):</FONT></I></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="2%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="97%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Management Fees</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="2%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>1.45%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="97%"><FONT face="Times New Roman" size=2>Other Expenses (1)</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD NOWRAP ALIGN="RIGHT" WIDTH="2%" STYLE="text-align: left"><FONT face="Times New Roman" size=2>1.43%</FONT></TD></TR>
  <TR>
    <TD width="100%" colSpan=3>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="97%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      Annual Expenses</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD NOWRAP ALIGN="RIGHT" WIDTH="2%" BGCOLOR="#c0c0c0" STYLE="text-align: left"><FONT face="Times New Roman" size=2>2.88%</FONT></TD></TR></TABLE><BR>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(1)</FONT></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD WIDTH="100%" STYLE="text-align: justify"><FONT face="Times New Roman" size=2>&#147;Other Expenses&#148; does
      not include expenses of the Fund incurred in connection with the Offer,
      estimated at $147,698. However, these expenses will be borne by the
      holders of the shares of Common Stock of the Fund and result in a
      reduction in the NAV of the shares of Common Stock. Other Expenses include
      fees and expenses of approximately 0.008% incurred indirectly as a result
      of investment in shares of one or more &#147;Acquired Funds,&#148; which include (i)
      investment companies, or (ii) companies that would be an investment
      company under Section 3(a) of the 1940 Act except for exceptions under
      Sections 3(c)(1) and 3(c)(7) under the 1940
Act.</FONT></TD></TR></TABLE><BR>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="82%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="9%" colSpan=3><B><FONT face="Times New Roman" size=2>Cumulative Expenses
      Paid for the Period of:</FONT></B></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap style="text-align: center" width="82%"><FONT face="Times New Roman" size=2>Example</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap style="text-align: center" width="3%"><FONT face="Times New Roman" size=2>1
      year</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap style="text-align: center" width="4%"><FONT face="Times New Roman" size=2>3
      years</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap style="text-align: center" width="4%"><FONT face="Times New Roman" size=2>5
      years</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap style="text-align: center" width="3%"><FONT face="Times New Roman" size=2>10
      years</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="82%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>An
      investor would pay the following</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="4%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="4%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="82%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>expenses on a $1,000 investment,</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="4%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="4%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="82%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>assuming a 5% annual return:</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap style="text-align: center" width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$29</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap style="text-align: center" width="4%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$89</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap style="text-align: center" width="4%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$152</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap style="text-align: center" width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$320</FONT></TD></TR></TABLE><BR>
<P align=justify><FONT face="Times New Roman" size=2>The foregoing Fee Table and
Example are intended to assist investors in understanding the costs and expenses
that an investor in the Fund will bear directly or indirectly. &#147;Other Expenses&#148;
are based on estimated amounts for the current fiscal year. See &#147;Management of
the Fund&#148; for additional information.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Example assumes the
reinvestment of all dividends and distributions at NAV and an expense ratio of
2.88%. The tables above and the assumption in the Example of a 5% annual return
are required by SEC regulations applicable to all investment companies.
</FONT><B><FONT face="Times New Roman" size=2>The Example should not be
considered a representation of past or future expenses or annual rates of return
and actual expenses or annual rates of return may be more or less than those
assumed for purposes of the Example.</FONT></B><FONT face="Times New Roman" size=2> In addition, while the Example assumes the reinvestment of all dividends
and distributions at NAV, participants in the Dividend Reinvestment Plan may
receive shares purchased or issued at a price or value different from NAV. See
&#147;Dividends and Distributions; Dividend Reinvestment Plan.&#148;</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="99%"><FONT face="Times New Roman" size=2>-8</FONT><FONT face="Times New Roman" size=2>-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=center><B><FONT face="Times New Roman" size=2>FINANCIAL
HIGHLIGHTS</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The table below sets forth
selected data for a share of Common Stock outstanding for each period presented.
The information for the fiscal year ended June 30, 2014 has been audited by
KPMG, LLP, the Fund&#146;s independent registered public accounting firm. The
information for the fiscal years ended June 30, 2013, 2012, 2011, and 2010
contained in the table was audited by Rothstein Kass &amp; Company, LLP, the
Fund&#146;s former independent registered public accounting firm. Audited financial
statements for the Fund for the fiscal year ended June 30, 2014, are included in
the Annual Report to stockholders. The Annual Report to stockholders is
available without charge by calling (800) TJH-FUND.</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="80%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="19%" colSpan=9><B><FONT face="Times New Roman" size=2>Year Ended June
      30,</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="80%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="3%"><B><FONT face="Times New Roman" size=2>2014</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="3%"><B><FONT face="Times New Roman" size=2>2013</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="3%"><B><FONT face="Times New Roman" size=2>2012</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="3%"><STRONG><FONT size=2 face="Times New Roman">2011</FONT></STRONG></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="3%"><B><FONT face="Times New Roman" size=2>2010</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="80%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Per Share Operating
      Performance</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="80%"><FONT face="Times New Roman" size=2>(For
      a share of capital stock outstanding for each year)</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: Silver">
    <TD noWrap align=left width="80%"><FONT face="Times New Roman" size=2>Net
      asset value, beginning of year</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$9.28</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$7.90</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$8.13</FONT></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$6.12</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$5.35</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD noWrap align=left width="80%"><FONT face="Times New Roman" size=2>Operations:</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD></TR>
  <TR STYLE="background-color: White">
    <TD width="100%" colSpan=11>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: Silver">
    <TD NOWRAP STYLE="text-align: left; width: 80%"><FONT face="Times New Roman" size=2>Net
      investment loss(1)</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>(0.07)</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>(0.03)</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>(0.06)</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>(0.06)</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>(0.07)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left; width: 80%"><FONT face="Times New Roman" size=2>Net
      realized and unrealized gain (loss) on</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD NOWRAP STYLE="text-align: left; width: 80%"><FONT face="Times New Roman" size=2>investment transactions (1)</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; width: 1%"></TD>
    <TD NOWRAP STYLE="border-bottom: #000000 1pt solid; text-align: right; width: 3%"><FONT face="Times New Roman" size=2>1.05</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="border-bottom: #000000 1pt solid; text-align: right; width: 3%"><FONT face="Times New Roman" size=2>1.61</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="border-bottom: #000000 1pt solid; text-align: right; width: 3%"><FONT face="Times New Roman" size=2>(0.11)</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="border-bottom: #000000 1pt solid; text-align: right; width: 3%"><FONT face="Times New Roman" size=2>2.07</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="border-bottom: #000000 1pt solid; text-align: right; width: 3%"><FONT face="Times New Roman" size=2>0.84</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: Silver">
    <TD NOWRAP STYLE="text-align: left; width: 80%"><FONT face="Times New Roman" size=2>Total from operations</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; width: 1%"></TD>
    <TD NOWRAP STYLE="border-bottom: #000000 1pt solid; text-align: right; width: 3%"><FONT face="Times New Roman" size=2>0.98</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="border-bottom: #000000 1pt solid; text-align: right; width: 3%"><FONT face="Times New Roman" size=2>1.58</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="border-bottom: #000000 1pt solid; text-align: right; width: 3%"><FONT face="Times New Roman" size=2>(0.17)</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="border-bottom: #000000 1pt solid; text-align: right; width: 3%"><FONT face="Times New Roman" size=2>2.01</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="border-bottom: #000000 1pt solid; text-align: right; width: 3%"><FONT face="Times New Roman" size=2>0.77</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left; width: 80%"><FONT face="Times New Roman" size=2>Distributions:</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD></TR>
  <TR STYLE="background-color: White">
    <TD COLSPAN="11" STYLE="width: 100%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: Silver">
    <TD noWrap align=left width="80%"><FONT face="Times New Roman" size=2>From
      net realized gains</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>(1.14)</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>(0.20)</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>(0.06)</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>--</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>--</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD noWrap align=left width="80%"><FONT face="Times New Roman" size=2>Total distributions</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>(1.14)</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>(0.20)</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>(0.06)</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>--</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>--</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: Silver">
    <TD noWrap align=left width="80%"><FONT face="Times New Roman" size=2>Net
      asset value, end of year</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$9.12</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$9.28</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$7.90</FONT></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$8.13</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 2pt double" noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$6.12</FONT></TD></TR>
  <TR STYLE="background-color: Silver">
    <TD width="100%" colSpan=11>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left; width: 80%"><FONT face="Times New Roman" size=2>Per
      share market value, end of year</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>$8.15</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>$8.51</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>$6.97</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; width: 1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>$7.14</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>$5.67</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: Silver">
    <TD NOWRAP STYLE="text-align: left; width: 80%"><FONT face="Times New Roman" size=2>Total investment return (loss) based on
      market</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: left; width: 3%"></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: Silver">
    <TD NOWRAP STYLE="text-align: left; width: 80%"><FONT face="Times New Roman" size=2>value per share</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>8.98%</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>25.31%</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>(1.39%)</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>25.93%</FONT></TD>
    <TD NOWRAP STYLE="text-align: left; width: 1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD NOWRAP STYLE="text-align: right; width: 3%"><FONT face="Times New Roman" size=2>(6.59%)</FONT></TD></TR>
  <TR STYLE="background-color: Silver">
    <TD COLSPAN="11" STYLE="width: 100%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD noWrap align=left width="80%"><FONT face="Times New Roman" size=2>Ratios And Supplemental Data</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: Silver">
    <TD noWrap align=left width="80%"><FONT face="Times New Roman" size=2>Net
      assets, end of year (in 000&#146;s)</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$33,862</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$34,445</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$29,330</FONT></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$30,169</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$22,707</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD noWrap align=left width="80%"><FONT face="Times New Roman" size=2>Ratio of expenses to average net
    assets</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>2.46%</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>2.50%</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>2.68%</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>2.66%</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>2.78%</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: Silver">
    <TD noWrap align=left width="80%"><FONT face="Times New Roman" size=2>Ratio of net investment loss to average net
      assets</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>(0.78%)</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>(0.38%)</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>(0.81%)</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>(0.81%)</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>(1.05%)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD noWrap align=left width="80%"><FONT face="Times New Roman" size=2>Portfolio turnover rate</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>24%</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>37%</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>15%</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>22%</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>27%</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: Silver">
    <TD noWrap align=left width="80%"><FONT face="Times New Roman" size=2>Average commission rate (per share)*</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$0.0075</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$0.009</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$0.015</FONT></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$0.026</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="3%"><FONT face="Times New Roman" size=2>$0.028</FONT></TD></TR></TABLE>____________________<BR>&nbsp;<BR>
<TABLE style="BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>(1)</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
    <TD ALIGN="LEFT" WIDTH="97%" STYLE="text-align: justify"><FONT face="Times New Roman" size=2>Computed by dividing the respective year&#146;s
      amounts from the Statement of Operations by the average outstanding shares
      for each year presented.</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2>*</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2 face="Times New Roman">&nbsp;</FONT></TD>
    <TD noWrap align=left width="97%"><FONT face="Times New Roman" size=2>Unaudited.</FONT></TD></TR></TABLE><BR>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="99%"><FONT face="Times New Roman" size=2>-9</FONT><FONT face="Times New Roman" size=2>-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<!--PART C-->
<P align=center><B><FONT face="Times New Roman" size=2>THE FUND</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Herzfeld Caribbean
Basin Fund, Inc. is a non-diversified, closed-end management investment company
incorporated under the laws of the State of Maryland on March 10, 1992, and
registered under the Investment Company Act of 1940 (the &#147;1940 Act&#148;). The Fund
is designed for investors seeking long-term capital appreciation. The Fund seeks
to achieve its objective primarily by investing in issuers that are likely, in
the opinion of the Adviser, to benefit from political, legal and economic
developments in Cuba and the Caribbean Basin. At such time as it becomes legally
permissible for U.S. entities to invest directly in Cuba, the Fund will consider
such investments. See &#147;Investment Objective and Policies.&#148; The Fund maintains
its principal offices at 119 Washington Avenue, Suite 504 Miami Beach, FL 33139.
No assurance can be given that the Fund&#146;s investment objective will be
achieved.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund&#146;s investment
adviser is HERZFELD/CUBA, a division of Thomas J. Herzfeld Advisors, Inc., a
Miami-based U.S. investment adviser.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>As of the Record Date, the
Fund had 3,713,071 shares of Common Stock outstanding. The Fund&#146;s Common Stock
is publicly held and is listed and traded on the NASDAQ Capital Market under the
symbol &#147;CUBA.&#148; The average weekly trading volume of the Common Stock on the
NASDAQ Capital Market during the fiscal year ended June 30, 2014 was
approximately 48,570 shares. As of October 9, 2014, the aggregate net assets of
the Fund were approximately $31,607,909, the NAV per share was $8.51, the
share price was $7.04, and the premium/discount was -17.27%. Historically, the
Fund&#146;s common stock has traded at both premiums and discounts to its NAV, most
recently at discounts.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The following table sets
forth, for the periods indicated, the high and low closing sales prices for the
shares on the NASDAQ Capital Market, the NAVs per share on the date of the high
and low closing sales prices, and the discount or premium that each sales price
represented as a percentage of the preceding NAV:</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Share Price
Data</FONT></B></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%"><B><FONT face="Times New Roman" size=2>Quarter</FONT></B><BR><B><FONT face="Times New Roman" size=2>Ended</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>High Close</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>NAV</FONT></B><BR><B><FONT face="Times New Roman" size=2>(on High</FONT></B><BR><B><FONT face="Times New Roman" size=2>Close Date)</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>Premium/</FONT></B><BR><B><FONT face="Times New Roman" size=2>(Discount)</FONT></B><BR><B><FONT face="Times New Roman" size=2>(on High</FONT></B><BR><B><FONT face="Times New Roman" size=2>Close Date)</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>Low Close</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>NAV</FONT></B><BR><B><FONT face="Times New Roman" size=2>(on Low</FONT></B><BR><B><FONT face="Times New Roman" size=2>Close Date)</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>Premium/</FONT></B><BR><B><FONT face="Times New Roman" size=2>(Discount)</FONT></B><BR><B><FONT face="Times New Roman" size=2>(on Low</FONT></B><BR><B><FONT face="Times New Roman" size=2>Close Date)</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>6/30/2014</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$8.31</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$8.91</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-6.73%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.79</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$8.84</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-9.84%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%"><B><FONT face="Times New Roman" size=2>3/31/2014</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$8.29</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$8.85</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-6.33%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$7.78</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$8.53</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-8.79%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>12/31/2013</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$8.97</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$9.61</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-6.66%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.69</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$8.60</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-10.58%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%"><B><FONT face="Times New Roman" size=2>9/30/2013</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$8.98</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$9.71</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-7.51%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$8.50</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$9.28</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-8.40%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>6/30/2013</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$9.23</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$9.61</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-3.95%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$8.24</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$8.86</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-7.00%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%"><B><FONT face="Times New Roman" size=2>3/31/2013</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$9.17</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$9.30</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-1.40%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$7.94</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$8.90</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-10.79%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>12/31/2012</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.81</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$8.52</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-8.33%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.27</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$8.21</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-11.45%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%"><B><FONT face="Times New Roman" size=2>9/30/2012</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$7.44</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$8.46</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-12.06%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$6.82</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$7.63</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-10.62%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>6/30/2012</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.46</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.90</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-5.57%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$6.55</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.30</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-10.27%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%"><B><FONT face="Times New Roman" size=2>3/31/2012</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$7.50</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$7.92</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-5.30%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$6.48</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$7.30</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-11.21%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>12/31/2011</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$6.97</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.68</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-9.25%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$5.62</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$6.53</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-13.94%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%"><B><FONT face="Times New Roman" size=2>9/30/2011</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$7.27</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$8.24</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-11.77%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$5.92</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$6.86</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-13.76%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>6/30/2011</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.54</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$8.22</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-8.32%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$6.86</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.85</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-12.61%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%"><B><FONT face="Times New Roman" size=2>3/31/2011</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$7.85</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$8.07</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-2.73%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$7.09</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$7.81</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-9.22%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>12/31/2010</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.20</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.82</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-7.93%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$6.58</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.15</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-7.97%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%"><B><FONT face="Times New Roman" size=2>9/30/2010</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$6.77</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$6.90</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-1.88%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$5.62</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$6.10</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-7.86%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>6/30/2010</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$6.88</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.10</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-3.10%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$5.67</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$6.12</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-7.35%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%"><B><FONT face="Times New Roman" size=2>3/31/2010</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$6.74</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$6.75</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-0.15%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$5.99</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$6.26</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>-4.31%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>12/31/2009</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$6.79</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$6.60</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>2.88%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$6.23</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$6.22</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>0.16%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%"><B><FONT face="Times New Roman" size=2>9/30/2009</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$6.83</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$6.83</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>0.00%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$5.95</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>$5.80</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%"><B><FONT face="Times New Roman" size=2>2.59%</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>6/30/2009</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$7.97</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$4.63</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>72.14%</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$4.25</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$4.40</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="13%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>-3.41%</FONT></B></TD></TR></TABLE><BR>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=1 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="100%"><FONT face="Times New Roman" size=2>-10-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=center><B><FONT face="Times New Roman" size=2>THE
OFFERING</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Terms of the
Offer</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund is issuing to its
Record Date Stockholders Rights to subscribe for additional shares of the Fund&#146;s
Common Stock as of the Record Date. Each Record Date Stockholder will receive
one non-transferable Right for each share of Common Stock owned on the Record
Date. The Rights entitle the holder to acquire one share of Common Stock at the
Subscription Price for every three Rights held.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Rights may be exercised at
any time during the period which commences on October 16, 2014, and ends at 5:00
p.m., Eastern Time, on November 6, 2014 (the &#147;Subscription Period&#148;), unless
extended by the Fund to a date not later than December 4, 2014, at 5:00 p.m.,
Eastern Time. See &#147;Expiration of the Offer&#148; below. The right to acquire one
additional share of Common Stock for every three Rights held during the
Subscription Period at the Subscription Price is herein after referred to as the
&#147;Primary Subscription&#148; and such shares of Commons Stock, the &#147;Primary
Subscription Shares.&#148;</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>In addition, any Record
Date Stockholder who fully exercises all Rights initially issued to him is
entitled to subscribe for shares which were not otherwise subscribed for by
others in the Primary Subscription (the Over-Subscription Privilege). If enough
shares are available, all of these requests will be honored in full. If these
requests for shares exceed the shares available, the Fund may determine after
the expiration of the Offer, in the discretion of the Fund, to issue additional
Common Stock up to an amount equal to 50% of the shares of Common Stock
available pursuant to the Offer (up to an additional 618,845 shares of Common
Stock) in order to cover these requests. Regardless of whether the Fund issues
such additional Common Stock, to the extent shares are not available to honor
all requests, the available shares will be allocated pro rata among those Record
Date Stockholders who over-subscribe based on the number of Rights originally
issued to them by the Fund.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>In the event that the Fund,
in its sole discretion, issues additional Common Shares in an amount of up to
50% of the Primary Subscription Shares (the &#147;Secondary Over-Subscription
Shares&#148;) for purposes of determining the maximum number of shares a Record Date
Stockholder may acquire pursuant to the Offer, broker-dealers whose shares are
held of record by Cede &amp; Co. (&#147;Cede&#148;), as nominee for The Depository Trust
Company, 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. Shares acquired pursuant to the Over-Subscription Privilege are
subject to allotment, which is more fully discussed below under
&#147;Over-Subscription Privilege.&#148;</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Officers of the Adviser
have indicated to the Fund that the Adviser and the Directors and Officers of
the Fund (the &#147;Affiliated Parties&#148;), as Record Date Stockholders, have been
authorized to purchase Common Stock through the Primary Subscription and the
Over-Subscription Privilege to the extent the Common Stock becomes available to
it in accordance with the Primary Subscription and the allotment provisions of
the Over-Subscription Privilege. Such over-subscriptions by the Affiliated
Parties may disproportionately increase their already existing ownership
resulting in a higher percentage ownership of outstanding shares of the Fund.
Any Common Stock acquired in the Offer by the Affiliated Parties as &#147;affiliates&#148;
of the Fund, as that term is defined under the Securities Act of 1933 (the
&#147;Securities Act&#148;), may only be sold in accordance with Rule 144 under the
Securities Act or another applicable exemption or pursuant to an effective
registration statement under the Securities Act. In general, under Rule 144, as
currently in effect, an &#147;affiliate&#148; of the Fund is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the then outstanding shares of common stock or the average weekly reported
trading volume of the common stock during the four calendar weeks preceding such
sale. Sales under Rule 144 are also subject to certain restrictions on the
manner of sale, to notice requirements and to the availability of current public
information about the Fund.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Rights will be evidenced by
certificates (&#147;Subscription Certificates&#148;). The number of Rights issued to each
Record Date Stockholder will be stated on the Subscription Certificate delivered
to the holder. The method by which Rights may be exercised and shares paid for
is set forth below in &#147;Method of Exercising Rights&#148; and &#147;Payment for Shares.&#148; A
Rights holder will have no right to rescind a purchase after the Subscription
Agent has received payment. See &#147;Payment for Shares&#148; below.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Rights are
non-transferable and, therefore may not be purchased or sold. Rights not
exercised will expire without residual value at the Expiration Date. The Rights
will not be listed for trading on the NASDAQ Capital Market or any other
securities exchange. Common Stock issued pursuant to an exercise of Rights will
be listed and available for trading on the NASDAQ Capital Market.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>There is no minimum number
of Rights which must be exercised in order for the Offer to close.</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=1 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="100%"><FONT face="Times New Roman" size=2>-11-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><B><FONT face="Times New Roman" size=2>Purpose of the
Offer</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Board has determined
that it is in the best interests of the Fund and its existing stockholders to
increase the assets of the Fund so that the Fund may be in a better position to
take advantage of investment opportunities that may arise. Without additional
capital, the Fund is limited in its ability to take advantage of new investment
opportunities. The only practical means of increasing the Fund&#146;s assets
available for investment other than through the Offer would be through the sale
of portfolio securities, which could subject the Fund to certain adverse tax
consequences under the Code.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Offer affords the Fund
a means of increasing its assets available for investment without requiring the
sale of portfolio securities at a time when it would not be desirable to do so.
The Offer will permit the Fund to take advantage of investment opportunities as
they arise, without necessarily having to liquidate Fund holdings to raise cash.
When the Adviser identifies an investment opportunity, it wants to be able to
take advantage of it quickly and make investments, without having to sell
current holdings in the process. The Adviser believes that having the cash
resources available to make new investments without liquidating current
portfolio holdings will allow the investment adviser to more fully implement its
investment strategy in pursuit of the Fund&#146;s investment objective.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>In addition, the Board
believes that increasing the size of the Fund may lower the Fund&#146;s expenses as a
proportion of average net assets because the Fund&#146;s fixed costs would be spread
over a larger asset base. As a fund&#146;s assets decrease, its expense ratio (i.e.,
the ratio of expenses to fund assets) will increase. This occurs because funds
have certain fixed costs which are not charged in proportion to a fund&#146;s size.
As a fund gets smaller, these fixed costs are spread over fewer assets, thus
resulting in a higher expense ratio. The opposite occurs as a fund&#146;s assets
increase, that is, the fixed costs are spread across a larger asset base thus
resulting in a lower expense ratio. There can be no assurance, however, that an
increase in the size of the Fund will lower the Fund&#146;s expense ratio.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Further, to the extent the
Fund realizes gains (as it has in the past), any net realized gains of the Fund
are required to be distributed to stockholders in order to maintain its status
as a &#147;regulated investment company&#148; under Subchapter M of the Code. Accordingly,
in the future the Fund may be required to make large distributions to
stockholders to maintain regulated investment company status, thereby reducing
the net assets of the Fund. Additionally, if the Fund is fully invested when it
is required to make a distribution it may need to sell some of its portfolio
holdings at an inopportune time in order to raise the necessary funds to satisfy
the distribution requirement. For instance, for the calendar year ended 2013,
the Fund paid a year-end distribution of $1.14 per share. As of June 30, 2014,
the aggregate capital gains were $3,563,497. Distributions of net realized gains
are paid on a calendar year basis; accordingly, the Fund&#146;s calendar year-end
distribution for 2014 is not known at this time.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Board also believes
that a larger number of outstanding shares could increase the level of market
interest in and visibility of the Fund and improve the trading liquidity of the
Fund&#146;s common stock on the NASDAQ Capital Market. If the Offer is successful,
the larger number of shares of common stock outstanding after the Offer should
help create a more efficient and active market for the Fund&#146;s shares and reduce
the effect of individual transactions on market price, all of which are believed
generally to increase liquidity.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Offer seeks to reward
existing stockholders by giving them the right to purchase additional shares at
a price below market without incurring any direct commission or other
transaction charges that they would normally incur when buying shares in the
market. Please note that stockholders that arrange to exercise Rights through a
broker, bank, trust company or other financial intermediary may be charged for
this service by such institution. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Board considered, among
other things, advice by the Investment Adviser, using fixed pricing versus
variable pricing for the Offer, the benefits and drawbacks of conducting a
non-transferable versus a transferable rights offering and the effect on the
Fund if the Offer is undersubscribed. The Board also considered the extent to
which the Adviser will benefit from the Offer because the Adviser&#146;s fee is based
on the average net assets of the Fund. It is not possible to state precisely the
amount of additional compensation the Adviser might 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. However, if the Offer is fully subscribed at the
Estimated Subscription Price, it would add (net of offering expenses)
approximately $8,404,740 to the net assets of the Fund. This amount, assuming no
fluctuation due to changes in the market, would add $121,869 to the Adviser&#146;s
annual compensation based upon an advisory fee of 1.45% during the one-year
period following completion of the Offer. The Fund&#146;s assets could increase
further if the Shares subject to the Over-Subscription Privilege were to be
issued.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>In addition, the Board
determined to proceed with the offer of rights after having considered the
dilutive effects of the offering on stockholders who are unwilling or unable to
fully exercise their rights, as well as the alternative of a secondary offering.
The Board has approved the terms of the Offer as set forth in this
prospectus.</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=1 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="100%"><FONT face="Times New Roman" size=2>-12-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may, in the future
and at its discretion, choose to make additional rights offerings from time to
time for a number of shares and on terms which may or may not be similar to the
Offer. Any such future rights offering will be made in accordance with the 1940
Act. Under the laws of Maryland, the State in which the Fund is organized, the
Board is authorized to approve rights offerings without obtaining stockholder
approval. The staff of the SEC has interpreted the 1940 Act as not requiring
stockholder approval of a rights offering at a price below the then current NAV
so long as certain conditions are met, including a good faith determination by
the Board that such offering would result in a net benefit to existing
stockholders.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Subscription
Price</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Subscription Price for
the shares of Common Stock issued in the Offer will be a price equal to 95% of
the volume-weighted average closing sales price of a share of common stock on
the NASDAQ Capital Market on the Expiration Date and the four preceding trading
days. Stockholders who exercise their Rights will have no right to rescind a
purchase after receipt of their completed Subscription Certificates for Shares
by the Subscription Agent. The Fund does not have the right to withdraw the
Offer after the Rights have been distributed.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund announced its
intention to make the Offer on June 2, 2014. The NAV per share of Common Stock
at the close of business on June 2, 2014 (announcement of rights offering) and
on October 9, 2014 was $8.92 and $8.51, respectively, and the last reported sale
price of a share of Common Stock on the NASDAQ Capital Market on those dates was
$8.21 and $7.04, respectively.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Over-Subscription
Privilege</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>If some Record Date
Stockholders do not exercise all of the Rights initially issued to them to
purchase Common Stock of the Fund, those Record Date Stockholders who have
exercised all of the Rights initially issued to them will be offered, by means
of the Over-Subscription Privilege, the right to acquire more than the number of
shares for which the Rights issued to them are exercisable. Record Date
Stockholders who exercise all the Rights initially issued to them will have the
opportunity to indicate on the Subscription Certificate how many shares of
Common Stock they are willing to acquire pursuant to the Over-Subscription
Privilege. In addition, the Fund, in its sole discretion, can issue the
Secondary Over-Subscription Shares.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>If sufficient Subscription
Shares remain after the Primary Subscriptions have been exercised, all
over-subscriptions will be honored in full. If sufficient Subscription Shares
are not available to honor all over-subscription requests, the available Common
Shares will be allocated among those Record Date Stockholders who over-subscribe
based on the number of Rights originally issued to them by the Fund. Should the
Fund determine to issue some or all of the Secondary Over-Subscription Shares,
they will be allocated only among Record Date Stockholders that submitted
over-subscription requests. Secondary Over-Subscription Shares will be allocated
pro rata among those fully exercising Record Date Stockholders who
over-subscribe based on the number of Rights originally issued to them by the
Fund. Any Secondary Over-Subscription Shares issued by the Fund, collectively
with any Primary Subscription Shares not subscribed through the Primary
Subscription, will be referred to in this prospectus as the &#147;Excess
Shares.&#148;</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The percentage of Excess
Shares each over-subscribing Record Date Stockholder may acquire will be rounded
down to result in delivery of whole Common Shares; provided, however, that if a
pro rata allocation results in any holder being allocated a greater number of
Excess Shares than the holder subscribed for pursuant to the exercise of such
holder&#146;s Over-Subscription Privilege, then such holder will be allocated only
such number of Excess Shares as such holder subscribed for and the remaining
Excess Shares will be allocated among all other holders then entitled to receive
Excess Shares whose over-subscription requests have not been fully honored. The
allocation process may be iterative in order to assure that the total number of
Excess Shares is distributed in accordance with the method described
above.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The formula to be used in
allocating the Excess Shares is as follows:</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="70%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="87%"><FONT face="Times New Roman" size=2>Stockholder&#146;s Record Date
      Position</FONT></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap style="text-align: center" width="1%"><FONT face="Times New Roman" size=2>x</FONT></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Excess Shares Remaining</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="87%"><FONT face="Times New Roman" size=2>Total Record Date Position of All Over-Subscribed
      Stockholders&nbsp;&nbsp;&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR></TABLE><BR>
<P align=justify><FONT face="Times New Roman" size=2>The Fund will not offer or
sell any shares which are not subscribed for under the Primary Subscription or
the Over-Subscription Privilege.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Expiration of the
Offer</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Offer will expire at
5:00 p.m., Eastern Time, on the Expiration Date (November 6, 2014), unless
extended by the Fund to a date not later than December 4, 2014, at 5:00 p.m.,
Eastern Time (the &#147;Extended Expiration Date&#148;). Rights will expire on the
Expiration Date (or Extended Expiration Date as the case may be) and thereafter
may not be exercised.</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=1 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="100%"><FONT face="Times New Roman" size=2>-13-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><B><FONT face="Times New Roman" size=2>Subscription
Agent</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Subscription Agent is
Boston Financial Data Services, Inc., Event Center, 30 Dan Road, Suite 55025,
Canton, MA 02021.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Stockholders may also
contact the Fund for information about the Offer by writing to The Herzfeld
Caribbean Basin Fund, Inc., 119 Washington Avenue, Suite 504, Miami Beach, FL
33139 or by calling (305) 271-1900 or (800) TJH-FUND. Stockholders may also
contact their brokers or nominees for information with respect to the
Offer.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Method of Exercising
Rights</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Rights may be exercised by
filling in and signing the Subscription Certificate and mailing it in the
envelope provided, or otherwise delivering the completed and signed Subscription
Certificate to the Subscription Agent, together with payment of the Estimated
Subscription Price for the Shares as described below under &#147;Payment for Shares.&#148;
Rights holders may also exercise Rights by contacting a broker, bank or trust
company who can arrange, on behalf of the Rights holder, to guarantee delivery
of payment and of a properly completed and executed Subscription Certificate. A
fee may be charged for this service. Completed Subscription Certificates and
full payment for the shares of Common Stock subscribed for must be received by
the Subscription Agent prior to 5:00 p.m., Eastern Time, on the Expiration Date
(unless payment is effected by means of a notice of guaranteed delivery as
described below under &#147;Payment for Shares&#148;) at the office of the Subscription
Agent at the addresses set forth above.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Qualified financial
institutions that hold shares of Common Stock as nominee for the account of
others should notify the respective 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. For purposes of this prospectus,
&#147;Qualified Financial Institution&#148; shall mean a registered broker-dealer,
commercial bank or trust company, securities depository or participant therein,
or nominee thereof. If the beneficial owner so instructs, the nominee should
complete the Subscription Certificate and submit it to the Subscription Agent
with the proper payment. In addition, beneficial owners of Common Stock or
Rights held through such a nominee should contact the nominee and request the
nominee to effect transactions in accordance with the beneficial owners&#146;
instructions.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Stockholders who are
registered holders can choose between either option set forth under &#147;Payment for
Shares&#148; below.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Payment for
Shares</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Payment for shares shall be
calculated by multiplying the Estimated Subscription Price of $6.91 per share
times the sum of (i) the number of Rights held and intended to be exercised in
the Primary Subscription, plus (ii) the number of additional shares for which a
stockholder wishes to over-subscribe under the Over-Subscription Privilege. For
example, if a stockholder receives 300 Rights and wishes to subscribe for 100
shares of Common Stock in the Primary Subscription, and also wishes to
over-subscribe for 50 additional shares pursuant to the Over-Subscription
Privilege, he, she or it would send in $6.91 x 100 plus $6.91 x 50. Rights
holders who wish to acquire shares in the Primary Subscription or pursuant to
the Over-Subscription Privilege may choose between the following methods of
payment:</FONT></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>a.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2><U>Notice of Guaranteed Delivery and Subscription Certificate (with
      payment sent separately)</U>. </FONT></I><FONT face="Times New Roman" size=2>If, prior to 5:00 p.m., Eastern Time, on the Expiration Date, the
      Subscription Agent shall have received a notice of guaranteed delivery by
      telegram or otherwise, from a bank or trust company or a NYSE member firm
      guaranteeing delivery of (i) payment of the Estimated Subscription Price
      of $6.91 per share for the shares subscribed for in the Primary
      Subscription and any additional shares subscribed for pursuant to the
      Over-Subscription Privilege and (ii) a properly completed and executed
      Subscription Certificate, the subscription will be accepted by the
      Subscription Agent. The Subscription Agent will not honor a notice of
      guaranteed delivery unless a properly completed and executed Subscription
      Certificate is received by the Subscription Agent prior to 5:00 p.m.,
      Eastern Time, on the third Business Day after the Expiration Date (the
      &#147;Protection Period&#148;).</FONT></TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"></TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>b.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><I><FONT face="Times New Roman" size=2><U>Subscription Certificate sent with Payment</U></FONT></I><FONT face="Times New Roman" size=2>. Alternatively, a stockholder can, together
      with the properly completed and executed Subscription Certificate, send
      payment for the shares acquired in the Primary Subscription and any
      additional shares subscribed for pursuant to the Over-Subscription
      Privilege, to the Subscription Agent based on the Estimated Subscription
      Price of $6.91 per share. To be accepted, such payment, together with the
      Subscription Certificate, must be received by the Subscription Agent prior
      to 5:00 p.m., Eastern Time, on the Expiration
Date.</FONT></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>Any excess payment will be
refunded to the stockholder to the extent that additional shares are
unavailable.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>A PAYMENT, PURSUANT TO
THE SECOND METHOD DESCRIBED ABOVE, MUST ACCOMPANY ANY SUBSCRIPTION CERTIFICATE
FOR SUCH SUBSCRIPTION CERTIFICATE TO BE ACCEPTED.</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Within ten (10) Business
Days following the completion of the Protection Period (the &#147;Confirmation
Date&#148;), a confirmation will be sent by the Subscription Agent to each
stockholder (or, if the Fund&#146;s shares on the Record Date are held by Cede or any
other depository or nominee, to Cede or such other depository or nominee). The
confirmation will show (i) the number of shares acquired pursuant to the Primary
Subscription; (ii) the number of shares, if any, acquired pursuant to the
Over-Subscription </FONT></P>
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  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="100%"><FONT face="Times New Roman" size=2>-14-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>Privilege; (iii) the
Subscription Price and total purchase price for the shares; and (iv) any
additional amount payable by such stockholder to the Fund (e.g., if the
Estimated Subscription Price was less than the Subscription Price on the Pricing
Date) or any excess to be refunded by the Fund to such stockholder (e.g., if the
Estimated Subscription Price was more than the Subscription Price on the Pricing
Date). Any additional payment required from a stockholder must be received by
the Subscription Agent prior to 5:00 p.m., Eastern Time, on the tenth Business
Day after the Confirmation Date, and any excess payment to be refunded by the
Fund to such stockholder will be mailed by the Subscription Agent within ten
(10) Business Days after the Confirmation Date. All payments by a stockholder
must be made in United States Dollars by money order or by checks drawn on banks
located in the Continental United States payable to &#147; </FONT><B><FONT face="Times New Roman" size=2>The Herzfeld Caribbean Basin Fund,
Inc.</FONT></B><FONT face="Times New Roman" size=2> &#148;</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Whichever of the above two
methods is used, issuance and delivery of certificates for the shares of Common
Stock subscribed for are subject to collection of funds and actual payment
pursuant to any notice of guaranteed delivery.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Subscription Agent will
deposit all checks received by it prior to the final due date into a segregated
interest bearing account pending distribution of the shares from the Offer. All
interest will inure to the benefit of the Fund and investors will not earn
interest on payments submitted.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>YOU WILL HAVE NO RIGHT
TO RESCIND YOUR SUBSCRIPTION AFTER THE SUBSCRIPTION AGENT HAS RECEIVED THE
SUBSCRIPTION CERTIFICATE OR NOTICE OF GUARANTEED DELIVERY.</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>If a holder of Rights who
acquires shares pursuant to the Primary Subscription or the Over-Subscription
Privilege does not make payment of any amounts due, the Fund reserves the right
to take any or all of the following actions: (i) find other stockholders or
Rights holders to purchase such subscribed-for and unpaid-for shares; (ii) apply
any payment actually received by it toward the purchase of the greatest whole
number of shares which could be acquired by such holder upon exercise of the
Primary Subscription or the Over-Subscription Privilege; (iii) sell all or a
portion of the shares purchased by the holder in the open market, and apply the
proceeds to the amounts owed; and (iv) exercise any and all other rights or
remedies to which it may be entitled, including, without limitation, the right
to set off against payments actually received by it with respect to such
subscribed shares and to enforce the relevant guaranty of payment.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Holders who hold shares of
common stock for the account of others, such as brokers, trustees or
depositaries for securities, should notify the respective beneficial owners of
the shares as soon as possible to ascertain the beneficial owners&#146; intentions
and to obtain instructions with respect to the Rights. If the beneficial owners
so instruct, the record holder of the Rights should complete Subscription
Certificates and submit them to the Subscription Agent with the proper payment.
In addition, beneficial owners of common stock or Rights held through such a
holder should contact the holder and request the holder to effect transactions
in accordance with the beneficial owner&#146;s instructions.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The instructions
accompanying the Subscription Certificates should be read carefully and followed
in detail. </FONT><B><FONT face="Times New Roman" size=2>DO NOT SEND
SUBSCRIPTION CERTIFICATES TO THE FUND.</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2>The method of delivery
of Subscription Certificates and payment of the Subscription Price to the
Subscription Agent will be at the election and risk of the Rights holders, but
if sent by mail it is recommended that the Subscription Certificates and
payments be sent by registered mail, properly insured, with return receipt
requested, and that a sufficient number of days be allowed to ensure delivery to
the Subscription Agent and clearance of payment prior to 5:00 p.m., Eastern
Time, on the Expiration Date. Because uncertified personal checks may take at
least five (5) Business Days to clear, you are strongly urged to pay, or arrange
for payment, by means of a certified or cashier&#146;s check or money
order.</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>All questions concerning
the timeliness, validity, form and eligibility of any exercise of Rights will be
determined by the Fund, whose determinations will be final and binding. The Fund
in its sole discretion may waive any defect or irregularity, or permit a defect
or irregularity to be corrected within such time as it may determine, or reject
the purported exercise of any Right. Subscriptions will not be deemed to have
been received or accepted until all irregularities have been waived or cured
within such time as the Fund determines in its sole discretion. Neither the Fund
nor the Subscription Agent will be under any duty to give notification of any
defect or irregularity in connection with the submission of Subscription
Certificates or incur any liability for failure to give such
notification.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Delivery of Stock
Certificates</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Stock Certificates
representing shares purchased pursuant to the Primary Subscription will be
delivered to subscribers as soon as practicable after the corresponding Rights
have been validly exercised and full payment for the shares has been received
and cleared. Stock Certificates representing shares purchased pursuant to the
Over-Subscription Privilege will be delivered to subscribers as soon as
practicable after the Expiration Date and after all allocations have been
effected.</FONT></P>
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  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="100%"><FONT face="Times New Roman" size=2>-15-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><B><FONT face="Times New Roman" size=2>Foreign
Restrictions</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Subscription Certificates
will only be mailed to Record Date Stockholders whose addresses are within the
United States. Record Date Stockholders whose addresses are outside the United
States or who have an APO or FPO address and who wish to subscribe to the Offer
either in part or in full should contact the Subscription Agent by written
instruction or recorded telephone conversation no later than three (3) Business
Days prior to the Expiration Date. See &#147;Subscription Agent&#148; above. The Fund will
determine whether the Offer may be made to any such stockholder.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Federal Income Tax
Consequences Associated With the Offer </FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>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.
trusts, estates, corporations and any other person who is generally subject to
U.S. Federal income tax (&#147;U.S. Stockholders&#148;). This summary discussion is for
general information only and does not purport to consider or analyze all aspects
of U.S. Federal income taxation or of all potential tax effects relevant to the
ownership of Rights or Common Stock. Therefore, this summary discussion
contained herein may not be considered to be individual tax advice and may not
be relied upon by any owner of Rights or Common Stock. It assumes that each U.S.
Stockholder holds Common Stock as a capital asset. Additionally, this summary
does not specifically address the U.S. Federal income tax consequences that
might be relevant to holders of Rights or Common Stock entitled to special
treatment under the U.S. 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
foreign, 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. See also, &#147;Taxation.&#148;</FONT></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>1.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>U.S. Stockholders who
      receive Rights pursuant to the Offer should not recognize taxable income
      for U.S. Federal income tax purposes upon their receipt of the Rights. If
      Rights issued to a U.S. Stockholder expire without being exercised, no
      basis should be allocated to such Rights, and such Stockholder should not
      recognize any gain or loss for U.S. Federal income tax purposes upon such
      expiration.</FONT></TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top width="100%"></TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>2.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>The tax basis of a
      U.S. Stockholder&#146;s Common Stock should remain unchanged and the
      stockholder&#146;s basis in the Rights should be zero, unless such U.S.
      Stockholder affirmatively and irrevocably elects (in a statement attached
      to such stockholder&#146;s U.S. 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.</FONT></TD></TR>
  <TR>
    <TD vAlign=top></TD>
    <TD vAlign=top colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>3.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>A U.S. Stockholder
      who exercises Rights should not recognize any gain or loss for U.S.
      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.</FONT></TD></TR>
  <TR>
    <TD vAlign=top></TD>
    <TD vAlign=top colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>4.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Each U.S. Stockholder
      is urged to consult his or her own tax adviser with respect to the
      specific Federal, state and local tax consequences to such U.S.
      Stockholder of receiving Rights in this
offer.</FONT></TD></TR></TABLE>

<P align=justify><B><FONT face="Times New Roman" size=2>Employee Plan
Considerations</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Stockholders 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 Code.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>USE OF
PROCEEDS</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The net proceeds of the
Offer, assuming the Offer is fully subscribed, are estimated to be approximately
$8.4 million, based on an Estimated Subscription Price of $6.91 per share, and
after deducting expenses related to the Offer estimated at approximately
$147,698. The foregoing estimate of the net proceeds of the Offer is based on
the closing price of the Fund&#146;s shares on October 9, 2014. Accordingly, the
assumptions and projections contained in this prospectus are subject to change
significantly depending on changes in market conditions for the Fund&#146;s shares
and performance of the Fund&#146;s portfolio. The Fund will invest the net proceeds
of the Offer in accordance with its investment objective and policies. The
Adviser anticipates that the proceeds will be invested promptly as investment
opportunities are identified, depending on market conditions and the
availability of appropriate securities, and it is anticipated to take not more
than approximately three to six months. Pending investment, the </FONT></P>
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  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="100%"><FONT face="Times New Roman" size=2>-16-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<!--PART D-->
<P align=justify><FONT face="Times New Roman" size=2>proceeds will be invested
in short-term cash-equivalent instruments. Although the Adviser anticipates that
a substantial portion of the proceeds will be invested pursuant to its
investment objective and policies, some of the proceeds may be used to make
capital gain distributions required to maintain its tax status as a regulated
investment company. </FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>RISK FACTORS AND SPECIAL
CONSIDERATIONS</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Investing in the Fund&#146;s
common stock provides an equity ownership interest in the Fund. Investing in any
investment company security involves risk, including the risk that a stockholder
may receive little or no return on the stockholder&#146;s investment or that the
stockholder may lose part or all of the stockholder&#146;s investment. Therefore,
before investing, stockholders should consider carefully the following risks
that are assumed when investing in the Fund through the Offer.</FONT></P>
<P align=left><B><FONT face="Times New Roman" size=2>Dilution of Net Asset Value
and Effect of Non-Participation in the Offer</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>If a stockholder does not
exercise all of his Rights, the stockholder will likely own a smaller
proportional interest in the Fund when the Offer is over (i.e., proportional
dilution). In addition, whether or not a stockholder exercises his Rights,
because the Subscription Price (and net proceeds to the Fund) may be below the
Fund&#146;s NAV per share on the Expiration Date the per share NAV of a stockholder&#146;s
shares may be diluted (reduced) immediately as a result of the Offer (i.e.,
economic dilution).</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>In other words, a
stockholder may experience economic dilution in addition to proportional
dilution because:</FONT></P>
<ul style="font-size: 10pt; text-align: justify"><LI><FONT face="Times New Roman" size=2>The Subscription Price per share is
  95% of the average volume-weighted closing sales price of a share of
  common</FONT> <FONT face="Times New Roman" size=2>stock on the NASDAQ Capital
  Market on the Pricing Date and the four immediately preceding trading days
  (which</FONT> <FONT face="Times New Roman" size=2>may be lower than the
  NAV);</FONT> <BR>&nbsp;
  </LI><LI><FONT face="Times New Roman" size=2>All stockholders will indirectly bear
  the expenses of the Offer; and</FONT> <BR>&nbsp;
  </LI><LI><FONT face="Times New Roman" size=2>The number of shares outstanding after
  the Offer will have increased proportionately more than the increase in
  the</FONT> <FONT face="Times New Roman" size=2>size of the Fund&#146;s net
  assets</FONT> </LI></UL>
<P align=justify><FONT face="Times New Roman" size=2>The Fund cannot state
precisely the amount of any dilution/accretion because it is not known at this
time (i) what the average volume-weighted closing sale price of a share on the
NASDAQ Capital Market will be on the Pricing Date and the four immediately
preceding trading days, or (ii) what proportion of the Rights will be exercised.
Because the Estimated Subscription Price is below the NAV, there is a likelihood
that the completion of the Offering will result in an immediate dilution of the
NAV for all existing stockholders.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The impact of the Offer on
NAV per share is shown by the following examples, assuming a Subscription Price
of $ 6.91, full primary and over-subscription privilege exercise and $147,698 in
expenses related to the Offer.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Scenario 1: (assumes NAV
per share is above subscription price)</FONT></P>
<DIV align=center>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="70%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="94%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Net
      Asset Value (&#147;NAV&#148;) (NAV as of October 9, 2014)</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$</FONT></B> </TD>
    <TD noWrap align=right width="3%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>8.51</FONT></B> </TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD noWrap align=left width="94%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="94%"><FONT face="Times New Roman" size=2>Subscription Price</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><B><FONT face="Times New Roman" size=2>$</FONT></B> </TD>
    <TD noWrap align=right width="3%"><B><FONT face="Times New Roman" size=2>6.91</FONT></B> </TD>
    <TD noWrap align=left width="1%"></TD></TR>
  <TR>
    <TD noWrap align=left width="94%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="3%"></TD>
    <TD noWrap align=left width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="94%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Reduction in NAV ($)</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$</FONT></B> </TD>
    <TD noWrap align=right width="3%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>0.43</FONT></B> </TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD noWrap align=left width="94%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="94%"><FONT face="Times New Roman" size=2>Reduction in NAV (%)</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="3%"><B><FONT face="Times New Roman" size=2>5.05</FONT></B> </TD>
    <TD noWrap align=left width="1%"><B><FONT face="Times New Roman" size=2>%</FONT></B> </TD></TR></TABLE></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>Scenario 2: (assumes NAV
per share is below subscription price)</FONT></P>
<DIV align=center>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="70%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="94%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Net
      Asset Value (&#147;NAV&#148;) (assumed for purposes of example)</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$</FONT></B> </TD>
    <TD noWrap align=right width="3%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>5.31</FONT></B> </TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD noWrap align=left width="94%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="94%"><FONT face="Times New Roman" size=2>Subscription Price</FONT></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"><B><FONT face="Times New Roman" size=2>$</FONT></B> </TD>
    <TD noWrap align=right width="3%"><B><FONT face="Times New Roman" size=2>6.91</FONT></B> </TD>
    <TD noWrap align=left width="1%"></TD></TR>
  <TR>
    <TD noWrap align=left width="94%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="3%"></TD>
    <TD noWrap align=left width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="94%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Increase in NAV ($)</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>$</FONT></B> </TD>
    <TD noWrap align=right width="3%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>0.37</FONT></B> </TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD noWrap align=left width="94%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="94%"><FONT face="Times New Roman" size=2>Increase in NAV (%)</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="3%"><B><FONT face="Times New Roman" size=2>6.97</FONT></B> </TD>
    <TD noWrap align=left width="1%"><B><FONT face="Times New Roman" size=2>%</FONT></B> </TD></TR></TABLE></DIV><BR>
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    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="99%"><FONT face="Times New Roman" size=2>-17-</FONT></TD></TR></TABLE><BR>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><B><FONT face="Times New Roman" size=2>Discount From Net Asset
Value</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Shares of closed-end funds
frequently trade at a market price that is less than the value of the net assets
attributable to those shares (a &#147;discount&#148;). The possibility that the Fund&#146;s
shares will trade at a discount from NAV is a risk separate and distinct from
the risk that the Fund&#146;s NAV will decrease. The risk of purchasing shares of a
closed-end fund that might trade at a discount or unsustainable premium is more
pronounced for investors who wish to sell their shares in a relatively short
period of time after purchasing them because, for those investors, realization
of a gain or loss on their investments is likely to be more dependent upon the
existence of a premium or discount than upon portfolio performance. The Fund&#146;s
shares are not redeemable at the request of stockholders. The Fund may
repurchase its shares in the open market or in private transactions, although it
has no present intention to do so. Stockholders desiring liquidity may, subject
to applicable securities laws, trade their shares in the Fund on the NASDAQ
Capital Market or other markets on which such shares may trade at the then
current market value, which may differ from the then current NAV.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Risks of Investing in
Caribbean Basin Countries</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The economies of Caribbean
Basin Countries have in the past experienced considerable difficulties,
including high inflation rates, high interest rates, and high unemployment. The
emergence of the economies and securities markets of the Caribbean Basin
Countries will require continued economic and fiscal discipline that has been
lacking at times in the past, as well as stable political and social conditions.
International economic conditions, particularly those in the United States, as
well as world prices for oil and other commodities may also influence the
development of the economies of the Caribbean Basin Countries.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The currencies of
foreign countries (including those foreign countries in the definition of the
Caribbean Basin) are subject to fluctuations relative to the U.S. Dollar and
foreign countries (including those foreign countries in the definition of the
Caribbean Basin) have had to make major adjustments in their currencies from
time to time. Also many Caribbean Basin Countries have experienced substantial,
and in some periods extremely high, rates of inflation for many years. For
companies that keep accounting records in the local currency, inflation
accounting rules in some Caribbean Basin Countries require, for both tax and
accounting purposes, that certain assets and liabilities be restated on the
company&#146;s balance sheet in order to express items in terms of currency of
constant purchasing power. Inflation accounting may indirectly generate losses
or profits for certain Caribbean Basin Companies. Inflation and rapid
fluctuations in inflation rates have had, and could, in the future, have very
negative effects on the economies and securities markets of certain Caribbean
Basin Countries.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>In addition, governments of
many Caribbean Basin Countries have exercised and continue to exercise
substantial influence over many aspects of the private sector. Governmental
actions in the future could have a significant effect on economic conditions in
Caribbean Basin Countries, which could affect the companies in which the Fund
invests and, therefore, the value of Fund shares. Investments in foreign markets
may be adversely affected by governmental actions such as the imposition of
punitive taxes. In addition, the governments of certain countries may prohibit
or impose substantial restrictions on foreign investing in their capital markets
or in certain industries. Substantial limitations may exist in certain countries
with respect to the Fund&#146;s ability to repatriate investment income, capital or
the proceeds of sales of securities. The Fund could be adversely affected by
delays in, or a refusal to grant, any required governmental approval for
repatriation of capital, as well as by the application to the Fund of any
restrictions on investments. Any of these actions could severely affect security
prices, impair the Fund&#146;s ability to purchase or sell foreign securities or
transfer the Fund&#146;s assets or income back into the United States, or otherwise
adversely affect the Fund&#146;s operations.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Certain Caribbean Basin
Countries have entered into regional trade agreements that are designed to,
among other things, reduce barriers between countries, increase competition
among companies and reduce government subsidies in certain industries. No
assurance can be given that these changes will be successful in the long term,
or that these changes will result in the economic stability intended. There is a
possibility that these trade arrangements will not be fully implemented, or will
be partially or completely unwound. It is also possible that a significant
participant could choose to abandon a trade agreement, which could diminish its
credibility and influence. Any of these occurrences could have adverse effects
on the markets of both participating and non-participating countries, including
sharp appreciation or depreciation of participants&#146; national currencies and a
significant increase in exchange rate volatility, a resurgence in economic
protectionism, an undermining of confidence in the Caribbean Basin markets, an
undermining of Caribbean Basin economic stability, the collapse or slowdown of
the drive towards economic unity, and/or reversion of the attempts to lower
government debt and inflation rates that were introduced in anticipation of such
trade agreements. Such developments could have an adverse impact on the Fund&#146;s
investments in the Caribbean Basin generally or in specific countries
participating in such trade agreements.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Caribbean Basin has
experienced natural disasters, including hurricanes, droughts and floods, which
have caused substantial damage to parts of the Caribbean Basin and have harmed
the region&#146;s economies. The possibility exists that another natural disaster
could materially disrupt and adversely affect the economies of Caribbean Basin
Countries. In addition, companies and industries in which the Fund invests may
experience substantial disruptions in operations as a result of any such natural
disasters.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>The Caribbean Basin is
vulnerable to environmental disasters, for instance the BP Oil spill in the Gulf
of Mexico in 2010 had a widespread economic impact on the region. The potential
and impact of such occurrences in the future is impossible to gauge.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Other
Caribbean Basin market risks include foreign exchange controls, difficulties in
pricing securities, defaults on sovereign debt, difficulties in enforcing
contracts, difficulties in enforcing favorable legal judgments in local courts
and political and social instability. Legal remedies available to investors in
certain Caribbean Basin countries may be less extensive than those available to
investors in the United States or other foreign countries.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Geographic Concentration
Risk</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may invest from
time to time a substantial amount of its assets in issuers located in a single
country or a limited number of countries. If the Fund concentrates its
investments in this manner, it assumes the risk that economic, political and
social conditions in those countries will have a significant impact on its
investment performance. The Fund&#146;s investment performance may also be more
volatile if it concentrates its investments in certain countries, especially
emerging market countries.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Foreign Securities
Risk</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Securities traded in
foreign markets have often (though not always) performed differently from
securities traded in the United States. However, such investments often involve
special risks not present in U.S. investments that can increase the chances that
the Fund will lose money. In particular, the Fund is subject to the risk that
because there may be fewer investors on foreign exchanges and a smaller number
of securities traded each day, it may be more difficult for the Fund to buy and
sell securities on those exchanges. In addition, prices of foreign securities
may go up and down more than prices of securities traded in the United
States.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Foreign Economy
Risk</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The economies of certain
foreign markets may not compare favorably with the economy of the United States
with respect to such issues as growth of gross national product, reinvestment of
capital, resources and balance of payments position. Certain foreign economies
may rely heavily on particular industries or foreign capital and are more
vulnerable to diplomatic developments, the imposition of economic sanctions
against a particular country or countries, changes in international trading
patterns, trade barriers and other protectionist or retaliatory measures.
Investments in foreign markets may also be adversely affected by governmental
actions such as the imposition of capital controls, nationalization of companies
or industries, expropriation of assets or the imposition of punitive taxes. In
addition, the governments of certain countries may prohibit or impose
substantial restrictions on foreign investments in their capital markets or in
certain industries. Any of these actions could severely affect securities prices
or impair the Fund&#146;s ability to purchase or sell foreign securities or transfer
the Fund&#146;s assets or income back into the United States, or otherwise adversely
affect the Fund&#146;s operations.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Other potential foreign
market risks include foreign exchange controls, difficulties in pricing
securities, defaults on foreign government securities, difficulties in enforcing
legal judgments in foreign courts and political and social instability. Legal
remedies available to investors in certain foreign countries may be less
extensive than those available to investors in the United States.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Currency
Risk</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Securities and other
instruments in which the Fund invests may be denominated or quoted in currencies
other than the U.S. Dollar. Changes in foreign currency exchange rates may
affect the value of the Fund&#146;s portfolio. Because the Fund&#146;s assets are
primarily invested in securities of Caribbean Basin Companies, and because some
portion of revenues and income may be received in foreign currencies while Fund
distributions will be made in dollars, the dollar equivalent of the Fund&#146;s net
assets and distributions would be adversely affected by reductions in the value
of the foreign currencies relative to the dollar. For this reason, changes in
foreign currency exchange rates can affect the value of the Fund&#146;s portfolio.
Generally, when the U.S. Dollar rises in value against a foreign currency, a
security denominated in that currency loses value because the currency is worth
fewer U.S. Dollars. Conversely, when the U.S. Dollar decreases in value against
a foreign currency, a security denominated in that currency gains value because
the currency is worth more U.S. Dollars. This risk, generally known as &#147;currency
risk,&#148; means that a strong U.S. Dollar may reduce returns for U.S. investors
while a weak U.S. Dollar may increase those returns. The Fund is managed with
the assumption that most of its stockholders hold their assets in U.S. Dollars.
As a result, and because distributions are made in U.S. Dollars, other non-U.S.
investors will be adversely affected by reductions in the value of the U.S.
Dollar relative to their home currency.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2><U>Governmental Supervision
and Regulation/Accounting Standards</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Foreign issuers are
generally not bound by uniform accounting, auditing, and financial reporting
requirements and standards of practice comparable to those applicable to U.S.
issuers. Some of the securities held by the Fund may not be registered with the
SEC nor may the issuers be subject to the SEC&#146;s reporting requirements. Thus,
there may be less available information concerning foreign issuers of securities
held by the Fund than is available concerning U.S. issuers. Adequate public
information on foreign issuers may not be available, and it may be difficult to
secure dividends and information regarding corporate actions on a timely basis.
In general, there is less overall governmental supervision and regulation of
securities exchanges, brokers, and listed companies than in the United States.
OTC markets tend to be less regulated than stock exchange markets and, in
certain countries, may be totally unregulated. Regulatory enforcement may be
influenced by economic or political concerns, and investors may have difficulty
enforcing their legal rights in foreign countries.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>In addition, the U.S.
Government has from time to time imposed restrictions, through penalties and
otherwise, on foreign investments by U.S. investors, including current
prohibitions on U.S. investment in Cuba. Investments in securities of Cuban
companies, if permitted by U.S. law, may be subject to certain political and
economic risks in addition to the risks associated with investment in the
securities of issuers domiciled in other foreign countries. The risks include
(i) less social, political and economic stability; (ii) the small current size
of the markets for such securities and the currently low or nonexistent volume
of trading, which result in a lack of liquidity and in greater price volatility;
(iii) certain national policies which may restrict the Fund&#146;s investment
opportunities, including restrictions on investment in issuers or industries
deemed sensitive to national interests; (iv) the absence of developed legal
structures governing private or foreign investment or allowing for judicial
redress for injury to private property; (v) the absence of a capital market
structure or market-oriented economy; and (vi) the possibility that recent
favorable economic developments may be slowed or reversed by unanticipated
political or social events in such countries. Investments in securities of Cuban
companies, if and when the Fund is permitted to invest in such securities, will
be speculative and involve risks not usually associated with investments in
securities of issuers in more developed market economies. See &#147;Emerging Markets
Risk&#148; below.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Some foreign securities or
nations impose restrictions on transfer within the United States or to U.S.
persons. Although securities subject to such transfer restrictions may be
marketable abroad, they may be less liquid than foreign securities of the same
class that are not subject to such restrictions.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Accounting standards in
other countries are not necessarily the same as in the United States. If the
accounting standards in another country do not require as much detail as U.S.
accounting standards, it may be harder for the Adviser to completely and
accurately determine a company&#146;s financial condition. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, the Adviser will take appropriate steps to
evaluate the proposed investment, which may include on-site inspection of the
issuer (including Cuba, if U.S. restrictions on travel to Cuba are lifted),
interviews with its management and consultation with accountants, bankers and
other specialists.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Certain Risks of Holding
Fund Assets Outside the United States</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund generally holds
its foreign securities and cash in foreign banks and securities depositories.
Some foreign banks and securities depositories may be recently organized or new
to the foreign custody business. In addition, there may be limited or no
regulatory oversight of their operations. Also, the laws of certain countries
limit the Fund&#146;s ability to recover its assets if a foreign bank, depository or
issuer of a security, or any of their agents, goes bankrupt. In addition, it is
often more expensive for the Fund to buy, sell and hold securities in certain
foreign markets than in the United States. The increased expense of investing in
foreign markets reduces the amount the Fund can earn on its investments and
typically results in a higher operating expense ratio for the Fund than for
investment companies invested only in the United States.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Settlement
Risk</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Settlement and clearance
procedures in certain foreign markets differ significantly from those in the
United States. Foreign settlement and clearance procedures and trade regulations
also may involve certain risks (such as delays in payment for or delivery of
securities) not typically associated with the settlement of U.S. investments.
Communications between the United States and emerging market countries may be
unreliable, increasing the risk of delayed settlements or losses of security
certificates in markets that still rely on physical settlement. At times,
settlements in certain foreign countries have not kept pace with the number of
securities transactions. These problems may make it difficult for the Fund to
carry out transactions. If the Fund cannot settle or is delayed in settling a
purchase of securities, it may miss attractive investment opportunities and
certain of its assets may be uninvested with no return earned thereon for some
period. If the Fund cannot settle or is delayed in settling a sale of
securities, it may lose money if the value of the security then declines or, if
it has contracted to sell the security to another party, the Fund could be
liable for any losses incurred. Dividends or interest on, or proceeds from the
sale of, foreign securities may be subject to foreign withholding
taxes.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2><U>Emerging Markets
Risk</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The risks of foreign
investments are usually much greater for emerging markets. Investments in
emerging markets, including many Caribbean Basin Countries, may be considered
speculative. Emerging markets are riskier than more developed markets because
they tend to develop unevenly and may never fully develop. Since these markets
are often small, they may be more likely to suffer sharp and frequent price
changes or long-term price depression because of adverse publicity, investor
perceptions or the actions of a few large investors. Many emerging markets have
histories of political instability and abrupt changes in policies. As a result,
their governments are more likely to take actions that are hostile or
detrimental to private enterprise or foreign investment than those of more
developed countries. Certain emerging markets may also face other significant
internal or external risks, including the risk of war, and civil unrest. In
addition, governments in many emerging market countries participate to a
significant degree in their economies and securities markets, which may impair
investment and economic growth.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2> Investments in the securities of issuers
domiciled in countries with emerging capital markets involve certain additional
risks that do not generally apply to investments in securities of issuers in
more developed capital markets, such as (i) low or non-existent trading volume,
resulting in a lack of liquidity and increased volatility in prices for such
securities, as compared to securities of comparable issuers in more developed
capital markets; (ii) uncertain national policies and social, political and
economic instability, increasing the potential for expropriation of assets,
confiscatory taxation, high rates of inflation or unfavorable diplomatic
developments; (iii) possible fluctuations in exchange rates, differing legal
systems and the existence or possible imposition of exchange controls, custodial
restrictions or other foreign or U.S. governmental laws or restrictions
applicable to such investments; (iv) national policies that may limit the Fund&#146;s
investment opportunities such as restrictions on investment in issuers or
industries deemed sensitive to national interests; and (v) the lack or
relatively early development of legal structures governing private and foreign
investments and private property. In addition to withholding taxes on investment
income, some countries with emerging markets may impose differential capital
gains taxes on foreign investors.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Emerging capital markets
are developing in a dynamic political and economic environment brought about by
events over recent years that have reshaped political boundaries and traditional
ideologies. In such a dynamic environment, there can be no assurance that any or
all of these capital markets will continue to present viable investment
opportunities for the Fund. In the past, governments of such nations have
expropriated substantial amounts of private property, and most claims of the
property owners have never been fully settled. There is no assurance that such
expropriations will not reoccur. In such an event, it is possible that the Fund
could lose the entire value of its investments in the affected
market.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Also, there may be less
publicly available information about issuers in emerging markets than would be
available about issuers in more developed capital markets, and such issuers may
not be subject to accounting, auditing and financial reporting standards and
requirements comparable to those to which U.S. companies are subject. In certain
countries with emerging capital markets, reporting standards vary widely. As a
result, traditional investment measurements used in the United States, such as
price/ earnings ratios, may not be applicable. Emerging market securities may be
substantially less liquid and more volatile than those of mature markets, and
company shares may be held by a limited number of persons. This may adversely
affect the timing and pricing of the Fund&#146;s acquisition or disposal of
securities. Communications between the United States and emerging market
countries may be unreliable, increasing the risk of delayed settlements or
losses of security certificates.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Practices in relation to
settlement of securities transactions in emerging markets involve higher risks
than those in developed markets, in part because the Fund may need to use
brokers and counterparties that are less well capitalized, and custody and
registration of assets in some countries may be unreliable. The possibility of
fraud, negligence, undue influence being exerted by the issuer or refusal to
recognize ownership exists in some emerging markets, and, along with other
factors, could result in ownership registration being completely lost. The Fund
would absorb any loss resulting from such registration problems and may have no
successful claim for compensation.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>INVESTMENT OBJECTIVE AND
POLICIES</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Investment Policies -
General</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund&#146;s investment
objective is to obtain long-term capital appreciation. This objective may not be
changed without the prior approval of the holders of a majority of the Fund&#146;s
outstanding voting securities. The Fund pursues its objective by investing
primarily in equity and equity-linked securities of public and private
companies, including U.S.-based companies, (i) whose securities are traded
principally on a stock exchange in a Caribbean Basin country, (ii) that have at
least 50% of the value of their assets in a Caribbean Basin Country or (iii)
that derive at least 50% of their total revenue from operations in a Caribbean
Basin country (collectively referred to herein as &#147;Caribbean Basin Companies&#148;).
Current income through receipt of interest or dividends from the Fund&#146;s
securities is incidental to the Fund&#146;s efforts to attain its investment
objective. The Fund invests in Caribbean Basin Companies that are likely, in the
opinion of the Adviser, to benefit from political, legal and economic
developments in the Caribbean Basin Countries. Under normal market conditions,
the Fund invests at least 80% of its total assets in equity and equity-linked
securities of Caribbean Basin Companies. The Fund may invest more than 25% of
its total assets in </FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>the securities of
U.S.-based companies. U.S. law currently prohibits the Fund from investing its
assets in securities of companies that benefit from free trade with Cuba
(&#147;companies strategically linked to Cuba&#148;). Companies strategically linked to
Cuba may include a company that benefits from free trade with Cuba, but does not
meet the definition of Caribbean Basin Company set forth above. If permitted to
make such investments upon a lifting or easing of the U.S. trade embargo against
Cuba or pursuant to regulations promulgated by a department or agency of the
U.S. Government, the Fund may invest up to 20% of its assets in equity and
equity-linked securities of non-Caribbean Basin Companies strategically linked
to Cuba.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund&#146;s investment
objective is fundamental and may not be changed without the approval of the
Fund&#146;s outstanding voting securities. As used in this prospectus, a majority of
the Fund&#146;s outstanding voting securities means the lesser of (i) 67% of the
shares represented at a meeting at which more than 50% of the outstanding shares
are present in person or represented by proxy or (ii) more than 50% of the
outstanding shares. The Fund&#146;s investment policies may be changed by its Board
without stockholder approval, but the Fund will not change its investment
policies without notice to its stockholders. The Fund is designed primarily for
long-term investment, and investors should not consider it a trading vehicle. An
investment in the Fund&#146;s shares should not constitute a complete investment
program. The Fund&#146;s NAV can be expected to fluctuate, and no assurance can be
given that the Fund will continue to achieve its investment
objective.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Equity securities of public
and private companies that may be purchased by the Fund consist of common stock,
convertible and non-convertible preferred stock (whether voting or non-voting),
debt with equity warrants and unattached warrants. Debt issued with a warrant
entitles the holder to purchase equity shares and differs from convertible debt
because the conversion feature is in the form of a separately traded warrant.
Equity-linked securities of public and private companies that may be purchased
by the Fund consist of debt securities convertible into equity and securities
such as warrants, options and futures, the prices of which are functions of the
value of the equity securities receivable upon exercise or settlement
thereof.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may also invest in
the shares of other registered investment companies, some of which may be
Caribbean Basin Companies. By investing in shares of investment companies, the
Fund would indirectly pay a portion of the operating expenses, management
expenses and brokerage costs of such companies as well as the expense of
operating the Fund. Thus, the Fund&#146;s investors may indirectly pay higher total
operating expenses and other costs than they might pay by owning the underlying
investment companies directly. The Adviser will continue to attempt to identify
investment companies that have demonstrated superior management in the past,
thus possibly offsetting these factors by producing better results and/or lower
expenses than other investment companies. There can be no assurance that this
result will continue to be achieved. In addition, Section 12(d)(1)(A) of the
1940 Act imposes limits on the amount of the investment of the Fund&#146;s assets,
and those of its affiliates, in any investment company and that provision may
adversely affect the Fund&#146;s ability to purchase or redeem shares issued by an
investment company.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may invest in
securities that lack an established secondary trading market or otherwise are
considered illiquid. Liquidity of a security relates to the ability to dispose
easily of the security and the price to be obtained upon disposition of the
security, which may be less than would be obtained for a comparable more liquid
security. Illiquid securities may trade at a discount from comparable, more
liquid investments. Investment of the Fund&#146;s assets in illiquid securities may
restrict the ability of the Fund to dispose of its investments in a timely
fashion and for a fair price as well as its ability to take advantage of market
opportunities. The risks associated with illiquidity will be particularly acute
where the Fund&#146;s operations require cash, such as when the Fund redeems shares
or pays a distribution, and could result in the Fund borrowing to meet
short-term cash requirements or incurring capital losses on the sale of illiquid
investments.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may invest in
securities that are not registered under the Securities Act (&#147;restricted
securities&#148;). Restricted securities may be sold in private placement
transactions between issuers and their purchasers and may be neither listed on
an exchange nor traded in other established markets. In many cases, privately
placed securities may not be freely transferable under the laws of the
applicable jurisdiction or due to contractual restrictions on resale. As a
result of the absence of a public trading market, privately placed securities
may be less liquid and more difficult to value than publicly traded securities.
To the extent that privately placed securities may be resold in privately
negotiated transactions, the prices realized from the sales, due to illiquidity,
could be less than those originally paid by the Fund or less than their fair
market value. In addition, issuers whose securities are not publicly traded may
not be subject to the disclosure and other investor protection requirements that
may be applicable if their securities were publicly traded. If any privately
placed securities held by the Fund are required to be registered under the
securities laws of one or more jurisdictions before being resold, the Fund may
be required to bear the expenses of registration. Certain of the Fund&#146;s
investments in private placements may consist of direct investments and may
include investments in smaller, less seasoned issuers, which may involve greater
risks. These issuers may have limited product lines, markets or financial
resources, or they may be dependent on a limited management group. In making
investments in such securities, the Fund may obtain access to material nonpublic
information, which may restrict the Fund&#146;s ability to conduct portfolio
transactions in such securities.</FONT></P>
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<P align=justify><FONT face="Times New Roman" size=2><U>Temporary Defensive
Positions</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may vary its
investment policy for temporary defensive purposes when, in the opinion of the
Adviser, such a change is warranted due to changes in the securities markets in
which the Fund may invest or other economic or political conditions affecting
such markets. For temporary defensive purposes, the Fund may reduce its position
in equity and equity-linked securities and invest in U.S. Treasury bills and
U.S. Dollar denominated bank time deposits and certificates of deposit rated
high quality or better by any nationally recognized statistical rating service
or, if unrated, of equivalent investment quality as determined by the Adviser.
The banks whose obligations may be purchased by the Fund will include any member
of the U.S. Federal Reserve System. The Fund does not seek to achieve its stated
investment objective when it has assumed a temporary defensive position.
</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Special Leverage
Considerations</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Hedging
Transactions</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may employ one or
more of the hedging techniques described below, primarily to protect against a
decrease in the U.S. Dollar equivalent value of its portfolio securities
denominated in foreign currencies or in the payments thereon that may result
from an adverse change in foreign currency exchange rates. Conditions in the
securities, futures, options and foreign currency markets will continue to
determine whether and under what circumstances the Fund will employ any of the
techniques or strategies described below. The Fund&#146;s ability to pursue certain
of these strategies may be limited by applicable regulations of the Commodity
Futures Trading Commission (&#147;CFTC&#148;) and the Federal tax requirements applicable
to regulated investment companies. See &#147;Taxation.&#148; </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Pursuant to applicable law
and subject to certain restrictions, the Fund may effect hedging transactions on
a variety of U.S. and foreign exchanges. The operations of U.S. exchanges are
considered to be subject to more stringent regulation and supervision than those
of certain non-U.S. exchanges.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>If any percentage
limitations applicable to the transactions described below are exceeded due to
market fluctuations after an initial investment, the Fund may not enter into new
transactions of the type to which the exceeded limitation applies until the
total of the Fund&#146;s commitments with respect to such transactions falls within
the applicable limitation.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Forward Foreign Currency
Exchange Contracts</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Adviser believes that
in some circumstances the purchase and sale of forward foreign currency exchange
contracts (&#147;forward contracts&#148;) may help offset declines in the U.S. Dollar
equivalent value of the Fund&#146;s assets denominated in foreign currencies and in
the income available for distribution to the Fund&#146;s stockholders that would
result from adverse changes in the exchange rate between the U.S. Dollar and
such foreign currencies. For example, the U.S. Dollar equivalent value of the
principal of and rate of return on, the Fund&#146;s foreign denominated securities
will decline if the exchange rate fluctuates between the U.S. Dollar and such
foreign currency whereby the U.S. Dollar increases in value. Such a decline
could be partially or completely offset by an increase in the value of a foreign
currency forward contract. The Fund may purchase forward contracts involving
either the currencies in which certain of its portfolio securities are
denominated or, in cross-hedging transactions, other currencies, changes in the
value of which correlate closely with the changes in the value of the currencies
in which its portfolio securities are denominated. The Fund will enter into such
cross-hedging transactions (i) only with respect to currencies whose foreign
exchange rate changes historically have shown a high degree of correlation to
changes in the foreign exchange rate of the currency in which the hedged asset
is denominated (a &#147;correlated currency&#148;) and (ii) only when the Adviser believes
that the increase in correlation risk is offset by the lower transaction costs
and increased liquidity available for financial instruments denominated in the
correlated currency.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may enter into
forward contracts or maintain a net exposure on such contracts only if (i) the
consummation of the contracts would not obligate the Fund to deliver an amount
of foreign currency in excess of the value of the Fund&#146;s portfolio securities or
other assets denominated in that currency or (ii) the Fund maintains cash, U.S.
Government securities or other liquid, high-grade debt securities in a
segregated account in an amount not less than the value of the Fund&#146;s total
assets committed to the consummation of the contract.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Although the use of forward
contracts may protect the Fund against declines in the U.S. Dollar equivalent
value of the Fund&#146;s assets, such use may reduce the possible gain from
advantageous changes in the value of the U.S. Dollar against particular
currencies in which the Fund&#146;s assets are denominated. Moreover, the use of
forward contracts will not eliminate fluctuations in the underlying U.S. Dollar
equivalent value of the prices of, or rates of return on, the assets held in the
Fund&#146;s portfolio.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The use of forward contracts subjects the Fund to certain
risks. The matching of the increase in value of a forward contract and the
decline in the U.S. Dollar equivalent value of the asset that is the subject of
the hedge generally is not precise. The success of any of these techniques
depends on the ability of the Adviser to predict correctly movements in foreign
currency exchange rates. If the Adviser incorrectly predicts the direction of
such movements or if unanticipated changes in foreign currency </FONT></P>
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<!--PART E-->
<P align=justify><FONT face="Times New Roman" size=2>exchange rates occur, the Fund&#146;s
performance may be poorer than if it had not entered into such contracts. The
cost to the Fund of engaging in forward contracts varies with such factors as
the foreign currency involved, the length of the contract period and the
prevailing market conditions, including general market expectations as to the
direction of the movement of various foreign currencies against the U.S. Dollar.
Consequently, because the Fund may not always be able to enter into forward
contracts at attractive prices, it may be limited in its ability to use such
contracts to hedge its assets or for other risk management purposes. In
addition, there can be no assurance that historical correlations between the
movements of certain foreign currencies relative to the U.S. Dollar will
continue.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Options on Foreign
Currencies</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may purchase and write put and
call options on foreign currencies to protect against a decline in the U.S.
Dollar equivalent value of its portfolio securities or payments due thereon or a
rise in the U.S. Dollar equivalent cost of securities that it intends to
purchase. A foreign currency put option grants the holder the right, but not the
obligation, at a future date to sell a specified amount of a foreign currency to
its counterparty at a predetermined price. A foreign currency call option grants
the holder the right, but not the obligation, to purchase at a future date a
specified amount of a foreign currency at a predetermined price.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>As in the case of other types of
options, the benefit to the Fund from purchases of foreign currency options will
be reduced by the amount of the premium and related transaction costs. In
addition, if currency exchange rates do not move in the direction or to the
extent anticipated, the Fund could sustain losses on transactions in foreign
currency options which would require it to forego a portion or all of the
benefits of advantageous changes in such rates.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Any options on foreign currencies
written by the Fund will be covered. A call option is &#147;covered&#148; if the Fund owns
the underlying foreign currency covered by the call or has an absolute and
immediate right to acquire that foreign currency without additional cash
consideration (or for additional cash consideration held in a segregated account
by its custodian) upon conversion or exchange of other foreign currency held in
its portfolio. A call option is also covered if the Fund has a call on the same
foreign currency and in the same principal amount as the call written, so long
as the exercise price of the call held (i) is equal to or less than the exercise
price of the call written or (ii) is greater than the exercise price of the call
written if the difference is maintained by the Fund in cash, U.S. government
securities or other liquid, high-grade debt securities in a segregated account
with its custodian. The Fund covers any put option it writes on foreign
currencies by holding with its custodian, in a segregated account, cash, U.S.
government securities or other liquid, high-grade debt securities in an amount
equal to the option price.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may not purchase or write
options on foreign currencies if, as a result, the Fund will have more than 20%
of the value of its total assets invested in, or at risk with respect to, such
options.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Futures Contracts</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may enter into contracts for
the purchase or sale for future delivery (&#147;futures contracts&#148;) of foreign stock
or bond indices or other financial indices that the Adviser and the Manager
determine are appropriate to hedge the risks associated with changes in interest
rates or general fluctuations in the value of the Fund&#146;s portfolio
securities.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Pursuant to the regulations of the
CFTC, and subject to certain restrictions, the Fund may purchase or sell futures
contracts that are traded on U.S. exchanges that have been designated as
contract markets by the CFTC. The Fund may also generally purchase or sell
futures contracts that are subject to the rules of any foreign board of trade
(&#147;foreign futures contracts&#148;). The Fund may not, however, trade a foreign
futures contract based on a foreign stock index unless the contract has been
approved by the CFTC for trading by U.S. persons.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund is required to make a margin
deposit in cash or government securities with a broker or custodian to initiate
and maintain positions in futures contracts. Minimal initial margin requirements
are established by the futures exchange and brokers may establish margin
requirements which are higher than the exchange requirements. After a futures
contract position is opened, the value of the contract is marked to market
daily. If the futures contract price changes to the extent that the margin on
deposit does not satisfy margin requirements, payment of additional &#147;variation&#148;
margin is required. Conversely, reduction in the contract value may reduce the
required margin resulting in a repayment of excess margin to the Fund. Variation
margin payments are made to and from the futures broker for as long as the
contract remains open.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Notwithstanding the foregoing, the Fund
will generally only purchase or sell futures contracts (including foreign
currency exchange contracts), or options thereon, for bona fide hedging
purposes, as defined in applicable CFTC regulations. If the Fund purchases or
sells such futures contracts (including foreign currency exchange contracts), or
options thereon for purposes other than bona fide hedging transactions, in
accordance with CFTC regulations, the Fund will in no event purchase or sell
futures contracts if immediately thereafter the sum of the amounts of initial
margin deposits and premiums on the Fund&#146;s existing </FONT></P>
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<P align=justify><FONT face="Times New Roman" size=2>futures contracts would exceed 5% of
the fair market value of the Fund&#146;s total assets. The Adviser reserves the right
to comply with such different standards as may be established by the CFTC with
respect to the purchase or sale of futures contracts and foreign futures
contracts.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Options on Securities and Options on
Indices</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may purchase or sell exchange
traded or over-the-counter put and call options on its portfolio
securities.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may write covered put and call
options on portfolio securities to generate additional revenue for the Fund and,
in certain circumstances, as a partial hedge (to the extent of the premium
received less transaction costs) against a decline in the value of portfolio
securities and in circumstances in which the Adviser anticipates that the price
of the underlying securities will not increase above or fall below (in the case
of put options) the exercise price of the option by an amount greater than the
premium received (less transaction costs incurred) by the Fund. Although writing
put and call options may generate additional revenue for the Fund, such revenue
is incidental to the Fund&#146;s efforts to achieve its investment objective. The
Fund&#146;s strategy limits potential capital appreciation in the portfolio
securities subject to the options.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may write only covered
options. &#147;Covered&#148; means that, so long as the Fund is obligated as the writer of
a call option, it will own either the underlying securities or an option to
purchase the same underlying securities having an expiration date not earlier
than the expiration date of the covered option and an exercise price equal to or
less than the exercise price of the covered option, or establish or maintain
with its custodian for the term of the option a segregated account consisting of
cash, U.S. government securities or other liquid, high-grade debt obligations
having a value equal to the fluctuating market value of the option securities.
The Fund will continue to cover any put option it writes by maintaining a
segregated account with its custodian as described above.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may not purchase or write
options on securities or options on indices if, as a result, the Fund will have
more than 5% of the value of its total assets invested in, or at risk with
respect to, either such class of options.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund&#146;s successful use of options
and futures depends on the ability of the Adviser to predict the direction of
the market, and is subject to various additional risks. The investment
techniques and skills required to use options and futures successfully are
different from those required to select equity and equity-linked securities for
investment. The correlation between movements in the price of the option or
future and the price of the securities being hedged is imperfect and the risk
from imperfect correlation increases, with respect to stock index futures and
options, as the composition of the Fund&#146;s portfolio diverges from the
composition of the index underlying such index futures and options. In addition,
the ability of the Fund to close out a futures or options position depends on a
liquid secondary market. There is no assurance that liquid secondary markets
will exist for any particular option or futures contract at any particular time.
The securities the Fund is required to maintain in segregated accounts in
connection with its hedging transactions are not available for investment in
accordance with the Fund&#146;s investment objective of long-term capital
appreciation.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>On U.S. exchanges, once an option
contract has been accepted for clearance, the exchange clearing organization is
substituted as both buyer and seller of the contract, thereby guaranteeing the
financial integrity of the option contract. Options on securities and on indices
traded on certain non-U.S. exchanges may not be so guaranteed by a clearing
organization. The absence of such a role for a clearing organization on such a
non-U.S. exchange would expose the Fund to the credit risk of its counterparty.
If its counterparty were to default on its obligations, the Fund could lose the
expected benefit of the transaction.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Repurchase Agreements</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>When cash may be available to the Fund
for only a few days, the Fund may invest such cash in repurchase agreements
until such time as it otherwise may be invested or used for payments of
obligations of the Fund. In these transactions, the Fund purchases a security
and simultaneously commits to resell that security to the seller at an
agreed-upon price and date. The resale price reflects the purchase price plus an
agreed-upon market rate of interest, which is unrelated to the coupon rate or
maturity of the security purchased. The obligation of the seller to pay the
agreed-upon price is secured by the value of the underlying securities, which is
maintained at the Fund&#146;s custodian at a value at least equal to the resale
price. The Adviser monitors the adequacy of the collateral on a daily basis to
ensure that the collateral always equals or exceeds the repurchase price.
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. The Fund could
suffer a loss to the extent proceeds from the sale of collateral were less than
the value of the contract.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may not invest its assets in
repurchase agreements with a maturity of more than seven days, but the
collateral securities may have maturities of more than one year. The Fund has
not adopted an investment restriction limiting the value of its total assets not
invested in accordance with its fundamental investment policy that may be
invested in repurchase agreements. To </FONT></P>
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<P align=justify><FONT face="Times New Roman" size=2>minimize the risks of such investments,
however, the Fund enters into repurchase agreements only with its custodian,
other member banks of the Federal Reserve System having assets in excess of $1
billion, and recognized primary U.S. Government securities dealers determined by
the Adviser, subject to review by the Board of the Fund, to be
creditworthy.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Repurchase agreements do not constitute
cash, cash items, receivables or government securities for purposes of the
federal tax diversification test. Therefore, the Fund limits its investments in
repurchase agreements with any one bank, dealer, broker or other entity in order
to comply with the federal tax diversification test.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Debt Securities</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may invest up to 20% of its
assets in non-equity linked debt securities including foreign denominated
corporate debt and sovereign debt issued by foreign governments, their agencies
or instrumentalities, or other government-related entities. Debt securities,
such as bonds, involve credit risk. This is the risk that the issuer will not
make timely payments of principal and interest. The degree of credit risk
depends on the issuer&#146;s financial condition and on the terms of the debt
securities. Changes in an issuer&#146;s credit rating or the market&#146;s perception of
an issuer&#146;s creditworthiness may also affect the value of a Fund&#146;s investment in
that issuer. All debt securities are subject to interest rate risk. This is the
risk that the value of the security may fall when interest rates rise. If
interest rates move sharply in a manner not anticipated by the Adviser, a Fund&#146;s
investments in debt securities could be adversely affected and the Fund could
lose money. In general, the market price of debt securities with longer
maturities will go up or down more in response to changes in interest rates than
will the market price of shorter-term debt securities. In addition, debt
securities issued in foreign currency denominations will be subject to currency
risk.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Investment in sovereign debt can
involve a high degree of risk. The governmental entity that controls the
repayment of sovereign debt may not be able or willing to repay the principal
and/or interest when due in accordance with the terms of such debt. A
governmental entity&#146;s willingness or ability to repay principal and interest due
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the governmental entity&#146;s policy
towards the International Monetary Fund and the political constraints to which a
governmental entity may be subject. Governmental entities may also be dependent
on expected disbursements from foreign governments, multilateral agencies and
others abroad to reduce principal and interest arrearages on their debt. The
commitment on the part of these governments, agencies and others to make such
disbursements may be conditioned on the implementation of economic reforms
and/or economic performance and the timely service of such debtor&#146;s obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due may result in the cancellation of such
third parties&#146; commitments to lend funds to the governmental entity, which may
further impair such debtor&#146;s ability or willingness to timely service its debts.
Consequently, governmental entities may default on their sovereign debt. Holders
of sovereign debt may be requested to participate in the rescheduling of such
debt and to extend further loans to governmental entities. In the event of a
default by a governmental entity, there may be few or no effective legal
remedies for collecting on such debt.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Securities Lending</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may lend portfolio securities
with a value not exceeding 33 1/3% of its total assets or the limit prescribed
by applicable law to banks, brokers and other financial institutions. In return,
the Fund receives collateral in cash or securities issued or guaranteed by the
U.S. Government, which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. The Fund
maintains the ability to obtain the right to vote or consent on proxy proposals
involving material events affecting securities loaned. The Fund receives the
income on the loaned securities. Where the Fund receives securities as
collateral, the Fund receives a fee for its loans from the borrower and does not
receive the income on the collateral. Where the Fund receives cash collateral,
it may invest such collateral and retain the amount earned, net of any amount
rebated to the borrower. As a result, the Fund&#146;s yield may increase. Loans of
securities are terminable at any time and the borrower, after notice, is
required to return borrowed securities within the standard time period for
settlement of securities transactions. The Fund is obligated to return the
collateral to the borrower at the termination of the loan. The Fund could suffer
a loss in the event the Fund must return the cash collateral and there are
losses on investments made with the cash collateral. In the event the borrower
defaults on any of its obligations with respect to a securities loan, the Fund
could suffer a loss where there are losses on investments made with the cash
collateral or where the value of the securities collateral falls below the
market value of the borrowed securities. The Fund could also experience delays
and costs in gaining access to the collateral. The Fund may pay reasonable
finder&#146;s, lending agent, administrative and custodial fees in connection with
its loans.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Portfolio Turnover</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>It is the Fund&#146;s policy to sell any
security whenever, in the opinion of the Adviser, the appreciation possibilities
of the security have been substantially realized or the business or market
prospects for the issuer of such security have deteriorated, irrespective of the
length of time that such security has been held. In addition, the Fund from time
to time may engage in short-term </FONT></P>
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<P align=justify><FONT face="Times New Roman" size=2>transactions in order to
take advantage of what the Adviser believes to be market inefficiencies in the
pricing of equity and equity-linked securities. The Adviser expects that the
Fund&#146;s annual rate of portfolio turnover may exceed 100% at times when the Fund
is taking advantage of short-term trading opportunities or if a complete
reallocation of the Fund&#146;s investment portfolio becomes advisable. A 100% annual
turnover rate would occur if all of the securities in the Fund&#146;s portfolio were
replaced once within a period of one year. The turnover rate has a direct effect
on the transaction costs borne by the Fund.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Investment
Restrictions</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund has adopted
certain investment restrictions that may not be changed without the prior
approval of a majority of the Board. For purposes of the non-fundamental
restrictions listed below and other investment restrictions of the Fund
described in this prospectus, all percentage limitations 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 from the Fund&#146;s portfolio. Under its investment restrictions, the
Fund may not:</FONT></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>1.</FONT></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Purchase
      any securities (other than obligations of the U.S. government, its
      agencies or instrumentalities or securities of other regulated investment
      companies) if as a result more than 25% of the Fund&#146;s total assets would
      be invested in securities of any single issuer.</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD vAlign=top colSpan=3>&nbsp; </TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>2.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Invest 25%
      or more of the value of its total assets in a particular industry. This
      restriction does not apply to securities issued or guaranteed by the U.S.
      government, its agencies or instrumentalities, but will apply to foreign
      government obligations until such time as the SEC permits their
      exclusion.</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD vAlign=top colSpan=3>&nbsp; </TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>3.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Purchase
      more than 10% of the outstanding voting securities of any one
      issuer.</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD vAlign=top colSpan=3>&nbsp; </TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>4.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Issue
      senior securities, pledge its assets or borrow money in excess of 10% of
      the total value of its assets (including the amount borrowed) less its
      liabilities (not including its borrowings) and other than for temporary or
      emergency purposes or for the clearance of transactions, except that the
      Fund may borrow from a bank or other entity in a privately arranged
      transaction for repurchases and/or tenders for its shares, if after such
      borrowing there is asset coverage of at least 300% as defined in the 1940
      Act, and may pledge its assets to secure any permitted borrowing. For the
      purposes of this investment restriction, the Fund will not purchase
      additional portfolio securities while borrowings exceed 5% of the Fund&#146;s
      total assets; and collateral arrangements with respect to the writing of
      options or the purchase or sale of futures contracts are not deemed a
      pledge of assets or the issuance of a senior security.</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD vAlign=top colSpan=3>&nbsp;&nbsp; </TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>5.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Make
      loans, except through purchasing debt obligations, lending portfolio
      securities and entering into repurchase agreements consistent with the
      Fund&#146;s investment objective and policies.</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD vAlign=top colSpan=3>&nbsp; </TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>6.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Purchase
      or sell real estate or real estate mortgage loans, except that the Fund
      may purchase and sell securities secured by real estate or interests
      therein.</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD vAlign=top colSpan=3>&nbsp; </TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>7.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Make short
      sales of securities or maintain a short position in any
  security.</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD vAlign=top colSpan=3>&nbsp; </TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>8.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Purchase
      securities on margin, except such short-term credits as may be necessary
      or routine for the clearance or settlement of transactions, and except
      that the Fund may engage in transactions as described under &#147;Investment
      Objective and Policies--Hedging Transactions&#148; and post margin in
      connection therewith consistent with its investment policies.</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD vAlign=top colSpan=3>&nbsp; </TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>9.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Underwrite
      securities of other issuers, except insofar as the Fund may be deemed an
      underwriter under the Securities Act in selling portfolio
      securities.</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD vAlign=top colSpan=3>&nbsp; </TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>10.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Buy or
      sell commodities, commodity contracts or futures contracts (other than as
      described under &#147;Investment Objective and Policies&#151;Hedging
      Transactions&#148;).</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD vAlign=top colSpan=3>&nbsp; </TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>11.</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Buy, sell
      or write put or call options (other than as described under &#147;Special
      Leverage Considerations - Hedging
Transactions&#148;).</FONT></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The Fund is also subject to
certain diversification requirements with respect to its qualification as a
&#147;regulated investment company&#148; under the Code. See &#147;Taxation--Federal Taxation
of the Fund and its Distributions&#148;.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>As an additional
non-fundamental investment restriction, the Fund will not guarantee the
obligations of third parties. The Fund may invest in other investment companies,
subject to limitations set forth in the 1940 Act.</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="99%"><FONT face="Times New Roman" size=2>-27-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>At the 2014 Annual Meeting
of Stockholders of the Fund to be held on November 10, 2014, stockholders will
be asked to consider a proposal to revise the Fund&#146;s investment policy with
regard to borrowing money and issuing senior securities. If stockholders approve
the proposal, investment restriction 4 above will be replaced with the following
investment restriction:</FONT></P>
<P align=justify style="padding-left: 15pt; padding-right: 15pt"><FONT face="Times New Roman" size=2>The Fund may not issue
any senior security (as that term is defined in the 1940 Act) or borrow money,
except to the extent permitted by the 1940 Act or the rules and regulations
thereunder (as such statute, rules or regulations may be amended from time to
time) or by guidance regarding, or interpretations of, or exemptive orders
under, the 1940 Act or the rules or regulations thereunder published by
appropriate regulatory authorities.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>MANAGEMENT OF THE
FUND</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Board of
Directors</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Board is responsible
for the overall management of the Fund, including oversight of the Adviser and
other service providers. There are six directors (each a &#147;Director&#148;) of the
Fund. Two of the Directors are &#147;interested person&#148; (as defined in the 1940 Act).
Information about both the Fund&#146;s Directors and Officers is set forth in the
tables below. Unless otherwise noted, the mailing address of each director and
executive officer is c/o The Herzfeld Caribbean Basin Fund, Inc., 119 Washington
Avenue, Suite 504, Miami Beach, FL, 33139.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Information About Directors and Officers</U></FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="15%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="36%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Number of</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="15%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="36%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Portfolios</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Other</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Position(s)</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="15%"><B><FONT face="Times New Roman" size=2>Term of Office*</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="36%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>in Complex</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Directorships</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Held with</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="15%"><B><FONT face="Times New Roman" size=2>and Length of</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="36%"><B><FONT face="Times New Roman" size=2>Principal Occupation(s)</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Overseen by</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Held by</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD NOWRAP ALIGN="LEFT" WIDTH="15%" STYLE="border-bottom: #000000 1pt solid; text-align: center"><B><FONT face="Times New Roman" size=2>Name and Age</FONT></B></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="10%"><B><FONT face="Times New Roman" size=2>Fund</FONT></B></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%"><B><FONT face="Times New Roman" size=2>Time Served</FONT></B></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="36%"><B><FONT face="Times New Roman" size=2>During Past 5 Years</FONT></B></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="10%"><B><FONT face="Times New Roman" size=2>Director</FONT></B></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="10%"><B><FONT face="Times New Roman" size=2>Director</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Independent Directors</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="36%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>John A.
      Gelety</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Director</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>Current
      term</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>John A.
      Gelety, P.A.,</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>1</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>None</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>Age:
    46</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>expires
      2016.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>attorney at
      law, a</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>2011 to
      present.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>transactional
      law firm</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>that
      specializes in</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>business law,
      with a</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>concentration
      on domestic</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>and
      cross-border mergers</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>&amp;
      acquisitions, private</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>equity and
      commercial</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>transactions,
      2005</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>to
      present.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Ann S.
      Lieff</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Director</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Current
      term</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="36%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>President of
      the Lieff</FONT></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap style="text-align: center" width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>1</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>None</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Age:
    62</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>expires
      2016.</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="36%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Company, a
      management</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>1998 to
      present.</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="36%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>consulting
      firm that offers</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="36%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>ongoing
      advisory services</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="36%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>as a corporate
      director,</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="36%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>1998 to
      present; former</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="36%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>CEO Spec&#146;s
      Music, 1980</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="36%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>to 1998, a
      retailer of</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="36%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>recorded
      music.</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>Michael A.
      Rubin</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Director</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>Current
      term</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>Partner,
      Michael A.</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>1</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>None</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>Age:
    72</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>expires
      2014.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>Rubin, P.A.,
      attorney</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>2002 to
      present.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>at law, 1974
      to</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>present;
      Broker, Oaks</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>Management
      &amp; Real</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>Estate Corp.,
      a real</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>estate
      corporation, 1977</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="36%"><FONT face="Times New Roman" size=2>to
      present.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR></TABLE><BR>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="99%"><FONT face="Times New Roman" size=2>-28-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="15%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="34%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Number of</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="15%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="34%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Portfolios</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Other</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Position(s)</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="15%"><B><FONT face="Times New Roman" size=2>Term of Office*</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="34%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>in Complex</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Directorships</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Held with</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="15%"><B><FONT face="Times New Roman" size=2>and Length of</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="34%"><B><FONT face="Times New Roman" size=2>Principal Occupation(s)</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Overseen by</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Held by</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD NOWRAP ALIGN="LEFT" WIDTH="15%" STYLE="border-bottom: #000000 1pt solid; text-align: center"><B><FONT face="Times New Roman" size=2>Name and Age</FONT></B></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="10%"><B><FONT face="Times New Roman" size=2>Fund</FONT></B></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%"><B><FONT face="Times New Roman" size=2>Time Served</FONT></B></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="34%"><B><FONT face="Times New Roman" size=2>During Past 5 Years</FONT></B></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="10%"><B><FONT face="Times New Roman" size=2>Director</FONT></B></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="10%"><B><FONT face="Times New Roman" size=2>Director</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Independent
Directors</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>Kay
      W. Tatum, Ph.D., CPA</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Director</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>Current term</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>Associate Professor of</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>1</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>None</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>Age:
      62</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>expires 2015.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>Accounting, University</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>2007
      to present.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>of
      Miami School of</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>Business Administration,</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>1992
      to present;</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>Chair, Department of</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>Accounting, 2004 to</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>2008; Assistant Professor</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>of
      Accounting, University</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>of
      Miami, 1986 to 1992.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Interested Directors</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>Cecilia L. Gondor **</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Director</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>Current term</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>Executive Vice President</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>1</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>None</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>Age:
      52</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>expires 2015.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>of
      Thomas J. Herzfeld &amp;</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>September 2014</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>Co.,
      Inc., 1984 to 2010</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>to
      present.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>and
      Thomas J. Herzfeld</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>Advisors, Inc., 1984 to</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>2014; Secretary/Treasurer</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>of
      The Herzfeld Caribbean</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>Basin Fund, Inc., inception</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>to
      2014; Freelance</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>financial writer, including</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>topics on closed-end</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>funds, 2014 to present.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Thomas J. Herzfeld***</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>President,</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Current term</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Chairman and President</FONT></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap style="text-align: center" width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>2</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>The
      Cuba</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Age:
      69</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Chairman,</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>expires 2014.</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>of
      Thomas J. Herzfeld &amp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Fund, Inc. (in</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Director</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>1993
      to present.</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Co.,
      Inc., a broker dealer,</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>registration)</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>and</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>1981
      to 2010, and Thomas</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Portfolio</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>J.
      Herzfeld Advisors, Inc.,</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Manager</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>1984
      to present.</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" width="99%" bgColor=#c0c0c0 colSpan=11>&nbsp;&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"><B><FONT face="Times New Roman" size=2>Officers:</FONT></B></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Erik
      M. Herzfeld***</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Portfolio</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>2008
      to present</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Portfolio Manager and</FONT></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap style="text-align: center" width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>N/A</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>N/A</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Age:
      40</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Manager</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Managing Director,</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Thomas J. Herzfeld</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Advisors, Inc., 2007 to</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>present; Vice President</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>JPMorgan Chase 2000 to</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>2007, foreign exchange</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="15%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="34%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>options trading.</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>Reanna J. M. Lee***</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Secretary,</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>Officer since</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>In-house counsel of</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>N/A</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>N/A</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>Age:
      28</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Treasurer,</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=2>2014</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>Thomas J. Herzfeld</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>CCO</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>Advisors, Inc. 2012 to</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>present; Chief Compliance</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>Officer of Thomas J.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>Herzfeld Advisors, Inc.,</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>2013
      to present; Reanna</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>J.
      M. Lee, a law firm with</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>areas of practice including</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>intellectual property and</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>entertainment law, 2011</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="34%"><FONT face="Times New Roman" size=2>to
      present.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR></TABLE><BR>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="99%"><FONT face="Times New Roman" size=2>-29-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>*</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Each
      director serves a three-year term after which the director may be
      re-elected for additional three-year terms.</FONT></TD></TR>
  <TR>
    <TD vAlign=top colSpan=3>&nbsp; </TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>**</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Ms. Gondor
      is an &#147;interested person&#148; of the Fund (as defined in the 1940 Act) due to
      her former positions as an officer and employee of the Fund&#146;s Adviser and
      of the Fund.</FONT></TD></TR>
  <TR>
    <TD vAlign=top colSpan=3>&nbsp;&nbsp; </TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>***</FONT></TD>
    <TD vAlign=top noWrap><FONT size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Each of
      Mr. T. Herzfeld, Mr. E. Herzfeld and Ms. Lee is an &#147;interested person&#148; of
      the Fund (as defined in the 1940 Act) because each is an officer of the
      Fund&#146;s Adviser.</FONT></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>Thomas J. Herzfeld, an
&#147;interested person&#148; (as such term is defined in the 1940 Act) currently serves
as the Chairman of the Board. The Board of Directors believes that Mr.
Herzfeld&#146;s service as Chairman is appropriate and benefits stockholders due to
his personal and professional stake in the quality of services provided to the
Fund. The Independent Directors believe that they can act independently and
effectively without having an Independent Director serve as Chairman.
Nonetheless, as currently composed, the Independent Directors constitute a
substantial majority of the Board.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Board believes that the
significance of each Director&#146;s experience, qualifications, attributes or skills
is an individual matter (meaning that experience that is important for one
Director may not have the same value for another) and that these factors are
best evaluated at the Board level, with no single Director, or particular
factor, being indicative of the Board&#146;s effectiveness. The Board determined that
each of the Directors is qualified to serve as a Director of the Fund based on a
review of the experience, qualifications, attributes and skills of each
Director. In reaching this determination, the Board has considered a variety of
criteria, including, among other things: character and integrity; ability to
review critically, evaluate, question and discuss information provided, to
exercise effective business judgment in protecting stockholder interests and to
interact effectively with the other Directors, the Adviser, other service
providers, counsel and the independent registered accounting firm (&#147;independent
accountants&#148;); and willingness and ability to commit the time necessary to
perform the duties of a Director. Each Director&#146;s ability to perform his duties
effectively is evidenced by his experience or achievements in the following
areas: management or board experience in the investment management industry or
companies or organizations in other fields, educational background and
professional training; and experience as a Director of the Fund. In addition,
the Board values the diverse skill sets and experiences that each Director
contributes. The Board considers that its diversity as a whole is as a result of
a combination of Directors and the various perspectives that each Director
provides as a result of his present experiences and his background. Information
discussing the specific experience, skills, attributes and qualifications of
each Director which led to the Board&#146;s determination that the Trustee should
serve in this capacity is provided below.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Thomas J. Herzfeld has
served as Chairman of the Board since inception of The Herzfeld Caribbean Basin
Fund, Inc. in 1993. In addition, he is the Chairman and President of Thomas J.
Herzfeld Advisors, Inc., the Fund&#146;s investment advisor. Thomas entered the
securities industry in 1968, was founder of a New York Stock Exchange member
firm in 1970 and was the Chairman and President of FINRA member firm Thomas J.
Herzfeld &amp; Co., Inc., formed in 1981.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Ann S. Lieff joined the
board in 1998. Ann is President of Lieff Company, a management consulting firm
that offers ongoing advisory services as a corporate director to several retail
operations. Previously she served as CEO of Spec&#146;s Music for 18 years, from
1980-1998; Specs was one of the largest music retail chain stores in the SE
region for many decades.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Michael A. Rubin, Esq.,
joined the board in 2002. Michael is a Partner in the law firm of Michael A.
Rubin, PA., and is Real Estate Broker at Oaks Management &amp; Real Estate
Corp., Miami, Florida.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Kay W. Tatum, Ph.D., CPA,
joined the board in 2007. Kay is an Associate Professor of Accounting at the
University of Miami School of Business Administration, where she has been since
1986. She also served as Chair of the Department of Accounting from
2004-2008.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>John A. Gelety, Esq. joined
the Board in 2011. John is a practicing attorney who specializes in business
law, with a concentration on domestic and cross-border mergers &amp;
acquisitions, private equity and commercial transactions.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Cecilia L. Gondor was
appointed to the Board on September 11, 2014. Cecilia served as the
Secretary/Treasurer of The Herzfeld Caribbean Basin Fund, Inc. from the Fund&#146;s
inception until her retirement in May 2014. She also served as Executive Vice
President of Thomas J. Herzfeld Advisors, Inc. from 1984 through the date of her
retirement. Additionally, she was the Executive Vice President of Thomas J.
Herzfeld &amp; Co., Inc., a broker-dealer, from 1984 through 2010, when the
broker-dealer ceased operations. Ms. Gondor is a freelance financial writer,
including topics related to closed-end funds.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Specific details regarding
each Director&#146;s principal occupations during the past five years are included in
the table above. The summaries set forth above as to the experience,
qualifications, attributes and/or skills of the Directors do not constitute
holding out the Board or any Director as having any special expertise or
experience, and do not impose any greater responsibility or liability on any
such person or on the Board as a whole than would otherwise be the
case.</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="99%"><FONT face="Times New Roman" size=2>-30-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2><U>Committees of the
Board</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Board has formed an
Audit Committee and a Nominating Committee.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Board has adopted a
written charter for the Audit Committee, which became effective February 5,
2004. The Audit Committee of the Board currently consists of each Mr. Gelety,
Mr. Rubin, Ms. Lieff and Dr. Tatum, none of whom is an &#147;interested person&#148; of
the Fund. Each member of the Audit Committee is considered independent under the
applicable NASDAQ Capital Market listing standards. During the fiscal year ended
June 30, 2014 the Audit Committee met twice. The Audit Committee reviews the
scope of the audit by the Fund&#146;s independent accountants, confers with the
independent accountants with respect to the audit and the internal accounting
controls of the Fund and with respect to such other matters as may be important
to an evaluation of the audit and the financial statements of the Fund, and
makes recommendations with respect to the selection of the independent
accountants for the Fund.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Nominating Committee is
comprised of Mr. Gelety, Ms. Lieff, Mr. Rubin and Dr. Tatum, each of whom is an
independent director under the 1940 Act and under NASDAQ Capital Market listing
standards. During the fiscal year ended June 30, 2014, the Nominating Committee
met twice. The Nominating Committee is responsible for reviewing and
recommending qualified candidates in the event that a directorship is vacated or
created. The Nominating Committee will not consider nominees recommended by
stockholders. The Nominating Committee believes that candidates for director
should have certain minimum qualifications, including (i) the ability to apply
good business judgment; (ii) the ability to properly exercise their duties of
loyalty and care; (iii) proven leadership capabilities, high integrity and moral
character, significant business experience and a high level of responsibility
within their chosen fields; (iv) the ability to quickly grasp complex principles
of business, finance, international transactions and the regulatory environment
in which investment companies must operate; and (v) the ability to read and
understand basic financial statements. The Committee retains the right to modify
these minimum qualifications from time to time. In general, candidates will be
preferred who hold an established senior or executive level position in
business, finance, law, education, research or government. The Committee&#146;s
process for identifying and evaluating nominees is as follows:</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>In the case of incumbent
directors whose terms of office are set to expire, the Nominating Committee
reviews such directors&#146; overall service to the Fund during their term, including
the number of meetings attended, level of participation, quality of performance,
and transactions of such directors with the Fund, if any, during their term, and
confirms their independence, if applicable. In the case of new director
candidates, the committee first determines whether the nominee must be
independent for purposes of The NASDAQ Capital Market and whether the candidate
must be considered a disinterested director under the 1940 Act. In either case,
determinations are based upon the Fund&#146;s charter and bylaws, applicable
securities laws, the rules and regulations of the SEC, and the advice of
counsel, if necessary. The Committee then uses its network of contacts to
compile a list of potential candidates, but may also engage, if it deems
appropriate, a professional search firm. The Committee then meets to discuss and
consider such candidates&#146; qualifications and recommend the nominee.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Ownership of the Fund By
Directors</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Set forth in the following
table are the Directors of the Fund, together with the dollar range of equity
securities beneficially owned by each Director as of June 30, 2014, as well as
the aggregate dollar range of equity securities in all funds overseen or to be
overseen in a family of investment companies (i.e., funds managed by the
Adviser).</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="72%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap style="text-align: center" width="15%"><B><FONT face="Times New Roman" size=2>Aggregate Dollar Range of</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="72%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><B><FONT face="Times New Roman" size=2>Dollar Range of Equity</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="15%"><B><FONT face="Times New Roman" size=2>Equity Securities in All Funds in</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD NOWRAP ALIGN="LEFT" WIDTH="72%" STYLE="border-bottom: #000000 1pt solid; text-align: center"><B><FONT face="Times New Roman" size=2>Name of
      Director</FONT></B></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="10%"><B><FONT face="Times New Roman" size=2>Securities in the
      Fund</FONT></B></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="15%"><B><FONT face="Times New Roman" size=2>Family of Investment
      Companies</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="72%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Disinterested
      Directors</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap style="text-align: center" width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap style="text-align: center" width="15%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="72%"><FONT face="Times New Roman" size=2>Ann
      S. Lieff</FONT></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>$50,001-100,000</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap style="text-align: center" width="15%"><FONT face="Times New Roman" size=2>$50,001-100,000</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="72%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Michael A. Rubin</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap style="text-align: center" width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$10,001-50,000</FONT></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap style="text-align: center" width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$10,001-50,000</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="72%"><FONT face="Times New Roman" size=2>Kay
      W. Tatum</FONT></TD>
    <TD noWrap align=right width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>$0-10,000</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap style="text-align: center" width="15%"><FONT face="Times New Roman" size=2>$0-10,000</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="72%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>John
      A. Gelety</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap style="text-align: center" width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$10,001-50,000</FONT></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap style="text-align: center" width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$10,001-50,000</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="72%"><B><FONT face="Times New Roman" size=2>Interested Director</FONT></B></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;</TD>
    <TD noWrap style="text-align: center" width="15%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="72%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Thomas J. Herzfeld</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap style="text-align: center" width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Over $100,000</FONT></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap style="text-align: center" width="15%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Over $100,000</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="72%"><FONT face="Times New Roman" size=2>Cecilia L. Gondor*</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>N/A</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="15%"><FONT face="Times New Roman" size=2>N/A</FONT></TD></TR></TABLE>____________________<BR>&nbsp;<BR>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Ms. Gondor
      joined the Board in September 2014; at the time she joined the Board Ms.
      Gondor directly held 2,709 shares of the Fund.</FONT></TD></TR>
</TABLE><Br>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="99%"><FONT face="Times New Roman" size=2>-31-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<!--PART F-->
<P align=justify><FONT face="Times New Roman" size=2>None of the disinterested
directors, and no immediate family member of any disinterested director, own
beneficially or of record any securities of the Fund&#146;s Adviser, or any person
directly or indirectly controlling, controlled by, or under common control with
the Adviser.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>As of June 30, 2014,
Directors and executive officers (6 persons) beneficially owned an aggregate of
5.33% of the Fund&#146;s outstanding shares on that date.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Director
Compensation</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>For the fiscal year ended
June 30, 2014, the aggregate director compensation paid by the Fund was $20,800.
For the calendar year ending December 31, 2014, the Fund paid each of the
disinterested directors an annual retainer of $2,000. In addition to the annual
retainer, for the fiscal year ended June 30, 2014, each disinterested director
was paid a per meeting fee of $800. The compensation paid by the Fund to each of
its disinterested directors serving during the fiscal year ended June 30, 2014
is set forth in the compensation table below. For calendar years after December
31, 2014, the Fund will pay each Director who is not an officer or employee of
the Fund&#146;s investment adviser an annual retainer of $20,000. The Chair of the
Audit Committee will receive an additional annual retainer of $3,000. In
addition, for the fiscal years ending after June 30, 2014, the Fund pays each
Director who is not an officer or employee of the Fund&#146;s investment adviser per
meeting fees of: $2,000 per regular board meeting attended in-person ($1,500 for
telephonic attendance); $1,000 per special board meeting attended in-person
($700 for telephonic attendance); and $500 per committee meeting attended
in-person ($350 for telephonic attendance). In addition to the annual retainer
and the per meeting fees described above, the Directors are also reimbursed for
related business expenses. Directors who are current employees or officers of
the Fund&#146;s investment adviser (currently Mr. Herzfeld) are not paid compensation
for their service as a Director. None of the other Directors serves on the board
of any other registered investment company to which the Fund&#146;s investment
adviser or an affiliated person of the Fund&#146;s investment adviser provides
investment advisory services. Directors and executive officers of the Fund do
not receive pension or retirement benefits from the Fund.</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="70%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="9%"><B><FONT face="Times New Roman" size=2>Pension or Retirement</FONT></B></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="8%"><B><FONT face="Times New Roman" size=2>Total Compensation from</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="TEXT-ALIGN: center" noWrap width="70%"><B><FONT face="Times New Roman" size=2>Name of Person and</FONT></B></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="10%"><B><FONT face="Times New Roman" size=2>Aggregate Compensation</FONT></B></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="9%"><B><FONT face="Times New Roman" size=2>Benefits Accrued As</FONT></B></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="8%"><B><FONT face="Times New Roman" size=2>the Fund and Fund</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="70%"><B><FONT face="Times New Roman" size=2>Position with the Fund</FONT></B></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="10%"><B><FONT face="Times New Roman" size=2>from the Fund</FONT></B></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="9%"><B><FONT face="Times New Roman" size=2>Part of Fund Expenses</FONT></B></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="8%"><B><FONT face="Times New Roman" size=2>Complex Paid to Directors</FONT></B></TD></TR>
  <TR style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: silver">
    <TD noWrap align=left width="70%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Disinterested Directors</FONT></B></TD>
    <TD noWrap width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="9%" bgColor=#c0c0c0></TD>
    <TD noWrap width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="8%" bgColor=#c0c0c0></TD></TR>
  <TR style="VERTICAL-ALIGN: bottom">
    <TD noWrap align=left width="70%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ann S. Lieff</FONT></TD>
    <TD noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="10%"><FONT face="Times New Roman" size=2>$5,200</FONT></TD>
    <TD noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="9%"><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="8%"><FONT face="Times New Roman" size=2>$5,200</FONT></TD></TR>
  <TR style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: silver">
    <TD noWrap align=left width="70%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Michael A. Rubin</FONT></TD>
    <TD noWrap width="1%" bgColor=#c0c0c0></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$5,200</FONT></TD>
    <TD noWrap width="1%" bgColor=#c0c0c0></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="9%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap width="1%" bgColor=#c0c0c0></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="8%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$5,200</FONT></TD></TR>
  <TR style="VERTICAL-ALIGN: bottom">
    <TD noWrap align=left width="70%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Kay W. Tatum</FONT></TD>
    <TD noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="10%"><FONT face="Times New Roman" size=2>$5,200</FONT></TD>
    <TD noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="9%"><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="8%"><FONT face="Times New Roman" size=2>$5,200</FONT></TD></TR>
  <TR style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: silver">
    <TD noWrap align=left width="70%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; John A. Gelety</FONT></TD>
    <TD noWrap width="1%" bgColor=#c0c0c0></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$5,200</FONT></TD>
    <TD noWrap width="1%" bgColor=#c0c0c0></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="9%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap width="1%" bgColor=#c0c0c0></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="8%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$5,200</FONT></TD></TR>
  <TR style="VERTICAL-ALIGN: bottom">
    <TD noWrap align=left width="70%"><B><FONT face="Times New Roman" size=2>Interested
      Director</FONT></B></TD>
    <TD noWrap width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap width="1%"></TD>
    <TD noWrap align=left width="9%"></TD>
    <TD noWrap width="1%"></TD>
    <TD noWrap align=left width="8%"></TD></TR>
  <TR style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: silver">
    <TD noWrap align=left width="70%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Thomas J. Herzfeld</FONT></TD>
    <TD noWrap width="1%" bgColor=#c0c0c0></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap width="1%" bgColor=#c0c0c0></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="9%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap width="1%" bgColor=#c0c0c0></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="8%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0</FONT></TD></TR>
  <TR style="VERTICAL-ALIGN: bottom">
    <TD noWrap align=left width="70%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cecilia L. Gondor*</FONT></TD>
    <TD noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="10%"><FONT face="Times New Roman" size=2>N/A</FONT></TD>
    <TD noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="9%"><FONT face="Times New Roman" size=2>N/A</FONT></TD>
    <TD noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="8%"><FONT face="Times New Roman" size=2>N/A</FONT></TD></TR></TABLE>____________________<BR>&nbsp;<BR>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR>
    <TD vAlign=top width="1%">
      <P align=justify><FONT face="Times New Roman" size=2>*</FONT></P></TD>
    <TD vAlign=top width="1%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
    <TD vAlign=top width="98%">
      <P align=justify><FONT face="Times New Roman" size=2>Ms. Gondor joined the
      Board in September 2014.</FONT></P></TD></TR></TABLE><BR>
<P align=justify><B><FONT face="Times New Roman" size=2>Investment Adviser and
Portfolio Managers</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Investment
Adviser</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund is advised by
HERZFELD/CUBA (the &#147;Adviser&#148;), a division of Thomas J. Herzfeld Advisors, Inc.,
whose principal business address is 119 Washington Avenue, Suite 504 Miami
Beach, FL 33139. The Adviser has been providing advisory services to the Fund
since September 1993. Thomas J. Herzfeld Advisors, Inc. has provided advisory
services since 1984 and is beneficially owned by Thomas J. Herzfeld, as the sole
voting stockholder.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Pursuant to an investment
advisory agreement with the Fund (the &#147;Investment Advisory Agreement&#148;) and under
the direction and control of the Board, the Adviser manages the Fund&#146;s portfolio
and makes investment decisions pursuant to the Fund&#146;s stated investment
objective, policies and restrictions. The Adviser is authorized to transmit
purchase and sale orders and select brokers and dealers to execute portfolio
transactions on behalf of the Fund. The Adviser determines the timing of
portfolio transactions and other matters related to execution.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Portfolio
Managers</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Thomas J. Herzfeld is
primarily responsible for the day-to-day management of the Fund. Mr. T. Herzfeld
currently serves as the Chairman, President, Director, and Portfolio Manager of
the Fund. Mr. T. Herzfeld has managed the Fund since its inception in 1993. In
addition, Mr. T. Herzfeld serves as the Chairman and President of Thomas J.
Herzfeld Advisors, Inc. since 1984. Prior to these positions he served as the
Chairman and President of Thomas J. Herzfeld &amp; Co., Inc. an affiliated
broker/dealer </FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=1 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="100%"><FONT face="Times New Roman" size=2>-32-</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>(that ceased operations in
2010) from 1981-2010. Prior to these positions he was Executive Vice President
and Director of a New York Stock Exchange member firm. Mr. T. Herzfeld has
authored or edited a number of books, including The Investors Guide to
Closed-End Funds (McGraw Hill, 1980), Herzfeld&#146;s Guide to Closed End Funds
(McGraw Hill, 1993) and co-authored High Return, Low Risk Investment (1st
edition, G.P. Putnam&#146;s Sons, 1981 and 2nd edition, McGraw Hill, 1993). He is
considered the first and a leading expert in the field of closed-end funds. Mr.
T. Herzfeld has been quoted in thousands of articles and written hundreds of
articles on the subject of closed end funds. He has written periodically for
</FONT><I><FONT face="Times New Roman" size=2>Barron&#146;s</FONT></I><FONT face="Times New Roman" size=2> and has made television appearances on
</FONT><I><FONT face="Times New Roman" size=2>Wall Street Week, The Nightly
Business Report</FONT></I><FONT face="Times New Roman" size=2> and
</FONT><I><FONT face="Times New Roman" size=2>CNBC</FONT></I><FONT face="Times New Roman" size=2>.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Erik M. Herzfeld is
primarily responsible for the day-to-day management of the Fund. Mr. E. Herzfeld
currently serves as Portfolio Manager of the Fund. Mr. E. Herzfeld has managed
the Fund since 2008. In addition, Mr. E. Herzfeld has served as Managing
Director of Thomas J. Herzfeld Advisors, Inc. since 2007. Prior to these
positions Mr. E. Herzfeld had served in quantitative research, trading and
management roles with both Lehman Brothers and JPMorgan and was based in New
York and Asia.</FONT></P>
<P align=justify><I><FONT face="Times New Roman" size=2>Other Accounts
Managed.</FONT></I><FONT face="Times New Roman" size=2> Thomas J. Herzfeld and
Erik M. Herzfeld are primarily responsible for the day-to-day management of the
Fund&#146;s portfolio. As of June 30, 2014, they were primarily responsible for the
day-to-day management of the following other accounts in addition to the
Fund:</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="79%"><B><FONT face="Times New Roman" size=2>Type of
      Account</FONT></B></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="10%"><B><FONT face="Times New Roman" size=2>Number of
      Accounts</FONT></B></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="9%"><B><FONT face="Times New Roman" size=2>Total Assets (in
      millions)</FONT></B></TD></TR>
  <TR style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: silver">
    <TD noWrap align=left width="79%"><FONT face="Times New Roman" size=2>Registered Investment Companies</FONT></TD>
    <TD noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="10%"><FONT face="Times New Roman" size=2>1</FONT></TD>
    <TD  noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="9%"><FONT face="Times New Roman" size=2>$19</FONT></TD></TR>
  <TR style="VERTICAL-ALIGN: bottom">
    <TD noWrap align=left width="79%"><FONT face="Times New Roman" size=2>Pooled Investment Vehicles</FONT></TD>
    <TD noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="10%"><FONT face="Times New Roman" size=2>0</FONT></TD>
    <TD  noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="9%"><FONT face="Times New Roman" size=2>$0</FONT></TD></TR>
  <TR style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: silver">
    <TD noWrap align=left width="79%"><FONT face="Times New Roman" size=2>Other Accounts</FONT></TD>
    <TD noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="10%"><FONT face="Times New Roman" size=2>260</FONT></TD>
    <TD  noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="9%"><FONT face="Times New Roman" size=2>$195</FONT></TD></TR></TABLE><BR>
<P align=justify><FONT face="Times New Roman" size=2>The advisory fee for these
accounts is based on assets under management for these accounts and is not based
on the performance of the accounts.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Material conflicts of
interest that may arise in connection with their management of the Fund&#146;s
investments and investments in other accounts include conflicts between the
investment strategy of the Fund and the investment strategy of the other
accounts managed by Mr. T. Herzfeld and Mr. E. Herzfeld, and conflicts
associated with the allocation of investment opportunities between the Fund and
other accounts managed by Mr. T. Herzfeld and Mr. E. Herzfeld. The Adviser has
adopted policies and procedures to address conflicts of interest to ensure
compliance with securities regulations and to ensure fair and equitable
treatment of the Fund and other accounts should any conflict arise.</FONT></P>
<P align=justify><I><FONT face="Times New Roman" size=2>Compensation.</FONT></I><FONT face="Times New Roman" size=2> Mr. T.
Herzfeld receives a quarterly fixed salary from Thomas J. Herzfeld Advisors,
Inc. Mr. T. Herzfeld may also receive bonuses from the Adviser. Mr. T. Herzfeld
does not receive separate compensation as portfolio manager from the Adviser. In
addition Mr. T. Herzfeld&#146;s compensation is not based on the value of assets held
by the Fund.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Mr. E. Herzfeld receives a
fixed salary, paid bi-weekly, from Thomas J. Herzfeld Advisors, Inc. Mr. E.
Herzfeld may also receive bonuses from the Adviser. Mr. E. Herzfeld does not
receive separate compensation as portfolio manager from the Adviser. In
addition, Mr. E. Herzfeld&#146;s compensation is not based on the value of the assets
held by the Fund.</FONT></P>
<P align=justify><I><FONT face="Times New Roman" size=2>Ownership of
Securities.</FONT></I><FONT face="Times New Roman" size=2> As of June 30, 2014,
Mr. T. Herzfeld beneficially owned over $100,000 of equity securities of the
Fund. As of June 30, 2014, Mr. E. Herzfeld beneficially owned over $100,000 of
equity securities of the Fund.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Investment Advisory
Agreement</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Investment Advisory
Agreement sets forth the services to be provided by the Adviser as described
above. The Fund pays the Adviser an advisory fee at the annual rate of 1.45% of
the Fund&#146;s average monthly net assets and payable at the end of each quarter.
That fee is higher than the advisory fee paid by most investment companies. For
the fiscal years ended June 30, 2014, 2013 and 2012, the Adviser received
$494,178, $472,075 and $400,637, respectively, for investment advisory services
provided to the Fund pursuant to the Investment Advisory Agreement.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Investment Advisory
Agreement was last approved by the Board on August 6, 2014. A discussion
regarding the basis for the Board&#146;s approval of the Investment Advisory
Agreement is provided in the Fund&#146;s Proxy Statement for the 2014 annual meeting
of stockholders dated August 29, 2014, and will be provided in the Fund&#146;s
Semi-Annual Report to stockholders for the semi-annual period ended December 31,
2014. At the 2014 Annual Meeting of Stockholders of the Fund to be held on
November 10, 2014, stockholders will be asked to consider a proposal to amend
the Investment Advisory Agreement to revise the calculation of the advisory fee
from &#147;net assets&#148; to &#147;managed assets&#148; which would be defined as &#147;the total
assets of the Fund, including any form of investment leverage, minus all accrued
expenses incurred in the normal course of operations, but not excluding any
liabilities or obligations attributable to investment leverage obtained through
(i) indebtedness of any type (including, without limitation, borrowing through a
credit facility or the issuance of debt securities), (ii) the issuance of
preferred stock or other </FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>similar preference
securities, and/or (iii) any other means (such as the reinvestment of collateral
received for securities loaned in accordance with the Fund&#146;s investment
objective, strategies and policies).&#148; If stockholders approve this proposal the
advisory fee paid to the investment adviser may increase to the extent the Fund
utilizes leverage.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Investment Advisory
Agreement provides that the Adviser bears all expenses of its employees and
overhead incurred by it in connection with its duties thereunder. The Fund
reimburses approximately $26,913 per year for compliance services performed by
the Chief Compliance Officer. The Adviser pays the salaries and expenses of such
of the Fund&#146;s officers and employees and any fees and expenses of such of the
Fund&#146;s Directors as are interested persons (as such term is defined in the 1940
Act) of the Adviser. The Fund bears all of its own expenses (See &#147;Expenses of
the Fund&#148; below).</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The services of the Adviser
under the Investment Advisory Agreement are not deemed to be exclusive, and
nothing in the Investment Advisory Agreement prevents the Adviser or any
affiliate thereof, from providing similar services to other investment companies
and other clients (whether or not their investment objectives and policies are
similar to those of the Fund) or from engaging in other activities. When other
clients of the Adviser desire to purchase or sell a security at the same time
the security is purchased for or sold by the Fund, such purchases and sales are
to the extent feasible, allocated among such clients and the Fund in a manner
believed by the Adviser to be equitable to the Fund. The allocation of
securities may adversely affect the price and quality of purchases and sales of
securities by the Fund. Purchase and sale orders for the Fund may be combined
with those of other clients of the Adviser in the interest of the most favorable
results for the Fund.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Investment Advisory
Agreement was initially approved by the Board on June 24, 1993. The Agreement
continued in effect for a period of two years from the effective date and
thereafter it is required to be approved annually by the Board. The Investment
Advisory Agreement continues in effect for successive periods of 12 months,
provided that its continuance is specifically approved annually by (i) the vote
of a majority of the Board who are not parties to such agreement or interested
persons (as such term is defined in the 1940 Act) of the Adviser, cast in person
at a meeting called for the purpose of voting on such approval and (ii) either
(a) the vote of a majority of the outstanding voting securities of the Fund or
(b) the vote of a majority of the Board. The Investment Advisory Agreement may
be terminated by the Fund, without the payment of any penalty, upon vote of a
majority of the Board or a majority of the outstanding voting securities of the
Fund at any time upon net less than 60 days&#146; prior written notice to the
Adviser, or by the Adviser upon not less than 60 days&#146; prior written notice to
the Fund. The Investment Advisory Agreement terminates automatically in the
event of its assignment (as such term is defined in the 1940 Act) by either
party or upon its termination.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Adviser is not liable
for any act of omission, error of judgment, mistake of law or loss suffered by
the Fund or its investors in connection with the matters to which the Investment
Advisory Agreement relates, except for a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of, or from
reckless disregard of, its obligations and duties under the Investment Advisory
Agreement, or a loss resulting from a breach of fiduciary duty with respect to
receipt of compensation for services (in which case any award of damages shall
be limited to the period and the amount set forth in Section 36 (b) (3) of the
1940 Act).</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Adviser also performs
and arranges for the performance of certain administrative and accounting
functions for the Fund, including (i) providing persons satisfactory to the
Directors of the Fund to serve as officers and, in that capacity, manage the
daily operations of the Fund; (ii) processing the payment of expenses for the
Fund; (iii) supervising the preparation of periodic reports to the Fund&#146;s
stockholders; (iv) preparing materials for Fund Board and Committee meetings;
(v) supervising the pricing of the Fund&#146;s investment portfolio and the
publication of the NAV of the Fund&#146;s shares, earnings reports and other
financial data; (vi) monitoring relationships with organizations providing
services to the Fund, including the custodian, transfer agent, auction agent and
printers; (vii) supervising compliance by the Fund with record-keeping
requirements under the 1940 Act and regulations thereunder, maintaining books
and records for the Fund (other than those maintained by the Adviser, custodian
and/or transfer agent) and preparing and filing of tax reports other than the
Fund&#146;s income tax returns; and (viii) providing executive, clerical and
secretarial help needed to carry out these responsibilities.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Benefit to the
Adviser</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund&#146;s Adviser will
benefit from the Offer because the Adviser&#146;s fee is based on the average net
assets of the Fund. It is not possible to state precisely the amount of
additional compensation the Adviser will receive as a result of the Offer
because the proceeds of the Offer will be invested in additional portfolio
securities which will fluctuate in value. However, assuming all Rights are
exercised and that the Fund receives the maximum proceeds of the Offer, the
annual compensation to be received by the Adviser would be increased by
approximately $121,869.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may, in the future
and at its discretion, choose to make additional rights offerings from time to
time for a number of shares and on terms which may or may not be similar to the
Offer. Any such future rights offering will be made in accordance with the 1940
Act. Under the laws of Maryland, the state in which the Fund is organized, the
Board is authorized to approve </FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>rights offerings without
obtaining stockholder approval. The staff of the SEC has interpreted the 1940
Act as not requiring stockholder approval of a rights offering at a price below
the then current NAV so long as certain conditions are met, including a good
faith determination by a Board that such offering would result in a net benefit
to existing stockholders.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Expenses of the
Fund</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Except as indicated above,
the Fund pays all of its expenses, including but not limited to the following:
organizational and certain offering expenses (but not overhead or employee costs
of the Adviser); advisory fees payable to the Adviser; fees and out-of-pocket
travel expenses of the Fund&#146;s Directors who are not interested persons (as such
term is defined in the 1940 Act) of any other party and other expenses incurred
by the Fund in connection with Directors&#146; meetings; interest expense; charges
and expenses of the Fund&#146;s legal counsel and independent accountants; taxes and
governmental fees; brokerage and other expenses connected with the execution,
recording and settlement of portfolio security transactions; expenses of
repurchasing shares; expenses of issuing any preferred shares or indebtedness;
expenses connected with negotiating, effecting purchase or sale, or registering
privately issued portfolio securities; membership dues to professional
organizations; premiums allocable to fidelity bond and D&amp;O insurance
coverage; expenses of preparing stock certificates; expenses of registering and
qualifying the Fund&#146;s shares for sale with the SEC and in various states and
foreign jurisdictions; custodian, sub-custodian, dividend paying agent, transfer
agency expenses; payment for portfolio pricing services to a pricing agent;
expenses of printing and mailing share certificates, stockholder reports,
notices, proxy statements and reports to governmental offices; expenses of
stockholders&#146; meetings and preparing and distributing proxies and reports to
stockholders; any litigation expenses; expenses relating to investor and public
relations; and NASDAQ Capital Market listing fees.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>PORTFOLIO TRANSACTIONS
AND BROKERAGE</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>In portfolio transactions
involving equity securities, the Adviser places orders on behalf of the Fund
directly with brokers, which may include brokers affiliated with the Adviser,
except that the purchase of shares in rights offerings is made directly from the
issuer. The Adviser may manage other accounts and funds that invest in equity
securities of Caribbean Basin Companies. Although investment decisions for the
Fund are made independently from those of other accounts or funds managed by the
Adviser, investments of the type the Fund may make may also be made by those
other accounts and funds. When the Fund and one or more accounts or funds
managed by the Adviser are prepared to invest in, or desire to dispose of, the
same security, available investments or opportunities for each will be allocated
in a manner believed by the Adviser to be equitable to each. In some cases, this
procedure may affect adversely the price paid or received by the Fund or the
size of the position obtained or disposed of by the Fund.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The primary objective of
the Adviser in placing orders for the purchase and sale of securities for the
Fund&#146;s portfolio is to obtain best execution taking into account such factors as
price, commission, size of order, difficulty of execution and skill required of
the broker or dealer. The capability and financial condition of the broker or
dealer may also be criteria for the choice of that broker or dealer. Subject to
obtaining the best execution, brokers, who provide investment research services
to the Adviser, including market and statistical information and quotations for
portfolio evaluation purposes, may receive orders for transactions of the Fund.
The terms &#147;investment research&#148; and &#147;market and statistical information and
quotations&#148; include advice as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities and potential buyers or sellers of securities, as well as the
furnishing of analyses and reports concerning issuers, industries, securities,
economic factors and trends, and portfolio strategy. Neither the Fund nor the
Adviser is obligated to deal with any broker or group of brokers for the
execution of portfolio transactions.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Research provided to the
Adviser in advising the Fund will be in addition to and not in lieu of the
services required to be performed by the Adviser itself, and the Adviser&#146;s fees
will not be reduced as a result of the receipt of supplemental information. This
information is regarded as only supplementary to the Adviser&#146;s own research
effort, since the information must be analyzed, weighed and reviewed by the
Adviser&#146;s staff. This information may be useful to the Adviser in providing
services to clients other than the Fund, and not all such information will
necessarily be used by the Adviser in connection with the Fund. Conversely,
information provided to the Adviser by brokers and dealers through whom other
clients of the Adviser effect securities transactions may prove useful to the
Adviser in providing services to the Fund. The Board will review at least
annually the commissions allocated by the Adviser on behalf of the Fund to
determine if such allocations were reasonable in relation to the benefits
inuring to the Fund.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>During the fiscal years
ended 2014, 2013 and 2012, the Fund paid $3,890, $4,359, and $3,865,
respectively, in brokerage commissions. For the fiscal year ended June 30, 2011,
brokerage commissions in the amount of $4,473, were paid by the Fund to a
broker-dealer that was an affiliated person of the Adviser (the &#147;affiliated
broker&#148;), in connection with portfolio transactions. The affiliated broker
ceased operations on December 31, 2010. Accordingly, the Fund did not pay any
brokerage commissions to the affiliated broker for the one-year period ending
June 30, 2014.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=center><B><FONT face="Times New Roman" size=2>CODE OF
ETHICS</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund and the Adviser
have adopted a joint Code of Ethics pursuant to Rule 17j-1 under the 1940 Act.
The code of ethics permits personnel subject to the code to invest in
securities, including securities that may be purchased or held by the Fund,
following certain black-out periods specified in the code, and subject to
certain other conditions and restrictions.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The code of ethics can be
reviewed and copied at the SEC&#146;s Public Reference Room in Washington, D.C.
Information on the operation of the Public Reference Room may be obtained by
calling the SEC at (202) 551-8090 or toll free at (800) 732-0330 and this code
of ethics is available on the EDGAR database on the SEC&#146;s internet site at:
http://www.sec.gov. Copies of this code of ethics may be obtained, after paying
a duplicating fee, by electronic request at the following e-mail address:
publicinfo@sec.gov or by writing the SEC&#146;s Public Reference Section, Washington,
D.C. 20549-0102.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>PROXY VOTING POLICIES AND
PROCEDURES</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund&#146;s and the
Adviser&#146;s proxy voting policies and procedures are attached hereto as Appendices
A and B, respectively. Information regarding how the Fund voted proxies relating
to portfolio securities during the most recent 12-month period ended June 30 is
available without charge, upon request, by calling 800-TJH-FUND (800-854-3863);
and on the SEC&#146;s website at http://www.sec.gov.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS </FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Persons or organizations
beneficially owning 25% or more of the outstanding shares of the Fund could be
presumed to &#147;control&#148; the Fund. As a result, those persons or organizations
could have the ability to take action with respect to the Fund without the
consent or approval of other stockholders. To the knowledge of the Fund, as of
June 30, 2014, Thomas J. Herzfeld beneficially owned 229,787 shares of common
stock, or 6.19% of the voting securities of the Fund. </FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>DESCRIPTION OF COMMON
STOCK</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund is authorized to
issue up to 100,000,000 shares of capital stock, at $.001 par value per share,
all of which shares are classified as common stock. The Board is authorized,
however, to classify and reclassify any unissued shares of capital stock by
setting or changing in any one or more respects the designation and number of
shares of any such class or series, and the nature, rates, amounts and times at
which and the conditions under which dividends shall be payable on, and the
voting, conversion, redemption and liquidation rights of, such class or series
and any other preferences, rights, restrictions and qualifications applicable
thereto.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund&#146;s shares have no
preemptive, conversion, exchange or redemption rights. Each share has equal
voting, dividend, distribution and liquidation rights. The shares outstanding
are fully paid and nonassessable. Stockholders are entitled to one vote per
share. All voting rights for the election of directors are noncumulative, which
means that the holders of more than 50% of the shares can elect 100% of the
directors then nominated for election if they choose to do so. In such event,
the holders of the remaining shares will not be able to elect any directors. The
foregoing description and the description under &#147;Certain Provisions of Articles
of Incorporation and Bylaws&#148; below are subject to the provisions contained in
the Fund&#146;s Articles of Incorporation and Bylaws.</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="70%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="9%"><B><FONT face="Times New Roman" size=2>Amount of Shares Held</FONT></B></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="8%"><B><FONT face="Times New Roman" size=2>Amount of Shares</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="70%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="9%"><B><FONT face="Times New Roman" size=2>by the Fund for its</FONT></B></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="8%"><B><FONT face="Times New Roman" size=2>Outstanding as of</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="70%"><B><FONT face="Times New Roman" size=2>Title of
      Class</FONT></B></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="10%"><B><FONT face="Times New Roman" size=2>Authorized</FONT></B></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="9%"><B><FONT face="Times New Roman" size=2>Account</FONT></B></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="8%"><B><FONT face="Times New Roman" size=2>Record
  Date</FONT></B></TD></TR>
  <TR style="VERTICAL-ALIGN: bottom; BACKGROUND-COLOR: silver">
    <TD style="TEXT-ALIGN: center" noWrap width="70%"><FONT face="Times New Roman" size=2>Shares of Common stock</FONT></TD>
    <TD noWrap width="1%">&nbsp;</TD>
    <TD style="TEXT-ALIGN: center" noWrap width="10%"><FONT face="Times New Roman" size=2>100,000,000</FONT></TD>
    <TD noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="9%"><FONT face="Times New Roman" size=2>0 Shares</FONT></TD>
    <TD noWrap width="1%"></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="8%"><FONT face="Times New Roman" size=2>3,713,071
Shares</FONT></TD></TR></TABLE><BR>
<P align=justify><FONT face="Times New Roman" size=2>The Fund will consider
offering additional shares in the future based on, among other things, the
lifting or easing of economic sanctions against Cuba. Other offerings of the
Fund&#146;s shares, if made, will require approval of the Board. Any additional
offering will be subject to the requirement of the 1940 Act that shares may not
be sold at a price below the then current NAV, exclusive of underwriting
discounts and commissions, except in connection with an offering to existing
stockholders or with the consent of the holders of a majority of the Fund&#146;s
outstanding voting securities.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Share Repurchases and
Tender Offers</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>In recognition of the
possibility that the Fund&#146;s shares might trade at a discount to NAV, the Board
may determine that it would be in the best interest of stockholders of the Fund
to take action to attempt to reduce or eliminate a market value discount from
NAV. To that end, the Board may take action from time to time either to
repurchase Fund shares in open market or private transactions or to make a
tender offer for Fund shares at NAV. No assurance can be given that the
Directors will decide to undertake such repurchases or tender offers, or that
any such repurchases or tender offers would reduce any market discount. The
Board does not currently intend to undertake repurchase or tenders
offers.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>The Fund anticipates that
the market price of its shares generally will continue to vary from NAV. The
market price of the Fund&#146;s shares is determined by a number of factors,
including the relative demand for and supply of such shares in the market, the
Fund&#146;s investment performance, the Fund&#146;s distributions and investor perception
of the Fund&#146;s overall attractiveness as an investment as compared with other
investment alternatives. The fact that the Fund&#146;s shares may be the subject of
share repurchases or tender offers at NAV from time to time may reduce the
spread between market price and NAV that otherwise might exist. In the opinion
of the Adviser, stockholders may be less inclined to accept a significant
discount on sales of the Fund&#146;s shares if they have a reasonable expectation of
being able to recover NAV in conjunction with a possible share repurchase or
tender offer.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Subject to the Fund&#146;s
investment restriction with respect to borrowing, the Fund may incur debt to
finance repurchases and tenders. See &#147;Investment Restrictions.&#148; If the Fund
incurs debt to finance such repurchases and tenders, interest on any such
borrowings will reduce the Fund&#146;s net income. In addition, although the Board
believes that share repurchases and tenders generally would have a favorable
effect on the market price of the Fund&#146;s shares, the acquisition of shares by
the Fund will decrease the total assets of the Fund and therefore would have the
effect of increasing the Fund&#146;s ratio of expenses to average net
assets.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>It is the Directors&#146;
announced policy, which may be changed by the Directors, that the Fund cannot
accept tenders or effect repurchases if (1) such transactions, if consummated,
would (a) impair the Fund&#146;s status as a regulated investment company under the
Code (which would make the Fund a taxable entity, causing the Fund&#146;s income to
be taxed at the Fund level in addition to the taxation of stockholders who
receive dividends from the Fund) or (b) result in a failure to comply with
applicable asset coverage requirements; (2) the amount of securities tendered
would require liquidation of such a substantial portion of the Fund&#146;s securities
that the Fund would not be able to liquidate portfolio securities in an orderly
manner in light of the existing market conditions and such liquidation would
have an adverse effect on the NAV of the Fund to the detriment of non-tendering
stockholders; (3) there is any (a) in the Board&#146;s judgment, material legal
action or proceeding instituted or threatened challenging such transactions or
otherwise materially adversely affecting the Fund, (b) declaration of a banking
moratorium by federal or state authorities or any suspension of payment by banks
in the United States, (c) limitation affecting the Fund or the issuers of its
portfolio securities imposed by federal or state authorities on the extension of
credit by lending institutions, (d) commencement of war, armed hostilities or
other international or national calamity directly or indirectly involving the
United States, or (e) in the Board&#146;s judgment, other event or condition which
would have a material adverse effect on the Fund or its holders of Common Stock
if shares of Common Stock were repurchased; or (4) the Board determines that
effecting any such transaction would constitute a breach of their fiduciary duty
owed the Fund or its stockholders. The Directors may modify these conditions in
light of experience.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Any tender offer made by
the Fund for its shares will be at a price equal to at least 90% of the NAV of
the shares as of the close of business on the date the offer ends. Each offer
will be made and stockholders notified in accordance&#146; with the requirements of
the Securities Exchange Act of 1934 and the 1940 Act, either by publication or
mailing or both. Each offering document will contain such information as is
prescribed by such laws and the rules and regulations promulgated thereunder,
including information stockholders should consider in deciding whether or not to
tender their shares and detailed instructions on how to tender shares. When a
tender offer is authorized to be made by the Board, a stockholder wishing to
accept the offer will be required to tender all (but not less than all) of the
shares owned by such stockholder (or attributed to the stockholder for Federal
income tax purposes under Section 318 of the Code). The Fund will purchase all
shares tendered by a holder of shares at any time during the period of the
tender offer in accordance with the terms of the offer unless it determines to
accept none of the shares tendered in the tender offer (based upon one of the
conditions set forth above). Each person tendering shares will pay to the Fund a
reasonable service charge currently anticipated to be $25.00, subject to change,
to help defray the costs associated with affecting the tender offer. It is the
position of the staff of the SEC that such service charge may 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 that the cost to the Fund of
affecting a tender offer will exceed the aggregate amount of all service charges
received from those who tender their shares. Such excess costs associated with
the tender offer will be charged against capital. During the period of a tender
offer, the Fund&#146;s stockholders will be able to determine the Fund&#146;s current NAV
by use of a toll-free telephone number.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Shares that have been
accepted and purchased by the Fund pursuant to a tender offer or share
repurchase will be held in the treasury until retired by direction of the Board.
Treasury shares will be recorded and reported as an offset to stockholder&#146;
equity and, accordingly, will reduce the Fund&#146;s total assets. If treasury shares
are retired, Common Stock issued and outstanding and capital in excess of par
will be reduced.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Because of the nature of
the Fund&#146;s investment objective and policies, if the Adviser anticipates that a
share repurchase or tender offer might have an adverse effect on the Fund&#146;s
investment performance and anticipate any material difficulty disposing of
portfolio securities in order to consummate such share repurchase or tender
offer, the Board would consider deferring the share repurchase or tender offer.
If the Fund must liquidate portfolio securities in order to effect a share
repurchase or tender offer, the Fund&#146;s ability to achieve its investment
objective may be adversely affected.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>If the Fund must liquidate
portfolio securities in order to purchase shares tendered, the Fund may realize
gains and losses on securities that it may not otherwise wish to sell in the
ordinary course of its portfolio management, which may adversely affect the
Fund&#146;s yield. The portfolio turnover rate of the Fund may or may not be affected
by the Fund&#146;s repurchases of shares pursuant to a tender offer. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>In the event that the Fund
engages in financial leveraging, the asset coverage requirements of the 1940 Act
may restrict the Fund&#146;s ability to engage in repurchases of its shares. With
respect to senior securities consisting of debt, such requirements provide that
no purchases of shares may be made by the Fund unless, at the time of the
purchase, the senior securities consisting of debt have an asset coverage of at
least 300% after deducting the amount of the purchase price.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Certain Provisions of
Articles of Incorporation and Bylaws</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund presently has
provisions in its Articles of Incorporation and Bylaws (together, the &#147;Charter
Documents&#148;) that could have the effect of limiting (i) the ability of other
entities or persons to acquire control of the Fund, (ii) the Fund&#146;s freedom to
engage in certain transactions or (iii) the ability of the Fund&#146;s Directors or
stockholders to amend the Charter Documents or effect changes in the Fund&#146;s
management. The Charter Documents also contain provisions which would inhibit
any conversion to an open-end investment company. The provisions of the Charter
Documents may be regarded as &#147;anti-takeover&#148; provisions.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Board is divided
into three classes. The term of office of the first class expired on the date of
the second annual meeting of stockholders, the term of office of the second
class expired on the date of the third annual meeting of stockholders and the
term of office of the third class expired on the date of the fourth annual
meeting of stockholders, etc. Upon the expiration of the term of office of each
class as set forth above, the Directors in such class will be elected for a term
of three years to succeed the Directors whose terms of office expired.
Accordingly, only those Directors in one class may be changed in any one year,
and such classification may prevent replacement of a majority of the Board for
up to a two-year period (although under Maryland law procedures are available
for the removal of Directors even if they are not then standing for re-election,
and under SEC regulations, procedures are available for including stockholder
proposals in the annual proxy statement). Such system of electing Directors is
intended to have the effect of maintaining the continuity of management and,
thus, make it more difficult for the Fund&#146;s stockholders to change the majority
of the Directors. A director may be removed from office only by a vote of at
least 75% of the outstanding shares of the Fund entitled to vote for the
election of Directors.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Under the Fund&#146;s Articles
of Incorporation, a vote of 75% (which is higher than that required under
Maryland law or the 1940 Act) of the outstanding shares of Common Stock of the
Fund is required to authorize (i) any merger or consolidation of the Fund with
or into any other corporation; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of assets of the Fund having an aggregate fair
market value of $1,000,000 or more (other than in the regular course of its
investment activities); and (iii) any amendment to the Articles of Incorporation
of the Fund which converts the Fund to an open-end investment company. Any
amendment to the Articles of Incorporation of the Fund which reduces the 75%
vote required to authorize the enumerated actions also must be approved by vote
of the holders of 75% of the outstanding shares of Common Stock. If any of the
foregoing actions is approved by a vote of two-thirds of the directors who have
served on the Board for a period of at least 12 months, however, the affirmative
vote of the holders of a majority of the Fund&#146;s outstanding common stock will be
sufficient to approve such actions.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The provisions of the
Charter Documents described above 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. The overall effect of these
provisions is to render more difficult the accomplishment of a merger or the
assumption of control by a principal stockholder. However, they provide the
advantage of potentially requiring persons seeking control of the Fund to
negotiate with its management regarding the price to be paid and facilitating
continuity of the Fund&#146;s management, objective and policies. The Board of the
Fund has considered the forgoing provisions and concluded that they are in the
best interests of the Fund and its stockholders.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>DIVIDENDS AND
DISTRIBUTIONS; DIVIDEND REINVESTMENT PLAN</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2><U>Dividends and
Distributions</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund currently intends
to distribute to stockholders, at least annually at such time so as to avoid
imposition of excise taxes, substantially all of its investment company taxable
income (i.e. net investment income and any net short-term capital gains less
expenses). Net investment income for this purpose is income other than realized
net capital gain (i.e. the extent of net long-term capital gains over net
short-term capital losses).</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund&#146;s current policy
is to comply with the provisions of the Code that are applicable to regulated
investment companies and to distribute all its taxable income to its
stockholders. Under these provisions, the Fund is not subject to federal income
tax on its taxable income and no federal tax provision is required.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2><U>Dividend Reinvestment
Plan</U></FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Registered stockholders of
shares of Common Stock of the Fund will automatically be enrolled
(&#147;Participants&#148;) in the Fund&#146;s Dividend Reinvestment Plan (the &#147;Plan&#148;). The
terms and conditions of the Plan are as follows:</FONT></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>1.</FONT></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>State
      Street Bank and Trust (the &#147;Agent&#148;) will act as agent for each
      Participant. The Agent will open an account for each registered
      stockholder as a Participant under the Plan in the same name in which such
      Participant&#146;s shares of Common Stock are registered.</FONT></TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      </FONT></TD>
    <TD vAlign=top width="100%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>2.</FONT></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>CASH
      OPTION. Pursuant to the Fund&#146;s Plan, unless a holder of Common Stock
      otherwise elects, all dividend and capital gains distributions
      (&#147;Distributions&#148;) will be automatically reinvested by the Agent in
      additional Common Stock of the Fund. Stockholders who elect not to
      participate in the Plan will receive all distributions in cash paid by
      check mailed directly to the stockholder of record (or, if the shares are
      held in street or other nominee name then to such nominee) by the Agent,
      as dividend paying agent. Stockholders and Participants may elect not to
      participate in the Plan and to receive all distributions of dividends and
      capital gains in cash by sending written instructions to the Agent, as
      dividend paying agent, at the address set forth below.</FONT></TD></TR>
  <TR>
    <TD vAlign=top colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>3.</FONT></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>MARKET
      PREMIUM ISSUANCES. If on the payment date for a Distribution, the NAV per
      share of Common Stock is equal to or less than the market price per Common
      Stock plus estimated brokerage commissions, the Agent shall receive newly
      issued Common Stock (&#147;Additional Common Stock&#148;) from the Fund for each
      Participant&#146;s account. The number of Additional Common Stock to be
      credited shall be determined by dividing the dollar amount of the
      Distribution by the greater of (i) the NAV per share of Common Stock on
      the payment date, or (ii) 95% of the market price per share of Common
      Stock on the payment date.</FONT></TD></TR>
  <TR>
    <TD vAlign=top colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>4.</FONT></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>MARKET
      DISCOUNT PURCHASES. If the NAV per share of Common Stock exceeds the
      market price plus estimated brokerage commissions on the payment date for
      a Distribution, the Agent (or a broker-dealer selected by the Agent) shall
      endeavor to apply the amount of such Distribution on each Participant&#146;s
      Common Stock to purchase Common Stock on the open market. In the event of
      a market discount on the payment date, the Agent will have 30 days after
      the dividend payment date (the &#147;last purchase date&#148;) to invest the
      dividend amount in shares acquired in open-market purchases. The weighted
      average price (including brokerage commissions) of all Common Stock
      purchased by the Agent as Agent shall be the price per Common Stock
      allocable to each Participant. If, before the Agent has completed its
      purchases, the market price plus estimated brokerage commissions exceeds
      the NAV of the Common Stock as of the payment date, the purchase price
      paid by Agent may exceed the NAV of the Common Stock, resulting in the
      acquisition of fewer Common Stock than if such Distribution had been paid
      in Common Stock issued by the Fund. Because of the foregoing difficulty
      with respect to open-market purchases, the Plan provides that if the Plan
      Agent is unable to invest the full dividend amount in open-market
      purchases during the purchase period or if the market discount shifts to a
      market premium during the purchase period, the Plan Agent may cease making
      open-market purchases and may invest the uninvested portion of the
      dividend amount in newly issued Common Stock at the NAV per share of
      Common Stock at the close of business on the last purchase date.
      Participants should note that they will not be able to instruct the Agent
      to purchase Common Stock at a specific time or at a specific price.
      Open-market purchases may be made on any securities exchange where Common
      Stock are traded, in the over-the-counter market or in negotiated
      transactions, and may be on such terms as to price, delivery and otherwise
      as the Agent shall determine. Each Participant&#146;s uninvested funds held by
      the Agent will not bear interest. The Agent shall have no liability in
      connection with any inability to purchase Common Stock within the time
      provided, or with the timing of any purchases effected. The Agent shall
      have no responsibility for the value of Common Stock acquired. The Agent
      may commingle Participants&#146; funds to be used for open-market purchases of
      the Fund&#146;s shares and the price per share allocable to each Participant in
      connection with such purchases shall be the average price (including
      brokerage commissions and other related costs) of all Fund shares
      purchased by Agent. The rules and regulations of the SEC may require the
      Agent to limit the Agent&#146;s market purchases or temporarily cease making
      market purchases for Participants.</FONT></TD></TR>
  <TR>
    <TD vAlign=top colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>5.</FONT></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>The market
      price of Common Stock on a particular date shall be the last sales price
      on the securities exchange where the Common Stock are listed on that date
      (currently the NASDAQ Capital Market)(the &#147;Exchange&#148;), or, if there is no
      sale on the Exchange on that date, then the average between the closing
      bid and asked quotations on the Exchange on such date will be used. The
      NAV per share of Common Stock on, a particular date shall be the amount
      calculated on that date (or if not calculated on such date, the amount
      most recently calculated) by or on behalf of the Fund.</FONT></TD></TR>
  <TR>
    <TD vAlign=top colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>6.</FONT></TD>
    <TD vAlign=top width="100%"><FONT face="Times New Roman" size=2>Whenever
      the Agent receives or purchases shares or fractional interests for a
      Participant&#146;s account, the Agent will send such Participant a notification
      of the transaction as soon as practicable. The Agent will hold such shares
      and fractional interests as such Participant&#146;s agent and may hold them in
      the Agent&#146;s name or the name of the Agent&#146;s nominee. The Agent will not
      send a Participant stock certificates for shares unless a Participants so
      requests in</FONT></TD></TR></TABLE><BR>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<!--PART G-->
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap></TD>
    <TD width="100%">
      <P align=justify><FONT face="Times New Roman" size=2>writing or unless a
      Participant&#146;s account is terminated as stated below. The Agent will vote
      any shares so held for a Participant in accordance with any proxy returned
      to the Fund by such Participant in respect of the shares of which such
      Participant is the record holder.</FONT></P></TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD width="100%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>7.</FONT></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>There is presently no
      service charge for the Agent serving as Participants&#146; agent and
      maintaining Participants&#146; accounts. The Agent may, however, charge
      Participants for extra services performed at their request. The Plan may
      be amended in the future to impose a service charge. In acting as
      Participants&#146; agent under the Plan, the Agent shall be liable only for
      acts, omissions, losses, damages or expenses caused by the Agent&#146;s willful
      misconduct or gross negligence. In addition, the Agent shall not be liable
      for any taxes, assessments or governmental charges which may be levied or
      assessed on any basis whatsoever in connection with the administration of
      the Plan.</FONT></TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT size=2 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      </FONT></TD>
    <TD width="100%">&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>8.</FONT></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>The Agent may hold
      each Participant&#146;s Common Stock acquired pursuant to the Plan together
      with the Common Stock of other stockholders of the Fund acquired pursuant
      to the Plan in non-certificated form in the Agent&#146;s name or that of the
      Agent&#146;s nominee. Each Participant will be sent a confirmation by the Agent
      of each acquisition made for his or her account as soon as practicable,
      but in no event later than 60 days, after the date thereof. Upon a
      Participant&#146;s request, the Agent will deliver to the Participant, without
      charge, a certificate or certificates for the full Common Stock. Although
      each Participant may from time to time have an undivided fractional
      interest in a Common Share of the Fund, no certificates for a fractional
      share will be issued. Similarly, Participants may request to sell a
      portion of the Common Stock held by the Agent in their Plan accounts by
      calling the Agent, writing to the Agent, or completing and returning the
      transaction form attached to each Plan statement. The Agent will sell such
      Common Stock through a broker-dealer selected by the Agent within 5
      business days of receipt of the request. The sale price will equal the
      weighted average price of all Common Stock sold through the Plan on the
      day of the sale, less brokerage commissions. Participants should note that
      the Agent is unable to accept instructions to sell on a specific date or
      at a specific price. Any share dividends or split shares distributed by
      the Fund on Common Stock held by the Agent for Participants will be
      credited to their accounts. In the event that the Fund makes available to
      its stockholders rights to purchase additional Common Stock, the Common
      Stock held for each Participant under the Plan will be added to other
      Common Stock held by the Participant in calculating the number of rights
      to be issued to each Participant.</FONT></TD></TR>
  <TR>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>If a Participant
      holds more than one Common Stock Certificate registered in similar but not
      identical names or if more than one address is shown for a Participant on
      the Fund&#146;s records, all of such Participant&#146;s shares of Common Stock must
      be put into the same name and address if all of them are to be covered by
      one account. Additional shares subsequently acquired by a Participant
      otherwise than through the Plan will be covered by the Plan.</FONT></TD></TR>
  <TR>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>9.</FONT></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>The reinvestment of
      Distributions does not relieve Participants of any federal, state or local
      taxes which may be payable (or required to be withheld on Distributions.)
      Participants will receive tax information annually for their personal
      records and to help them prepare their federal income tax return. For
      further information as to tax consequences of participation in the Plan,
      Participants should consult with their own tax advisors.</FONT></TD></TR>
  <TR>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>10.</FONT></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>Each registered
      Participant may terminate his or her account under the Plan by notifying
      the Agent in writing at State Street Bank and Trust, 200 Clarendon Street
      16th Floor, Boston, MA 02116, or by calling the Agent at (617) 662-2760.
      Such termination will be effective with respect to a particular
      Distribution if the Participant&#146;s notice is received by the Agent prior to
      such Distribution Record Date. The Plan may be terminated by the Agent or
      the Fund upon notice in writing mailed to each Participant at least 60
      days prior to the effective date of the termination. Upon any termination,
      the Agent will cause a certificate or certificates to be issued for the
      full shares held for each Participant under the Plan and cash adjustment
      for any fraction of a Common Share at the then current market value of the
      Common Shares to be delivered to him. If preferred, a Participant may
      request the sale of all of the Common Shares held by the Agent in his or
      her Plan account in order to terminate participation in the Plan. If any
      Participant elects in advance of such termination to have Agent sell part
      or all of his shares, Agent is authorized to deduct from the proceeds the
      brokerage commissions incurred for the transaction. If a Participant has
      terminated his or her participation in the Plan but continues to have
      Common Shares registered in his or her name, he or she may re-enroll in
      the Plan at any time by notifying the Agent in writing at the address
      above.</FONT></TD></TR>
  <TR>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>11.</FONT></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>These terms and
      conditions may be amended by the Agent or the Fund at any time but, except
      when necessary or appropriate to comply with applicable law or the rules
      or policies of the SEC or any other regulatory authority, only by mailing
      to each Participant appropriate written notice at least 30 days prior to
      the effective date thereof. The amendment shall be deemed to be accepted
      by each Participant unless, prior to the effective date thereof, the Agent
      receives notice of the termination of the Participant&#146;s account under the
      Plan. Any such amendment may include an appointment by the Agent of a
      successor Agent, subject to the prior written approval of the successor
      Agent by the Fund.</FONT></TD></TR>
  <TR>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>12.</FONT></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>These terms and
      conditions shall be governed by the laws of the State of
    Maryland.</FONT></TD></TR>
  <TR>
    <TD colSpan=2>&nbsp;</TD></TR></TABLE>
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    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="99%"><FONT face="Times New Roman" size=2>-40-</FONT></TD></TR></TABLE><BR>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=center><B><FONT face="Times New Roman" size=2>TAXATION</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The following summary
reflects the existing provisions of the U.S. Internal Revenue Code of 1986, as
amended (the &#147;Code&#148;) and other relevant federal income tax authorities as of the
date of this prospectus and is subject to any subsequent changes therein. The
federal income tax consequences described below are merely statements of general
tax principles. The following discussion summarizes certain U.S. federal income
tax considerations affecting the Fund and its U.S. Stockholders. This discussion
is for general information only and does not purport to consider all aspects of
U.S. federal income taxation that might be relevant to owners of Common Stock or
Rights. Therefore, the summary discussion that follows may not be considered to
be individual tax advice and may not be relied upon by any owner of Common Stock
or rights. The summary is based upon current provisions of the Code, applicable
U.S. Treasury Regulations promulgated thereunder (the &#147;Regulations&#148;), and
administrative and judicial interpretations thereof, all of which are subject to
change, which change could be retroactive, and may affect the conclusions
expressed herein. The summary applies only to U.S. Stockholders in whose hands
Rights and Common Stock are capital assets within the meaning of Section 1221 of
the Code, and may not apply to certain types of owners of Common Stock or Rights
in the Fund, including, but not limited to insurance companies, tax-exempt
organizations, U.S. Stockholders holding the Fund&#146;s shares through
tax-advantaged accounts (such as an individual retirement account (an &#147;IRA&#148;), a
401(k) plan account, or other qualified retirement account), financial
institutions, pass-through entities, broker-dealers, entities that are not
organized under the laws of the United States or a political subdivision
thereof, persons who are neither a citizen nor resident of the United States,
U.S. Stockholders holding Rights or Common Stock as part of a hedge, straddle or
conversion transaction, and U.S. Stockholders who are subject to the alternative
minimum tax. Persons who may be subject to tax in more than one country should
consult the provisions of any applicable tax treaty to determine the potential
tax consequences to them.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund has not requested
and will not request an advance ruling from the Internal Revenue Service (the
&#147;IRS&#148;) as to the federal income tax matters described below. The IRS could adopt
positions contrary to those discussed below and such positions could be
sustained. In addition, the following discussion applicable to U.S. Stockholders
of the Fund addresses only some of the federal income tax considerations
generally affecting investments in the Fund. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>IN VIEW OF THE INDIVIDUAL
NATURE OF TAX CONSEQUENCES, EACH STOCKHOLDER IS ADVISED TO CONSULT THE
STOCKHOLDER&#146;S OWN TAX ADVISER WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF
BEING A STOCKHOLDER OF THE FUND, INCLUDING THE EFFECT AND APPLICABILITY OF
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF
CHANGES THEREIN.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Federal Taxation of the
Fund and its Distributions </FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund has elected and
intends to continue to qualify annually to be treated as a regulated investment
company under the Code. To qualify as a regulated investment company, the Fund
must, among other things: (a) derive at least 90% of its gross income for each
taxable year from (i) dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of stock, securities or
foreign currencies, or other income (including but not limited to gains from
options, futures and forward contracts) derived with respect to its business of
investing in such stock, securities or currencies, and (ii) net income from
certain qualified publicly traded partnerships (together with (i), the
&#147;Qualifying Income Requirement&#148;); (b) diversify its holdings so that, at the
close of each quarter of the taxable year: (i) at least 50% of the value of its
assets is comprised of cash, cash items (including receivables), U.S. government
securities, securities of other regulated investment companies and other
securities, with those other securities limited, in respect of any one issuer,
to an amount that does not exceed 5% of the value of its total assets and that
does not represent more than 10% of the outstanding voting securities of such
issuer; and (ii) not more than 25% of the value of its assets is invested in the
securities (other than U.S. government securities or securities of other
regulated investment companies) of any one issuer or the securities (other than
the securities of other regulated investment companies) of two or more issuers
controlled by it and engaged in the same, similar or related trades or
businesses, or one or more &#147;qualified publicly traded partnerships&#148; (together
with (i), the &#147;Diversification Requirement&#148;); and (c) distribute for each
taxable year the sum of (i) at least 90% of its investment company taxable
income (which includes dividends, taxable interest, taxable original issue
discount income, market discount income, income from securities lending, net
short-term capital gain in excess of net long-term capital loss, certain net
realized foreign currency exchange gains, and any other taxable income other
than &#147;net capital gain&#148; as defined below and is reduced by deductible expenses
all determined without regard to any deduction for dividends paid); and (ii) 90%
of its tax-exempt interest, if any, net of certain expenses allocable thereto
(&#147;net tax-exempt interest&#148;).</FONT></P>

<P align=justify><FONT face="Times New Roman" size=2>The Treasury Department is authorized to promulgate
regulations under which gains from foreign currencies (and options, futures, and
forward contracts on foreign currency) would constitute qualifying income for
purposes of the Qualifying Income Requirement only if such gains are directly
related to the principal business of the Fund in investing in stock or
securities or options and futures with respect to stock or securities. To date,
no such regulations have been issued.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>As a regulated investment
company, the Fund (but not its stockholders) generally will not be subject to
U.S. federal income tax on the portion of its income and capital gains that it
distributes to its stockholders in any taxable year for which it distributes, in
compliance with the Code&#146;s timing and other requirements at least 90% of its
investment company taxable income and at least </FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>90% of its net tax-exempt
interest. The Fund may retain for investment all or a portion of its net capital
gain (i.e., the excess of its net long-term capital gain over its net short-term
capital loss). If the Fund retains any investment company taxable income or net
capital gain, it will be subject to tax at regular corporate rates on the amount
retained. The Fund currently intends to distribute to its stockholders, at least
annually, substantially all of its investment company taxable income, as
computed for U.S. federal income tax purposes. If the Fund retains any net
capital gain, it may designate the retained amount as undistributed net capital
gain in a notice to its stockholders, who will be (i) required to include in
income for federal income tax purposes, as long-term capital gain, their shares
of such undistributed amount; and (ii) entitled to credit their proportionate
shares of tax paid by the Fund against their federal income tax liabilities, if
any, and to claim refunds to the extent the credit exceeds such liabilities. For
federal income tax purposes, the tax basis of the shares owned by a stockholder
of the Fund will be increased by the amount of undistributed net capital gain
included in the stockholder&#146;s gross income and decreased by the federal income
tax paid by the Fund on that amount of capital gain. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>In general, for purposes of
the Qualifying Income Requirement described above, income derived from a
partnership will be treated as qualifying income only to the extent such income
is attributable to items of income of the partnership which would be qualifying
income if realized directly by the regulated investment company. However, all of
the net income of a regulated investment company derived from an interest in a
qualified publicly traded partnership (defined as a partnership (x) the
interests in which are traded on an established securities market or are readily
tradable on a secondary market or the substantial equivalent thereof, and (y)
that derives less than 90% of its income from the qualifying income described in
clause (i) of the Qualifying Income Requirement described above) will be treated
as qualifying income. In general, such entities will be treated as partnerships
for federal income tax purposes if they meet the passive income requirement
under section 7704(c)(2) of the Code. In addition, although in general the
passive loss rules of the Code do not apply to regulated investment companies,
such rules do apply to a regulated investment company with respect to items
attributable to an interest in a qualified publicly traded partnership. For
purposes of the Diversification Requirement described above, the term
&#147;outstanding voting securities of such issuer&#148; will include the equity
securities of a qualified publicly traded partnership.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>If the Fund fails to
satisfy the Qualifying Income Requirement or the Diversification Requirement in
any taxable year, it may be eligible for relief provisions if the failures are
due to reasonable cause and not willful neglect and if a penalty tax is paid
with respect to each failure to satisfy the applicable requirements.
Additionally, relief is provided for certain de minimis failures to satisfy the
Diversification Requirements where the Fund corrects the failure within a
specified period of time. If the applicable relief provisions are not available
or cannot be met, the Fund will fail to qualify as a regulated investment
company and will be subject to tax in the same manner as an ordinary corporation
subject to tax on a graduated basis with a maximum tax rate of 35% and all
distributions from earnings and profits (as determined under U.S. federal income
tax principles) to its stockholders will be taxable as ordinary dividend income
eligible for the dividends-received deduction for corporate stockholders and
either (i) the 20% long-term capital gains tax rate for non-corporate
stockholders with taxable income in excess of $400,000 ($450,000 if married and
filing jointly) or (ii) the 15% non-corporate stockholder long-term capital
gains tax rate (0% for non-corporate stockholders in lower income tax brackets)
for non-corporate stockholders with taxable income less than the threshold
amounts. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>If the Fund fails to
distribute by December 31 of each calendar year an amount equal to the sum of
(1) at least 98% of its taxable ordinary income (excluding capital gains and
losses) for such year, (2) at least 98.2% of the excess of its capital gains
over its capital losses (as adjusted for certain ordinary losses) for the twelve
month period ending on October 31 of such year), and (3) all taxable ordinary
income and the excess of capital gains over capital losses for the prior year
that were not distributed during such year and on which it did not pay federal
income tax, the Fund will be subject to a nondeductible 4% excise tax (the
&#147;Excise Tax&#148;) on the undistributed amounts. A distribution will be treated as
paid on December 31 of the calendar year if it is declared by the Fund in
October, November, or December of that year to stockholders of record on a date
in such month and paid by it during January of the following year. Such
distributions will be taxable to stockholders (other than those not subject to
federal income tax) in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
The Fund intends to actually distribute or be deemed to have distributed
substantially all of its net income and gain, if any, by the end of each
calendar year in compliance with these requirements so that it will generally
not be required to pay the Excise Tax. The Fund may, in certain circumstances,
be required to liquidate its investments in order to make sufficient
distributions to avoid Excise Tax liability at a time when an investment adviser
might not otherwise have chosen to do so. Liquidation of investments in such
circumstances may affect the ability of the Fund to satisfy the requirements for
qualification as a regulated investment company. Moreover, if the Fund utilizes
leverage through borrowings, it may be restricted by loan covenants with respect
to the declaration and payment of dividends in certain circumstances. Limits on
the Fund&#146;s payment of dividends may prevent the Fund from distributing at least
90% of its net income and may therefore jeopardize the Fund&#146;s qualification for
taxation as a regulated investment company and/or may subject the Fund to the
nondeductible 4% federal excise tax. The Fund will endeavor to avoid
restrictions on its ability to make dividend payments. However, no assurances
can be given that the Fund will not be subject to the Excise Tax and, in fact,
in certain instances if warranted, the Fund may choose to pay the Excise Tax as
opposed to making an additional distribution.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>For losses arising from tax
years beginning before December 22, 2010, the Fund is permitted to carry forward
a net capital loss from any year to offset its capital gains, if any, realized
during the eight years following the year of the loss and such capital loss
carryforward is treated as a short-term capital loss in the year to which it is
carried. For capital losses realized with respect to tax years of the Fund
beginning after December 22, 2010, such Fund may carry capital losses forward
indefinitely. For capital losses realized in taxable years beginning after
December 22, 2010, the excess of the Fund&#146;s net short-term capital losses over
its net long-term capital gain is treated as short-term capital losses arising
on the first day of the Fund&#146;s next taxable year and the excess of the Fund&#146;s
net long-term capital losses over its net short-term capital gain is treated as
long-term capital losses arising on the first day of the Fund&#146;s net taxable
year. If future capital gains are offset by carried forward capital losses, such
future capital gains are not subject to Fund-level federal income taxation,
regardless of whether they are distributed to stockholders. The Fund cannot
carry back or carry forward any net operating losses.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>A distribution will be
treated as paid on December 31 of a calendar year if it is declared by the Fund
in October, November or December of that year to stockholders of record on a
date in such a month and paid by the Fund during January of the following
calendar year. Such distributions will be taxable to stockholders in the
calendar year in which the distributions are declared, rather than the calendar
year in which the distributions are received.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Gain or loss on the sales
of securities by the Fund will generally be long-term capital gain or loss if
the securities have been held by the Fund for more than one year. Gain or loss
on the sale of securities held for one year or less will be short-term capital
gain or loss.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund&#146;s investment in
so-called &#147;section 1256 contracts,&#148; such as regulated futures contracts, certain
foreign currency contracts, options on most stock indices and any listed
non-equity options, are subject to special tax rules. Any such section 1256
contracts held by the Fund at the end of its taxable year are required to be
marked to their market value, and any unrealized gain or loss on those positions
will be included in the Fund&#146;s income as if each position had been sold for its
fair market value at the end of the taxable year. The resulting gain or loss
will be combined with any gain or loss realized by the Fund from positions in
section 1256 contracts closed during the taxable year. Provided such positions
are held as capital assets and are not part of a &#147;hedging transaction&#148; nor part
of a &#147;straddle,&#148; 60% of the resulting net gain or loss will be treated as
long-term capital gain or loss, and 40% of such net gain or loss will be treated
as short-term capital gain or loss, regardless of the period of time the
positions were actually held by the Fund.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Certain of the Fund&#146;s
investment practices are subject to special and complex U.S. federal income tax
provisions that may, among other things, (i) disallow, suspend or otherwise
limit the allowance of certain losses or deductions, including the dividends
received deduction, (ii) convert lower taxed long-term capital gains and
qualified dividend income into higher taxed short-term capital gains or ordinary
income, (iii) convert ordinary loss or a deduction into capital loss (the
deductibility of which is more limited), (iv) cause the Fund to recognize income
or gain without a corresponding receipt of cash making it difficult to satisfy
the investment income distribution requirements, (v) adversely affect the time
as to when a purchase or sale of stock or securities is deemed to occur, (vi)
adversely alter the characterization of certain complex financial transactions
and (vii) produce income that will not qualify as good income for purposes of
the Qualifying Income Requirement described above. The Fund monitors its
transactions and may make certain tax elections and may be required to borrow
money or dispose of securities to mitigate the effect of these rules and prevent
disqualification of the Fund as a regulated investment company.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Income received by the Fund
from sources within foreign countries may be subject to foreign withholding and
other taxes. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. If more than 50% of the Fund&#146;s total assets at
the close of any taxable year consist of stock or securities of foreign
corporations and it meets the distribution requirements described above, the
Fund may file an election (the &#147;pass-through election&#148;) with the IRS pursuant to
which stockholders of it would be required to (i) include in gross income (in
addition to taxable dividends actually received) their pro rata shares of
foreign income taxes paid by it even though not actually received by such
stockholders; and (ii) treat such respective pro rata portions as foreign income
taxes paid by them. The Fund will furnish its stockholders with a written
statement providing the amount of foreign taxes paid by it that will
&#147;pass-through&#148; for the year, if any. Generally, a credit for foreign taxes is
subject to the limitation that it may not exceed the stockholder&#146;s U.S. tax
attributable to his or her total foreign source taxable income. For this
purpose, if the pass-through election is made, the source of the Fund&#146;s income
will flow through to stockholders. The limitation on the foreign tax credit is
applied separately to foreign source passive income, and to certain other types
of income. Stockholders may be unable to claim a credit for the full amount of
their proportionate share of the foreign taxes paid by the Fund. Various
limitations, including a minimum holding period requirement, apply to limit the
credit and deduction for foreign taxes for purposes of regular federal tax and
alternative minimum tax.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may invest in a
non-U.S. corporation, which could be treated as a passive foreign investment
company (a &#147;PFIC&#148;) or become a PFIC under the Code. A PFIC is generally defined
as a foreign corporation that meets either of the following tests: (1) at least
75% of its gross income for its taxable year is income from passive sources
(such as interest, dividends, certain rents and royalties, or capital gains); or
(2) an average of at least 50% of its assets produce, or are held for the
production of, such passive income. If the Fund acquires any equity interest in
a PFIC, the Fund could be subject to federal income tax and </FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>interest charges on &#147;excess
distributions&#148; received with respect to such PFIC stock or on any gain from the
sale of such PFIC stock (collectively &#147;PFIC income&#148;), plus interest thereon even
if the Fund distributes the PFIC income as a taxable dividend to its
stockholders. The balance of the PFIC income will be included in the Fund&#146;s
investment company taxable income and, accordingly, will not be taxable to it to
the extent it distributes that income to its stockholders. The Fund&#146;s
distributions of PFIC income, if any, will be taxable as ordinary income even
though, absent the application of the PFIC rules, some portion of the
distributions may have been classified as capital gain.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund will not be
permitted to pass through to its stockholders any credit or deduction for taxes
and interest charges incurred with respect to a PFIC. Payment of this tax would
therefore reduce the Fund&#146;s economic return from its investment in PFIC shares.
To the extent the Fund invests in a PFIC, it may elect to treat the PFIC as a
&#147;qualified electing fund&#148; (&#147;QEF&#148;), then instead of the tax and interest
obligation described above on excess distributions, the Fund would be required
to include in income each taxable year its pro rata share of the QEF&#146;s annual
ordinary earnings and net capital gain. As a result of a QEF election, the Fund
would likely have to distribute to its stockholders an amount equal to the QEF&#146;s
annual ordinary earnings and net capital gain to satisfy the Code&#146;s minimum
distribution requirement described herein and avoid imposition of the Excise Tax
even if the QEF did not distribute those earnings and gain to the Fund. In most
instances it will be very difficult, if not impossible, to make this election
because of certain requirements in making the election. The Fund may elect to
&#147;mark-to-market&#148; its stock in any PFIC. &#147;Marking-to-market,&#148; in this context,
means including in ordinary income each taxable year the excess, if any, of the
fair market value of the PFIC stock over the Fund&#146;s adjusted basis therein as of
the end of that year. Pursuant to the election, the Fund also may deduct (as an
ordinary, not capital, loss) the excess, if any, of its adjusted basis in the
PFIC stock over the fair market value thereof as of the taxable year-end, but
only to the extent of any net mark-to-market gains with respect to that stock it
included in income for prior taxable years under the election. The Fund&#146;s
adjusted basis in its PFIC stock subject to the election would be adjusted to
reflect the amounts of income included and deductions taken thereunder. In
either case, the Fund may be required to recognize taxable income or gain
without the concurrent receipt of cash.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Gains or losses
attributable to fluctuations in exchange rates between the time the Fund accrues
income or receivables or expenses or other liabilities denominated in a foreign
currency and the time the Fund actually collects such income or receivables or
pays such liabilities are generally treated as ordinary income or loss.
Similarly, gains or losses on foreign currency forward contracts and the
disposition of debt securities denominated in a foreign currency, to the extent
attributable to fluctuations in exchange rates between the acquisition and
disposition dates, are also treated as ordinary income or loss.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Distributions paid out of
the Fund&#146;s current and accumulated earnings and profits (as determined at the
end of the year), whether reinvested in additional shares or paid in cash, are
generally taxable and must be reported by each stockholder who is required to
file a federal income tax return. Distributions in excess of the Fund&#146;s current
and accumulated earnings and profits, as computed for federal income tax
purposes, will first be treated as a return of capital up to the amount of a
stockholder&#146;s tax basis in his or her Fund shares and then as capital
gain.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>For federal income tax
purposes, distributions of investment company taxable income are generally
taxable as ordinary income, and distributions of gains from the sale of
investments that the Fund owned for one year or less will be taxable as ordinary
income. Distributions designated by the Fund as &#147;capital gain dividends&#148;
(distributions from the excess of net long-term capital gain over short-term
capital losses) will be taxable to stockholders as long-term capital gain
regardless of the length of time they have held their shares of the Fund. Such
dividends do not qualify as dividends for purposes of the dividends received
deduction described below. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Non-corporate stockholders
of the Fund may be eligible for the long-term capital gain tax rate applicable
to distributions of &#147;qualified dividend income&#148; received by such non-corporate
stockholders. The long-term capital gains tax rate is 20% for non-corporate
stockholders with taxable income in excess of $400,000 ($450,000 if married and
filing jointly) and 15% (0% for non-corporate stockholders in lower income tax
brackets) for non-corporate stockholders with taxable income of less than the
threshold amounts. The Fund&#146;s distribution will be treated as qualified dividend
income and therefore eligible for the long-term capital gains tax rate to the
extent that it receives dividend income from taxable domestic corporations and
certain qualified foreign corporations, provided that certain holding periods
and other requirements are met. Generally, distributions from the Fund to
corporate stockholders will not be eligible for the dividends received deduction
because the Fund&#146;s income will not consist of dividends received from domestic
corporations.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Under current law, a 3.8%
Medicare contribution tax on net investment income including interest
(excluding, tax-exempt interest), dividends, and capital gains of U.S.
individuals with income exceeding $200,000 ($250,000 if married and filing
jointly) and of estates and trusts.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund will furnish a
statement to stockholders providing the federal income tax status of its
dividends and distributions including the portion of such dividends, if any,
that qualifies as long-term capital gain.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>Different tax treatment,
including penalties on certain excess contributions and deferrals, certain
pre-retirement and post-retirement distributions, and certain prohibited
transactions, is accorded to accounts maintained as qualified retirement plans.
Stockholders are urged and advised to consult their own tax advisers for more
information.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may retain for
investment its net capital gain. However, if the Fund retains any net capital
gain or any investment company taxable income, it will be subject to a tax of
35% of such amount. If the Fund retains any net capital gain, it expects to
designate the retained amount as undistributed capital gains in a notice to its
stockholders, each of whom, if subject to U.S. federal income tax on long-term
capital gains, (i) will be required to include in income for U.S. federal income
tax purposes its share of such undistributed long-term capital gain, (ii) will
be entitled to credit its proportionate share of the tax paid by the Fund
against their U.S. federal income tax liability, if any, and to claim refunds to
the extent that the credit exceeds such liability and (iii) will increase its
tax basis in its common shares for the Fund by an amount equal to 65% of the
amount of undistributed capital gain included in such stockholder&#146;s gross
income.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund&#146;s income will be
increased or decreased by the amount of foreign currency gains or losses
realized by the Fund in connection with the disposition of foreign
currency-denominated debt securities as well as changes in foreign exchange
rates between the time the Fund accrues a receivable (typically, dividends,
interest and payments for securities sold) or payable (typically, expenses and
payments for securities purchased) and the time such receivable or payable is
satisfied. The Fund cannot predict the impact of such transactions on its
investment company taxable income distributable to stockholders.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Upon the disposition of
shares of the Fund (whether by redemption, sale or exchange), a stockholder may
realize a capital gain or loss. Such capital gain or loss will be long-term or
short-term depending upon the stockholder&#146;s holding period for the shares. The
capital gain will be long-term if the shares were held for more than 12 months
and short-term if held for 12 months or less. If a stockholder sells or
exchanges shares of the Fund within 90 days of having acquired such shares and
if, before January 31 of the calendar year following the calendar year of the
sale or exchange, as a result of having initially acquired those shares, the
stockholder subsequently pays a reduced sales charge on a new purchase of shares
of the Fund, the sales charge previously incurred in acquiring the Fund&#146;s shares
generally shall not be taken into account (to the extent the previous sales
charges do not exceed the reduction in sales charges on the new purchase) for
the purpose of determining the amount of gain or loss on the disposition, but
generally will be treated as having been incurred in the new purchase. Any loss
realized on a disposition will be disallowed under the &#147;wash sale&#148; rules to the
extent that the shares disposed of by the stockholder are replaced by the
stockholder within a period of 61 days beginning 30 days before and ending 30
days after the date of disposition. In such a case, the basis of the shares
acquired will be adjusted to reflect the disallowed loss. Any loss realized by a
stockholder on a disposition of shares held by the stockholder for six months or
less will be treated as a long-term capital loss to the extent of any
distributions of capital gain dividends received by the stockholder and
disallowed to the extent of any distributions of tax-exempt interest dividends
received by the stockholder with respect to such shares. Capital losses are
generally deductible only against capital gains except that individuals may
deduct up to $3,000 of capital losses against ordinary income.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The 3.8% Medicare
contribution tax (described above) will apply to gains from the sale or exchange
of shares of the Fund. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund generally is
required to withhold, and remit to the U.S. Treasury, subject to certain
exemptions, an amount equal to 28% of all distributions and redemption proceeds
paid or credited to a stockholder of the Fund if (i) the stockholder fails to
furnish the Fund with the correct taxpayer identification number (&#147;TIN&#148;)
certified under penalties of perjury, (ii) the stockholder fails to provide a
certified statement that the stockholder is not subject to backup withholding,
or (iii) the IRS or a broker has notified the Fund that the number furnished by
the stockholder is incorrect or that the stockholder is subject to backup
withholding as a result of failure to report interest or dividend income. If the
backup withholding provisions are applicable, any such distributions or
proceeds, whether taken in cash or reinvested in shares, will be reduced by the
amounts required to be withheld. Backup withholding is not an additional tax.
Any amounts withheld may be credited against a stockholder&#146;s U.S. federal income
tax liability. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>A tax-exempt stockholder
could realize unrelated business taxable income (&#147;UBTI&#148;) by virtue of its
investment in the Fund as a result of the Fund&#146;s investments and if shares in
the Fund constitute debt financed property in the hands of the tax-exempt
stockholder within the meaning of Code Section 514(b). In addition, special tax
consequences apply to charitable remainder trusts (CRTs) that invest in
regulated investment companies that invest directly or indirectly in certain
real estate mortgage investments. Tax-exempt stockholders are urged and advised
to consult their own tax advisers as to the tax consequences of an investment in
the Fund. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>State and local laws often
differ from federal income tax laws with respect to the treatment of specific
items of income, gain, loss, deduction and credit. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Distributions made to
non-U.S. stockholders attributable to net investment income generally are
subject to U.S. federal income tax withholding at a 30% rate (or such lower rate
provided under an applicable income tax treaty). Notwithstanding the foregoing,
if a distribution described above is effectively connected with the conduct of a
trade or business carried on by a non-U.S. stockholder within the United States
(or, if an income tax treaty applies, is attributable to a permanent
establishment </FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>in the United States),
federal income tax withholding and exemptions attributable to foreign persons
will not apply. Instead, the distribution will be subject to withholding at the
highest applicable U.S. tax rate (currently 39.6% in the case of individuals and
35% in the case of corporations) and the non-U.S. stockholder will be subject to
federal income tax reporting requirements generally applicable to U.S. persons
described above.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Under U.S. federal tax law,
a non-U.S. stockholder is not, in general, subject to federal income tax or
withholding tax on capital gains (and is not allowed a deduction for losses)
realized on the sale of shares of the Fund and on long-term capital gains
dividends, provided that the Fund obtains a properly completed and signed
certificate of foreign status, unless (i) such gains or distributions are
effectively connected with the conduct of a trade or business carried on by the
non-U.S. stockholder within the United States (or, if an income tax treaty
applies, are attributable to a permanent establishment in the United States of
the non-U.S. stockholder); (ii) in the case of an individual non-U.S.
stockholder, the stockholder is present in the United States for a period or
periods aggregating 183 days or more during the year of the sale and certain
other conditions are met; or (iii) the shares of the Fund constitute U.S. real
property interests (USRPIs), as described below.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Subject to the additional
rules described herein, federal income tax withholding will apply to
distributions attributable to dividends and other investment income distributed
by the Fund. The federal income tax withholding rate may be reduced (and, in
some cases, eliminated) under an applicable tax treaty between the United States
and the non-U.S. stockholder&#146;s country of residence or incorporation. In order
to qualify for treaty benefits, a non-U.S. stockholder must comply with
applicable certification requirements relating to its foreign status (generally
by providing a Fund with a properly completed Form W-8BEN). </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Recently enacted rules
require the reporting to the IRS of direct and indirect ownership of foreign
financial accounts and foreign entities by U.S. persons. The IRS has issued
final guidance with respect to these new rules. Pursuant to these rules, known
as FATCA, a 30% withholding tax generally will be imposed on ordinary dividends
paid after June 30th 2014, capital gain dividends paid after December 31, 2016
and redemption proceeds paid after December 31, 2016 to (i) foreign financial
institutions (including non-U.S. investment funds) unless they certify on Form
W-8BEN-E that they have either (a) entered into an agreement with the IRS to
disclose information concerning its direct and certain indirect U.S. account
holders or (b) are resident in a jurisdiction that has entered into an
intergovernmental agreement with the United Sates and comply with the
requirements of such agreement and (ii) certain other foreign entities unless
they certify on Form W-8BEN-E certain information regarding their direct and
indirect substantial U.S. owners. Stockholders are urged and advised to consult
their own tax adviser regarding the application of this new reporting and
withholding regime to their own tax situation.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>All non-U.S.
stockholders are urged and advised to consult their own tax advisers as to the tax
consequences of an investment in the Fund.</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>A stockholder that owns
directly or indirectly more than 50% by vote or value of the Fund, is urged and
advised to consult its own tax adviser regarding its filing obligations with
respect to IRS Form FinCEN114, Report of Foreign Bank and Financial
Accounts.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Also, under recently
enacted rules, subject to exceptions, individuals (and, to the extent provided
in forthcoming future U.S. Treasury regulations, certain domestic entities) must
report annually their interests in &#147;specified foreign financial assets&#148; on their
U.S. federal income tax returns. It is currently unclear whether and under what
circumstances stockholders would be required to report their indirect interests
in the Fund&#146;s &#147;specified foreign financial assets&#148; (if any) under these new
rules. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Stockholders may be subject
to substantial penalties for failure to comply with these reporting
requirements. Stockholders are urged and advised to consult their own tax
advisers to determine whether these reporting requirements are applicable to
them. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Under Treasury regulations,
if a stockholder recognizes a loss of $2 million or more for an individual
stockholder or $10 million or more for a corporate stockholder, the stockholder
must file with the IRS a disclosure statement on Form 8886. The fact that a loss
is reportable under these regulations does not affect the legal determination of
whether the taxpayer&#146;s treatment of the loss is proper. Stockholders are urged
and advised to consult their own tax advisers to determine the applicability of
these regulations in light of their individual circumstances.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Stockholders are urged and
advised to consult their own tax adviser with respect to the tax consequences of
an investment in the Fund including, but not limited to, the applicability of
state, local, foreign and other tax laws affecting the particular stockholder
and to possible effects of changes in federal or other tax laws.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>See &#147;The Offering - Federal
Income Tax Consequences Associated With the Offer&#148; for a discussion regarding
certain United States Federal income tax consequences of the Offer generally
applicable U.S. Stockholders.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund will inform
stockholders of the source and tax status of all distributions promptly after
the close of each calendar year.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>The Fund may be required to
withhold for U.S. federal income taxes 28% of all taxable distributions payable
to stockholders who fail to provide the Fund with their certified U.S. taxpayer
identification number (or certificate regarding foreign status) or to
stockholders otherwise subject to U.S. backup withholding. Similarly, proceeds
from the sale or other disposition of shares of the Fund in the United States
may be subject to backup withholding if the stockholder fails to provide a
certified U.S. taxpayer identification number (or certificate regarding foreign
status) and make other certifications in connection with the transaction, or if
the stockholder is otherwise subject to U.S. backup withholding. Corporate
stockholders and other stockholders specified in the Code are exempt from such
backup withholding. Backup withholding is not an additional tax. Any amounts
withheld may be refunded or credited against the stockholder&#146;s U.S. federal
income tax liability, provided that the required information is furnished to the
Internal Revenue Service.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Distributions from the Fund
and sales or other dispositions of shares of the Fund may be subject to
additional state, local and foreign taxes depending on each stockholder&#146;s
particular situation. Stockholders are advised to consult their own tax advisers
with respect to the particular tax consequences to them of an investment in the
Fund.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>An investor should also be
aware that the benefits of any reduced tax rate applicable to long-term capital
gains and qualified dividend income may be impacted by the application of the
alternative minimum tax to individual stockholders.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Stockholders are urged
and advised to consult their own tax advisers as to the state and local tax
rules affecting investments in the Fund. </FONT></B></P>
<P align=center><B><FONT face="Times New Roman" size=2>DETERMINATION OF NET
ASSET VALUE</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Fund&#146;s NAV per share
will be calculated by the Adviser (i) no less frequently than monthly, (ii) on
the last business day of each month and (iii) at any other times determined by
the Board. NAV per share is calculated by dividing the value of the Fund&#146;s net
assets (the value of its assets less its liabilities) by the total number of
shares of Common Stock outstanding.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>An unaudited NAV per share
is posted daily on the Fund&#146;s website at http://www.herzfeld.com/cuba.
</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>In calculating the NAV per
share at any time:</FONT></P>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(i)</FONT></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>the value of any cash
      on hand or on deposit, bills and demand notes and accounts receivable,
      prepaid expenses, cash dividends and interest declared or accrued and not
      yet received, will be its face amount, unless the Adviser has determined
      that its value is less, in which case its value will be deemed to be such
      amount as the Adviser determines to be reasonable;</FONT></TD></TR>
  <TR>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"></TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(ii)</FONT></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>investments in
      securities traded on a national securities exchange (or reported on the
      NASDAQ National Market or Capital Market) are stated at the last reported
      sales price on the day of valuation (or at the NASDAQ official closing
      price); other securities traded in the over-the-counter market and listed
      securities for which no sale was reported on that date are stated at the
      last quoted bid price;</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(iii)</FONT></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>the value of any
      security traded in the unregulated market will be determined, by taking
      the last quoted bid price;</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(iv)</FONT></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>investments (if any)
      in securities of the U.S. government, its agencies and instrumentalities
      having a maturity of 60 days or less are valued at amortized
    cost;</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(v)</FONT></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>the value of a
      forward contract is calculated by reference to the price quoted at the
      date of valuation of the contract by the customary banking sources of the
      Fund;</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(vi)</FONT></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>the value of
      commodity futures or option contracts entered into by the Fund are the
      margin deposit plus or minus the difference between the value of the
      contract on the date NAV is calculated and the value on the date the
      contract originated, value being that established on a recognized
      commodity or options exchange, or by reference to other customary sources,
      with a gain or loss being recognized;</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(vii)</FONT></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>the value of any
      security or property for which no price quotation is available as provided
      above is the fair value determined in such manner as the Board, acting in
      good faith, deems appropriate, although the actual calculation may be done
      by others; and</FONT></TD></TR>
  <TR>
    <TD></TD>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(viii)</FONT></TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>the liabilities of
      the Fund are deemed to include, without limitation, all bills and accounts
      payable, all other contractual obligations for the payment of money,
      including the amount of distributions declared and unpaid, all accrued and
      unpaid management fees, advisory fees and other expenses, all reserves for
      taxes or contingencies and all other liabilities of the Fund determined in
      accordance with generally accepted accounting
  principles.</FONT></TD></TR></TABLE>
<P align=justify><FONT face="Times New Roman" size=2>The Fund has procedures to
determine the fair value of securities and other financial instruments for which
market prices are not readily available. Under these procedures, the Advisor
convenes on a regular and ad hoc basis to review such securities and considers a
number of factors, including valuation methodologies and significant
unobservable valuation inputs, when arriving </FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<!--PART H-->
<P align=justify><FONT face="Times New Roman" size=2>at a fair value. The
Advisor may employ a market-based approach which may use related or comparable
assets or liabilities, recent transactions, market multiples, book values and
other relevant information for the investment to determine the fair value of the
investment. An income-based valuation approach may also be used in which the
anticipated future cash flows of the investment are discounted to calculate fair
value. Discounts may be applied due to the nature or duration of any
restrictions on the disposition of investments. Due to the inherent uncertainty
of valuations of such investments, the fair values may differ significantly from
the values that would have been used had an active market existed. The Advisors
employs various methods for calibrating these valuation approaches including a
regular view of valuation methodologies, key inputs and assumptions,
transactional back-testing or disposition analysis and reviews of any related
market activity. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Any assets or liabilities
initially expressed in terms of foreign currencies are translated into dollars
at a quoted exchange rate or at such other appropriate rate as may be determined
by the Adviser.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>CUSTODIAN, TRANSFER
AGENT, DIVIDEND DISBURSING AGENT, AND REGISTRAR</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>State Street Bank and Trust
Company acts as custodian for the Fund&#146;s assets. The principal address of the
custodian is 200 Clarendon Street, 5<SUP>th</SUP> Floor Boston, MA 02116. The
custodian employs sub-custodians in each of the jurisdictions in which the Fund
invests. The custodian&#146;s services include, in addition to the custody of all
cash and securities owned by the Fund, the maintenance of a custody account in
the custodian&#146;s Fund department, the segregation of all certificated securities
owned by the Fund, the appointment of authorized agents as sub-custodians,
disbursement of funds from the custody account of the Fund, releasing and
delivering securities from the custody account of the Fund, maintain records
with respect to such custody account, delivering to the Fund a daily and monthly
statement with respect to such custody account, and causing proxies to be
executed. The custodian&#146;s fee is paid by the Fund.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>State Street Bank and Trust
Company also serves as the Fund&#146;s transfer agent, dividend/distribution
disbursing agent, dividend reinvestment plan agent and as registrar for the
Fund&#146;s common stock.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>LEGAL
MATTERS</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Pepper Hamilton LLP, 3000
Two Logan Square, 18<SUP>th</SUP> and Arch Streets, Philadelphia, PA 19103
serves as counsel to the Fund.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The independent registered
accounting firm of the Fund is KPMG, LLP located at 55 Second Street, Suite
1400, San Francisco, CA 94105. </FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>FINANCIAL
STATEMENTS</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The audited financial
statements and notes thereto in the Annual Report to Stockholders for the fiscal
year ended June 30, 2014 (the &#147;Annual Report&#148;) are incorporated by reference
into this prospectus. No other parts of the Annual Report are incorporated by
reference herein and are not part of the registration statement or the
prospectus. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>On June 30, 2014, KPMG
acquired certain assets of ROTHSTEIN-KASS, P.A. (d/b/a Rothstein Kass &amp;
Company, P.C.) and certain of its affiliates (&#147;Rothstein Kass&#148;), the independent
registered public accounting firm for the Fund. As a result of this transaction,
effective June 30, 2014, Rothstein Kass resigned as the independent registered
public accounting firm for the Fund. The Fund, by action of its Audit Committee,
which was confirmed and approved by its Board of Directors, approved the
engagement of KPMG as the independent registered public accounting firm for the
Fund for the Fund&#146;s fiscal year ended June 30, 2014.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The audit reports of KPMG,
LLP and Rothstein Kass on the Fund&#146;s financial statements for the two most
recent fiscal years did not contain an adverse opinion or a disclaimer of
opinion, and were not qualified or modified as to uncertainty, audit scope or
accounting principles.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>During the two most recent
fiscal years, and through the subsequent interim period preceding Rothstein
Kass&#146;s resignation: i) there were no disagreements between the Fund and
Rothstein Kass on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures, which disagreements, if
not resolved to the satisfaction of Rothstein Kass would have caused them to
make reference thereto in their reports on the Fund&#146;s financial statements for
such years; and, ii) there were no &#147;reportable events&#148; within the meaning set
forth in Item 304(a)(1)(v) of Regulation S-K.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The selection of KPMG does
not reflect any disagreements with or dissatisfaction by the Fund or the Board
of Directors with the performance of the Fund&#146;s prior independent registered
public accounting firm, Rothstein Kass. During the Fund&#146;s two most recent fiscal
years, neither the Fund, nor anyone on their behalf, consulted with KPMG on
items which: (i) concerned the </FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2>application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Fund&#146;s financial statements; or
(ii) concerned the subject of a disagreement (as defined in paragraph (a)(1)(iv)
of Item 304 of Regulation S-K) or reportable events (as described in paragraph
(a)(1)(v) of said Item 304).</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Annual Report may be
obtained without charge, and is available at http://www.herzfeld.com/cuba or
upon request by calling the Secretary of the Fund, Reanna Lee at 800-854-3863 or
305-271-1900.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=center><B><FONT face="Times New Roman" size=2>APPENDIX A</FONT></B></P>
<P align=center><B><FONT face="Times New Roman" size=2>THE HERZFELD CARIBBEAN
BASIN FUND, INC.</FONT></B></P>
<P align=center><B><FONT face="Times New Roman" size=2>Proxy Voting Policy and
Procedures</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>The Board of Directors of The Herzfeld
Caribbean Basin Fund, Inc. (the &#147;Fund&#148;) hereby adopts the following policy and
procedures with respect to voting proxies relating to portfolio securities held
by the Fund:</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Policy</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>It is the policy of the Board of
Directors of the Fund (the &#147;Board&#148;) to delegate the responsibility for voting
proxies relating to portfolio securities held by the Fund to the Fund&#146;s
investment adviser (the &#147;Adviser&#148;) as a part of the Adviser&#146;s general management
of the Fund, subject to the Board&#146;s continuing oversight.<SUP>1</SUP> The voting
of proxies is an integral part of the investment management services that the
Adviser provides pursuant to the advisory contract.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>The Adviser may, but is not required to,
delegate the responsibility for voting proxies relating to portfolio securities
held by the Fund to a sub-adviser (&#147;Sub-Adviser&#148;) retained to provide investment
advisory services, if applicable. If such responsibility is delegated to a
Sub-Adviser, then the Sub-Adviser shall assume the fiduciary duty and reporting
responsibilities of the Adviser under these policy guidelines.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Fiduciary
Duty</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>The right to vote a proxy with respect to
portfolio securities held by the Fund is an asset of the Fund. The Adviser, to
which authority to vote on behalf of the Fund is delegated, acts as a fiduciary
of the Fund and must vote proxies in a manner consistent with the best interest
of the Fund and its stockholders.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Procedures</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>The following are the procedures adopted
by the Board for the administration of this policy:</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>A. <U>Review of Adviser Proxy Voting
Procedures</U> . The Adviser with authority to vote proxies on behalf of the
Fund shall present to the Board its policies, procedures and other guidelines
for voting proxies at least annually, and must notify the Board promptly of
material changes to any of these documents.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>B. <U>Voting Record Reporting</U> . No
less than annually, the Adviser shall report to the Board a record of each proxy
voted with respect to portfolio securities of the Fund during the year. With
respect to those proxies that the Adviser has identified as involving a conflict
of interest<SUP>2</SUP>, the Adviser shall submit a separate report indicating
the nature of the conflict of interest and how that conflict was resolved with
respect to the voting of the proxy.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Revocation</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>The delegation by the Board of the
authority to vote proxies relating to portfolio securities of the Fund is
entirely voluntary and may be revoked by the Board, in whole or in part, at any
time.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Annual
Filing</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>The Fund shall file an annual report of
each proxy voted with respect to its portfolio securities during the
twelve-month period ended June 30 on Form N-PX not later than August 31 of each
year.</FONT></P>____________________
<DIV align=justify><FONT face="Times New Roman" size=2><SUP>1</SUP> This policy is adopted for the purpose of the disclosure
requirements adopted by the Securities and Exchange Commission, Release Nos.
33-8188, 34-47304, IC-25922.</FONT></DIV>
<DIV align=justify><FONT face="Times New Roman" size=2><SUP>2</SUP> As it is
used in this document, the term &#147;conflict of interest&#148; refers to a situation in
which the Adviser or Sub-Adviser or affiliated persons of the Adviser or
Sub-Adviser have a financial interest in a matter presented by a proxy other
than the obligation it incurs as investment adviser to the Fund which
compromises the Adviser&#146;s or Sub-Adviser&#146;s independence of judgment and action
with respect to the voting of the proxy.</FONT></DIV><BR>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><B><FONT face="Times New Roman" size=2>Disclosures</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>The Fund shall include in its annual
report to stockholders:</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>A description of this policy and of the
policies and procedures used by the Adviser to determine how to vote proxies
relating to portfolio securities<SUP>3</SUP>; and</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>A statement disclosing that information
regarding how the Fund voted proxies relating to portfolio securities during the
most recent 12-month period ended June 30 is available without charge, upon
request, by calling the Fund&#146;s toll-free telephone number and on the SEC
website.<SUP>4</SUP></FONT></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>The Fund shall also include in its annual and semi-annual reports to
stockholders:</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>A statement disclosing that a description
of the policies and procedures used by or on behalf of the Fund to determine how
to vote proxies relating to portfolio securities of the Funds is available
without charge, upon request, by calling the Fund&#146;s toll-free telephone number
and on the SEC website.<SUP>5</SUP></FONT></P>
<P align=justify><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT face="Times New Roman" size=2>A statement disclosing that
information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available
without charge, upon request, by calling the Fund&#146;s toll-free telephone number
and on the SEC website.<SUP>6</SUP></FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Review of
Policy</FONT></B></P>
<P align=justify><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT face="Times New Roman" size=2>At least annually, the
Board shall review this Policy to determine its sufficiency and shall make and
approve any changes that it deems necessary from time to
time.</FONT></P>____________________
<DIV align=justify><FONT face="Times New Roman" size=2><SUP>3</SUP> This
disclosure shall be included in the annual report next filed by the Fund, on
Form N-CSR on or after July 1, 2003.</FONT></DIV>
<DIV align=justify><FONT face="Times New Roman" size=2><SUP>4</SUP>
</FONT><I><FONT face="Times New Roman" size=2>Id.</FONT></I></DIV>
<DIV align=justify><FONT face="Times New Roman" size=2><SUP>5</SUP> This
disclosure shall be included in the report next filed by the Fund on or after
July 1, 2003.</FONT></DIV>
<DIV align=justify><FONT face="Times New Roman" size=2><SUP>6</SUP>
</FONT><I><FONT face="Times New Roman" size=2>Id.</FONT></I></DIV><BR>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=center><B><FONT face="Times New Roman" size=2>APPENDIX B</FONT></B></P>
<P align=center><B><FONT face="Times New Roman" size=2>THOMAS J. HERZFELD
ADVISORS, INC.</FONT></B></P>
<P align=center><B><FONT face="Times New Roman" size=2>PROXY VOTING<br>POLICIES AND
PROCEDURES</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2>I. POLICY</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Thomas J. Herzfeld
Advisors, Inc. (the &#147;Adviser&#148;) acts as discretionary investment adviser for
various clients, including The Herzfeld Caribbean Basin Fund, Inc., an
investment company registered under the Investment Company Act of 1940, as
amended, and clients governed by the Employee Retirement Income Security Act of
1974 (&#147;ERISA&#148;). Selected clients, including the Caribbean Basin Fund, Inc. have
elected to have the Adviser vote proxies or act on the other shareholder actions
on their behalf, while other clients vote proxies themselves.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>When voting proxies or
acting on corporate actions for clients, the Adviser&#146;s utmost concern is that
all decisions be made in the best interest of its clients (for ERISA accounts,
plan beneficiaries and participants, in accordance with the letter and spirit of
ERISA). The Adviser will act in a manner deemed prudent and diligent and which
is intended to enhance the economic value of the assets of its clients&#146;
accounts.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>II.
PURPOSE</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The purpose of these
Policies and Procedures is to memorialize the procedures and policies adopted by
the Adviser to enable it to comply with its responsibilities and the
requirements of Rule 206(4)-6 under the Investment Advisers Act of 1940, as
amended (&#147;Advisers Act&#148;). These Policies and Procedures also reflect the
fiduciary standards and responsibilities set forth by the Department of Labor
for ERISA accounts.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>III.
PROCEDURES</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The portfolio managers are
ultimately responsible for ensuring that all proxies received by the Adviser are
voted in a timely manner and voted consistently across all portfolios. Although
many proxy proposals can be voted in accordance with the Adviser&#146;s established
guidelines (see Section V. below) (the &#147;Guidelines&#148;), the Adviser recognizes
that some proposals require special consideration, which may dictate that the
Adviser makes an exception to the Guidelines.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The portfolio managers are
also responsible for ensuring that all corporate actions received by the Adviser
are addressed in a timely manner and consistent action is taken across all
portfolios.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>A. <U>Conflicts of Interest</U> . Where a
proxy proposal raises a material conflict of interest between the Adviser&#146;s
interests and that of one or more its clients, the Adviser shall resolve such
conflict in the manner described below.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>1. <U>Vote
in Accordance with the Guidelines</U> . To the extent that the Adviser has
little or no discretion to deviate from the Guidelines with respect to the
proposal in question, the Adviser shall vote in accordance with such
pre-determined voting policy.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>2.
<U>Obtain Consent of Clients</U> . To the extent that the Adviser has discretion
to deviate from the Guidelines with respect to the proposal in question, the
Adviser shall disclose the conflict to the relevant clients and obtain their
consent to the proposed vote prior to voting the securities. The disclosure to
the clients will include sufficient detail regarding the matter to be voted on
and the nature of our conflict that the clients would be able to make an
informed decision regarding the vote. When a client does not respond to such a
conflict disclosure request or denies the request, the Adviser will abstain from
voting the securities held by that client&#146;s account.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>B. <U>Limitations</U> . In certain
circumstances, in accordance with a client&#146;s investment advisory contract (or
other written directive) or where the Adviser has determined that it is in the
client&#146;s best interest, the Adviser will not vote proxies received. The
following are some circumstances where the Adviser will limit its role in voting
proxies received on client securities:</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>1.
<U>Client Maintains Proxy Voting Authority</U> : Where a client has not
specifically delegated the authority to vote proxies to the Adviser or that it
has delegated the right to vote proxies to a third party, the Adviser will not
vote the securities and will direct the relevant custodian to send the proxy
material directly to the client. If any proxy material is received by the
Adviser, it will promptly be forwarded to the client.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>2.
<U>Terminated Account</U> : Once a client account has been terminated with the
Adviser in accordance with its investment advisory agreement, the Adviser will
not vote any proxies received after the termination. However, the client may
specify in writing that proxies should be directed to the client for
action.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>3.
<U>Limited Value</U> : If the Adviser concludes that the client&#146;s economic
interest or the value of the portfolio holding is indeterminable or
insignificant, the Adviser will abstain from voting a client&#146;s proxies. The
Adviser does not vote proxies received for securities which are no longer held
by the client&#146;s account. In addition, the Adviser generally does not vote
securities where the economic value of the securities in the client&#146;s account is
less than $500.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>4.
<U>Securities Lending Programs</U> : When securities are out on loan, they are
transferred into the borrower&#146;s name and are voted by the borrower, in its
discretion. However, where the Adviser determines that a proxy vote (or
shareholder action) is materially important to the client&#146;s account, the Adviser
may recall the security.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>5.
<U>Unjustifiable Costs</U> : In certain circumstances, after doing a
cost-benefit analysis, the Adviser may abstain from voting where the cost of
voting a client&#146;s proxy would exceed any anticipated benefits of the proxy
proposal.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>IV. RECORD
KEEPING</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>In accordance with Rule
204-2 under the Advisers Act, the Adviser will maintain for the time periods set
forth in the Rule (i) these proxy voting procedures and policies, and amendments
thereto; (ii) all proxy statements received regarding client securities
(provided however, that the Adviser may rely on the proxy statement filed on
EDGAR as its records)<SUP>1</SUP> ; (iii) a record of votes cast on behalf of
clients; (iv) records of client requests for proxy voting information; (v) any
documents prepared by the adviser that were material to making a decision how to
vote or that memorialized the basis for the decision; and (vi) records relating
to requests made to clients regarding conflicts of interest in voting the
proxy.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The Adviser will describe
in its Part II of Form ADV (or other brochure fulfilling the requirement of Rule
204-3) its proxy voting policies and procedures and advising clients how they
may obtain information on how the Adviser voted their securities. Clients may
obtain information on how their securities were voted or a copy of our Policies
and Procedures by written request addressed to the Adviser.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>V.
GUIDELINES</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>Each proxy issue will be
considered individually. The following guidelines are a partial list to be used
in voting proposals contained in the proxy statements, but will not be used as
rigid rules.</FONT></P>
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    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>1.</FONT></TD>
    <TD noWrap align=left width="87%" colSpan=3><FONT face="Times New Roman" size=2>Issues regarding the issuer&#146;s
      Board entrenchment and anti-takeover measures such as the
    following:</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Oppose</FONT></TD></TR>
  <TR>
    <TD align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="85%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align=left width="10%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"><FONT size=2 face="Times New Roman">b.&nbsp;&nbsp;&nbsp; </FONT></TD>
    <TD noWrap align=left width="85%"><FONT size=2 face="Times New Roman">Proposals to limit the ability of shareholders to call special
      meetings;</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>c.</FONT></TD>
    <TD noWrap align=left width="85%"><FONT face="Times New Roman" size=2>Proposals to require super majority votes;</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>d.</FONT></TD>
    <TD noWrap align=left width="85%"><FONT face="Times New Roman" size=2>Proposals requesting excessive increases in authorized common
      or preferred shares where</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="85%"><FONT face="Times New Roman" size=2>management provides no explanation for the use or need for
      these additional shares;</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>e.</FONT></TD>
    <TD noWrap align=left width="85%"><FONT face="Times New Roman" size=2>Proposals regarding &#147;poison pill&#148; provisions; and</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>f.</FONT></TD>
    <TD noWrap align=left width="85%"><FONT size=2 face="Times New Roman">Permitting &#147;green mail&#148;.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD></TR>
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    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>2.</FONT></TD>
    <TD noWrap align=left width="87%" colSpan=3><FONT face="Times New Roman" size=2>Providing cumulative voting
      rights.</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Oppose</FONT></TD></TR>
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    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>3.</FONT></TD>
    <TD noWrap align=left width="87%" colSpan=3><FONT face="Times New Roman" size=2>&#147;Social issues,&#148; unless specific
      client guidelines supersede, e.g., restrictions regarding South
      Africa.</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Oppose</FONT></TD></TR>
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    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>4.</FONT></TD>
    <TD noWrap align=left width="87%" colSpan=3><FONT face="Times New Roman" size=2>Election of directors recommended
      by management, except if there is a proxy fight.</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Approve</FONT></TD></TR>
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    <TD vAlign=top noWrap align=left width="1%"><FONT face="Times New Roman" size=2>5.</FONT></TD>
    <TD align=left width="87%" colSpan=3><FONT face="Times New Roman" size=2>Election of auditors recommended by management, unless
      seeking to replace if there exists a dispute over policies.</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Approve</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>6.</FONT></TD>
    <TD noWrap align=left width="87%" colSpan=3><FONT face="Times New Roman" size=2>Date and place of annual
      meeting.</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Approve</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>7.</FONT></TD>
    <TD noWrap align=left width="87%" colSpan=3><FONT face="Times New Roman" size=2>Limitation on charitable
      contributions or fees paid to lawyers.</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Approve</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>8.</FONT></TD>
    <TD noWrap align=left width="87%" colSpan=3><FONT face="Times New Roman" size=2>Ratification of directors&#146; actions
      on routine matters since previous annual meeting.</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Approve</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>9.</FONT></TD>
    <TD noWrap align=left width="87%" colSpan=3><FONT face="Times New Roman" size=2>Confidential voting</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Approve</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="87%" colSpan=3>&nbsp;</TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"></TD></TR>
  <TR>
    <TD COLSPAN="4" STYLE="text-align: left; width: 88%"><P align=justify><FONT face="Times New Roman" size=2>Confidential voting is most often proposed by shareholders as a
      means of eliminating undue management pressure on shareholders regarding
      their vote on proxy issues.</FONT></P>
      <P align=justify><FONT face="Times New Roman" size=2>The Adviser will
      generally approve these proposals as shareholders can later divulge their
      votes to management on a selective basis if a legitimate reason
      arises.</FONT></P></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"></TD></TR></TABLE><BR>
<P align=justify>____________________<BR><FONT face="Times New Roman" size=2><SUP>1</SUP> Because the Adviser primarily invests its clients&#146; assets in
securities of foreign issuers, the Adviser generally has not been receiving
proxy statements from such issuers because the laws of the countries in which
these issuers are domiciled respecting delivery of proxy statements to
shareholders are different than those of the U.S.</FONT></P>
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<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
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    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>10.</FONT></TD>
    <TD noWrap align=left width="88%"><FONT face="Times New Roman" size=2>Limiting directors&#146; liability</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Approve</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>11.</FONT></TD>
    <TD noWrap align=left width="88%"><FONT face="Times New Roman" size=2>Eliminate preemptive right</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Approve</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="88%"></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap style="text-align: center" width="10%">&nbsp;</TD></TR>
  <TR>
    <TD align=left width="89%" colSpan=2>
      <P align=justify><FONT face="Times New Roman" size=2>Preemptive rights
      give current shareholders the opportunity to maintain their current
      percentage ownership through any subsequent equity offerings. These
      provisions are no longer common in the U.S., and can restrict management&#146;s
      ability to raise new capital.</FONT></P></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"></TD></TR>
  <TR>
    <TD align=left width="1%"></TD>
    <TD align=left width="88%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD align=left width="89%" colSpan=2><FONT face="Times New Roman" size=2>The
      Adviser approves the elimination of preemptive rights, but will oppose the
      elimination of limited preemptive rights, e.g., on proposed issues
      representing more than an acceptable level of total dilution.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>12.</FONT></TD>
    <TD noWrap align=left width="88%"><FONT face="Times New Roman" size=2>Employee Stock Purchase Plan</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Approve</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>13.</FONT></TD>
    <TD noWrap align=left width="88%"><FONT face="Times New Roman" size=2>Establish 401(k) Plan</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Approve</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>14.</FONT></TD>
    <TD noWrap align=left width="88%"><FONT face="Times New Roman" size=2>Rotate annual meeting location/date</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Approve</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>15.</FONT></TD>
    <TD noWrap align=left width="88%"><FONT face="Times New Roman" size=2>Establish a staggered Board</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Approve</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>16.</FONT></TD>
    <TD noWrap align=left width="88%"><FONT face="Times New Roman" size=2>Eliminate director mandatory retirement policy</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Case-by-Case</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>17.</FONT></TD>
    <TD noWrap align=left width="88%"><FONT face="Times New Roman" size=2>Option and stock grants to management and directors</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Case-by-Case</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD NOWRAP WIDTH="1%" STYLE="text-align: left; vertical-align: top"><FONT face="Times New Roman" size=2>18.</FONT></TD>
    <TD STYLE="text-align: left; width: 88%; vertical-align: top"><FONT face="Times New Roman" size=2>Allowing indemnification of directors and/or officers after
      reviewing the applicable laws and extent of protection
requested.</FONT></TD>
    <TD NOWRAP WIDTH="1%" STYLE="text-align: left; vertical-align: top"></TD>
    <TD NOWRAP WIDTH="10%" STYLE="text-align: center; vertical-align: top"><FONT face="Times New Roman" size=2>Case-by-Case</FONT></TD></TR></TABLE><BR>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=center width="100%"><FONT face="Times New Roman" size=2>B-3</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>


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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
