N-2/A

As filed with the Securities and Exchange Commission on June 6, 2012

Registration File No. 333-178943

Registration File No. 811-007528

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-2

(Check appropriate box or boxes)

[X]	REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[X]	Pre-Effective Amendment No.    2
[   ]	Post-Effective Amendment No. ___
and
[X]	REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X]	Amendment No. 15

Special Opportunities Fund, Inc.

_____________________________________________________________________________________________

Exact Name of Registrant as Specified in Charter

615 East Michigan Street, Milwaukee, WI 53202

_____________________________________________________________________________________________

Address of Principal Executive Offices (Number, Street, City, State, Zip Code)

Registrant’s Telephone Number, including Area Code 1-877-607-0414

Andrew Dakos, Brooklyn Capital Management, LLC, Park 80 West, 250 Pehle Avenue, Suite 708, Saddle Brook, NJ 10570

____________________________________________________________________________________________________________

Name and Address (Number, Street, City, State, Zip Code) of Agent for Service

Copies of Communications to:

Thomas R. Westle, Esquire, Blank Rome LLP, 405 Lexington Avenue, New York, New York 10174

Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Registration Statement

If any securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a dividend reinvestment plan, check the following box …. [   ]

It is proposed that this filing will become effective (check appropriate box)

[X] when declared effective pursuant to section 8(c)

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

Title of Securities Being Registered	Amount Being Registered	Proposed Maximum Offering Price Per Unit	Proposed Maximum Aggregate Offering Price(1)	Amount of Registration Fee
Rights to Purchase Convertible Preferred Stock (2)		$-	$-	$-
Convertible Preferred Stock		$50.00	$34,049,350	$3,902.06 (3)
Total			$34,049,350	$3,902.06 (3)

       (1) Estimated solely for the purpose of calculating fee as required by Rule 457(o) under the Securities Act of 1933.

       (2) Evidencing the rights to subscribe for shares of convertible preferred stock of the Registrant being registered herewith.  Pursuant to Rule 457(g) of the Securities Act of 1933, no separate registration fee is required for the rights because the rights are being registered in the same registration statement as the securities of the Registrant underlying the rights.

       (3) Of which $3,902.06 was previously paid.

Pursuant to Rule 473 under the Securities Act of 1933, as amended, the Registrant hereby amends the Registration Statement to delay its effective date until the Registrant shall file a further amendment that specifically states that the Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

PROSPECTUS – SUBJECT TO COMPLETION

Rights to Purchase up to 680,987 Shares of

Convertible Preferred Stock at $50.00 per Share

Special Opportunities Fund, Inc.

We are distributing at no charge to holders of our common stock as of _________ (the “Record Date”) transferable rights to purchase up to an aggregate of 680,987 shares of 3.00% convertible preferred stock, Series A, par value $0.001 per share (“Convertible Preferred Stock”).  The shares of Convertible Preferred Stock will be convertible into shares of our common stock at a conversion rate of three shares of common stock for each share of Convertible Preferred Stock, subject to adjustment upon the occurrence of certain events.

You will receive one transferable right (each whole right, a “Subscription Right”) for each ten shares of our common stock you own on the Record Date (the “Basic Subscription Right”). The number of Subscription Rights issued to each Record Date stockholder will be rounded up to the nearest whole number.  Each Subscription Right will entitle holders to purchase one share of Convertible Preferred Stock at a subscription price of $50.00 per share.  We will not issue fractional shares upon the exercise of your Basic Subscription Right or Over-Subscription Privilege (as defined below). This offering to purchase Convertible Preferred Stock will expire at 5:00 p.m., New York City time, on __________, 2012, unless we decide to extend it to some later date (the “Expiration Date”).  You should carefully consider whether to exercise your Subscription Rights.  Unless our Board of Directors cancels or terminates the offering, all exercises of Subscription Rights are irrevocable.

If you elect to purchase the maximum amount of our Convertible Preferred Stock that you are entitled to pursuant to your Basic Subscription Right, you will also be entitled to subscribe, subject to allotment, to purchase additional shares of our Convertible Preferred Stock, if any, that are not purchased by our other stockholders pursuant to their Basic Subscription Right as of the Expiration Date (the “Over-Subscription Privilege”). If you do not fully subscribe for your Basic Subscription Right, your ownership may be diluted. See “Risk Factors – Dilution of Ownership.”  We expect the total purchase price of Convertible Preferred Stock in this rights offering to be $34,049,350, assuming full participation.

The Rights are transferable and will be admitted for trading on the New York Stock Exchange (“NYSE”) under the symbol “SPE RT.”  We intend to file an application to list our Convertible Preferred Stock on the New York Stock Exchange under the symbol “SPE Pr,” but we cannot assure you that the Convertible Preferred Stock will be listed for trading or that a liquid market for our Rights or our Convertible Preferred Stock will develop.  Shares of our common stock have traded on the NYSE under the symbol “SPE” since April 21, 2010 and before that under the symbol “PIF.” New shares of common stock issued upon conversion of the Convertible Preferred Stock will also be listed under the symbol “SPE.”

Special Opportunities Fund, Inc. is registered under the Investment Company Act of 1940, as amended, as a closed-end, diversified management investment company.  Our investment objective is total return.

An investment in the Fund involves risks.  See “Risk Factors” beginning on page 11.

For more information, please call Phoenix Advisory Partners (the "Information Agent") toll free at 877-478-5038.

 (continued on following page)

	Subscription Price	Sales Load	Proceeds to the Fund(1)
Per Share	$50.00	None	$50.00
Total	$34,049,350	None	$34,049,350

____________________________

(1)   Proceeds to the Fund are before deduction of expenses incurred by the Fund in connection with the offering, estimated to be approximately $172,000.  Funds received prior to the final due date of this offering will be deposited in a segregated account pending allocation and distribution of Shares.  Interest, if any, on subscription monies will be paid to the Fund regardless of whether Shares are issued by the Fund; interest will not be used as credit toward the purchase of Shares.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this Prospectus is _________.

Investment Adviser.  Brooklyn Capital Management (the “Adviser”) acts as the Fund's investment adviser. See “Management of the Fund.” As of the date of this Prospectus, the Adviser does not manage any assets other than the Fund’s.  The Adviser's address is Park 80 West, 250 Pehl Avenue, Suite 708, Saddle Brook, New Jersey 10570.

This Prospectus sets forth concisely the information about the Fund that you should know before deciding whether to invest in the Fund.   The Fund files annual and semi-annual stockholder reports, proxy statements and other information with the SEC. You can obtain this information or any information regarding the Fund filed with the SEC from the SEC’s web site (http://www.sec.gov) or by calling 1-877-607-0414 or by writing to the Fund c/o U.S. Bancorp 615 East Michigan Street, Milwaukee, WI 53202.  The Fund’s website address is www.specialopportunitiesfundinc.com and includes all stockholder reports and proxy statements filed with the SEC.

The Fund’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.

ii 

You should rely only on the information contained in this Prospectus.  We have not authorized any other person to provide you with different information.  If anyone provides you with different or inconsistent information, you should not rely on it.  This Prospectus is not an offer to sell or issue, or a solicitation of an offer to buy or accept, any securities in any jurisdiction where it is unlawful to make such an offer or solicitation.

TABLE OF CONTENTS

Prospectus Summary	1
The Offering	3
Fees and Expenses	7
Financial Highlights	8
Risk Factors	11
Convertible Preferred Stock Rights Offering	21
Material United States Federal Income Tax Consequences	28
Use of Proceeds	34
Price Range of Common Stock	34
Distributions	34
About the Fund	34
Management	38
Investment Advisory Agreement	47
Administration Agreement	49
Control Persons and Principal Stockholders	49
Determination of Net Asset Value	50
Description of our Capital Stock	50
Limitation on Liability of Directors and Officers; Indemnification and Advancement of Expenses	53
Provisions of the Maryland General Corporation Law and our Charter and Bylaws	54
Regulation	54
Share Repurchases	55
Custodian, Transfer and Dividend Paying Agent and Registrar	56
Brokerage Allocation and Other Practices	56
Legal Matters	56
Experts	56
Available Information	57
Forward-Looking Statements	57
Financial Statements	57

Prospectus Summary

This summary highlights some of the information in this Prospectus.  It may not contain all of the information that you may want to consider.  You should read carefully the more detailed information set forth under “Risk Factors” and the other information included in this Prospectus.  The terms “we,” “us,” the “Fund” and “our” refer to Special Opportunities Fund, Inc. “BCM,” the “Adviser” or the “investment adviser” refers to Brooklyn Capital Management.

General

The Fund was incorporated in Maryland on February 13, 1993 and commenced investment operations on June 7, 1993.  In 2009, a new Board of Directors was elected, the Fund’s investment adviser was replaced and the Fund’s principal investment objective was changed from providing tax free income to providing total return.  The Fund is registered under the Investment Company Act of 1940, as amended (together with the rules promulgated thereunder, the “1940 Act”), as a closed–end, diversified management investment company.  Our common stock is listed and trades on the NYSE under the trading symbol “SPE.”  On April 21, 2010 the Fund’s symbol changed from “PIF” to “SPE.”

Our Investment Objective and Strategy

Our investment objective is total return through capital appreciation and current income.  Our investment objective is not fundamental and may be changed by the Board with 60 days notice to stockholders.  We seek to achieve our investment objective by investing primarily in other closed-end investment companies and other private and publicly-issued U.S. and foreign securities that our Adviserbelieves have opportunities for appreciation.  The Fund may employ strategies designed to capture price movements generated by anticipated corporate events such as investing in companies involved in special situations, including, but not limited to, mergers, acquisitions, asset sales, spin-offs, balance sheet restructuring, bankruptcy, liquidations, self-tender offers, converting from a closed-end to open-end management investment company and other situations.

Our Adviser

Our investment adviser is Brooklyn Capital Management LLC, a limited liability company organized under the laws of Delaware.  BCM is an investment adviser registered under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).  Under our Investment Advisory Agreement, we pay BCM a monthly fee at an annual rate of 1.00% of the value of our average weekly total assets.  See “Investment Advisory Agreement.”

Rights Offering of Convertible Preferred Stock

Each of our stockholders as of the Record Date shall receive, at no cost, one transferable right (each whole right, a “Subscription Right”) to purchase one share of Convertible Preferred Stock for each ten shares of our common stock such stockholder owns as of the Record Date (the “Basic Subscription Right”).  We will not issue fractional shares of our Convertible Preferred Stock upon the exercise of any Rights (as defined below). The number of Rights issued to Record Date stockholders will be rounded up to the nearest whole number of Rights. We intend to offer shares of Convertible Preferred Stock to these stockholders for $50.00 per share (the “Subscription Price”).  The offer to purchase Convertible Preferred Stock will expire at 5:00 p.m., New York City time, on ______________, unless we decide to extend it to some later date (the “Expiration Date”).

If you elect to purchase the maximum amount of our Convertible Preferred Stock that you are entitled to purchase pursuant to your Basic Subscription Right, you will also be entitled to an Over-Subscription Privilege to subscribe, subject to allotment, to purchase additional shares of our Convertible Preferred Stock, if any, that are not purchased by our other stockholders pursuant to their Basic Subscription Right as of the Expiration Date.  Additionally, if there are not enough unsubscribed shares to honor all over-subscription requests, the Fund may, in its sole discretion, issue additional shares, up to 10% of the shares available in the Offering, to honor over-subscription requests. See “Convertible Preferred Stock Rights Offering – Over-Subscription Privilege.” If you do not fully subscribe for your Basic Subscription Right, your ownership may be diluted. See “Risk Factors – Dilution of Ownership.”  The Basic Subscription Right and the Over-Subscription Privilege shall be collectively referred to herein as the “Rights.”

1

The dividend rate of our Convertible Preferred Stock will be 3.00% of the Subscription Price per share of Convertible Preferred Stock.  Dividends on our Convertible Preferred Stock will be fully cumulative, will accumulate without interest from the date of original issuance of the Convertible Preferred Stock and will be payable quarterly in arrears on the last calendar day of March, June, September and December, commencing on the last calendar day of the first March, June, September or December following the date of Expiration Date.

Sale of Rights

The Rights are transferable until the Expiration Date and have been admitted for trading on the NYSE. Although no assurance can be given that a market for the Rights will develop, trading in the Rights on the NYSE will begin three Business Days prior to the Record Date and may be conducted until the close of trading on the last NYSE trading day prior to the Expiration Date, such period to be no less than 20 days. The value of the Rights, if any, will be reflected by the market price.

Trading of the Rights on the NYSE will be conducted on a when-issued basis until and including the date on which the Subscription Certificates are mailed to Record Date stockholders and thereafter will be conducted on a regular-way basis until and including the last NYSE trading day prior to the Expiration Date.  The shares will begin trading ex-Rights two Business Days prior to the Record Date. The Fund will not be responsible if Rights cannot be sold and it has not guaranteed any minimum sales price for the Rights. For purposes of this Prospectus, a “Business Day” shall mean any day on which trading is conducted on the NYSE. Stockholders are urged to obtain a recent trading price for the Rights on the NYSE from their broker, bank, financial advisor or the financial press.

How to Subscribe

Ø Deliver a completed Subscription Certificate (enclosed) and payment to the Subscribing Agent at the address below (Attn: Reorg Dept.) so that it is received by the Expiration Date (we recommend using an insured courier), or

Ø	Instruct your broker, dealer, trust company, custodian bank or other nominee to act for you by instructing DTC to exercise Rights with payment to the account of the Subscribing Agent by the Expiration Date, or
Ø	If you wish to exercise your Rights, but you do not have sufficient time to deliver the Subscription Certificate or transfer the Rights through DTC, have your broker, dealer, trust company, custodian bank or other nominee deliver a Notice of Guaranteed Delivery to the Subscribing Agent by the Expiration Date.

Information Agent

Phoenix Advisory Partners is the Information Agent for the Offering and can be reached toll free at 877-478-5038 or by email at info@phoenixadvisorypartners.com.

Subscribing Agent

American Stock Transfer & Trust Company, LLC (the “Subscribing Agent”), 6201 15th Avenue, Brooklyn, NY 11219, is the Subscribing Agent for the Offering.

Important Dates to Remember

Record Date
Subscription Period	*
Expiration Date/ Deadline to Purchase Convertible Preferred Stock†	*
Deadline for Notice of Guaranteed Delivery†	*
Deadline for Payment to Notice of Guaranteed Delivery	*
Confirmation Mailed to Participating Holders	*

2

*	Unless the offering is extended.
†	A person purchasing Convertible Preferred Stock pursuant to his or her Rights must deliver either (i) Subscription Certificate and payment for the Convertible Preferred Stock or (ii) a Notice of Guaranteed Delivery by the Expiration Date, unless the offering is extended.

The Offering

As a result of the terms of this offer, stockholders who do not fully exercise their Rights will own, upon completion of this offer, a smaller proportional interest in the Fund than they owned prior to the offer.   The following examples illustrate the impact of the offer depending upon whether the common stock is trading at a premium or a discount to its NAV.  See “Risk Factors – Dilution of Ownership.”

Rights to be Issued by Us	680,987 transferable rights exercisable for shares of Convertible Preferred Stock.
Description of Convertible Preferred Stock	The Board of Directors presently intends that, except as otherwise indicated in this Prospectus and except as otherwise required by applicable law or the Fund’s Articles of Incorporation, Articles Supplementary or bylaws, holders of Convertible Preferred Stock will have equal voting rights with holders of our common stock (one vote per share, unless otherwise required by the 1940 Act) and shall vote together with such holders of common stock as a single class.
Purpose of the Offering/Use of Proceeds	The Board of Directors of the Fund has determined that it would be in the best interests of the Fund and our stockholders to increase the assets of the Fund so that we may be in a better position to take advantage of investment opportunities that exist or may arise.  This offering seeks to reward existing stockholders by giving them the opportunity to purchase additional securities of the Fund without incurring any commission or charge.  The distribution of the Rights, which themselves may have intrinsic value, will also give non-participating stockholders the potential of receiving a cash payment upon the sale for their Rights, which may be viewed as partial compensation for the possible dilution of their interests in the Fund as a result of the Offer.  Proceeds will be invested in accordance with the Fund’s investment objectives and policies as stated herein. See “Business of the Fund.”
Basic Subscription Right	Each of our stockholders as of the Record Date shall receive, at no cost, one transferable right (each whole right, a “Subscription Right”) to purchase one share of Convertible Preferred Stock for each ten shares of our common stock such stockholder owns as of the Record Date (the “Basic Subscription Right”).  We will not issue fractional shares of our Convertible Preferred Stock upon the exercise of Rights. The number of Rights issued to Record Date stockholders will be rounded up to the nearest whole number of Rights. We intend to offer shares of Convertible Preferred Stock to these stockholders for $50.00 per share.
Over-Subscription Privilege	If you elect to purchase the maximum amount of our Convertible Preferred Stock that you are entitled to purchase pursuant to your Basic Subscription Right, you will also be entitled to subscribe, subject to allotment, to purchase additional shares of our Convertible Preferred Stock, if any, that are not purchased by our other stockholders pursuant to their Basic Subscription Right as of the Expiration Date. See “Convertible Preferred Stock Rights Offering – Over-Subscription Privilege.” If you do not fully subscribe for your Basic Subscription Right, your ownership may be diluted. See “Risk Factors – Dilution of Ownership.”
Expiration Date	5:00 p.m., New York City time, on ______________, unless we decide to extend it to some later date.

3

Issuance of Convertible Preferred Stock	If you purchase shares of Convertible Preferred Stock through the offering, we will issue a Direct Registration System book-entry statement representing the shares of Convertible Preferred Stock to you or DTC on your behalf promptly after completion of the Rights Offering and after pro rata allocations and adjustments have been completed.
Liquidation Preference	In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Fund, the holders of Convertible Preferred Stock will be entitled to receive preferential liquidating distribution at face value (i.e., $50.00 per share), before any distribution of assets is made to the holders of our common stock.  After payment of the full amount of the liquidating distribution to which they are entitled, the holders of shares of Convertible Preferred Stock will not be entitled to any further participation in any distribution of assets by the Fund.  See “Convertible Preferred Stock Rights Offering – Description of Convertible Preferred Stock.”
Voting Rights	So long as the Fund is subject to the 1940 Act, the holders of any Convertible Preferred Stock, voting separately as a single class, shall have the right to elect two Directors at all times.  The remaining Directors shall be elected by holders of common stock and Convertible Preferred Stock voting together as a single class.  So long as the Fund is subject to the 1940 Act, in addition to any approval by stockholders that might otherwise be required, the approval of the holders of a majority of any outstanding Convertible Preferred Stock voting separately as a class, would be required to (1) adopt any plan of reorganization that would adversely affect the Convertible Preferred Stock, and (2) take any action requiring a vote of security holders under Section 13(a) of the 1940 Act, including, among other things, changes in the Fund’s subclassification as a closed-end investment company or changes in its fundamental investment restrictions.  As a result of these voting rights, the Fund’s ability to take any such actions may be impeded to the extent that there is any Convertible Preferred Stock outstanding.  The Board of Directors presently intends that, except as otherwise indicated in this Prospectus and except as otherwise required by applicable law or the Fund’s Articles of Incorporation, Articles Supplementary or bylaws, holders of Convertible Preferred Stock will have equal voting rights with holders of our common stock (one vote per share, unless otherwise required by the 1940 Act) and shall vote together with such holders of common stock as a single class.  See “Convertible Preferred Stock Rights Offering – Description of Convertible Preferred Stock.”
Risk Factors	See “Risk Factors” beginning on page 11 and the other information included in this Prospectus for a discussion of risks that you should carefully consider about us and about this offering.
Transferability of the Rights	Your Rights are transferable until the Expiration Date and have been admitted for trading on the NYSE.  Although no assurance can be given that a market for the Rights will develop, trading in the Rights on the NYSE will begin three Business Days prior to the Record Date and may be conducted until the close of trading on the last NYSE trading day prior to the Expiration Date.  The value of the Rights, if any, will be reflected by the market price.  Rights may be sold by individual holders or may be submitted to the Subscribing Agent for sale.

4

Termination of the Offering	The Board of Directors may decide to terminate this offering at any time, on or before the Expiration Date.  If we terminate the offering, our only obligation to you will be to return any payment, without interest.
Distribution Arrangements	We do not intend to engage a dealer manager for the offering. Our officers and Directors may solicit the exercise of Rights by our stockholders. This offering is not contingent on any number of Rights being exercised. We will pay all expenses incurred in connection with this offering.
Listing	It is the Fund’s intention to list the Convertible Preferred Stock for trading on the NYSE under the symbol “SPE Pr” prior to the issuance of the Convertible Preferred Stock.
Trading	We cannot assure you that the Convertible Preferred Stock will develop any liquidity in the secondary market.  In addition, we cannot predict how the issuance of the Convertible Preferred Stock will affect the market value of our common stock.
Material United States Federal Income Tax Consequences	The receipt and election to purchase Convertible Preferred Stock are intended to be nontaxable events.  If you sell the Convertible Preferred Stock after purchasing them, you will recognize gain or loss.  You should obtain specific tax advice from your personal tax advisor.  See “Material United States Federal Income Tax Consequences —Taxation of Stockholders” below.
Management Arrangements	Brooklyn Capital Management (“BCM”) serves as our investment adviser.  U.S. Bancorp Fund Services, LLC (“Administrator”) serves as our administrator.  For a description of BCM or the Administrator and our contractual arrangements with these companies, see “Investment Advisory Agreement” and “Administration Agreement.”
Information Agent	Phoenix Advisory Partners
Subscribing Agent	American Stock Transfer & Trust Company, LLC
Dilution	As a result of the terms of this offer, stockholders who do not fully exercise their Rights will own, upon completion of this offer, a smaller proportional interest in the Fund than they owned prior to the offer.   The following examples illustrate the impact of the offer depending upon whether the common stock is trading at a premium or a discount to its NAV.  See “Risk Factors – Dilution of Ownership.”

Example #1 – Stock Price Trading at 10% Discount to NAV (Dilutive to NAV)
NAV Per Share	Stock Price	Conversion Price	New NAV Per Share	Percentage Dilution	Dollar Amt Per Share Dilution
$20.00	$18.00	$16.67	$19.23	3.84%	$0.77

Example #2 – Stock Price Trading at 10% Premium to NAV (Accretive to NAV)
NAV Per Share	Stock Price	Conversion Price	New NAV Per Share	Percentage Accretion	Dollar Amt Per Share Accretion
$16.00	$17.60	$16.67	$16.15	0.97%	$0.15

5

Shares issued and outstanding before the Offering	6,809,870 shares of common stock as of __________.
Shares outstanding after completion of the Offering	Assuming that all 680,987 shares of Convertible Preferred Stock in the Offering are subscribed for, we will have 680,987 shares of Convertible Preferred Stock outstanding, which will be convertible into 2,042,961 shares of our common stock immediately after the rights offering.  Assuming full conversion of the Convertible Preferred Stock, there would be 8,852,831 shares of our common stock issued and outstanding.
Notice of NAV Decline	The Fund has, as required by the SEC's registration form, undertaken to suspend the offer until it amends this Prospectus if, subsequent to the effective date of this Prospectus, the Fund's NAV declines more than 10% from its NAV as of that date.  If that occurs, the Fund will notify you of the decline and permit you to cancel your exercise of your Rights. Stockholders will have their payment for shares returned to them if they opt to cancel the exercise of their Rights.

6

Fees and Expenses

The following table shows Fund expenses as a percentage of net assets attributable to common shares the costs and expenses associated with an investment in the Fund, expressed as a percentage of the Fund’s net assets as of December 31, 2011.

Stockholder Transaction Expenses
Sales load	None
Annual Expenses (as a percentage of net assets attributable to common shares)
Management fees	1.00%
Other expenses (1)	0.51%
Acquired Fund fees and expenses (2)	0.81%
Total Annual Expenses	2.32%
Dividends on Preferred Shares (3)	0.70%
Total Annual Expenses and Dividends on Preferred Shares	3.02%

Example (4)

The following example illustrates the hypothetical expenses that you would pay on a $1,000 investment in common shares, assuming (i) annual expenses of 3.02% of net assets attributable to common shares and (ii) a 5% annual return:

	1 Year	3 Years	5 Years	10 Years
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return	$268	$823	$1,405	$2,983

____________________________

“Other Expenses” include, among other expenses, administration and fund accounting fees.

(2) The Fund invests in other closed-end investment companies and ETFs (collectively, the “Acquired Funds”).  The Fund’s stockholders indirectly bear a pro rata portion of the fees and expenses of the Acquired Funds in which the Fund invests.

 (3) Dividends on Preferred Shares represent the distributions that would be made assuming full participation in this offering resulting in the issuance of approximately $34 million of convertible preferred stock with a fixed dividend rate of 3.00%. There can be no guarantee that any shares of preferred stock will be issued.

(4) The example assumes that the estimated “Other Expenses” set forth in the Annual Expenses table remain the same each year and that all dividends and distributions are reinvested at net asset value. Actual expenses may be greater or less than those assumed. Moreover, the Fund’s actual rate of return will vary and may be greater or less than the hypothetical 5% annual return.

The purpose of the above table is to help a holder of common shares understand the fees and expenses that such holder would bear directly or indirectly.  The example should not be considered a representation of actual future expenses.  Actual expenses may be higher or lower than those shown.

We will not pay any broker or dealer, commercial bank, trust company or other person any solicitation fee for any Convertible Preferred Stock purchased pursuant to this offering.  No such broker, dealer, commercial bank, trust company or other person has been authorized to act as our agent for purposes of this offering.

7

Financial Highlights

Set forth below is per share operating performance data for a share of common stock outstanding, total investment return, ratios to average net assets and other supplemental data for each year indicated.  This information has been derived from the financial statements and market price data for the Fund's common stock.  The financial highlights for the fiscal year ended December 31, 2011 have been audited by Tait, Weller & Baker LLP, independent registered public accounting firm. The financial statements and notes thereto, together with the report of independent registered public accounting firm, have been incorporated by reference in the SAI and are available without charge by calling 1-877-607-0414 or by writing to the Fund c/o U.S. Bancorp 615 East Michigan Street, Milwaukee, WI 53202.  

Selected data for a share of common stock outstanding throughout each period is presented below:

	For the year ended December 31, 2011			For the year ended December 31, 2010			For the nine months ended December 31, 2009			For the year ended March 31, 2009			For the year ended March 31, 2008			For the year ended March 31, 2007			For the year ended March 31, 2006
Net asset value, beginning of period	$	16.42		$	14.26		$	13.05		$	13.71		$	14.96		$	14.70		$	14.93
Net investment income		0.22	(1)(2)		0.04	(1)(2)		0.52	(1)		0.88	(1)		0.97	(1)		0.94	(1)		0.90
Net realized and unrealized gains (losses) from       investment activities		(0.10	)		2.15			1.24			(0.70	)		(1.22	)		0.33			0.02
Common share equivalent of dividends and       distributions paid to auction preferred       shareholders from:
Net investment income		-			-			(0.02	)		(0.25	)		(0.39	)		(0.34	)		(0.22	)
Net realized gains from investment activities		-			-			-			-			(0.01	)		(0.02	)		(0.07	)
Total dividends and distributions paid to       auction preferred shareholders		-			-			(0.02	)		(0.25	)		(0.40	)		(0.36	)		(0.29	)
Net increase (decrease) from operations		0.12			2.19			1.74			(0.07	)		(0.65	)		0.91			0.63
Dividends and distributions paid to common       shareholders from:
Net investment income		(0.26	)		(0.03	)		(0.53	)		(0.59	)		(0.58	)		(0.62	)		(0.65	)
Net realized gains from investment activities		(0.27	)		-			-			-			(0.02	)		(0.03	)		(0.21	)
Total dividends and distributions paid to common shareholders		(0.53	)		(0.03	)		(0.53	)		(0.59	)		(0.60	)		(0.65	)		(0.86	)
Net asset value, end of period	$	16.01		$	16.42		$	14.26		$	13.05		$	13.71		$	14.96		$	14.70
Market value, end of period	$	14.50		$	14.75		$	14.09		$	11.37		$	12.38		$	13.48		$	13.02
Total net asset value return(3)		0.85	%		15.36	%		13.51	%		(0.39	)%		(4.52	)%		6.31	%		4.29	%
Total market price return(4)		1.89	%		4.90	%		29.00	%		(3.32	)%		(3.86	)%		8.83	%		9.51	%

1 Calculated using the average shares method.

2 Recognition of net investment income by the Fund is affected by the timing and declaration of dividends by the underlying investment companies in which the Fund invests.

3 Total net asset value return is calculated assuming a $10,000 purchase of common stock at the current net asset value on the first day of each period reported and a sale at the current net asset value on the last day of each period reported, and assuming reinvestment of dividends and other distributions at the net asset value on the payable date for dividends and other distributions payable through December 31, 2009 and reinvested at the NAV on the ex-dividend date for dividends and other distributions payable after December 31, 2009.  Total investment return based on net asset value is hypothetical as investors cannot purchase or sell Fund shares at net asset value but only at market prices. Returns do not reflect the deduction of taxes that a shareholder could pay on Fund dividends and other distributions, if any, or the sale of Fund shares.

4 Total market price return is calculated assuming a $10,000 purchase of common stock at the current market price on the first day of each period reported and a sale at the current market price on the last day of each period reported, and assuming reinvestment of dividends and other distributions to common shareholders at prices obtained under the Fund's Dividend Reinvestment Plan (which was terminated on January 1, 2010) for dividends and other distributions payable through December 31, 2009 and reinvested at the lower of the NAV or the closing market price on the ex-dividend date for dividends and other distributions payable after December 31, 2009. Total investment return does not reflect brokerage commissions and has not been annualized for the period of less than one year. Returns do not reflect the deduction of taxes that a shareholder could pay on Fund dividends and other distributions, if any, or the sale of Fund shares.

8

	For the year ended December 31, 2011			For the year ended December 31, 2010			For the nine months ended December 31, 2009			For the year ended March 31, 2009			For the year ended March 31, 2008			For the year ended March 31, 2007			For the year ended March 31, 2006
Ratio to average net assets attributable to common shares:
Total expenses, net of fee waivers by investment advisor and administrator including interest expense and fees on floating rate notes		1.51	%(6)		1.50	%(6)		1.03	%(5)(7)		1.73	%(7)		1.18	%		1.25	%		1.39	%
Total expenses, before fee waivers by investment advisor and administrator including interest expense and fees on floating rate notes		1.51	%(6)		1.67	%(6)		1.92	%(5)(7)		2.62	%(7)		1.88	%		1.88	%		1.90	%
Total expenses, net of fee waivers by investment advisor and administrator excluding interest expense and fees on floating rate notes		1.51	%(6)		1.50	%(6)		0.99	%(5)		1.59	%		1.18	%		1.25	%		1.39	%
Net investment income before dividends paid to auction preferred shareholders		1.32	%(2)		0.26	%(2)		5.00	%(5)		6.71	%		6.66	%		6.32	%		5.95	%
Dividends paid to auction preferred shareholders from net investment income		-			-			0.20	%(5)		1.87	%		2.68	%		2.31	%		1.48	%
Net investment income available to common shareholders		1.32	%(2)		0.26	%(2)		4.80	%(5)		4.84	%		3.98	%		4.01	%		4.47	%
Supplemental data:
Net assets applicable to common shareholders, end of period (000’s)	$	106,864		$	109,631		$	294,133		$	269,266		$	282,886		$	308,552		$	303,315
Portfolio turnover		55	%		73	%		7	%		27	%		30	%		39	%		57	%
Asset coverage per share of auction preferred shares, end of period	$	-		$	-		$	-		$	136,860		$	117,354		$	123,465		$	122,218

5 Annualized.

6 Does not include expenses of the investment companies in which the Fund invests.

7 Interest expense represents interest and fees on short term floating rate notes issued in conjunction with inverse floating rate securities.  Interest income from such transactions was included in income from investment operations.

9

 Continued

	For the years Ended March 31,
	2005			2004			2003			2002			2001
Net asset value, beginning of year	$	15.39		$	15.76		$	15.15		$	15.30		$	14.54
Net investment income		0.83			0.84			0.97			1.01			1.04
Net realized and unrealized gains (losses) from investment activities		(0.31	)		0.00	#		0.58			(0.26	)		0.79
Common share equivalent of dividends and distributions paid to auction preferred shareholders from:
Net investment income		(0.14	)		(0.07	)		(0.10	)		(0.17	)		(0.31	)
Net realized gains from investment activities		(0.01	)		(0.02	)		-			-			-
Total dividends and distributions paid to auction preferred shareholders		(0.15	)		(0.09	)		(0.10	)		(0.17	)		(0.31	)
Net increase from operations		0.37			0.75			1.45			0.58			1.52
Dividends and distributions paid to common shareholders from:
Net investment income		(0.76	)		(0.84	)		(0.84	)		(0.73	)		(0.76	)
Net realized gains from investment activities		(0.07	)		(0.24	)		-			-			-
Total dividends and distributions paid to common shareholders		(0.83	)		(1.08	)		(0.84	)		(0.73	)		(0.76	)
Auction preferred shares offering expenses		-			(0.04	)		-			-			-
Net asset value, end of year	$	14.93		$	15.39		$	15.76		$	15.15		$	15.30
Market value, end of year	$	12.71		$	14.48		$	13.98		$	13.42		$	13.11
Total investment return(8)		(6.55	)%		11.75	%		10.61	%		8.04	%		16.02	%
Ratio to average net assets attributable to common  shares:
Total expenses, net of fee waivers by advisor		1.51	%		1.35	%		1.41	%		1.42	%		1.44	%
Total expenses, before fee waivers by advisor		1.96	%		1.62	%		1.60	%		1.61	%		1.63	%
Net investment income before auction preferred shares dividends		5.52	%		5.42	%		6.23	%		6.57	%		7.00	%
Auction preferred shares dividends from net investment income		0.90	%		0.44	%		0.61	%		1.11	%		2.10	%
Net investment income available to common shareholders, net of fee waivers by advisor		4.62	%		4.98	%		5.62	%		5.46	%		4.90	%
Net investment income available to common shareholders, before fee waivers by advisor		4.17	%		4.71	%		5.43	%		5.27	%		4.71	%
Supplemental data:
Net assets applicable to common shareholders, end of year (000’s)	$	308,033		$	317,568		$	325,060		$	312,552		$	315,568
Portfolio turnover		50	%		37	%		24	%		14	%		2	%
Asset coverage per share of auction preferred shares, end of year	$	123,341		$	125,612		$	158,353		$	154,184		$	155,189

 

# Amount represents less than $0.005 per common share. 

8Total investment return is calculated assuming a $10,000 purchase of common stock at the current market price on the first day of each year reported and a sale at the current market price on the last day of each year reported, and assuming reinvestment of dividends and other distributions to common shareholders at prices obtained under the Fund's Dividend Reinvestment Plan. Total investment return does not reflect brokerage commissions. Returns do not reflect the deduction of taxes that a shareholder could pay on Fund distributions.

10

Risk Factors

An investment in the Fund involves risks.  You should carefully consider these risk factors, together with all of the other information included in this Prospectus.  If any of the following adverse events and circumstances described in the risk factors occurs, our business, financial condition and results of operations could be materially adversely affected, and our NAV and the trading price of our common stock and the Convertible Preferred Stock could decline.

RISKS RELATED TO THIS OFFERING

Absence of Existing Public Market:  There is no existing market for the Convertible Preferred Stock. There can be no assurance that an active and liquid trading market for the Convertible Preferred Stock will develop or that quotation of the Convertible Preferred Stock will be available on the NYSE. Although the NYSE has approved the listing of the Convertible Preferred Stock subject to official notice of issuance, its approval is conditioned on there being at least 100 holders of the Convertible Preferred Stock.  Therefore, the listing of the Convertible Preferred Stock on the NYSE will depend upon the number of our stockholders that exercise their rights, and it will not be possible until after the Offering has been completed to determine whether the Convertible Preferred Stock will be listed on the NYSE.  In addition, if listed, the continued listing of the Convertible Preferred Stock on the NYSE will depend upon the Convertible Preferred Stock continuing to meet the NYSE’s continued listing standards.  Future trading prices of the Convertible Preferred Stock, if any, will depend on many factors including, among other things, prevailing interest rates, the operating results and financial condition of the Fund, and the market for similar securities.  As a result, we cannot provide you with any assurance about the price at which you will be able to sell the Convertible Preferred Stock, or about whether you will be able to sell the Convertible Preferred Stock at all.

Decline in Convertible Preferred Stock Trading Price:  The public trading price for our Convertible Preferred Stock cannot yet be determined as there is currently no market for the Convertible Preferred Stock.  After you purchase Convertible Preferred Stock, and if a market is established for the Convertible Preferred Stock, the public trading price of our Convertible Preferred Stock may decline.  If our trading price declines below the Subscription Price, you will suffer an immediate unrealized loss.

Value versus Subscription Price:  The Subscription Price was not determined based on established criteria for valuation, such as expected future performance, cash flows or financial condition.  You should not rely on the Subscription Price to bear a relationship to those criteria or to be a guaranty of the value of the Fund or of our Convertible Preferred Stock.  The Board of Directors believes that the value of the conversion right of the Convertible Preferred Stock is not a predominant factor in the value of the Convertible Preferred Stock as of the date of its issuance.   The conversion right is a secondary attribute which is included to enhance the terms upon which the Fund is able to issue the Convertible Preferred Stock.

No Revocation:  Once you elect to purchase Convertible Preferred Stock, you may not revoke the election, even if you later learn information about us that you consider to be unfavorable.

Termination of Offering:  Our Board of Directors may terminate the offering at any time.  If we decide to terminate the offering, we have no obligation to you except to return, without interest, your subscription payments.

Rejection of Exercise of Subscription Rights:  Stockholders who desire to purchase shares of Convertible Preferred Stock in the Offering must act promptly to ensure that all required forms and payments are actually received by the Subscribing Agent before ____, the expiration date of the Offering, unless extended.  If you are a beneficial owner of shares of common stock, you must act promptly to ensure that your broker, custodian bank or other nominee acts for you and that all required forms and payments are actually received by the Subscribing Agent before the expiration date.  We will not be responsible if your broker, custodian or nominee fails to ensure that all required forms and payments are actually received by the Subscribing Agent before the expiration date.  If you fail to complete and sign the required subscription forms, send an incorrect payment amount or otherwise fail to follow the subscription procedures that apply to your exercise in the Offering, the Subscribing Agent may, depending on the circumstances, reject your subscription or accept it only to the extent of the payment received.  Neither we nor our Subscribing Agent undertakes to contact you concerning an incomplete or incorrect subscription form or payment, nor are we under any obligation to correct such forms or payments.  We have the sole discretion to determine whether a subscription exercise properly follows the subscription procedures.

11

Discount to Net Asset Value: The Fund’s shares of common stock have historically traded on the NYSE at a discount to the Fund’s net asset value (“NAV”) per share.  There is no assurance that this offering of Convertible Preferred Stock will have any effect on the persistent discount to NAV experienced by the Fund.

Dilution of Ownership: As a result of the terms of this offer, stockholders who do not fully exercise their Rights will own, upon conversion of the preferred stock acquired by participating completion of this offer, a smaller proportional interest in our voting stock than they owned prior to the offer. The following examples illustrate the impact of the offer depending upon whether the common stock is trading at a premium or a discount to its NAV.

Example #1 – Stock Price Trading at 10% Discount to NAV (Dilutive to NAV)
NAV Per Share	Stock Price	Conversion Price	New NAV Per Share	Percentage Dilution	Dollar Amt Per Share Dilution
$20.00	$18.00	$16.67	$19.23	3.84%	$0.77

Example #2 – Stock Price Trading at 10% Premium to NAV (Accretive to NAV)
NAV Per Share	Stock Price	Conversion Price	New NAV Per Share	Percentage Accretion	Dollar Amt Per Share Accretion
$16.00	$17.60	$16.67	$16.15	0.97%	$0.15

 Required Redemption or Conversion: If the NAV of our Common Stock reaches $20 per share, the Board may, in its sole discretion, redeem all then outstanding shares of Convertible Preferred Stock at $50 per share.  Under such circumstances, the Fund would provide no less than 30 days notice to the holders of Convertible Preferred Stock that, unless such shares have been converted by a certain date, the shares would be redeemed.  In connection with such redemption or conversion you would receive payment for all declared and unpaid dividends on your shares of Convertible Preferred Stock to the date of conversion, but after conversion you would no longer be entitled to the dividends, liquidation preference or other rights attributable to holders of the Convertible Preferred Stock.

Leveraging:  By issuing the Convertible Preferred Stock, the Fund will be using financial leverage for investment purposes. The Fund’s leveraged capital structure creates special risks not associated with unleveraged funds having similar investment objectives and policies. These include the possibility of greater loss and the likelihood of higher volatility of the NAV of the Fund and the asset coverage. Such volatility may increase the likelihood of the Fund’s having to sell investments in order to meet dividend payments on the Convertible Preferred Stock, or to redeem Convertible Preferred Stock, when it may be disadvantageous to do so. Also, when the Fund is using leverage, a decline in NAV could affect the ability of the Fund to make common stock distribution payments, and such a failure to make distributions could result in the Fund’s ceasing to qualify as a regulated investment company under the Code.

RISKS RELATED TO THE FUND’S INVESTMENTS

Other Closed-End Investment Company Securities:  The Fund invests in the securities of other closed-end investment companies.  Investing in other closed-end investment companies involves substantially the same risks as investing directly in the underlying instruments, but the total return on such investments at the investment company level may be reduced by the operating expenses and fees of such other closed-end investment companies, including advisory fees.  There can be no assurance that the investment objective of any investment company in which the Fund invests will be achieved.  Closed-end investment companies are subject to the risks of investing in the underlying securities.  The Fund, as a holder of the securities of another closed-end investment company, will bear its pro rata portion of the closed-end investment company’s expenses, including advisory fees.  These expenses are in addition to the direct expenses of the Fund’s own operations.  To the extent the Fund invests a portion of its assets in investment company securities, those assets will be subject to the risks of the purchased investment company’s portfolio securities, and a stockholder in the Fund will bear not only his proportionate share of the expenses of the Fund, but also, indirectly, the expenses of the purchased investment company.  The market price of a closed-end investment company fluctuates and may be either higher or lower than the NAV of such closed-end investment company.

12

In accordance with Section 12(d)(1)(F) of the 1940 Act, the Fund will be limited by provisions of the 1940 Act that limit the amount the Fund, together with its affiliated persons, can invest in other investment companies to 3% of any other investment company’s total outstanding stock.  As a result, the Fund may hold a smaller position in a closed-end investment company than if it were not subject to this restriction. 

In September, 2010, members of the staff of the Division of Investment Management (the “Staff”) informed the Fund that they had concerns that the Fund might not be in compliance with the exemptive conditions of Section 12(d)(1)(F) of the Investment Company Act of 1940 because the Fund and certain private partnerships might be deemed to be under common control.  The Staff members based their concerns on certain public disclosures regarding the ownership and control of the Adviser by certain individuals who also own and control other entities that serve as the general partners and investment advisers to certain private investment partnerships that are excluded from the definition of an investment company by Section 3(c)(1) of the Investment Company Act.  The Staff cited the SEC’s conclusion in In the Matter of Steadman Security Corp. (Exchange Act Release No. 13695; Investment Company Act Release No. 9830; Investment Advisers Act Release No. 593) (June 29, 1977), that “the investment adviser almost always controls the fund” in support of its position.

The Board, including all of the Independent Directors, and the Adviser reviewed the matter with their respective counsel and determined that they disagreed with the Staff’s position.  In December, 2010, the Adviser and the Fund filed a joint request for a declaratory order from the SEC that the Adviser does not control the Fund which, if granted, would resolve the Section 12(d)(l)(F) compliance issue raised by the Staff.  In March 2011, the Board and the Adviser made a determination that the joint request for a declaratory order should be deemed to have been temporarily granted under the provisions of Section 2(a)(9) of the Investment Company Act because more than 60 days had elapsed since the date the request was filed with the SEC.  The Staff has advised the Board and the Adviser that they disagree with such determination.  In June, 2011, the Fund and the Adviser submitted a letter to the Staff requesting that they re-evaluate the Staff’s position regarding whether the Adviser should be deemed to control the Fund based on the recent decision by the U.S. Supreme Court in Janus Capital Group v. First Derivative Traders.  In Janus, the Court ruled that despite the “unique close relationship” between the fund and the adviser, the adviser did not control the fund.  Although the position is not free from doubt, the Fund and the Adviser and their respective counsel believe that the Fund is in compliance with the exemptive conditions of Section 12(d)(l)(F) of the Investment Company Act.

To comply with provisions of the 1940 Act, on any matter upon which stockholders of a closed-end investment company in which the Fund has invested are solicited to vote, the Fund’s investment adviser will vote such shares in the same general proportion as shares held by other stockholders of such closed-end investment company or seek instructions from the Fund’s stockholders with regard to the voting on such matter.  Compliance with such provisions regarding its voting of proxies will cause the Fund to incur additional costs.  In addition, if the Fund votes its proxies in the same general proportion as shares held by other stockholders, the Fund may be required to vote contrary to that which the Adviser believes is in the Fund’s best interests in light of its investment objective and strategy.

The staff’s position is that in order to comply with the “seek instructions” requirement, the Fund must seek instructions from its stockholder for each proxy it receives from a closed-end investment company.  The Fund’s Board of Directors believes that the staff’s interpretation is not correct because it would render the option to “seek instructions” virtually useless which the Board believes could not have been Congress’s intent.  On December 13, 2011, the Fund applied for a declaratory order from the SEC stating that implementation of its new proxy voting procedure, as approved by stockholders on December 7, 2011, will not cause the Fund to be in violation of Section 12(d)(1) of the 1940 Act.  The application was submitted pursuant to Section 554(e) of the Administrative Procedure Act of 1946 (the “APA”).  As of March 1, 2012, having received no response from the SEC to the Fund’s application for a declaratory order, the Adviser will vote proxies received by the Fund from any closed-end investment company in the Fund’s portfolio on any proposal (including the election of directors) in a manner which the Adviser reasonably determines is likely to favorably impact the discount of such investment company’s market price as compared to its net asset value.

13

Common Stocks.  The Fund invests in common stocks.  Common stocks represent an ownership interest in a company.  The Fund may also invest in securities that can be exercised for or converted into common stocks (such as convertible preferred stock).  Common stocks and similar equity securities are more volatile and riskier than some other forms of investment.  Therefore, the value of your investment in the Fund may sometimes decrease instead of increase.  Common stock prices fluctuate for many reasons, including adverse events such as unfavorable earnings reports, changes in investors’ perceptions of the financial condition of an issuer, the general condition of the relevant stock market or when political or economic events affecting the issuers occur.  In addition, common stock prices may be sensitive to rising interest rates, as the costs of capital rise and borrowing costs increase for issuers.  Because convertible securities can be converted into equity securities, their values will normally increase or decrease as the values of the underlying equity securities increase or decrease.  The common stocks in which the Fund invests are structurally subordinated to preferred securities, bonds and other debt instruments in a company’s capital structure in terms of priority to corporate income and assets and, therefore, will be subject to greater risk than the preferred securities or debt instruments of such issuers.

Exchange Traded Funds.  The Fund may invest in exchange-traded funds, which are investment companies that, in general, aim to track or replicate a desired index, such as a sector, market or global segment.  ETFs are passively or, to a lesser extent, actively managed and their shares are traded on a national exchange.  ETFs do not sell individual shares directly to investors and only issue their shares in large blocks known as “creation units.”  The investor purchasing a creation unit may sell the individual shares on a secondary market.  Therefore, the liquidity of ETFs depends on the adequacy of the secondary market.  There can be no assurance that an ETF’s investment objective will be achieved, as ETFs based on an index may not replicate and maintain exactly the composition and relative weightings of securities in the index. ETFs are subject to the risks of investing in the underlying securities.  The Fund, as a holder of the securities of the ETF, will bear its pro rata portion of the ETF’s expenses, including advisory fees.  These expenses are in addition to the direct expenses of the Fund’s own operations.

Fixed Income Securities, including Non-Investment Grade Securities. The Fund may invest in fixed income securities, also referred to as debt securities.  Fixed income securities are subject to credit risk and market risk.  Credit risk is the risk of the issuer’s inability to meet its principal and interest payment obligations.  Market risk is the risk of price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity.  There is no limitation on the maturities or duration of fixed income securities in which the Fund invests. Securities having longer maturities generally involve greater risk of fluctuations in value resulting from changes in interest rates.  The Fund’s credit quality policy with respect to investments in fixed income securities does not require the Fund to dispose of any debt securities owned in the event that such security’s rating declines to below investment grade, commonly referred to as “junk bonds.”  Although lower quality debt typically pays a higher yield, such investments involve substantial risk of loss.  Junk bonds are considered predominantly speculative with respect to the issuer’s ability to pay interest and principal and are susceptible to default or decline in market value due to adverse economic and business developments.  The market values for junk bonds tend to be very volatile and those securities are less liquid than investment grade debt securities.  Moreover, junk bonds pose a greater risk that exercise of any of their redemption or call provisions in a declining market may result in their replacement by lower-yielding bonds.  In addition, bonds in the lowest two investment grade categories, despite being of higher credit rating than junk bonds, have speculative characteristics with respect to the issuer’s ability to pay interest and principal and their susceptibility to default or decline in market value.

Corporate Bonds, Government Debt Securities and Other Debt Securities:  The Fund may invest in corporate bonds, debentures and other debt securities.  Debt securities in which the Fund may invest may pay fixed or variable rates of interest. Bonds and other debt securities generally are issued by corporations and other issuers to borrow money from investors.  The issuer pays the investor a fixed or variable rate of interest and normally must repay the amount borrowed on or before maturity.  Certain debt securities are “perpetual” in that they have no maturity date.

14

The Fund may invest in government debt securities, including those of emerging market issuers or of other non-U.S. issuers.  These securities may be U.S. dollar-denominated or non-U.S. dollar-denominated and include: (a) debt obligations issued or guaranteed by foreign national, provincial, state, municipal or other governments with taxing authority or by their agencies or instrumentalities; and (b) debt obligations of supranational entities.  Government debt securities include: debt securities issued or guaranteed by governments, government agencies or instrumentalities and political subdivisions; debt securities issued by government owned, controlled or sponsored entities; interests in entities organized and operated for the purpose of restructuring the investment characteristics issued by the above noted issuers; or debt securities issued by supranational entities such as the World Bank or the European Union.  The Fund may also invest in securities denominated in currencies of emerging market countries.  Emerging market debt securities generally are rated in the lower rating categories of recognized credit rating agencies or are unrated and considered to be of comparable quality to lower rated debt securities.  A non-U.S. issuer of debt or the non-U.S. governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due, and the Fund may have limited resources in the event of a default.  Some of these risks do not apply to issuers in large, more developed countries.  These risks are more pronounced in investments in issuers in emerging markets or if the Fund invests significantly in one country.

Short Sale Risk:  When a cash dividend is declared on a security for which the Fund holds a short position, the Fund incurs the obligation to pay an amount equal to that dividend to the lender of the shorted security.  By closing out the short position prior to the ex-dividend date, such dividend expenses are avoided.  The Fund’s actual dividend expenses paid on securities sold short may be significantly higher than 0% of its managed assets due to, among other factors, the actual extent of the Fund’s short positions (which may range from 0% to 30% of managed assets), the actual dividends paid with respect to the securities the Fund sells short, and the actual timing of the Fund’s short sale transactions, each of which may vary over time and from time to time.

The Fund’s obligation to replace the borrowed security will be secured by collateral deposited with the broker-dealer, usually cash, U.S. government securities or other liquid securities.  The Fund will also be required to designate on its books and records similar collateral with its custodian to the extent, if any, necessary so that the aggregate collateral value is at all times at least equal to the current market value of the security sold short.  Depending on arrangements made with the broker-dealer from which it borrowed the security regarding payment over of any payments received by the Fund on such security, the Fund may not receive any payments (including interest) on its collateral deposited with such broker-dealer.

If the price of the security sold short increases between the time of the short sale and the time the Fund replaces the borrowed security, the Fund will incur a loss; conversely, if the price declines, the Fund will realize a gain.  Any gain will be decreased, and any loss increased, by the transaction costs described above.  Although the Fund’s gain is limited to the price at which it sold the security short, its potential loss is unlimited.

Purchasing securities to close out the short position can itself cause the price of the securities to rise further, thereby exacerbating the loss.  Short selling exposes the Fund to unlimited risk with respect to that security due to the lack of an upper limit on the price to which an instrument can rise.  Although the Fund reserves the right to use short sales, the Adviser is under no obligation to use short sales at all.

The requirements of the 1940 Act and Internal Revenue Code of 1986, as amended (the “Code”) provide that the Fund not make a short sale if, after giving effect to such sale, the market value of all securities sold short by the Fund exceeds 30% of the value of its managed assets.

Small and Medium Cap Company Risk:  Compared to investment companies that focus only on large capitalization companies, the Fund’s share price may be more volatile because it also invests in small and medium capitalization companies.  Compared to large companies, small and medium capitalization companies are more likely to have (i) more limited product lines or markets and less mature businesses, (ii) fewer capital resources, (iii) more limited management depth and (iv) shorter operating histories.  Further, compared to large cap stocks, the securities of small and medium capitalization companies are more likely to experience sharper swings in market values, be harder to sell at times and at prices that the Fund’s investment adviser believes appropriate, and offer greater potential for gains and losses.

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Foreign Securities:  The Fund may invest in foreign securities, including direct investments in securities of foreign issuers that are traded on a U.S. securities exchange or over the counter and investments in depository receipts (such as American Depositary Receipts (“ADRs”)), ETFs and other closed-end investment companies that represent indirect interests in securities of foreign issuers.  The Fund is not limited in the amount of assets it may invest in such foreign securities.  These investments involve certain risks not generally associated with investments in the securities of U.S. issuers, including the risk of fluctuations in foreign currency exchange rates, unreliable and untimely information about the issuers and political and economic instability.  These risks could result in the Fund’s investment adviser misjudging the value of certain securities or in a significant loss in the value of those securities.

The value of foreign securities is affected by changes in currency rates, foreign tax laws (including withholding and confiscatory taxes), government policies (in this country or abroad), relations between nations and trading, settlement, custodial and other operational risks.  In addition, the costs of investing abroad are generally higher than in the United States, and foreign securities markets may be less liquid, more volatile and less subject to governmental supervision than markets in the U.S.  As an alternative to holding foreign traded securities, the Fund may invest in dollar-denominated securities of foreign companies that trade on U.S. exchanges or in the U.S. over-the-counter market (including depositary receipts as described below, which evidence ownership in underlying foreign securities, and ETFs as described below).

Because foreign companies are not subject to uniform accounting, auditing and financial reporting standards, practices and requirements comparable to those applicable to U.S. companies, there may be less publicly available information about a foreign company than about a domestic company.  Volume and liquidity in most foreign debt markets is less than in the United States and securities of some foreign companies are less liquid and more volatile than securities of comparable U.S. companies.  There is generally less government supervision and regulation of securities exchanges, broker dealers and listed companies than in the United States.  Mail service between the United States and foreign countries may be slower or less reliable than within the United States, thus increasing the risk of delayed settlements of portfolio transactions or loss of certificates for portfolio securities.  Payment for securities before delivery may be required.  In addition, with respect to certain foreign countries, including those with emerging markets, there is the possibility of expropriation or confiscatory taxation, political or social instability, or diplomatic developments which could affect investments in those countries.  For example, prior governmental approval for foreign investments may be required in some emerging market countries, and the extent of foreign investment may be subject to limitation in other emerging countries.  Moreover, individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position.  Foreign securities markets, while growing in volume and sophistication, are generally not as developed as those in the United States, and securities of some foreign issuers (particularly those located in developing countries) may be less liquid and more volatile than securities of comparable U.S. companies.

The Fund may purchase ADRs, international depositary receipts (“IDRs”) and global depository receipts (“GDRs”) which are certificates evidencing ownership of shares of foreign issuers and are alternatives to purchasing directly the underlying foreign securities in their national markets and currencies.  However, such depository receipts continue to be subject to many of the risks associated with investing directly in foreign securities.  These risks include foreign exchange risk as well as the political and economic risks associated with the underlying issuer’s country. ADRs, EDRs and GDRs may be sponsored or unsponsored.  Unsponsored receipts are established without the participation of the issuer.  Unsponsored receipts may involve higher expenses, they may not pass-through voting or other stockholder rights, and they may be less liquid.  Less information is normally available on unsponsored receipts.

Dividends paid on foreign securities may not qualify for the reduced federal income tax rates applicable to qualified dividends under the Code.  As a result, there can be no assurance as to what portion of the Fund’s distributions attributable to foreign securities will be designated as qualified dividend income.

Emerging Market Securities:  The Fund may invest up to 5% of its net assets in emerging market securities, although through its investments in ETFs, other investment companies or depository receipts that invest in emerging market securities, up to 20% of the Fund’s assets may be invested indirectly in issuers located in emerging markets.  The risks of foreign investments described above apply to an even greater extent to investments in emerging markets.  The securities markets of emerging countries are generally smaller, less developed, less liquid, and more volatile than the securities markets of the United States and developed foreign markets.  Disclosure and regulatory standards in many respects are less stringent than in the United States and developed foreign markets.  There also may be a lower level of monitoring and regulation of securities markets in emerging market countries and the activities of investors in such markets and enforcement of existing regulations has been extremely limited.  Many emerging countries have experienced substantial, and in some periods extremely high, rates of inflation for many years.  Inflation and rapid fluctuations in inflation rates have had and may continue to have very negative effects on the economies and securities markets of certain emerging countries.  Economies in emerging markets generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values, and other protectionist measures imposed or negotiated by the countries with which they trade.  The economies of these countries also have been and may continue to be adversely affected by economic conditions in the countries in which they trade.  The economies of countries with emerging markets may also be predominantly based on only a few industries or dependent on revenues from particular commodities.  In addition, custodial services and other costs relating to investment in foreign markets may be more expensive in emerging markets than in many developed foreign markets, which could reduce the Fund’s income from such securities.  In many cases, governments of emerging countries continue to exercise significant control over their economies, and government actions relative to the economy, as well as economic developments generally, may affect the Fund’s investments in those countries.  In addition, there is a heightened possibility of expropriation or confiscatory taxation, imposition of withholding taxes on interest payments, or other similar developments that could affect investments in those countries.  There can be no assurance that adverse political changes will not cause the Fund to suffer a loss of any or all of its investments.  Dividends paid by issuers in emerging market countries will generally not qualify for the reduced federal income tax rates applicable to qualified dividends under the Code.

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Preferred Stocks:  The Fund may invest in preferred stocks.  Preferred stock, like common stock, represents an equity ownership in an issuer.  Generally, preferred stock has a priority of claim over common stock in dividend payments and upon liquidation of the issuer. Unlike common stock, preferred stock does not usually have voting rights.  Preferred stock in some instances is convertible into common stock.  Although they are equity securities, preferred stocks have characteristics of both debt and common stock.  Like debt, their promised income is contractually fixed.  Like common stock, they do not have rights to precipitate bankruptcy proceedings or collection activities in the event of missed payments.  Other equity characteristics are their subordinated position in an issuer’s capital structure and that their quality and value are heavily dependent on the profitability of the issuer rather than on any legal claims to specific assets or cash flows.

Investment in preferred stocks carries risks, including credit risk, deferral risk, redemption risk, limited voting rights, risk of subordination and lack of liquidity.  Fully taxable or hybrid preferred securities typically contain provisions that allow an issuer, at its discretion, to defer distributions for up to 20 consecutive quarters.  Distributions on preferred stock must be declared by the board of directors and may be subject to deferral, and thus they may not be automatically payable.  Income payments on preferred stocks may be cumulative, causing dividends and distributions to accrue even if not declared by the company’s board or otherwise made payable, or they may be non-cumulative, so that skipped dividends and distributions do not continue to accrue.  There is no assurance that dividends on preferred stocks in which the Fund invests will be declared or otherwise made payable.  The Fund may invest in non-cumulative preferred stock, although the Fund’s investment adviser would consider, among other factors, their non-cumulative nature in making any decision to purchase or sell such securities.

Shares of preferred stock have a liquidation value that generally equals the original purchase price at the date of issuance.  The market values of preferred stock may be affected by favorable and unfavorable changes impacting the issuers’ industries or sectors, including companies in the utilities and financial services sectors, which are prominent issuers of preferred stock.  They may also be affected by actual and anticipated changes or ambiguities in the tax status of the security and by actual and anticipated changes or ambiguities in tax laws, such as changes in corporate and individual income tax rates, and in the dividends received deduction for corporate taxpayers or the lower rates applicable to certain dividends.

Because the claim on an issuer’s earnings represented by preferred stock may become onerous when interest rates fall below the rate payable on the stock or for other reasons, the issuer may redeem preferred stock, generally after an initial period of call protection in which the stock is not redeemable.  Thus, in declining interest rate environments in particular, the Fund’s holdings of higher dividend paying preferred stocks may be reduced and the Fund may be unable to acquire securities paying comparable rates with the redemption proceeds.  In the event of a redemption, the Fund may not be able to reinvest the proceeds at comparable rates of return.

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Convertible Securities.  The Fund may invest in convertible securities.  Convertible securities include fixed income securities that may be exchanged or converted into a predetermined number of shares of the issuer’s underlying common stock at the option of the holder during a specified period.  Convertible securities may take the form of convertible preferred stock, convertible bonds or debentures, units consisting of “usable” bonds and warrants or a combination of the features of several of these securities.  The investment characteristics of each convertible security vary widely, which allows convertible securities to be employed for a variety of investment strategies.  The Fund will exchange or convert convertible securities into shares of underlying common stock when, in the opinion of the Fund’s investment adviser, the investment characteristics of the underlying common shares will assist the Fund in achieving its investment objective.  The Fund may also elect to hold or trade convertible securities. In selecting convertible securities, the Fund’s investment adviser evaluates the investment characteristics of the convertible security as a fixed income instrument, and the investment potential of the underlying equity security for capital appreciation.  In evaluating these matters with respect to a particular convertible security, the Fund’s investment adviser considers numerous factors, including the economic and political outlook, the value of the security relative to other investment alternatives, trends in the determinants of the issuer’s profits, and the issuer’s management capability and practices.

The value of a convertible security, including, for example, a warrant, is a function of its “investment value” (determined by its yield in comparison with the yields of other securities of comparable maturity and quality that do not have a conversion privilege) and its “conversion value” (the security’s worth, at market value, if converted into the underlying common stock).  The investment value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline.  The credit standing of the issuer and other factors may also have an effect on the convertible security’s investment value.  The conversion value of a convertible security is determined by the market price of the underlying common stock.  If the conversion value is low relative to the investment value, the price of the convertible security is governed principally by its investment value.  Generally, the conversion value decreases as the convertible security approaches maturity.  To the extent the market price of the underlying common stock approaches or exceeds the conversion price, the price of the convertible security will be increasingly influenced by its conversion value.  A convertible security generally will sell at a premium over its conversion value by the extent to which investors place value on the right to acquire the underlying common stock while holding a fixed income security.  A convertible security may be subject to redemption at the option of the issuer at a price established in the convertible security’s governing instrument.  If a convertible security held by the Fund is called for redemption, the Fund will be required to permit the issuer to redeem the security, convert it into the underlying common stock or sell it to a third party.  Any of these actions could have an adverse effect on the Fund’s ability to achieve its investment objective.

Real Estate Investment Trusts.  The Fund may invest in real estate investment trusts (“REITs”).  REITs are financial vehicles that pool investors’ capital to purchase or finance real estate.  Investments in REITs will subject the Fund to various risks. REIT share prices may decline because of adverse developments affecting the real estate industry and real property values.  In general, real estate values can be affected by a variety of factors, including supply and demand for properties, the economic health of the country or of different regions, and the strength of specific industries that rent properties. REITs often invest in highly leveraged properties.  Returns from REITs, which typically are small or medium capitalization stocks, may trail returns from the overall stock market.  In addition, changes in interest rates may hurt real estate values or make REIT shares less attractive than other income-producing investments. REITs are also subject to heavy cash flow dependency, defaults by borrowers and self-liquidation.

Qualification as a REIT under the Code in any particular year is a complex analysis that depends on a number of factors.  There can be no assurance that the entities in which the Fund invests with the expectation that they will be taxed as a REIT will qualify as a REIT.  An entity that fails to qualify as a REIT would be subject to a corporate level tax, would not be entitled to a deduction for dividends paid to its stockholders and would not pass through to its stockholders the character of income earned by the entity. If the Fund were to invest in an entity that failed to qualify as a REIT, such failure could significantly reduce the Fund’s yield on that investment.

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REITs can be classified as equity REITs, mortgage REITs and hybrid REITs.  Equity REITs invest primarily in real property and earn rental income from leasing those properties. They may also realize gains or losses from the sale of properties.  Equity REITs will be affected by conditions in the real estate rental market and by changes in the value of the properties they own.  Mortgage REITs invest primarily in mortgages and similar real estate interests and receive interest payments from the owners of the mortgaged properties.  Mortgage REITs will be affected by changes in creditworthiness of borrowers and changes in interest rates.  Hybrid REITs invest both in real property and in mortgages.  Equity and mortgage REITs are dependent upon management skills, may not be diversified and are subject to the risks of financing projects.

Dividends paid by REITs will not generally qualify for the reduced U.S. federal income tax rates applicable to qualified dividends under the Code.

The Fund’s investments in REITs may include an additional risk to stockholders.  Some or all of a REIT’s annual distributions to its investors may constitute a non-taxable return of capital.  Any such return of capital will generally reduce the Fund’s basis in the REIT investment, but not below zero.  To the extent the distributions from a particular REIT exceed the Fund’s basis in such REIT, the Fund will generally recognize gain.  In part because REIT distributions often include a nontaxable return of capital, trust distributions to stockholders may also include a nontaxable return of capital.  Stockholders that receive such a distribution will also reduce their tax basis in their common shares of the Fund, but not below zero.  To the extent the distribution exceeds a stockholder’s basis in the Fund’s common shares such stockholder will generally recognize a capital gain.

The Fund does not have any investment restrictions with respect to investments in REITs other than its concentration policy which limits its investments in REITs to no more than 25% of its assets.

Issuer Risk: The value of an issuer’s securities that are held in the Fund’s portfolio may decline for a number of reasons which directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer’s goods and services.

Foreign Currency Risk: Although the Fund will report its NAV  and pay expenses and distributions in U.S. dollars, the Fund may invest in foreign securities denominated or quoted in currencies other than the U.S. dollar.  Therefore, changes in foreign currency exchange rates will affect the U.S. dollar value of the Fund’s investment securities and NAV.  For example, even if the securities prices are unchanged on their primary foreign stock exchange, the Fund’s NAV may change because of a change in the rate of exchange between the U.S. dollar and the trading currency of that primary foreign stock exchange.  Certain currencies are more volatile than those of other countries and Fund investments related to those countries may be more affected.  Generally, if a foreign currency depreciates against the dollar (i.e., if the dollar strengthens), the value of the existing investment in the securities denominated in that currency will decline.  When a given currency appreciates against the dollar (i.e., if the dollar weakens), the value of the existing investment in the securities denominated in that currency will rise.  Certain foreign countries may impose restrictions on the ability of foreign securities issuers to make payments of principal and interest to investors located outside of the country, due to a blockage of foreign currency exchanges or otherwise.

Defensive Positions: During periods of adverse market or economic conditions, the Fund may temporarily invest all or a substantial portion of its net assets in cash or cash equivalents.  The Fund would not be pursuing its investment objective in these circumstances and could miss favorable market developments.

Risk Characteristics of Options and Futures: Options and futures transactions can be highly volatile investments. Successful hedging strategies require the anticipation of future movements in securities prices, interest rates and other economic factors. When a fund uses futures contracts and options as hedging devices, the prices of the securities subject to the futures contracts and options may not correlate with the prices of the securities in a portfolio. This may cause the futures and options to react to market changes differently than the portfolio securities. Even if expectations about the market and economic factors are correct, a hedge could be unsuccessful if changes in the value of the portfolio securities do not correspond to changes in the value of the futures contracts. The ability to establish and close out futures contracts and options on futures contracts positions depends on the availability of a secondary market. If these positions cannot be closed out due to disruptions in the market or lack of liquidity, losses may be sustained on the futures contract or option. In addition, the Fund’s use of options and futures may have the effect of reducing gains made by virtue of increases in value of the Fund’s common stock holdings.

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Securities Lending Risk:  Securities lending is subject to the risk that loaned securities may not be available to the Fund on a timely basis and the Fund may, therefore, lose the opportunity to sell the securities at a desirable price.  Any loss in the market price of securities loaned by the Fund that occurs during the term of the loan would be borne by the Fund and would adversely affect the Fund’s performance.  Also, there may be delays in recovery, or no recovery, of securities loaned or even a loss of rights in the collateral should the borrower of the securities fail financially while the loan is outstanding. The Fund would not have the right to vote any securities having voting rights during the existence of the loan.

Discount Risk: Historically, our shares, as well as those of other closed-end investment companies, have frequently traded at a discount to their NAV, which discount often fluctuates over time. See “Financial Highlights.”

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Convertible Preferred Stock Rights Offering

Purpose of Offering/Use of Proceeds

The Board of Directors of the Fund has determined that it would be in the best interests of the Fund and our stockholders to increase the assets of the Fund so that we may be in a better position to take advantage of investment opportunities that exist or may arise.  This offering seeks to reward existing stockholders by giving them the opportunity to purchase additional securities of the Fund without incurring any commission or charge.  The distribution of the Rights, which themselves may have intrinsic value, will also give non-participating stockholders the potential of receiving a cash payment upon the sale of their Rights, which may be viewed as partial compensation for the possible dilution of their interests in the Fund as a result of the Offer.  Proceeds will be invested in accordance with the Fund’s investment objective and policies as stated herein.

Basic Subscription Right

Each of our stockholders as of the Record Date shall receive, at no cost, one transferable right ( each whole right, a “Subscription Right” or “Right”) to purchase one share of Convertible Preferred Stock for each ten shares of our common stock such stockholder owns as of the Record Date (the “Basic Subscription Right”).  We will not issue fractional shares of our Convertible Preferred Stock upon the exercise of Rights. The number of Rights issued to Record Date stockholders will be rounded up to the nearest whole number of Rights. We intend to offer shares of Convertible Preferred Stock to these stockholders for a price equal to $50.00 per share (the “Subscription Price”).  The offer to purchase Convertible Preferred Stock will expire at 5:00 p.m., New York City time, on __________, unless we decide to extend it to some later date (the “Expiration Date”).

The Fund announced this offering after the close of trading on the NYSE on _________.  The NAV per share of our common stock at the close of business on __________ (the last trading date on which the Fund publicly reported its NAV prior to the announcement) was $____, and the last reported sales price of a share of our common stock on the NYSE on such date was $_____.

All questions as to the validity, form, eligibility (including time of receipt), payment and acceptance for payment of any Convertible Preferred Stock will be determined by us, in our sole discretion, which determination shall be final and binding.  We reserve the absolute right to reject any and all requests for participation in this offering and to issue a lower number of shares of Convertible Preferred Stock, with our only obligation being to return any excess payment without interest.  We shall be under no duty to give notification of any defects or irregularities in any request for participation in this offering, nor shall we incur any liability for failure to give any such notification.

Over-Subscription Privilege

If you elect to purchase the maximum amount of our Convertible Preferred Stock that you are entitled to purchase pursuant to your Basic Subscription Right, you will also be entitled to the Over-Subscription Privilege to subscribe, subject to allotment, to purchase additional shares of our Convertible Preferred Stock, if any, that are not purchased by our other stockholders pursuant to their Basic Subscription Right as of the Expiration Date.  If sufficient shares of our Convertible Preferred Stock are available, we will seek to honor over-subscription requests in full.  If the number of shares of our Convertible Preferred Stock available for sale pursuant to the Over-Subscription Privilege is not sufficient to satisfy in full all subscriptions submitted for additional shares, we will allocate any available shares pro rata among stockholders who exercise their Over-Subscription Privilege in proportion to the number of shares each stockholder subscribing for additional shares was entitled to and elected to purchase under his or her Basic Subscription Right; up to the number of additional shares that the stockholder subscribed for pursuant to the exercise of his or her Over-Subscription Privilege, rounded up to the nearest whole share.  Additionally, if there are not enough unsubscribed shares to honor all over-subscription requests, the Fund may, in its sole discretion, issue additional shares, up to 10% of the shares available in the Offering, to honor over-subscription requests.

Banks, brokers, trustees and other nominee holders of Rights will be required to certify to the Subscribing Agent, before any Over-Subscription Privilege may be exercised with respect to any particular beneficial owner, as to the aggregate number of Subscription Rights exercised and the number of Convertible Preferred Stock subscribed for pursuant to the Over-Subscription Privilege by such beneficial owner and that such beneficial owner’s Basic Subscription Right was exercised in full. A Nominee Holder Certification form will be distributed to banks, brokers, trustees and other nominee holders with the Subscription Certificate.

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We have been advised that the Directors who own or control shares of our common stock intend to exercise all of the Rights initially issued to them.

Transferability of Rights

The Rights are evidenced by Subscription Certificates and are transferable until the Expiration Date and have been admitted for trading on the NYSE. Although no assurance can be given that a market for the Rights will develop, trading in the Rights on the NYSE will begin three Business Days prior to the Record Date and may be conducted until the close of trading on the last NYSE trading day prior to the Expiration Date, such period to be no less than 20 days. The value of the Rights, if any, will be reflected by the market price.

Trading of the Rights on the NYSE will be conducted on a when-issued basis until and including the date on which the Subscription Certificates are mailed to Record Date stockholders and thereafter will be conducted on a regular-way basis until and including the last NYSE trading day prior to the Expiration Date.  The shares will begin trading ex-Rights two Business Days prior to the Record Date.  Neither the Fund nor the Subscribing Agent will be responsible if Rights cannot be sold and neither has guaranteed any minimum sales price for the Rights.  For purposes of this Prospectus, a “Business Day” shall mean any day on which trading is conducted on the NYSE. Stockholders are urged to obtain a recent trading price for the Rights on the NYSE from their broker, bank, financial advisor or the financial press.

Description of Convertible Preferred Stock

The Convertible Preferred Stock is a new class of our capital stock designated by the Board of Directors specifically for issuance pursuant to this offering.  See “Description of our Capital Stock”

(a)           Liquidation Preference:  In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Fund, the holders of Convertible Preferred Stock will be entitled to receive preferential liquidating distribution at face value (i.e., $50.00 per share), before any distribution of assets is made to the holders of our common stock.  After payment of the full amount of the liquidating distribution to which they are entitled, the holders of shares of Convertible Preferred Stock will not be entitled to any further participation in any distribution of assets by the Fund.

 (b)           Dividends:  The holders of Convertible Preferred Stock will be entitled to receive dividends at the rate of 3.00% of the Subscription Price per year.  Dividends on our Convertible Preferred Stock will be fully cumulative, will accumulate without interest from the date of original issuance of the Convertible Preferred Stock and will be payable quarterly in arrears on the last calendar day of March, June, September and December, commencing on the last calendar day of the first March, June, September or December following the date of Expiration Date.

 (c)           Voting Rights:  So long as the Fund is subject to the 1940 Act, the holders of any Convertible Preferred Stock, voting separately as a single class, shall have the right to elect two Directors at all times.  The remaining Directors shall be elected by holders of common stock and the holders of the Convertible Preferred Stock, voting together as a single class.  So long as the Fund is subject to the 1940 Act, in addition to any approval by stockholders that might otherwise be required, the approval of the holders of a majority of any outstanding Convertible Preferred Stock voting separately as a class, would be required to (1) adopt any plan of reorganization that would adversely affect the Convertible Preferred Stock, and (2) take any action requiring a vote of security holders under Section 13(a) of the 1940 Act, including, among other things, changes in the Fund’s subclassification as a closed-end investment company or changes in its fundamental investment restrictions.  As a result of these voting rights, the Fund’s ability to take any such actions may be impeded to the extent that there is any Convertible Preferred Stock outstanding.  The Board of Directors presently intends that, except as otherwise indicated in this Prospectus and except as otherwise required by applicable law or the Fund’s Articles of Incorporation, Articles Supplementary or bylaws, holders of Convertible Preferred Stock will have equal voting rights with holders of our common stock (one vote per share, unless otherwise required by the 1940 Act) and shall vote together with such holders of common stock as a single class.

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(d)           Conversion Right:  Holders of Convertible Preferred Stock may convert their shares to common stock at the ratio of three shares of Common Stock for each share of Convertible Preferred Stock held.  The conversion ratio will be adjusted for any distributions made to common stockholders.  The Board of Directors believes that the value of the conversion right of the Convertible Preferred Stock is not a predominant factor in the market value of the Convertible Preferred Stock as of the date of its issuance.   The conversion right is a secondary attribute which is included to enhance the terms upon which the Fund is able to issue the Convertible Preferred Stock. If the NAV of our Common Stock reaches $20 per share, the Board may, in its sole discretion, redeem all then outstanding shares of Convertible Preferred Stock at $50 per share.  Under such circumstances, the Fund would provide no less than 30 days notice to the holders of Convertible Preferred Stock that, unless such shares have been converted by a certain date, the shares would be redeemed.  In connection with such conversion (or redemption) you would receive payment for all declared and unpaid dividends on your shares of Convertible Preferred Stock to the date of conversion, but after conversion you would no longer be entitled to the dividends, liquidation preference or other rights attributable to holders of the Convertible Preferred Stock.

(e)           Mandatory Redemption:  We will redeem all outstanding shares of Convertible Preferred Stock as of _____, 2017 (five years from the Expiration Date) at a price of $50 per share of Convertible Preferred Stock held on such date.

Asset Coverage

Immediately following the issuance of the Convertible Preferred Stock to purchasing stockholders and so long as the Fund is subject to the 1940 Act, (i) the Fund shall have an asset coverage of at least 200 percent, (ii) the Fund will be prohibited from declaring any dividend (except a dividend payable in our common stock) or any other distribution upon our common stock, unless the Convertible Preferred Stock has, at the time of any such declaration, an asset coverage of at least 200 percent after deducting the amount of such dividend or distribution, as the case may be, (iii) holders of Convertible Preferred Stock will be entitled, voting as a class, to the voting rights outlined in (b) above, and (iv) holders of Convertible Preferred Stock will have the liquidation preference outlined in (a) above.

No Fractional Shares

We will not issue fractional shares of our Convertible Preferred Stock upon the exercise of Rights. The number of Rights issued to Record Date stockholders will be rounded up to the nearest whole number of Rights.

Expiration Date of the Offering

You may elect to purchase Convertible Preferred Stock pursuant to your Basic Subscription Right and/or Over-Subscription Privilege at any time before 5:00 p.m., New York City time, on ________ (the Expiration Date).  The Board of Directors reserves the right to extend the date upon which the Rights expire.  If you do not elect to purchase Convertible Preferred Stock pursuant to your Rights before the time they expire, then your Rights will be null and void.  We will not be obligated to honor your election to purchase Convertible Preferred Stock if we receive the documents relating to your purchase of Convertible Preferred Stock or collect your payment after the time they expire, regardless of when you transmitted the documents. See “Receipt of Payment” below.

Any extension of this offering will be followed as promptly as practicable by announcement thereof, and in no event later than 9:00 a.m., New York City time, on the next business day following the previously scheduled Expiration Date. Without limiting the manner in which the Fund may choose to make such announcement, the Fund will not, unless otherwise required by law, have any obligation to publish, advertise or otherwise communicate any such announcement other than by making a release to the Dow Jones News Service or such other means of announcement as the Fund deems appropriate.

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Although we have no present intention to do so, we may, in the future and in our discretion, choose to make additional offerings from time to time for a number of shares and on terms which may or may not be similar to this offer. Any such future offering will be made in accordance with the 1940 Act.

Distribution Arrangements

We do not intend to engage a dealer manager for the offer. Our officers and Directors may solicit the exercise of Rights by our stockholders. This offering is not contingent on any number of Rights being exercised, and we will pay all expenses incurred in connection with the offer.

Election to Purchase Convertible Preferred Stock

You may elect to purchase Convertible Preferred Stock by delivering the following to the Subscribing Agent at or before the Expiration Date:

● your properly completed and signed Subscription Certificate, with any required signature guarantees, evidencing those rights with any other supplemental documentation, or your properly completed Beneficial Owner Election Form instructing your broker, dealer, custodian bank or other nominee to act on your behalf through DTC; and

● your payment in full of the Subscription Price for each share of our Convertible Preferred Stock that you choose to subscribe for under your Basic Subscription Right and your Over-Subscription Privilege.

Method of Payment

Your payment of the Subscription Price must be made by either:

● check or bank draft drawn upon a U.S. bank or postal, telegraphic, or express money order payable to: “Special Opportunities Fund, Inc.”; or

● wire transfer of immediately available funds to the account maintained by the Subscribing Agent for such purpose at: [Bank Name, ABA# and Account #].

● If you hold our common stock through a nominee holder, you will need to have your broker, custodian bank or other nominee act for you.  To indicate your decision with respect to your Rights, you should send a Beneficial Owner Election Form to your broker, dealer, custodian bank or other nominee instructing them to exercise the Rights and make payment through DTC by the Expiration Date.

Receipt of Payment

Your payment of the Subscription Price will be deemed to have been received by us only upon:

● clearance of any uncertified check;

● receipt by us of any certified check or bank draft drawn upon a U.S. bank or any postal, telegraphic or express money order; or

● receipt of collected funds in our account designated above.

Clearance of Uncertified Checks

You should note that funds paid by uncertified personal checks may take 5 business days or more to clear.  If you wish to pay the Subscription Price by an uncertified personal check, we recommend that you make payment at least 10 days in advance of the Expiration Date to ensure that your payment is received and clears by that time.  If your check does not clear before the Expiration Date, you will not receive any shares of Convertible Preferred Stock, and our only obligation will be to return your subscription payment, without interest.  It is safer to use a certified or cashier’s check, money order or wire transfer of funds to avoid missing the opportunity to purchase Convertible Preferred Stock.

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Delivery of Subscription Materials and Payment

You should deliver the Subscription Certificate and payment of the Subscription Price, as well as any other subscription documentation as follows:

By Mail Delivery:	By Hand or Overnight Delivery:
American Stock Transfer & Trust Company, LLC	American Stock Transfer & Trust Company, LLC
Attn:  Reorganization Department	Operations Center
P.O. Box 2042	Attn:  Reorganization Department
New York, New York 10272-2042	6201 15th Avenue
	Brooklyn, New York 11219

Information

If you have any questions about the offering or with to request another copy of a document, please call the Information Agent, Phoenix Advisory Partners, toll free at 877-478-5038.  You may also e-mail Phoenix at info@phoenixadvisorypartners.com.

Calculation of Convertible Preferred Stock Purchased

If you do not indicate the number of shares of Convertible Preferred Stock being subscribed for, or do not forward full payment of the aggregate Subscription Price for the number of shares of Convertible Preferred Stock that you indicate are subscribed for, then you will be deemed to have purchased the maximum number of shares of the Convertible Preferred Stock that may be purchased for the payment that you delivered to our Subscribing Agent.

Funds Will Be Held by our Subscribing Agent until Shares of Convertible Preferred Stock Are Issued

Our Subscribing Agent will hold your payment in a segregated account with other payments received from stockholders until we issue to you your shares of our Convertible Preferred Stock. You will not be entitled to any interest on such payment.

Notice to Nominee Holders

If you are a broker, a trustee or a depositary for securities who holds shares of our common stock for the account of others as of the Record Date, you should notify the respective beneficial owners of the shares about the rights offering as soon as possible to find out their intentions.  You should obtain instructions from the beneficial owner with respect to the rights by using the instructions that we have provided to you for your distribution to beneficial owners.  If the beneficial owner so instructs, you should complete the appropriate Subscription Certificate and Notice of Guaranteed Delivery, if applicable, and submit them to our Subscribing Agent with the proper payment.

Notice to Beneficial Owners Whose Shares are Held by a Broker or Nominee

If you are a beneficial owner of shares of our common stock or rights that you hold through a nominee holder, we will ask your broker, custodian bank or other nominee to notify you of this offering.  If you wish to purchase Convertible Preferred Stock, you will need to have your broker, custodian bank or other nominee act for you.  To indicate your decision with respect to your rights, you should complete and return to your broker, custodian bank or other nominee the Beneficial Holder Election Form.  You should receive this form from your broker, custodian bank or other nominee with the other rights offering materials.  We suggest that you contact your broker or other nominee to be sure that they are sending you the election form without delay. If you are giving instructions to your nominee, you should act promptly to allow a sufficient amount of time to ensure that the nominee can act to follow your instructions in time.

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Notice of NAV Decline

The Fund, as required by the SEC’s registration form, will suspend this offering until it amends this Prospectus if, subsequent to the date of this Prospectus, the Fund’s NAV declines more than 10% from its NAV as of that date. Accordingly, the Expiration Date would be extended and the Fund would notify Record Date stockholders of the decline and permit stockholders to cancel their exercise of Rights.

Mailing of Confirmation

On a date within eight (8) business days following the Expiration Date (“Confirmation Date”), the Subscribing Agent will send to each exercising Rights holder (or, if shares of common stock are held by a nominee, to such nominee) a confirmation showing (i) the number of shares of Convertible Preferred Stock purchased pursuant to the Basic Subscription Right; (ii) the number of shares, if any, acquired pursuant to the Over-Subscription Privilege (for Record Date stockholders who are exercising all of the Rights originally issued to them); and (iii) the per share and total Subscription Price for the shares.  All payments by an exercising Rights holder must be in U.S. dollars by money order or check drawn on or wire transfer from a bank or branch located in the United States and payable to “Special Opportunities Fund, Inc.”

Determinations Regarding the Election to Purchase Convertible Preferred Stock

We will decide all questions concerning the timeliness, validity, form and eligibility of your election to purchase Convertible Preferred Stock.  Our decisions will be final and binding.  We, in our sole discretion, may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as we may determine.  We may reject the election to purchase Convertible Preferred Stock because of any defect or irregularity.  Your election will not be deemed to have been received or accepted until all irregularities have been waived by us or cured by you within such time as we decide, in our sole discretion.

Neither we nor our Subscribing Agent will be under any duty to notify you of a defect or irregularity.  We will not be liable for failing to give you any such notice.  We reserve the right to reject your election to purchase Convertible Preferred Stock if your election is not in accordance with the terms of the offering or in proper form.  We will also not accept your election to purchase Convertible Preferred Stock if our issuance of shares of our Convertible Preferred Stock upon your election could be deemed unlawful or materially burdensome.

Termination

We may terminate this offering at any time prior to the Expiration Date.  If we terminate the offering, our only obligation to you will be to return your subscription payment to you, without interest.

Effects of this Offer on the Fund Adviser

Our investment adviser will benefit from this offer because the investment management fee we pay to the investment adviser is based on our total net assets. See “Investment Advisory Agreement.” It is not possible to state precisely the amount of additional compensation the investment adviser will receive as a result of this offer because it is not known how many shares of Convertible Preferred Stock will be subscribed for. However, assuming (i) all Rights are exercised and (ii) the average value of our total net assets remains between $100 million and $200 million, and after giving effect to expenses related to this offer, the investment adviser would receive additional annualized advisory fees of $340,494.  Messrs. Andrew Dakos and Phillip Goldstein are members of our Board of Directors, but are also officers and owners of our investment adviser and may benefit from this Offering by virtue of this affiliation.  The other Directors were aware of the potential benefit to the Adviser (and indirectly to Messrs. Goldstein and Dakos), but nevertheless concluded that the Offering was in the best interest of the Fund's stockholders.  This offering was approved by a unanimous vote of the full Board and separately by those Directors who are not affiliated with the investment adviser.

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Board Considerations in Approving the Offering.

At a meeting held on September 22, 2011, the Board considered the approval of the Offering and the Directors affirmed their conclusion at a meeting held on March 22, 2012.  In considering whether or not to approve the Offering, the Board relied on materials and information prepared and presented by the Fund's management at such meeting and discussions at that time.  Based on such materials and their deliberations at this meeting, the Board determined that it would be in the best interests of the Fund and its stockholders to conduct the Offering in order to increase the assets of the Fund available for current and future investment opportunities, while providing existing stockholders an opportunity to purchase additional shares of the Fund without incurring any commission or transaction charges.  In making its determination, the Board considered the investment opportunities available to the Fund, the ability of the Adviser to invest the proceeds of the Offering in accordance with such opportunities and the value of accessing such additional proceeds at favorable terms (i.e., an annual rate of 3.00% of the Subscription Price) in light of the relative illiquidity of the current credit market.  In addition, the Board noted that increasing Fund assets may lower the Fund's expenses as a proportion of net assets because the Fund's fixed costs would be spread over a larger asset base.  While the Board acknowledged that there can be no assurance that increasing the size of the Fund would result in lowering the Fund's expense ratio, the Board considered this an appealing potential.

In designating the Rights transferable, rather than non-transferable, the Board considered that the distribution of the Rights may themselves have intrinsic value, which may be viewed as partial compensation for the possible dilution of non-participating stockholders interest by potentially receiving a cash payment upon the sale for their Rights.  Furthermore, because the Rights are transferable, the Offering may increase the number of stockholders, which could increase the level of market interest in and visibility of the Fund overall and potentially enhance the trading liquidity of the Fund’s shares on the NYSE.

After considering all of the characteristics, terms and conditions of the Convertible Preferred Stock, the Board of Director believes that the value of the conversion right of the Convertible Preferred Stock is not a predominant factor in the market value of the Convertible Preferred Stock as of the date of its issuance.   The Board further believes that the conversion right is a secondary attribute which is included to enhance the terms upon which the Fund is able to issue the Convertible Preferred Stock.

There can be no assurance that the Fund or its stockholders will achieve any of the foregoing objectives or benefits through the Offering.

The Fund may, in the future and at its discretion, choose to make additional rights offerings from time to time for shares of its Common or Convertible Preferred Stock and on terms which may or may not be similar to the Offering.  Any such future rights offerings will be made in accordance with the 1940 Act.  Under the laws of Maryland, the state in which the Fund is incorporated, under certain circumstances, the Board is authorized to approve rights Offerings without obtaining 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 fund's board of directors that such offering would result in a net benefit to the Fund's existing stockholders.  The Board reserves the right to terminate at any time, in its sole discretion, prior to the Expiration Date.

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No Recommendations to Holders

WE MAKE NO RECOMMENDATION TO ANY PERSON TO PARTICIPATE IN THIS OFFERING, AND WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION. POTENTIAL HOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE REGISTRATION STATEMENT, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN DECISIONS WHETHER OR NOT TO PARTICIPATE IN THIS OFFERING.

Material United States Federal Income Tax Consequences

The following discussion is a summary of certain material U.S. federal income tax consequences to a typical “U.S. holder” (defined below) that receives Rights pursuant to this offering and that either (i) exercises such Rights, (ii) allows such Rights to expire, or (iii) sells, exchanges, redeems or otherwise disposes of such Rights.

This discussion is based on current provisions of the Internal Revenue Code of 1986, as amended, which we refer to as the “Code,” applicable current, temporary and proposed Treasury regulations promulgated thereunder, which we refer to as the “Treasury Regulations,” the legislative history of the Code and publicly available administrative and judicial interpretations thereof, all as in effect of the date of this Prospectus and all of which are subject to change, possibly with retroactive effect, or to different interpretations.  In addition, the administrative interpretations and practices of the Internal Revenue Service include its practices and policies as expressed in private letter rulings which are not binding on the Internal Revenue Service, except with respect to the particular taxpayers who requested and received these rulings.  This discussion is included for general information purposes only and does not purport to be a complete technical analysis or listing of all potential tax considerations that may be relevant to U.S. holders in light of their particular circumstances.  This discussion does not address any state, local or foreign tax consequences or any non-income tax consequences (such as estate or gift tax consequences).  This discussion applies only to U.S. holders that hold shares of our common stock as capital assets and that will hold the Rights distributed pursuant to this offering as capital assets (and, in the event such Rights are exercised, will hold newly acquired shares of our Convertible Preferred Stock as capital assets), in each case, within the meaning of Section 1221 of the Code.  This discussion also assumes that all holders of such securities are the beneficial owners and are not acting as agents or nominees.  This discussion also does not address the United States federal income tax consequences to a U.S. holder that is one of our affiliates or that is subject to special rules under the Code, including but not limited to:

·  A financial institution, insurance company, or regulated investment company;

·  Persons who are subject to alternative minimum tax;

·  A tax-exempt organization, retirement plan, or mutual fund;

·  A dealer, broker, or trader in securities;

·  Non-U.S. holders (as defined below);

·  An entity treated as a partnership for U.S. federal income tax purposes;

·  A stockholder that owns its shares of our common stock indirectly through an entity treated as a partnership for United States federal income tax purposes, or a trust or estate;

·  Persons deemed to sell their shares of common stock under the constructive sale provisions of the Code;

·  A stockholder that holds its shares of our common stock as part of a hedge, appreciated financial position, straddle or conversion transaction; or

·  A stockholder that acquired our common stock pursuant to the exercise of compensatory stock options or otherwise as compensation.

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We will not seek a ruling from the Internal Revenue Service, or the “IRS,” with respect to the rights offering. The IRS could take positions concerning the tax consequences of this offering that are different from those described in this discussion, and, if litigated, a court could sustain any such positions taken by the IRS.

For purposes of this discussion, the term “U.S. holder” means a holder of shares of our common stock that, for U.S. federal income tax purposes, is:

·   A citizen or resident of the U.S.;

·   A corporation or other entity treated as a corporation for U.S. federal income tax purposes created or organized in the U.S. or under U.S. laws or the laws of any state or political subdivision thereof;

·   An estate the income of which is subject to U.S. federal income taxation regardless of its source; or

·   A trust (i) if, in general, a court within the U.S. is able to exercise primary jurisdiction over its administration and one or more U.S. persons have authority to control all of its substantial decisions or (ii) that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

A “non-U.S. holder” is a holder other than a U.S. holder.  If a holder of our common stock is a non-U.S. holder, the tax consequences of the rights offering to such holder will depend upon a variety of factors, including whether such person conducts a trade or business in the U.S.  Non-U.S. holders are urged to consult their own tax advisors regarding the tax consequences associated with the rights offering.

Holders of our common stock are urged to consult their own tax advisors regarding the specific tax consequences associated with the Rights offering, including the applicability and effect of any state, local, foreign, or other tax laws as well as changes in applicable tax laws.

Distribution of Rights

We believe that pursuant to Section 305 of the Code and the Treasury Regulations issued thereunder, a U.S. holder that receives Rights pursuant to this offering should not be required to recognize taxable income for U.S. federal income tax purposes upon the receipt of such Rights.

We intend to report this offering accordingly.  However, if our intended treatment of the Rights were challenged by the IRS and if such challenge were ultimately upheld, the U.S. federal income tax consequences to a U.S. holder that receives Rights pursuant to this offering may differ from the consequences described herein, and it is possible that a U.S. holder’s receipt of Rights or a portion thereof pursuant to this offering may be taxable.

Basis and Holding Period of Rights

If, in accordance with Section 307 of the Code, the fair market value of the Rights which we distribute to U.S. holder is less than 15% of the fair market value of such U.S. holder’s shares of our common stock with respect to which such Rights were distributed, such U.S. holder’s basis in the Rights distributed generally will be zero.  A U.S. holder may elect, however, to allocate its basis in our common stock between such common stock and the Rights received in proportion to the fair market value of such common stock and such Rights. This election may be made pursuant to Section 307 of the Code and the Treasury Regulations thereunder and will be irrevocable once made.

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If the fair market value of the Rights which we distribute to a U.S. holder is 15% or more of the fair market value of such U.S. holder’s shares of our common stock with respect to which such Rights were distributed, such U.S. holder will be required to allocate its basis between such common  tock and such Rights in proportion to their relative fair market values.

In either case, a U.S. holder’s holding period for the Rights that we distribute will include the holding period of such U.S. holder’s shares of our common stock with respect to which such Rights were distributed.

Exercise of Rights; Basis and Holding Period of Convertible Preferred Stock

A U.S. holder will not recognize gain or loss upon the exercise of the Rights.  A U.S. holder’s basis in our Convertible Preferred Stock acquired through exercise of the Rights generally will equal the sum of (i) the Subscription Price paid by such U.S. holder to acquire such stock and (ii) such U.S. holder’s basis, if any, in the Rights exercised.  A U.S. holder’s holding period in shares of our Convertible Preferred Stock acquired through the exercise of Rights will begin on the day such U.S. holder exercises the Rights.

Dividends Paid on Convertible Preferred Stock

Dividends paid on the Convertible Preferred Stock will be taxable to the holders of such stock, except to the extent they are treated as a return of capital.  The description below of distributions on our common stock will generally apply to distributions on the Convertible Preferred Stock, too.

Sale, Exchange, Redemption or Conversion of Convertible Preferred Stock

Upon the sale, exchange, redemption or other disposition of the Convertible Preferred Stock acquired upon the exercise of Rights, except for a conversion into shares of our common stock, a U.S. holder generally will recognize gain or loss equal to the difference between the amount realized and such U.S. holder’s basis in such Convertible Preferred Stock.  Such gain or loss will be capital gain or loss and will be long-term capital gain or loss if a U.S. holder’s holding period exceeds one year at the time of the sale, exchange or other disposition.  The deductibility of capital losses is subject to limitations.

However, the conversion of the Convertible Preferred Stock into shares of our common stock, whether done at the option of the holder or the Fund, will not be a taxable transaction.  In such case, the holder will take a tax basis and holding period in the shares of common stock received equal to the tax basis and holding period which it had in the Convertible Preferred Stock surrendered.

Expiration of Rights

If a U.S. holder receives Rights pursuant to this offering, and such U.S. holder’s basis in our common stock is not allocated between such common stock and the Rights received and such U.S. holder’s Rights expire unexercised, then such U.S. holder will not recognize taxable loss upon expiration of the Rights.  In addition, such U.S. holder’s basis in its shares of our common stock will not be affected by this offering or such U.S. holder’s decision to allow its Rights to expire and will remain the same as before this offering.

If a U.S. holder receives Rights pursuant to this offering, and such U.S. holder’s basis in our common stock is allocated between such a common stock and the Rights received and such U.S. holder’s Rights expire unexercised, then such U.S. holder will recognize a taxable loss upon the expiration of the Rights equal to the basis that was allocated to the Rights.  Such loss will be a capital loss.  Such U.S. holder’s basis in its shares of our common stock will be reduced by the amount of basis allocated to the Rights.

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Backup Withholding

A U.S. holder that sells, exchanges, redeems or otherwise disposes of shares of our Convertible Preferred Stock acquired upon the exercise of Rights or that sells, exchanges or otherwise disposes of Rights may be subject to backup withholding on the proceeds received, unless such U.S. holder:

· Is a corporation or other exempt recipient and, when required, establishes this exemption; or

· Provides a correct taxpayer identification number, certifies that it is not currently subject to backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules.

Backup withholding is not an additional tax.  Any amount withheld under the backup withholding rules will generally be creditable against the United States federal income tax liability of a U.S. holder if appropriate information is provided to the IRS.  If a U.S. holder does not provide the appropriate party with the correct taxpayer identification number or any other proper document or certification required by the IRS (generally a Form W-9 in the case of a U.S. holder), such U.S. holder may be subject to penalties imposed by the IRS.

Taxation as a Regulated Investment Company

The Fund elects to be treated and intends to qualify each year for taxation as a regulated investment company (a “RIC”) under Subchapter M of the Code. In order for the Fund to qualify as a RIC, it must meet income and asset diversification tests each year.  If the Fund so qualifies and satisfies certain distribution requirements, the Fund (but not its stockholders) will not be subject to federal income tax to the extent it distributes its investment company taxable income and net capital gains (the excess of net long-term capital gains over net short-term capital loss) in a timely manner to its stockholders in the form of dividends or capital gain distributions.  The Code imposes a 4% nondeductible excise tax on RICs, such as the Fund, to the extent they do not meet certain distribution requirements by the end of each calendar year.  The Fund anticipates meeting these distribution requirements.

Distributions

The Fund intends to make distributions of investment company taxable income after payment of the Fund’s operating expenses.  Distributions of the Fund’s investment company taxable income (including short-term capital gains) will generally be treated as ordinary income to the extent of the Fund’s current and accumulated earnings and profits.  Distributions of the Fund’s net capital gains (“capital gain dividends”), if any, are taxable to stockholders as long-term capital gains, regardless of the length of time shares have been held by stockholders.  Distributions, if any, in excess of the Fund’s earnings and profits will first reduce the adjusted tax basis of a holder’s shares and, after that basis has been reduced to zero, will constitute capital gains to the stockholder of the Fund (assuming the shares are held as a capital asset).  See below for a summary of the maximum tax rates applicable to capital gains (including capital gain dividends) for individuals and other non-corporate taxpayers.  A corporation that owns Fund shares generally will not be entitled to the dividends received deduction with respect to all of the dividends it receives from the Fund.  However, Fund dividend payments that are attributable to qualifying dividends received by the Fund from certain domestic corporations may be designated by the Fund as being eligible for the dividends received deduction.  There can be no assurance as to what portion of Fund dividend payments may be classified as qualifying dividends.  The determination of the character for U.S. federal income tax purposes of any distribution from the Fund (i.e., ordinary income dividends, capital gains dividends, qualifying dividends, return of capital distributions) will be made as of the end of the Fund’s taxable year.  The Fund will provide stockholders with a written notice designating the amount of any capital gain distributions or other distributions.

The Fund may elect to retain its net capital gain or a portion thereof for investment and be taxed at corporate rates on the amount retained.  In such case, it may designate the retained amount as undistributed capital gains in a notice to its stockholders who will be treated as if each received a distribution of his pro rata share of such gain, with the result that each stockholder will (i) be required to report his pro rata share of such gain on his tax return as long-term capital gain, (ii) receive a refundable tax credit for his pro rata share of tax paid by the Fund on the gain, and (iii) increase the tax basis for his shares by an amount equal to the deemed distribution less the tax credit.

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Under current law, certain income distributions paid by the Fund to individual and other non-corporate taxpayers may be taxed at rates equal to those applicable to net long-term capital gains (generally, 15%).  This tax treatment applies only if certain holding period and other requirements are satisfied by the stockholder of the Fund with respect to its shares of the Fund, and the dividends are attributable to qualified dividends received by the Fund itself.  For this purpose, “qualified dividends” means dividends received by the Fund from certain United States corporations and certain qualifying foreign corporations, provided that the Fund satisfies certain holding period and other requirements in respect of the stock of such corporations. In the case of securities lending transactions, payments in lieu of dividends are not qualified dividends.  These special rules relating to qualifying dividends generally apply to taxable years beginning before January 1, 2013.  Thereafter, the Fund’s dividends, other than capital gain dividends, will be fully taxable at ordinary income tax rates unless further Congressional legislative action is taken.  As additional special rules apply to determine whether a distribution will be a qualified dividend, investors should consult their tax advisors.

The Fund may invest in other RICs.  In general, the Code taxes a RIC which satisfies certain requirements as a pass-through entity by permitting a qualifying RIC to deduct dividends paid to its stockholders in computing the RIC’s taxable income.  A qualifying RIC is also generally permitted to pass through the character of certain types of its income when it makes distributions.  For example, a RIC may distribute ordinary dividends to its stockholders, capital gain dividends, or other types of dividends which effectively pass through the character of the RIC’s income to its stockholders, including the Fund.

Sales of Fund Shares

Selling stockholders of the Fund will generally recognize gain or loss in an amount equal to the difference between the stockholder’s adjusted tax basis in the shares sold and the amount received.  If the shares are held as a capital asset, the gain or loss will be a capital gain or loss.  Under current law, the maximum tax rate applicable to net capital gains recognized by individuals and other non-corporate taxpayers is (i) the same as the maximum ordinary income tax rate for gains recognized on the sale of capital assets held for one year or less or (ii) generally, 15% for gains recognized on the sale of capital assets held for more than one year (as well as certain capital gain dividends).  Any loss on a disposition of shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends received with respect to those shares.  The use of capital losses is subject to limitations.  For purposes of determining whether shares have been held for six months or less, the holding period is suspended for any periods during which the stockholder’s risk of loss is diminished as a result of holding one or more other positions in substantially similar or related property, or through certain options or short sales.  Any loss realized on a sale or exchange of shares will be disallowed to the extent those shares are replaced by other substantially identical shares within a period of 61 days beginning 30 days before and ending 30 days after the date of disposition of the shares.  In that event, the basis of the replacement shares will be adjusted to reflect the disallowed loss.

Other Considerations

An investor should be aware that, if shares are purchased shortly before the record date for any taxable dividend (including a capital gain dividend), the purchase price likely will reflect the value of the dividend and the investor then would receive a taxable distribution likely to reduce the trading value of such shares, in effect resulting in a taxable return of some of the purchase price.  Taxable distributions to individuals and certain other non-corporate stockholders of the Fund, including those who have not provided their correct taxpayer identification number and other required certifications, may be subject to “backup” federal income tax withholding currently equal to 28%.

An investor should also be aware that the benefits of the reduced tax rate applicable to long-term capital gains and qualified dividend income may be affected by the application of the alternative minimum tax to individual stockholders.

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THE FOREGOING DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OF THE POTENTIAL TAX CONSIDERATIONS RELATING TO THIS OFFERING AND IS NOT TAX ADVICE.  THEREFORE, HOLDERS OF OUR COMMON STOCK ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THIS OFFERING, INCLUDING THE APPLICABILITY OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.

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Use of Proceeds

Proceeds of the Offering, after deduction of the expenses associated with this Offering estimated to be ______, will be invested in accordance with the Fund’s investment objective and policies as stated herein.   The Adviser expects to have such net proceeds invested accordingly in approximately 30 days, but reserves the right to extend such investment period to as long as six months.

Price Range of Common Stock

      Our common stock is traded on the NYSE under the symbol “SPE.” On April 21, 2010 the Fund’s symbol changed from “PIF” to “SPE.”  The following table lists the high and low closing sales prices for our common stock, and the closing sales price as a percentage of NAV:

	Closing Sales
	Price				Premium/Discount			Premium/Discount
					of High Sales			of Low Sales			Declared
	High		Low		Price to NAV			Price to NAV			Dividends
Year ended December 31, 2008
First Quarter	$	13.01	$	12.28		-11.53	%		-6.84	%		0.1425
Second Quarter		12.99		12.51		-8.16	%		-9.19	%		0.1445
Third Quarter		12.71		10.65		-8.18	%		-15.49	%		0.1495
Fourth Quarter		10.25		10.10		-16.98	%		-20.59	%		0.1325
Year ended December 31, 2009
First Quarter	$	11.66	$	10.10		-12.01	%		-20.59	%		0.166
Second Quarter		12.62		12.30		-8.08	%		-8.46	%		0.191
Third Quarter		14.14		12.73		-4.67	%		-7.07	%		0.225
Fourth Quarter		14.12		13.69		-1.06	%		-4.67	%		0.115
Year ending December 31, 2010
First Quarter	$	14.09	$	13.17		-1.21	%		-9.42	%		0
Second Quarter		13.48		12.80		-9.20	%		-10.23	%		0
Third Quarter		13.94		12.50		-9.97	%		-13.44	%		0
Fourth Quarter		14.75		13.85		-11.32	%		-10.32	%		0.03
Year ending December 31, 2011
First Quarter	$	15.48	$	14.75		-9.50	%		-11.32	%		0
Second Quarter		15.64		15.22		-11.45	%		-11.56	%		0
Third Quarter		15.81		14.10		-10.69	%		-11.91	%		0
Fourth Quarter		15.23		13.89		-6.30	%		-11.74	%		0.53545

Distributions

We make annual distributions to our stockholders of at least 90% of our ordinary income and short-term capital gains.  We will distribute during each calendar year an amount equal to the sum of (1) at least 98% of our ordinary income for the calendar year, (2) at least 98.2% of the Fund’s capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (3) any ordinary income and net capital gains for the preceding year that were not distributed during such year, in order to avoid excise taxes imposed on registered investment companies that do not make these distributions.  In addition, although we currently intend to distribute net realized long-term capital gains at least annually, we may in the future decide to retain such capital gains for investment in accordance with our investment objective.  No stockholder should assume that there will be a distribution.

About the Fund

The Fund was incorporated in Maryland on February 13, 1993 and commenced investment operations on June 7, 1993.  We are registered under the Investment Company Act of 1940, as amended (together with the rules promulgated thereunder, the “1940 Act”), as a closed–end, diversified management investment company.  Our common stock is listed and trades on the NYSE under the trading symbol “SPE.”  On April 21, 2010 the Fund’s symbol changed from “PIF” to “SPE.”

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From its inception in 1993 until 2009, the Fund operated under the name PaineWeber Insured Municipal Income Fund Inc. (1993-1996) or Insured Municipal Income Fund Inc. (1996-2009) and invested exclusively in tax free securities.  After a proxy contest that ended on August 12, 2009, a new Board of Directors was elected to manage the Fund.  The Fund’s former investment adviser, UBS Global Asset Management (Americas) Inc. then resigned effective October 18, 2009.  The newly elected Board voted to (1) replace UBS with our current Adviser, Brooklyn Capital Management LLC, and (2) change the Fund’s principal investment objective from one of providing tax free income to one of providing total return.  These changes were subsequently approved by stockholders.  The name of the Fund was also changed to Special Opportunities Fund, Inc. to conform to its new objective.

In addition, in September 2009, the Board commenced a program to conduct an orderly sale of all of the Fund’s portfolio securities in order to fund a self-tender offer for the Fund’s common shares.  The purpose of the self-tender offer was to fulfill a commitment made during the proxy contest to afford stockholders an opportunity to realize the intrinsic value of their shares.  Only after the tender offer was completed did the Adviser begin to invest the Fund’s remaining assets in accordance with its new investment objective and policies.  The Adviser voluntarily waived its management fees until the tender was completed on January 22, 2010.  All of the shares that were tendered were accepted for payment at a price of $14.18 per share (99.5% of the NAV per common share of $14.25).

Our investment objective is total return.  Our investment objective is not fundamental and may be changed by the Board with 60 days notice to stockholders.  To achieve our objective, the Fund invests primarily in securities the Adviser believes have opportunities for appreciation.  The Fund employs strategies designed to capture price movements generated by anticipated corporate events such as investing in companies involved in special situations, including, but not limited to, mergers, acquisitions, asset sales, spin-offs, balance sheet restructuring, bankruptcy, liquidations and other situations.  In addition, the Fund employs strategies designed to invest in the debt, equity, or trade claims of companies in financial distress.  Such securities typically trade at substantial discounts to par value, and may be attractive to investors when managers perceive a turnaround will materialize.  Furthermore, the Fund invests both long and short in related securities or other instruments in an effort to take advantage of perceived discrepancies in the market prices for such securities, including long and short positions in securities involved in an announced merger deal.  Securities which the Adviser identifies include other closed-end investment companies with opportunities for appreciation, including funds that trade at a market price discount from their NAV.  In addition to the foregoing, the Adviser seeks out other opportunities in the market that have attractive risk reward characteristics for the Fund.

The Fund intends its investment portfolio, under normal market conditions, to consist principally of investments in other closed-end investment companies and the securities of large, mid and small-capitalization companies, including direct and indirect investments in the securities of foreign companies.  Equity securities in which the Fund may invest include common and preferred stocks, convertible securities, warrants and other securities having the characteristics of common stocks, such as American Depositary Receipts (“ADRs”) and International Depositary Receipts (“IDRs”), other closed-end investment companies and exchange-traded funds (“ETFs”).  The Fund may, however, invest a portion of its assets in debt securities or other investment opportunities when the Fund’s investment adviser believes that it is appropriate to do so to earn current income.  For example, when interest rates are high in comparison to anticipated returns on equity investments, the Fund’s investment adviser may determine to invest in debt securities.  Debt securities in which the Fund may invest include bank, corporate or government bonds, notes, and debentures that the Fund’s investment adviser determines are suitable investments for the Fund.  Such determination may be made regardless of the maturity, duration or rating of any such debt security.

The Fund may, from time to time, engage in short sales of securities for investment or for hedging purposes.  Short sales are transactions in which the Fund sells a security it does not own.  To complete the transaction, the Fund must borrow the security to make delivery to the buyer.  The Fund is then obligated to replace the security borrowed by purchasing the security at the market price at the time of replacement.  The Fund may sell short individual stocks, baskets of individual stocks and ETFs that the Fund expects to underperform other stocks which the Fund holds.  For hedging purposes, the Fund may purchase or sell short future contracts on global equity indexes.

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The Fund may invest, without limitation, in the securities of other closed-end investment companies and ETFs, provided that, in accordance with Section 12(d)(1)(F) of the 1940 Act, the Fund will limit such investment so that it does not represent more than 3% of the voting stock of the acquired investment company of which such shares are purchased.

To comply with provisions of the 1940 Act, on any matter upon which stockholders of a closed-end investment company in which the Fund has invested are solicited to vote, the Fund’s investment adviser will vote such shares in the same general proportion as shares held by other stockholders of such closed-end investment company (i.e., “mirror vote”) or seek instructions from the Fund’s stockholders with regard to the voting on such matter.  Until March 1, 2012, the Fund complied with this requirement by mirror voting its proxies for the shares it holds of other closed-end investment companies, however, the Board determined that under certain circumstances, such mirror voting may compel the Fund to vote contrary to its best interest in light of its investment objective and strategy.  Therefore, the Board approved a proposal by which the Fund’s stockholders would instruct the Adviser to vote proxies received by the Fund from any closed-end investment company in the Fund’s portfolio on any proposal (including the election of directors) in a manner which the Adviser reasonably determines is likely to favorably impact the discount of such investment company’s market price as compared to its NAV.  At a meeting held on December 7, 2011, the stockholders voted in favor of such proposal.  The staff of the SEC advised the Fund that, in its opinion, the implementation of voting as described above would violate Section 12(d)(1) because the mechanism proposed would not satisfy the requirement of Section 12(d))(1)(E) to “seek instructions from its security holders with regard to the voting of all proxies…and to vote such proxies only in accordance with such instructions.”  The staff’s position is that in order to comply with the “seek instructions” requirement, the Fund must seek instructions from its stockholder for each proxy it receives from a closed-end investment company.  The Fund’s Board of Directors believes that the staff’s interpretation is not correct because it would render the option to “seek instructions” virtually useless which the Board believes could not have been Congress’s intent.

On December 13, 2011, the Fund applied for a declaratory order from the SEC stating that implementation of its new proxy voting procedure, as approved by stockholders on December 7, 2011, will not cause the Fund to be in violation of Section 12(d)(1) of the 1940 Act.  The application was submitted pursuant to Section 2(a)(9) of the 1940 Act, or alternatively, pursuant to Section 554(e) of the Administrative Procedure Act of 1946 (the “APA”).  As of March 1, 2012, having received no response from the SEC to the Fund’s application for a declaratory order, with respect to any proposal (including the election of directors) that the Adviser deems likely to favorably impact an investment company’s market price discount to its NAV, the Adviser is authorized by stockholders to determine how to vote on such proposal.

The ETFs and other closed-end investment companies in which the Fund invests may invest in common stocks and may invest in fixed income securities.  As a stockholder in any investment company, the Fund will bear its ratable share of the investment company’s expenses and would remain subject to payment of the Fund's advisory and administrative fees with respect to the assets so invested.

The Fund's management utilizes a balanced approach, including “value” and “growth” investing by seeking out companies at reasonable prices, without regard to sector or industry, which demonstrate favorable long-term growth characteristics.  Valuation and growth characteristics may be considered for purposes of selecting potential investment securities.  In general, valuation analysis is used to determine the inherent value of the company by analyzing financial information such as a company's price to book, price to sales, return on equity, and return on assets ratios; and growth analysis is used to determine a company's potential for long-term dividends and earnings growth due to market-oriented factors such as growing market share, the launch of new products or services, the strength of its management and market demand.  Fluctuations in these characteristics may trigger trading decisions to be made by the Fund’s investment adviser with respect to the Fund’s portfolio.

Generally, securities will be purchased or sold by the Fund on national securities exchanges and in the over-the-counter market.  From time to time, securities may be purchased or sold in private transactions, including securities that are not publicly traded or that are otherwise illiquid.

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The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Fund’s principal investment strategies in attempting to respond to adverse market, economic, political or other conditions.  During such times, the Fund may temporarily invest up to 100% of its assets in cash or cash equivalents, including money market instruments, prime commercial paper, repurchase agreements, Treasury bills and other short-term obligations of the U.S. Government, its agencies or instrumentalities.  In these and in other cases, the Fund may not achieve its investment objective.

The Fund’s investment adviser may invest the Fund’s cash balances in any investments it deems appropriate, subject to the restrictions set forth in below under “Fundamental Investment Restrictions” and as permitted under the 1940 Act, including investments in repurchase agreements, money market funds, additional repurchase agreements, U.S. Treasury and U.S. agency securities, municipal bonds and bank accounts.  Any income earned from such investments will ordinarily be reinvested by the Fund in accordance with its investment program.  Many of the considerations entering into the Fund’s investment adviser’s recommendations and the portfolio manager’s decisions are subjective.

Fundamental Investment Restrictions

The following fundamental investment limitations cannot be changed without the affirmative vote of the lesser of (a) more than 50% of the outstanding shares of the Fund or (b) 67% or more of such shares present at a stockholders’ meeting if more than 50% of the outstanding shares are represented at the meeting in person or by proxy.  If a percentage restriction is adhered to at the time of an investment or transaction, a later increase or decrease in percentage resulting from a change in values of portfolio securities or the amount of total assets will not be considered a violation of any of the following limitations or of any of the Fund’s investment policies.  The Fund may not:

(1)           issue senior securities (including borrowing money from banks and other entities and thorough reverse repurchase agreements), except (a) the Fund may borrow in an amount not in excess of 33 1/3% of total assets (including the amount of senior securities issued, but reduced by any liabilities and indebtedness not constituting senior securities), (b) the Fund may issue preferred stock having a liquidation preference in an amount which, combined with the amount of any liabilities or indebtedness constituting senior securities, is not in excess of 50% of its total assets (computed as provided in clause (a) above) and (c) the Fund may borrow up to an additional 5% of its total assets (not including the amount borrowed) for temporary or emergency purposes;

The following interpretation applies to, but is not a part of, fundamental limitation (1):

Each state (including the District of Columbia and Puerto Rico), territory and possession of the United States, each political subdivision, agency, instrumentality and authority thereof, and each multi-state agency of which a state is a member is a separate “issuer.”  When the assets and revenues of an agency authority, instrumentality or other political subdivision are separate from the government creating the subdivision and the security is backed only by the assets and revenues of the subdivision, such subdivision would be deemed to be the sole issuer.  Similarly, in the case of an Industrial Development Bond or Private Activity Bond, if that bond is backed only by the assets and revenues of the non-governmental user, then that non-governmental user would be deemed to be the sole issuer.  However, if the creating government or another entity guarantees a security, then to the extent that the value of all securities issued or guaranteed by that government or entity and owned by the Fund exceeds 10% of the Fund's total assets, the guarantee would be considered a separate security and would be treated as issued by that government or entity.  This restriction does not limit the percentage of the Fund’s assets that may be invested in Municipal Obligations insured by any given insurer.

(2)           purchase any security if, as a result of that purchase, 25% or more of the Fund’s total assets would be invested in securities of issuers having their principal business activities in the same industry, except that this limitation does not apply to securities issued or guaranteed by the U.S. government, its agencies or instrumentalities or to municipal securities.

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(3)           Intentionally omitted.

(4)           make loans, except through loans of portfolio securities or through repurchase agreements, provided that for purposes of this restriction, the acquisition of bonds, debentures, other debt securities or instruments, or participations or other interests therein and investment in government obligations, commercial paper, certificates of deposit, bankers’ acceptances or similar instruments will not be considered the making of a loan.

(5)           engage in the business of underwriting securities of other issuers, except to the extent that the Fund might be considered an underwriter under the federal securities laws in connection with its disposition of portfolio securities.

(6)           purchase or sell real estate, except that investments in securities of issuers that invest in real estate and investments in mortgage-backed securities, mortgage participations or other instruments supported by interests in real estate are not subject to this limitation, and except that the Fund may exercise rights under agreements relating to such securities, including the right to enforce security interests and to hold real estate acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner.

(7)           purchase or sell physical commodities unless acquired as a result of owning securities or other instruments, but the Fund may purchase, sell or enter into financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments.

The Fund has no intention to file a voluntary application for relief under federal bankruptcy law or any similar application under state law for so long as the Fund is solvent and does not foresee becoming insolvent.

Legal Proceedings

Although we may, from time to time, be involved in litigation arising out of our operations in the normal course of business, we are not currently a party to any pending material legal proceedings.  However, certain of our Directors are involved in a legal proceeding.  See “Litigation Involving Directors” below.

Management

Our business and affairs are managed under the direction of our Board of Directors.  The Board of Directors currently consists of five members, three of whom are not “interested persons” as that term is defined in Section 2(a)(19) of the 1940 Act.  We refer to these individuals as our Independent Directors.  Our Board of Directors elects our officers, who serve at the discretion of the Board of Directors. The officers of the Fund, except for Mr. Hellerman, are employees of our investment adviser.

Directors and Executive Officers

Our Directors and executive officers, their positions, age and principal occupation are set forth below.  The address for each Director and executive officer is c/o U.S. Bancorp Fund Services, LLC, 615 East Michigan Street, Milwaukee, WI  53202.  Each of our Directors is elected for a one year term until his successor is elected and qualifies or until he resigns or is otherwise removed.

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Name, Address and Age*	Position(s) Held with the Fund	Term of Office and Length of Time Served		Principal Occupation During the Past Five Years	Number of Portfolios in Fund Complex Overseen by Director**	Other Directorships held by Director During the Past Five Years
			INTERESTED DIRECTORS
Andrew Dakos*** (45)	President as of October 2009.	1 year; Since 2009		Principal of the Adviser; Principal of the general partner of several private investment partnerships in the Bulldog Investors group of funds.	1	Director, Mexico Equity and Income Fund, Inc.; Director, Brantley Capital Corporation.
Phillip Goldstein*** (66)	Chairman and Secretary as of October 2009.	1 year; Since 2009		Principal of the Adviser; Principal of the general partner of several private investment partnerships in the Bulldog Investors group of funds.	1	Chairman, Mexico Equity and Income Fund, Inc.; Chairman, Brantley Capital Corporation; Director, ASA Ltd.; Director, Korea Equity and Income Fund, Inc.
Gerald Hellerman**** (74)	Chief Compliance Officer and Chief Financial Officer as of January 2010.	1 year; Since 2009		Managing Director of Hellerman Associates (a financial and corporate consulting firm).	1	Director, Mexico Equity and Income Fund, Inc.; Director, Brantley Capital Corporation; Director, MVC Capital, Inc.

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Name, Address and Age*	Position(s) Held with the Fund	Term of Office and Length of Time Served		Principal Occupation During the Past Five Years	Number of Portfolios in Fund Complex Overseen by Director**	Other Directorships held by Director During the Past Five Years
			INDEPENDENT DIRECTORS
James Chadwick (38)	-	1 year; Since 2009		Managing Director of Main Street Investment Partners, LLC (private equity firm), since April 2011; Managing Director of Opus Partners, LLC (private equity firm), June 2010 – April 2011; Managing Director of Harlingwood Equity Partners LP, March 2009 – June 2010; Managing Partner of Chadwick Capital Management, January 2006 – December 2008.	1	None
Ben Hormel Harris (43)	-	1 year; Since 2009		Chief Financial Officer and General Counsel of NHI II, LLC and NBC Bancshares, LLC; Investment Professional of MVC Capital, Inc. and The Tokarz Group Advisers, LLC.	1	None
Charles C. Walden (67)	-	1 year; Since 2009		President and Owner of Sound Capital Associates, LLC (consulting firm); Chief Investment Officer of Knights of Columbus (fraternal benefit society selling life insurance and annuities).	1	Lead Trustee, Third Avenue Funds (fund complex consisting of five funds and one variable series trust).

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Name, Address and Age*	Position(s) Held with the Fund	Term of Office and Length of Time Served	Principal Occupation During the Past Five Years	Number of Portfolios in Fund Complex Overseen by Director**	Other Directorships held by Director During the Past Five Years
			OFFICERS
Andrew Dakos*** (45)	President as of October 2009	1 year; Since 2009	Principal of the Adviser; Principal of the general partner of several private investment partnerships in the Bulldog Investors group of funds.	n/a	n/a
Rajeev Das (42)	Vice-President and Treasurer as of October   2009	1 year; Since 2009	Managing Member of the general partner of several private investment partnerships in the Bulldog Investors group of funds.	n/a	n/a
Phillip Goldstein*** (66)	Chairman and Secretary as of October 2009	1 year; Since 2009	Principal of the Adviser; Principal of the general partner of several private investment partnerships in the Bulldog Investors group of funds.	n/a	n/a
Gerald Hellerman**** (74)	Chief Compliance Officer and Chief Financial Officer  as of January 2010.	1 year; Since 2009	Managing Director of Hellerman Associates (a financial and corporate consulting firm).	n/a	n/a

*The address for all Directors and officers is c/o Special Opportunities Fund, Inc., 615 East Michigan Street, Milwaukee, WI 53202.

** The Fund Complex is comprised of only the Fund.

*** Messrs. Dakos and Goldstein are each considered an “interested person” of the Fund within the meaning of the 1940 Act because of their affiliation with Brooklyn Capital Management, LLC, the Adviser, and their positions as officers of the Fund.

**** Mr. Hellerman is considered an “interested person” of the Fund within the meaning of the 1940 Act because he serves as the Fund’s Chief Compliance Officer and Chief Financial Officer.

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The Board believes that the significance of each Director’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’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 Boardhas 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 public accounting firm (“independent auditors”); and willingness and ability to commit the time necessary to perform the duties of a Director.  Each Director’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 in other fields, educational background and professional training; and experience as a Director of the Fund.  Information indicating the specific experience, skills, attributes and qualifications of each Director, which led to the Board’s determination that the Director should serve in this capacity is provided below.

James Chadwick.Mr. Chadwick has been a Director of the Fund since 2009.  He has over 10 years of investment management experience, selecting investments, managing risk and managing investment pools of capital.  Mr. Chadwick previously worked with a large accounting firm auditing public companies.  He has served as a director of three other public companies and has served on certain of their audit, governance, nominating and compensation committees.

Andrew Dakos.  Mr. Dakos has been the President and a Director of the Fund since 2009. He is also a principal of the Adviser.  Mr. Dakos has over 10 years of investment management experience and currently manages several private investment partnerships.  In addition to the Fund, he is currently a director of a closed-end fund, one private company and a business development company that is undergoing liquidation.

Phillip Goldstein.  Mr. Goldstein has been the Chairman of the Board and the Secretary of the Fund since 2009.  He is also a principal of the Adviser.  Mr. Goldstein has 19 years of investment management experience and currently manages several private investment partnerships.  In addition to the Fund, he is currently a director of two closed-end funds and a business development company that is undergoing liquidation.

Ben Hormel Harris.  Mr. Harris has been a Director of the Fund since 2009.  He has extensive experience in the management of private and public entities, highly regulated entities and corporate restructurings.  In addition to the Fund, Mr. Harris is currently a director of two private companies.

Gerald Hellerman.  Mr. Hellerman has been a Director of the Fund since 2009 and its Chief Compliance Officer and Chief Financial Officer since January 2010.  Mr. Hellerman has more the 40 years of financial experience, including serving as a Financial Analyst and Branch Chief at the U.S. Securities and Exchange Commission and as Chief Financial Analyst at the Antitrust Division of the U.S. Department of Justice for 17 years. He has served as a director of a number of public companies, including registered investment companies, and as a financial and corporate consultant since 1993.

Charles C. Walden.  Mr. Walden has been a Director of the Fund since 2009.  He has over 40 years of experience in investments, including 30 years experience as a chief investment officer in the life insurance industry.  He has served on the Board of Directors of mutual funds for 15 years, including the investment committees of a healthcare system and a religious diocese.  Mr. Walden is a Chartered Financial Analyst.

Specific details regarding each Director’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.

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Litigation Involving Directors

On October 17, 2007 the Massachusetts Secretary of State issued an “obey the law” injunction and fined Bulldog Investors, Messrs. Goldstein and Dakos and certain related parties $25,000 for operating a publicly accessible website containing information about certain unregistered investments and sending an e-mail about such investments to a Massachusetts resident who requested it. On April 5, 2012, President Obama signed the JOBS Act which expressly permits privately held investment companies like Bulldog Investors to operate a publicly accessible interactive website provided, as is the policy of Bulldog Investors, sales are limited to accredited investors.

Board Composition and Leadership Structure

The Board consists of six individuals, three of whom are interested Directors.  The Chairman of the Board, Mr. Goldstein, is an interested Director and is the Secretary of the Fund and is a principal of the Adviser.  The Board does not have a lead Independent Director.

The Board believes that its structure facilitates the orderly and efficient flow of information to the Directors from the Adviser and other service providers with respect to services provided to the Fund, potential conflicts of interest that could arise from these relationships and other risks that the Fund may face.  The Board further believes that its structure allows all of the Directors to participate in the full range of the Board’s oversight responsibilities.  The Board believes that the orderly and efficient flow of information and the ability to bring each Director’s talents to bear in overseeing the Fund’s operations is important, in light of the size and complexity of the Fund and the risks that the Fund faces.  The Board and its committees review their structure regularly, to help ensure that it remains appropriate as the business and operations of the Fund, and the environment in which the Fund operates, changes.

Currently, the Board has an Audit Committee and a Nominating and Corporate Governance Committee. The responsibilities of each committee and its members are described below.

Board’s Role in Risk Oversight of the Fund

The Board oversees risk management for the Fund directly and, as to certain matters, through its committees.  The Board exercises its oversight in this regard primarily through requesting and receiving reports from and otherwise working with the Fund’s senior officers (including the Fund’s President, Chief Compliance Officer and Treasurer), portfolio management and other personnel of the Adviser, the Fund’s independent auditors, legal counsel and personnel from the Fund’s other service providers.  The Board has adopted, on behalf of the Fund, and periodically reviews with the assistance of the Fund’s Chief Compliance Officer, policies and procedures designed to address certain risks associated with the Fund’s activities.  In addition, the Adviser and the Fund’s other service providers also have adopted policies, processes and procedures designed to identify, assess and manage certain risks associated with the Fund’s activities, and the Board receives reports from service providers with respect to the operation of these policies, processes and procedures as required and/or as the Board deems appropriate.

Compensation of Directors

The Board does not have a standing compensation committee.  Currently, each Director who is not an “interested person” of the Adviser receives an annual retainer equal to $25,000 for serving as a Director and attending the quarterly meetings of the Board, paid quarterly in advance, plus $1,000 for each special Board meeting attended in person (or $500 if attended by telephone).  Each such Director is entitled to receive such compensation for any partial quarter for which he serves.

Directors who are “interested persons” of the Adviser will not receive any compensation for their services as Directors.  The Fund does not have a bonus, profit sharing, pension or retirement plan.  No other entity affiliated with the Fund pays any compensation to the Directors.  The table below details the amount of compensation the Directors received from the Fund during the fiscal year ended December 31, 2011.

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Name of Person/Position	Aggregate Compensation From the Fund	Pension or Retirement Benefits Accrued as Part of Fund Expenses	Estimated Annual Benefits Upon Retirement	Total Compensation from Fund Complex Paid to Directors*
Independent Directors
James Chadwick, Independent Director	$25,500	None	None	$25,500
Ben Hormel Harris,     Independent Director	$25,500	None	None	$25,500
Charles C. Walden, Independent Director**	$25,500	None	None	$25,500
Interested Directors
Andrew Dakos,   Interested Director***	$0	None	None	$0
Phillip Goldstein, Interested Director***	$0	None	None	$0
Gerald Hellerman, Interested Director***	$55,500	None	None	$55,500

*       The Fund Complex is comprised of only the Fund.

**     Messrs. Dakos and Goldstein are each considered an “interested person” of the Fund within the meaning of the 1940 Act because of their affiliation with the Adviser and their positions as officers of the Fund.  These fees were paid prior to each of Messrs. Dakos and Goldstein becoming an “interested person” of the Fund.

***  In addition to his compensation as a director, Mr. Hellerman received $30,000 from the Fund during the fiscal year ended December 31, 2011 as compensation for service in his capacity as the Fund’s Chief Compliance Officer.

Management Ownership

To the knowledge of the Fund’s management, as of December 31, 2011, the officers and directors of the Fund beneficially owned, as a group, less than 1% of the shares of the Fund’s common stock.  The following table shows the dollar range of shares beneficially owned by each director and officer in the Fund as of December 31, 2011:

Name of Director	Dollar Range of Equity Securities in the Fund	Aggregate Dollar Range of Equity Securities in All Funds Overseen by Director in Family of Investment Companies*
Independent Directors
James Chadwick	None	None
Ben Hormel Harris	$50,001 - $100,000	$50,001 - $100,000
Charles C. Walden	Over $100,000	Over $100,000

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Interested Directors
Name of Director	Dollar Range of Equity Securities in the Fund	Aggregate Dollar Range of Equity Securities in All Funds Overseen by Director in Family of Investment Companies*
Andrew Dakos**	None	None
Phillip Goldstein**	$10,001 - $50,000	$10,001 - $50,000
Gerald Hellerman***	$50,001 - $100,000	$50,001 - $100,000

*     The Family of Investment Companies is comprised of only the Fund.

**   Messrs. Dakos and Goldstein are each considered an “interested person” of the Fund within the meaning of the 1940 Act because of their affiliation with Brooklyn Capital Management, LLC, the Adviser, and their positions as officers of the Fund.

*** Mr. Hellerman is considered an “interested person” of the Fund within the meaning of the 1940 Act because he serves as the Fund’s Chief Compliance Officer and Chief Financial Officer.

Director Transactions with Fund Affiliates

As of December 31, 2011, neither the Independent Directors nor members of their immediate family owned securities beneficially or of record in the Adviser or any of its affiliates.  Furthermore, over the past five years, neither the Independent Directors nor members of their immediate family have had any direct or indirect interest, the value of which exceeds $120,000, in the Adviser, UBS Global Asset Management (Americas) Inc., the Fund’s previous investment adviser (the “Previous Adviser”), or any affiliate of these entities.  In addition, since the beginning of the last two fiscal years, neither the Independent Directors nor members of their immediate family have conducted any transactions (or series of transactions) or maintained any direct or indirect relationship in which the amount involved exceeds $120,000 and to which the Adviser, the Previous Adviser or any affiliate of any of these entities was a party.

Additional Information about the Board

Board Meetings and Committees.

Each present Director has attended more than 75% of the meetings of the Board held since his respective election as Director.  During the year ended December 31, 2011, the Board met seven times.

Audit Committee.The Board has established an Audit Committee that acts pursuant to a written charter (the “Audit Committee Charter”) and whose responsibilities are generally: (i) to oversee the accounting and financial reporting processes of the Fund and its internal control over financial reporting and, as the Audit Committee deems appropriate, to inquire into the internal control over financial reporting of certain third-party providers; (ii) to oversee the quality and integrity of the Fund’s financial statements and the independent audit thereof; (iii) to oversee, or, as appropriate, assist Board oversight of, the Fund’s compliance with legal and regulatory requirements that relate to the Fund’s accounting and financial reporting, internal control over financial reporting and independent audits; (iv) to approve prior to appointment the engagement of the Fund’s independent auditors and, in connection therewith, to review and evaluate the qualifications, independence and performance of the Fund’s independent auditors and the full Board; and (v) to act as liaison between the Fund’s independent auditors and the full Board.  A copy of the Audit Committee Charter was filed as Exhibit C to the Fund’s proxy statement filed with the SEC on November 19, 2009.

Although the Audit Committee is expected to take a detached and questioning approach to the matters that come before it, the review of the Fund’s financial statements by the Audit Committee is not an audit, nor does the Audit Committee’s review substitute for the responsibilities of the Fund’s management for preparing, or the independent auditors for auditing, the financial statements.  Members of the Audit Committee are not full-time employees of the Fund and, in serving on the Audit Committee, are not, and do not hold themselves out to be, acting as accountants or auditors.  As such, it is not the duty or responsibility of the Audit Committee or its members to conduct “field work” or other types of auditing or accounting reviews.  In discharging their duties, the members of the Audit Committee are entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by: (1) one or more officers of the Fund whom such Director reasonably believes to be reliable and competent in the matters presented; (2) legal counsel, public accountants, or other persons as to matters the Director reasonably believes are within the person’s professional or expert competence; or (3) a Board committee of which the Director is not a member.

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The Audit Committee currently consists of Messrs. Chadwick, Harris and Walden.  None of the members of the Audit Committee has any relationship to the Fund that may interfere with the exercise of his independence from management of the Fund, and each is independent as defined under the listing standards of the New York Stock Exchange (“NYSE”) applicable to closed-end funds.  For the year ended December 31, 2011, the Board’s Audit Committee met two times and each member of the Audit Committee has attended 100% of the meetings of the Audit Committee held since his election as Director.

Nominating and Corporate Governance Committee.The Board has also established a Nominating and Corporate Governance Committee that acts pursuant to a written charter (the “Nominating and Corporate Governance Committee Charter”).  The Nominating and Corporate Governance Committee is responsible for, among other things, identifying and selecting qualified individuals to become Board members and members of Board committees and developing, adopting and periodically monitoring and updating the Fund’s corporate governance principles and policies.  A copy of the Nominating and Corporate Governance Committee Charter was filed as Exhibit D to the Fund’s proxy statement filed with the SEC on November 19, 2009.

The Nominating and Corporate Governance Committee currently consists of Messrs. Chadwick, Harris and Walden.  None of the members is an “interested person” for purposes of the 1940 Act, and each is independent as defined under listing standards of the NYSE applicable to closed-end funds.  The Board’s Nominating and Corporate Governance Committee met once during the fiscal year ended December 31, 2011.

In nominating candidates, the Nominating and Corporate Governance Committee believes that no specific qualifications or disqualifications are controlling or paramount, or that specific qualities or skills are necessary for each candidate to possess. In identifying and evaluating nominees for director, the Nominating and Corporate Governance Committee takes into consideration such factors as it deems appropriate.  These factors may include: (i) whether or not the person is an “interested person” as defined in the 1940 Act, meets the independence and experience requirements of the NYSE applicable to closed-end funds and is otherwise qualified under applicable laws and regulations to serve as a member of the Board; (ii) whether or not the person has any relationships that might impair his or her independence, such as any business, financial or family relationships with Fund management, the investment advisor and/or sub-advisors of the Fund, Fund service providers or their affiliates; (iii) whether or not the person is willing to serve, and willing and able to commit the time necessary for the performance of the duties of a Board member; (iv) the person’s judgment, skill, diversity and experience with investment companies and other organizations of comparable purpose, complexity and size and subject to similar legal restrictions and oversight; (v) the interplay of the candidate’s experience with the experience of other Board members; and (vi) the extent to which the candidate would be a desirable addition to the Board and any committees thereof.

The Nominating and Corporate Governance Committee will consider nominees recommended by stockholders if a vacancy occurs. In order to recommend a nominee, a stockholder should send a letter to the chairperson of the Nominating and Corporate Governance Committee, care of the Administrator, 615 East Michigan Street, Milwaukee, WI 53202, and indicate on the envelope “Nominating and Corporate Governance Committee.”  The stockholder’s letter should state the nominee’s name and should include the nominee’s résumé or curriculum vitae, and must be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected by stockholders.  Stockholders can send other communications to the Board, care of the Administrator, 615 East Michigan Street, Milwaukee, WI 53202.

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Investment Advisory Agreement

Management Services

Pursuant to an Investment Advisory Agreement, the Adviser provides overall investment management services for the Fund, and in connection therewith (i) supervises the Fund’s investment program, including advising and consulting with the Board regarding the Fund’s overall investment strategy; (ii) makes, in consultation with the Board, investment strategy decisions for the Fund; (iii) manages the investing and reinvesting of the Fund’s assets; (iv) places purchase and sale orders on behalf of the Fund; (v) advises the Fund with respect to all matters relating to the Fund’s use of leveraging techniques; and (vi) provides or procures the provision of research and statistical data to the Fund in relation to investing and other matters within the scope of the investment objective and limitations of the Fund.

 The Adviser’s services under the Investment Advisory Agreement are not exclusive, and it is free to furnish similar services to other entities so long as its services to us are not impaired.

Portfolio Managers

The Portfolio Manager of the Fund is comprised of principals and employees of the Adviser.  Phillip Goldstein, Andrew Dakos, and Rajeev Das comprise the group (the “Group”) of individuals responsible for the day-to-day management of the Fund’s portfolio.  The business experience of Messrs. Goldstein, Dakos, and Das during the past 5 years is as follows:

Phillip Goldstein:   Managing Member of Brooklyn Capital Management LLC since its inception in October 2009. Since 1992, Mr. Goldstein has been an investment advisor and a principal of the general partner of seven investment partnerships in the Bulldog Investors group of funds.  He is also a principal for the general partner of the sub-adviser to nine other pooled investment vehicles as well as two separately managed accounts.  He has been a director of the following closed-end funds: Mexico Equity and Income Fund since 2000, Brantley Capital Corporation since 2001 and ASA Ltd since 2008.  Mr. Goldstein may buy and sell securities for the Fund’s portfolio without limitation.

Andrew Dakos:   Managing Member of Brooklyn Capital Management LLC since its inception in October 2009. Mr. Dakos has been an investment advisor and a principal of the general partner of seven investment partnerships in the Bulldog Investors group of funds.  He is also a principal for the general partner of the sub-adviser to nine other pooled investment vehicles as well as two separately managed accounts.  He has been a director of the Mexico Equity and Income Fund since 2001 and Brantley Capital Corporation intermittently since 2005 and currently.  Mr. Dakos currently serves as the Chief Compliance Officer of Brooklyn Capital Management LLC.  Mr. Dakos may buy and sell securities for the Fund’s portfolio without limitation.

Rajeev Das:  Head Trader of Brooklyn Capital Management LLC since its inception in October 2009.  Mr. Das is a Managing Member of the general partner of Opportunity Income Plus L.P., an investment partnership in the Bulldog Investors group of investment funds.  Mr. Das is Head Trader of Bulldog Investors. He has been a Director of The Mexico Equity and Income Fund, Inc. since 2001 and served as a Director of Brantley Capital Corporation from September 2005 to March 2006.  Mr. Das provides the Group with research and analysis used by the Group to determine the attractiveness of certain prospective investments.   Mr. Das may buy and sell securities for the Fund’s portfolio under the supervision of Mr. Goldstein and Mr. Dakos.

The following table shows the number of other accounts managed by each member of the Group and the total assets in the accounts managed within various categories as of December 31, 2011.

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			ADVISORY FEE BASED ON PERFORMANCE
TYPE OF ACCOUNTS	NUMBER OF ACCOUNTS	TOTAL ASSETS ($ IN MILLIONS)	NUMBER OF ACCOUNTS	TOTAL ASSETS
PHILLIP GOLDSTEIN
Registered Investment   Companies	0
Other Pooled Investments	9	324.2	9	324.2
Other Accounts	2	20.9	2	20.9
ANDREW DAKOS
Registered Investment   Companies	0
Other Pooled Investments	9	324.2	9	324.2
Other Accounts	2	20.9	2	20.9
RAJEEV DAS
Registered Investment   Companies	0
Other Pooled Investments	1	12.0	1	12.0
Other Accounts	0

Certain conflicts of interest may arise in connection with the Portfolio Manager’s management of the Fund’s portfolio and the portfolios of other accounts managed by the Adviser and/or its affiliates, as a result of different investment strategies among such accounts.  In addition, in cases where the investment strategies are the same or very similar, various factors (including, but not limited to, tax considerations, amount of available cash, and risk tolerance) may result in substantially different portfolios in such accounts. Material conflicts of interest could arise in the allocation of investment opportunities between the Fund and the other pooled investment vehicles managed by members of the Group.  The Adviser has adopted Trade Allocation Policy and Procedures in order to avoid unfairness and strive to achieve an equitable balancing of competing interests with respect to the allocation of trades.

Compensation for Mr. Goldstein and Mr. Dakos is comprised solely of net income generated by the Fund’s investment adviser.  Compensation for Mr. Das is comprised of a fixed salary plus a discretionary bonus based on performance to be determined by Messrs Goldstein and Dakos.

As of __________, 2012 the members of the Group responsible for the day-to-day management of the Fund’s portfolio owned less than 1% of the Fund’s Common Stock.

Organization of the Investment Adviser

Brooklyn Capital Management, LLC is a Delaware limited liability company formed on August 27, 2009 for the purpose of providing investment advisory and management services to investment companies.  Its members are Phillip Goldstein and Andrew Dakos, each a member of our Board of Directors, and Steven J. Samuels.  Its principal office is located at 60 Heritage Drive, Pleasantville, New York 10570.  The Adviser is registered with the SEC under the Investment Advisers Act of 1940, as amended.

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Management Fees

We pay the Adviser a monthly fee at an annual rate of 1.00% of the value of our average weekly total assets, including any assets attributable to leverage, for the investment management and research services provided.  For the fiscal year ended December 31, 2011, the Fund paid the Adviser $1,113,338 in management fees.

Payment of Expenses

The Investment Advisory Agreement provides that we will be responsible for all of our expenses and liabilities, except that the Adviser is responsible for the expense in connection with maintaining a staff within its organization to furnish the above services to us.    

Duration and Termination

The Investment Advisory Agreement was approved by our Board of Directors on September 24, 2009, and by our stockholders on December 10, 2009 for an initial term of two years.  It will remain in effect from year to year thereafter if approved annually by our Board of Directors or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our Directors who are not interested persons.  The Investment Advisory Agreement will automatically terminate in the event of its assignment.  The Investment Advisory Agreement may be terminated by either party or by a vote of the holders of a majority of the outstanding voting securities of the Fund, without penalty upon not more than 60 days’ written notice.

Factors in Approving the Investment Advisory Agreement

The Fund’s Board of Directors, including the Directors who are not interested persons of any party to the Investment Advisory Agreement or its affiliates, approved the continuation of the Investment Advisory Agreement at a meeting of the Board of Directors held on December 6, 2011, with legal counsel in attendance.  A discussion regarding the Board's basis for approving the Investment Advisory Agreement is available in the Fund's Semi-Annual Report to Stockholders dated June 30, 2012.

Administration Agreement

U.S. Bancorp Fund Services LLC serves as our administrator pursuant to an Administration Agreement dated October 18, 2009.  Pursuant to the Administration Agreement, the Administrator provides us general fund management services, compliance oversight, financial reporting oversight and tax reporting.  For the fiscal year ended December 31, 2011, the Fund paid the Administrator $90,850.

Control Persons and Principal Stockholders

The following table sets forth certain ownership information with respect to our common stock for those persons who directly or indirectly own, control or hold with the power to vote, 5% or more of our outstanding common stock and all officers and Directors, as a group.

		Immediately prior to this offering
Name and address	Type of ownership	Shares owned	Percentage
Relative Value Partners, LLC 1033 Skoikie Blvd., Suite 470 Northbrook, IL  60062	Beneficial Owner	1,173,399.000	17.58%
Karpus Management, Inc. 183 Sully’s Trail Pittsford, NY  14534	Beneficial Owner	1,047,261.000	15.69%

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Name and address	Type of ownership	Shares owned	Percentage
All officers and Directors as a      group (1)	Record and beneficial	*	*

______________________________

* All of the officers and Directors as a group hold less than 1% of the Fund’s shares of common stock.

(1) The address for all officers and Directors is c/o US Bancorp Fund Services, LLC, 615 East Michigan Street, 2nd Floor, Milwaukee, WI  53202.

Outstanding Securities

The following table sets forth certain information regarding our authorized shares and shares outstanding as of December 31, 2011.

(1) Title of Class	(2) Amount Authorized	(3) Amount Issued and Outstanding
Common Stock	199,995,800	6,809,870

Determination of Net Asset Value

The NAV per share of our outstanding shares of common stock is determined weekly, by dividing the value of total assets minus liabilities by the total number of shares outstanding at the date as of which such determination is made.

All securities for which market quotations are readily available are valued at the last sales price prior to the time of determination of NAV, or, if no sales price is available at that time, at the closing price last quoted for the securities (but if bid and asked quotations are available, at the mean between the current bid and asked prices, rather than the quoted closing price).  Securities that are traded over-the-counter are valued (if bid and asked quotations are available) at the mean between the current bid and asked prices.  Investments in short-term debt securities having a maturity of 60 days or less are valued at amortized cost if their term to maturity from the date of purchase was less than 60 days, or by amortizing their value on the 61st day prior to maturity if their term to maturity from the date of purchase when acquired by us was more than 60 days.  Securities for which market values are not readily ascertainable are carried at fair value as determined in good faith by, or under the supervision of, the Board of Directors.  It is possible that the estimated value may differ significantly from the amount that might ultimately be realized in the near term, and the difference could be material.

Description of our Capital Stock

Our authorized capital stock consists of 199,995,800 shares of common stock, par value $0.001 per share.  As of the date of this Prospectus, we have 6,809,870 shares of common stock issued and outstanding.  As of May 16, 2012,749,086 shares of the Fund’s capital stock have been classified by the Board as 3.00% Convertible Preferred Stock, par value $0.001 per share.

Our common stock trades on the NYSE under the symbol “SPE.”  We intend to file an application to list our Convertible Preferred Stock on the NYSE under the symbol “SPE Pr.” No stock has been authorized for issuance under any equity compensation plans.  Under Maryland law, our stockholders generally are not personally liable for our debts or obligations.

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As permitted by the Maryland General Corporation Law, our charter provides that the Board of Directors, without any action by our stockholders, may amend the charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Fund has authority to issue.  In addition, our charter provides that the Board of Directors, by majority vote, may reclassify any unissued shares of our capital stock into one or more additional or other classes or series of stock with such designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and qualifications as determined by the Board of Directors. As discussed below, our Board of Directors has designated a new class of Convertible Preferred Stock created specifically for issuance pursuant to this offering.

Common Stock

All shares of our common stock have equal rights as to earnings, assets, dividends and voting privileges and, when they are issued, will be duly authorized, validly issued, fully paid and nonassessable.  Distributions may be paid to the holders of our common stock if, as and when authorized by our Board of Directors and declared by us out of funds legally available for such distributions.  Shares of our common stock have no preemptive, conversion or redemption rights and are freely transferable, except where their transfer is restricted by federal and state securities laws or by contract.  In the event of our liquidation, dissolution or winding up, each share would be entitled to share ratably in all of our assets that are legally available for distribution after we pay all debts and other liabilities.  Each of our shares of common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of Directors.  Except as provided with respect to any other class or series of stock, the holders of the Fund’s common stock will possess exclusive voting power.  There is no cumulative voting in the election of Directors, which means that holders of a majority of the outstanding shares of common stock will elect all of our Directors, and holders of less than a majority of such shares will be unable to elect any Director.

Convertible Preferred Stock

The Convertible Preferred Stock is a new class of our capital stock designated by the Board of Directors specifically for issuance pursuant to this offering.  The following is a brief description of the terms of the 3.00% Convertible Preferred Stock. This description does not purport to be complete and is qualified by reference to the Fund’s Charter, including the provisions of the Articles Supplementary establishing the 3.00% Convertible Preferred Stock. For complete terms of the 3.00% Convertible Preferred Stock including definitions of terms used in this Prospectus, please refer to the actual terms of the 3.00% Convertible Preferred Stock, which are set forth in the Articles Supplementary.

(a)           Liquidation Preference:  In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Fund, the holders of Convertible Preferred Stock will be entitled to receive preferential liquidating distribution at face value (i.e., $50.00 per share), before any distribution of assets is made to the holders of our common stock.  After payment of the full amount of the liquidating distribution to which they are entitled, the holders of shares of Convertible Preferred Stock will not be entitled to any further participation in any distribution of assets by the Fund.

 (b)           Dividends:  The holders of Convertible Preferred Stock will be entitled to receive dividends at the rate of 3.00% per year.  Dividends on our Convertible Preferred Stock will be fully cumulative, will accumulate without interest from the date of original issuance of the Convertible Preferred Stock and will be payable quarterly in arrears on the last calendar day of March, June, September and December, commencing on the last calendar day of the first March, June, September or December following the date of Expiration Date.

(c)           Voting Rights:  So long as the Fund is subject to the 1940 Act, the holders of any Convertible Preferred Stock, voting separately as a single class, shall have the right to elect two Directors at all times.  The remaining Directors shall be elected by the holders of common stock and preferred stock voting as a single class.  So long as the Fund is subject to the 1940 Act, in addition to any approval by stockholders that might otherwise be required, the approval of the holders of a majority of any outstanding Convertible Preferred Stock voting separately as a class, would be required to (1) adopt any plan of reorganization that would adversely affect the Convertible Preferred Stock, and (2) take any action requiring a vote of security holders under Section 13(a) of the 1940 Act, including, among other things, changes in the Fund’s subclassification as a closed-end investment company or changes in its fundamental investment restrictions.  As a result of these voting rights, the Fund’s ability to take any such actions may be impeded to the extent that there is any Convertible Preferred Stock outstanding.  The Board of Directors presently intends that, except as otherwise indicated in this Prospectus and except as otherwise required by applicable law or the Fund’s Articles of Incorporation, Articles Supplementary or bylaws, holders of Convertible Preferred Stock will have equal voting rights with holders of our common stock (one vote per share, unless otherwise required by the 1940 Act) and shall vote together with such holders of common stock as a single class.

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(d)           Conversion Right:  Until the mandatory redemption date set forth in (e) below, holders of Convertible Preferred Stock may convert their shares to common stock at the ratio of three shares of Common Stock for each share of Convertible Preferred Stock held.  The conversion ratio will be adjusted for any distributions made to common stockholders.  The Board of Directors believes that the value of the conversion right of the Convertible Preferred Stock is not a predominant factor in the market value of the Convertible Preferred Stock as of the date of its issuance.   The conversion right is a secondary attribute which is included to enhance the terms upon which the Fund is able to issue the Convertible Preferred Stock. If the NAV of our Common Stock reaches $20 per share, the Board may, in its sole discretion, redeem all then outstanding shares of Convertible Preferred Stock at $50 per share.  Under such circumstances, the Fund would provide no less than 30 days notice to the holders of Convertible Preferred Stock that, unless such shares have been converted by a certain date, the shares would be redeemed.  In connection with such conversion (or redemption) you would receive payment for all declared and unpaid dividends on your shares of Convertible Preferred Stock to the date of conversion, but after conversion you would no longer be entitled to the dividends, liquidation preference or other rights attributable to holders of the Convertible Preferred Stock.

(e)           Mandatory Redemption:  We will redeem all outstanding shares of Convertible Preferred Stock as of _____, 2017 (five years from the Expiration Date) at a price of $50 per share of Convertible Preferred Stock held on such date.

Immediately following the issuance of the Convertible Preferred Stock, and so long as the Fund is subject to the 1940 Act, (i) the Fund shall have an asset coverage of at least 200 percent, (ii) the Fund will be prohibited from declaring any dividend (except a dividend payable in our common stock) or any other distribution upon our common stock, unless the Convertible Preferred Stock has at the time of any such declaration an asset coverage of at least 200 percent after deducting the amount of such dividend or distribution, as the case may be, (iii) holders of Convertible Preferred Stock will be entitled, voting as a class, to the voting rights outlined in (c) above, and (iv) holders of Convertible Preferred Stock will have the liquidation preference outlined in (a) above.

Effects of Leverage

The holders of the Fund’s Convertible Preferred Stock will be entitled to the dividend rate of 3.00% of the Subscription Price.   Any return earned in excess of the stated dividend rate would directly benefit holders of our Common Stock; however, any shortfall from the stated rate would negatively affect our Common stockholders.  The following table is designed to assist you in understanding the effects of the existing leverage on the Common Stock of the Fund. The table assumes that 680,987 shares of 3.00% Convertible Preferred Stock are issued and outstanding. The assumed returns appearing in the table are hypothetical and actual returns may be greater or less than those appearing in the table.

Assumed on portfolio (net of expenses)	(10.00	)%	(5.00	)%	0.00	%	5.00	%	10.00	%
Corresponding return to Common Shareholder	(14.73	)%	(7.73	)%	(1.23	)%	5.27%		11.77	%

The following factors associated with leveraging could increase the investment risk and volatility of the price of our Common Stock:

•  leveraging exaggerates any increase or decrease in the net asset value of the Common Stock;

•  the dividend requirements on the Convertible Preferred Stock may exceed the income from the portfolio securities purchased with the proceeds from the issuance of preferred shares;

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•  a decline in net asset value results if the investment performance of the additional securities purchased fails to cover their cost to the Fund (including any dividend requirements of preferred shares);

•  a decline in net asset value could affect the ability of the Fund to make Common Stock dividend payments;

•  a failure to pay dividends or make distributions on its Common Stock could result in the Fund’s ceasing to qualify as a regulated investment company under the Code; and

•  if the asset coverage for the Fund’s preferred shares declines to less than two hundred percent (as a result of market fluctuations or otherwise), the Fund may be required to sell a portion of its investments when it may be disadvantageous to do so.  

Pursuant to Section 18 of the 1940 Act, it is unlawful for the Fund, as a registered closed-end investment company, to issue any class of senior security, or to sell any senior security that it issues, unless it can satisfy certain “asset coverage” ratios. The asset coverage ratio with respect to a senior security representing indebtedness means the ratio of the value of the Fund’s total assets (less all liabilities and indebtedness not represented by senior securities) to the aggregate amount of the Fund’s senior securities representing indebtedness. The asset coverage ratio with respect to a senior security representing stock means the ratio of the value of the Fund’s total assets (less all liabilities and indebtedness not represented by senior securities) to the aggregate amount of the Fund’s senior securities representing indebtedness plus the aggregate liquidation preference of the Fund’s outstanding preferred shares.

If, as is the case with the Fund, a registered investment company’s senior securities are equity securities, such securities must have an asset coverage ratio of at least 200% immediately following its issuance. If a registered investment company’s senior securities represent indebtedness, such indebtedness must have an asset coverage ratio of at least 300% immediately after their issuance. Subject to certain exceptions, during any period following issuance that the Fund fails to satisfy these asset coverage ratios, it will, among other things, be prohibited from declaring any dividend or declaring any other distribution in respect of its common stock except a dividend payable in Common Shares issued by the Fund. A registered investment company may, to the extent permitted by the 1940 Act, segregate assets or “cover” transactions in order to avoid the creation of a class of senior security.

Any rating received by the Fund on its Convertible Preferred Stock, or on any other senior security that it may issue, is an assessment by the applicable rating agency of the capacity of the Fund to satisfy its obligations on its senior securities. However, the rating does not eliminate or mitigate the risks associated with investing in the Fund’s Convertible Preferred Stock. In addition, should a rating on the Convertible Preferred Stock be lowered or withdrawn by the relevant rating agency, there may be an adverse effect on the market value of the Fund’s Convertible Preferred Stock and the Fund may also be required to redeem all or part of its outstanding Convertible Preferred Stock. If the Fund were required to redeem its Convertible Preferred Stock (in whole or part) as a result of the change in or withdrawal of the rating, the Common Stock of the Fund would lose the benefits associated with a leveraged capital structure

Limitation on Liability of Directors and Officers; Indemnification and Advancement of Expenses

Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its Directors and officers to the corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment and which is material to the cause of action.  Our charter contains such a provision which eliminates Directors’ and officers’ liability to the maximum extent permitted by Maryland law, subject to the requirements of the 1940 Act.

Our bylaws obligate us, to the maximum extent permitted by Maryland law and subject to the requirements of the 1940 Act, to indemnify any Director, officer, employees or agent of the Fund against any judgments, fines, settlements or expenses.

Maryland law requires a corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made a party by reason of his or her service in that capacity.  Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.  However, under Maryland law, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received, unless in either case a court orders indemnification, and then only for expenses.  In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.

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Provisions of the Maryland General Corporation Law and our Charter and Bylaws

The Maryland General Corporation Law and our charter and bylaws contain provisions that could make it more difficult for a potential acquiror to acquire us by means of a tender offer, proxy contest or otherwise.  These provisions are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our Board of Directors.  We believe that the benefits of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because, among other things, the negotiation of such proposals may improve their terms.

Action by Stockholders

The Maryland General Corporation Law provides that stockholder action can be taken only at an annual or special meeting of stockholders or by unanimous written consent in lieu of a meeting.  These provisions, combined with the requirements of our bylaws regarding the calling of a stockholder-requested special meeting of stockholders discussed below, may have the effect of delaying consideration of a stockholder proposal until the next annual meeting.

Ability of Stockholders to call a Special Meeting of Stockholders

Our bylaws only allow our stockholders to call a Special Meeting of Stockholders if such request is made to the Secretary of the Fund in writing signed by stockholders having at least 50% of the issued and outstanding shares of voting stock.

Regulation

We intend to continue to be regulated as a registered management investment company under the 1940 Act and as a registered investment company under Subchapter M of the Internal Revenue Code.  The 1940 Act contains prohibitions and restrictions relating to transactions between registered investment companies and their affiliates (including any investment advisers or sub-advisers), principal underwriters and affiliates of those affiliates or underwriters and requires that a majority of the directors be persons other than “interested persons,” as that term is defined in the 1940 Act.

Code of Ethics

The Fund and the Adviser have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts certain personal securities transactions.  Personnel subject to each code may invest in securities for their personal investment accounts, including securities that may be purchased or held by us, so long as such investments are made pursuant to the code’s requirements.  For information on how to obtain a copy of each code of ethics, see “Available Information.”

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Proxy Voting Policies and Procedures

The Fund’s Board of Directors has delegated the responsibility to vote the proxies of securities held by the Fund to the Adviser.  The Adviser has adopted a Proxy Voting Policy which, in compliance with Rule 206(4)-6 under the Adviser Act, is reasonably designed to ensure Brooklyn Capital votes in the Fund’s best interest.  The following summarizes the Adviser’s proxy voting policy and procedure and guidelines.

Proxy Voting Policies

The Adviser recognizes and adheres to the principle that one of the privileges of owning stock in a company is the right to vote on issues submitted to stockholder vote, such as election of directors and important matters affecting a company’s structure and operations. As an investment adviser with a fiduciary responsibility to the Fund, the Adviser analyzes the proxy statements of issuers whose stock is owned by the Fund and votes proxies on behalf of the Fund.  The Adviser’s decisions with respect to proxy issues are made in light of the anticipated impact of the issue on the desirability of investing in the portfolio company. Proxies are voted solely in the interests of the Fund and its stockholders.

Proxy Voting Procedures

In evaluating proxy statements, the Fund’s portfolio managers rely upon their own fundamental research, and information presented by company management and stockholder groups. The Adviser will not delegate its proxy voting responsibility on behalf of the Fund to a third party proxy voting service.

Proxy Voting Guidelines

The Adviser will generally vote proxies in favor of proposals that, in the opinion of the Fund’s portfolio managers, seek to enhance stockholder democracy. In those instances where stockholder democracy is not affected by the issue submitted to vote, the Adviser will endeavor to vote in the best economic interest of the Fund. With respect to proxies of closed-end investment companies whose shares are held by the Fund, except regarding any proposal that the Adviser deems likely to favorably impact such investment company’s market price discount to its NAV, the Adviser adheres to a “mirror voting” policy, whereby the Adviser votes the Fund’s shares in proportion to those votes cast by such investment company’s shareholders. Regarding any proposal (including the election of directors) that the Adviser deems likely to favorably impact such investment company’s market price discount to its NAV, the Adviser has been authorized by the Fund’s stockholders to determine how to vote on any such proposal.

Monitoring and Resolving Conflicts of Interest

When reviewing proxy statements and related research materials, the Fund’s portfolio managers will consider whether any business or other relationships between a portfolio manager, the Adviser and a portfolio company could influence a vote on such proxy matter. With respect to personal conflicts of interest, the Adviser’s Code of Ethics requires all members to avoid activities, perquisites, gifts, or receipt of investment opportunities that could interfere with the their ability to act objectively and effectively in the best interests of the Adviser and the Fund, and restricts their ability to engage in certain outside business activities. Portfolio managers with a personal conflict of interest regarding a particular proxy vote must recuse themselves and not participate in the voting decisions with respect to that proxy.

Share Repurchases

Stockholders of a closed-end management investment company generally do not have the right to cause it to repurchase its shares.  Generally, a closed-end management company may repurchase its shares under the 1940 Act:  (1) on a securities exchange or such other open market as may be designated by the SEC (provided that it has, in any such case, informed holders of the class of stock involved within the preceding six months of its intention to repurchase such stock), (2) by a tender offer open to all holders of the class of shares involved or (3) as otherwise permitted by the SEC.  If the Fund intends to repurchase its shares other than on a securities exchange, in the open market or by making a tender offer, a rule adopted by the SEC under the 1940 Act provides that the closed-end fund must meet certain conditions regarding the distribution of our net income, the identity of the seller, the price paid, any brokerage commissions, prior notice to holders of the class of shares involved of an intention to purchase such shares and that the purchase is not being made in a manner or on a basis which discriminates unfairly against the other holders of such class.

55

While we are not required to repurchase our shares, we have done so in the past and may continue to do so if the Board of Directors believes that such repurchase is in our best interests and of our stockholders.

Custodian, Transfer and Dividend Paying Agent and Registrar

Our portfolio securities are held under a custody agreement by U.S. Bank, N.A.  The address of the custodian is 1555 North RiverCenter Drive, Suite 302, Milwaukee, WI 53212.  Our assets are held under bank custodianship in compliance with the 1940 Act.  American Stock Transfer & Trust Company, LLC acts as our transfer agent, dividend paying agent and registrar (as well as Subscribing Agent in connection with this offering).  The principal business address of the transfer agent is 6201 15th Avenue, Brooklyn, NY 11219.

Brokerage Allocation and Other Practices

Subject to the supervision of the Directors, decisions to buy and sell securities for the Fund are made by the Adviser.  The Adviser is authorized by the Directors to allocate the orders placed by them on behalf of the Fund to brokers and dealers who may, but need not, provide research or statistical material or other services to the Fund or the Adviser for the Fund’s use.  Such allocation is to be in such amounts and proportions as the Adviser may determine.

In selecting a broker or dealer to execute each particular transaction, the adviser will take the following into consideration: (i) best net price available; (ii) the reliability, integrity and financial condition of the broker or dealer; (iii) the size of and difficulty in executing the order; and (iv) the value of the expected contribution of the broker or dealer to the investment performance of the Fund on a continuing basis.

Brokers or dealers executing a portfolio transaction on behalf of the Fund may receive a commission in excess of the amount of commission another broker or dealer would have charged for executing the transaction if the adviser determines in good faith that such commission is reasonable in relation to the value of brokerage, research and other services provided to the Fund.

In allocating portfolio brokerage, the adviser may select brokers or dealers who also provide brokerage, research and other services to other accounts over which the adviser exercise investment discretion.  Some of the services received as the result of the Fund’s transactions may primarily benefit accounts other than the Fund’s, while services received as the result of portfolio transactions effected on behalf of those other accounts may primarily benefit the Fund.

Legal Matters

Legal matters regarding the securities offered by this Prospectus and of the Fund in general will be passed upon for the Fund by Blank Rome LLP, New York, New York.

Experts

The financial statements included in this Prospectus and in the Registration Statement have been audited by Tait, Weller & Baker LLP, an independent registered public accounting firm, to the extent and for the periods set forth in their report appearing elsewhere herein and in the Registration Statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

56

Available Information

We will file with or submit to the SEC reports, proxy statements and other information meeting the informational requirements of the 1940 Act and the Exchange Act.  You may inspect and copy these reports, proxy statements and other information at the Public Reference Room of the SEC at 100 F St. NE, Washington, D.C. 20549. You may call the SEC at 1-800-SEC-0330 for information on the operation of the Public Reference Room. Our SEC filings are also available to the public on the SEC’s Internet website at http://www.sec.gov and can be inspected at the offices of the NYSE, 20 Broad Street, New York, NY 10005.  Copies of these reports, proxy and information statements and other information 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’s Public Reference Section, 100 F St. NE, Washington, D.C. 20549-0102 and are also available on the Fund’s website at  http://www.specialopportunitiesfundinc.com.

Forward-Looking Statements

This Prospectus contains forward-looking statements, within the meaning of the Securities Act, that involve risks and uncertainties.  We use words such as “anticipates,” “believes,” “expects,” “objectives,” “future,” “intends,” “will,” “may,” “should,” and similar expressions to identify forward-looking statements.  Our actual results could differ materially from those projected in the forward-looking statements because of various risks and uncertainties, including the factors set forth in “Risk Factors” and elsewhere in this Prospectus.

We have based the forward-looking statements included in this Prospectus on information available to us on the date of this Prospectus, and we assume no obligation to update any such forward-looking statements.  Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports, if any, that we in the future may file with the SEC, including an annual or semi-annual report on Form N-CSR.

Financial Statements

The financial statements included in the Fund’s Annual Report for the year ended December 31, 2011, filed with the Securities and Exchange Commission on March 9, 2012 (File No. 811-07528), are herein incorporated by reference.

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Not Part of the Prospectus

SPECIAL OPPORTUNITIES FUND

PRIVACY NOTICE

FACTS	WHAT DOES SPECIAL OPPORTUNITIES FUND INC. (THE “FUND”)  DO WITH YOUR PERSONAL INFORMATION?
Why?	Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information.  Please read this notice carefully to understand what we do.
What?	The types of personal information we may collect and share may include: ·     Social Security number ·     account balances ·     account transactions ·     transaction history ·     wire transfer instructions ·checking account information When you are no longer our customer, we continue to share your information as described in this notice.
How?	All financial companies need to share customers’ personal information to run their everyday business.  In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons the Fund chooses to share; and whether you can limit this sharing.
Reasons we can share your personal information		Does the Fund share?	Can you limit this sharing?
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus		Yes	No
For our marketing purposes – to offer our products and services to you		No	We don’t share
For joint marketing with other financial companies		No	We don’t share
For our affiliates’ everyday business purposes – information about your transactions and experiences		Yes	No
For our affiliates’ everyday business purposes – information about your creditworthiness		No	We don’t share
For our affiliates to market to you		No	We don’t share
For nonaffiliates to market to you		No	We don’t share

Questions?  Call (877) 607-0414

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Page 2

What we do
Who is providing this notice?	Funds advised by Brooklyn Capital Management LLC.  A complete list is included below.
How does the Fund protect my personal information?	To protect your personal information from unauthorized access and use, we use security measures that comply with federal law.  These measures include computer safeguards and secured files and buildings.
How does the Fund collect my personal information?	We collect your personal information, for example, when you ▪    open an account or respond to an offer ▪    provide account information ▪    give us your contact information ▪    make a wire transfer ▪    tell us where to send money We also may collect your information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?	Federal law gives you the right to limit only ▪    sharing for affiliates’ everyday business purposes – information about your creditworthiness ▪    affiliates from using your information to market to you ▪    sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.
Definitions
Affiliates	Companies related by common ownership or control.  They can be financial and nonfinancial companies. ▪    Our affiliates include: Brooklyn Capital Management LLC
Nonaffiliates	Companies not related by common ownership or control.  They can be financial and nonfinancial companies. ▪   The Fund doesn’t share with nonaffiliates so they can market to you.
Joint marketing	A formal agreement between nonaffiliated financial companies that together market financial products or services to you. ▪    The Fund doesn’t jointly market.
List of funds providing this notice
Special Opportunities Fund, Inc.

59 

PART C

OTHER INFORMATION

Item 25. Financial Statements and Exhibits

(1)           Financial Statements (included in Part B)

Portfolio Summary as of December 31, 2011*

Summary Schedule of Investments as of December 31, 2011*

Statement of Assets and Liabilities as of December 31, 2011*

Statement of Operations for the year ended December 31, 2011*

Statement of Changes in Net Assets for the years ended December 31, 2011 and 2010*

Financial Highlights*

Notes to Financial Statements*

Report of Independent Registered Public Accounting Firm*

* Incorporated by reference from the Fund’s Annual Report on Form N-CSR for the year ended December 31, 2011, filed on March 9, 2011 (File No. 811-07528).

(2)           Exhibits

(a)(i)	Articles of Incorporation(1)
(a)(ii)	Articles of Amendment(2)
(a)(iii)	Articles Supplementary
(b)(i)	Bylaws(3)
	(b)(ii) Amendment to Bylaws(2)
(c)	Not applicable
(d)	Form of Transferable Subscription Rights Certificate
(e)	Not applicable
(f)	Not applicable
(g)	Investment Management Agreement between the Fund and Brooklyn Capital Management, LLC
(h)	Not applicable
(i)	Not applicable
(j)	Custody Agreement between the Fund and U.S. Bank National Association
(k)(i)	Transfer Agent Servicing Agreement between the Fund and American Stock Transfer and Trust Company, LLC
(k)(ii)	Administration Agreement
(l)	Opinion and Consent of Counsel
(m)	Not applicable
(n)	Consent of Independent Auditor
(o)	Not applicable
(p)	Not applicable
(q)	Not applicable
(r)(i)	Code of Ethics of the Fund
(r)(ii)	Code of Ethics of the Adviser

(1) Incorporated by reference to the Fund’s Post-Effective Amendment No. 2 to the Registration Statement (File No. 333-58532) filed June 15, 1995.

(2) Incorporated by reference to Form NSAR (File No. 811-07528) filed on February 26, 2010.

(3) Incorporated by reference to the Fund’s Registration Statement on Form N-2 (File No. 333-58532) filed on February 19, 1993.

(4) Incorporated by reference to the Fund’s Schedule 14A (File No. 811-07528) filed on November 19, 2009.

Item 26. Marketing Arrangements

Not applicable.

Item 27. Other Expenses of Issuance and Distribution

The approximate expenses in connection with the offering are as follows:

Subscription Agent’s and Information Agent’s Fees and Expenses	$32,500
Auditing Fees and Expenses	$5,000
Legal Fees and Expenses	$75,000
NYSE Listing Fees	$47,500
Printing, Typesetting, and Edgar Fees	$10,000
Miscellaneous	$2,000
	$172,000

Item 28. Persons Controlled by or Under Common Control With Registrant

In December, 2010, the Adviser and the Fund filed a joint request for a declaratory order from the SEC that the Adviser does not control the Fund.  In March 2011, the Board and the Adviser made a determination that the joint request for a declaratory order should be deemed to have been temporarily granted under the provisions of Section 2(a)(9) of the Investment Company Act because more than 60 days had elapsed since the date the request was filed with the SEC.  The Staff has advised the Board and the Adviser that they disagree with such determination.  In June, 2011, the Fund and the Adviser submitted a letter to the Staff requesting that they re-evaluate the Staff’s position regarding whether the Adviser should be deemed to control the Fund based on the recent decision by the U.S. Supreme Court in Janus Capital Group v. First Derivative Traders.  In Janus, the Court ruled that despite the “unique close relationship” between the fund and the adviser, the adviser did not control the fund. 

Item 29. Number of Holders of Securities

Set forth below is the number of record holders as of  May 14, 2012, of each class of securities of the Registrant:

Title of Class	Number of Record Holders
Common Stock, par value $0.001	203

Item 30. Indemnification

Section 2-418 of the Maryland General Corporation Law and the Registrant’s By-laws (incorporated by reference as an Exhibit 2(b) to this Registration Statement) provide for indemnification of directors and officers of the Registrant, and employees and agents of the Registrant as determined by the Board of Directors.  The Investment Management Agreement (incorporated by reference as Exhibit 2(g) to this Registration Statement) provides for indemnification of the Fund’s investment adviser.  The Registrant’s directors and officers are insured under a standard investment company errors and omissions insurance policy covering loss incurred by reason of negligent errors and omissions committed in their official capacities.

Insofar as indemnification for liability arising under the Securities Act of 1933, as amended (the “Act”) may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Item 31. Business and Other Connections of Investment Adviser

A description of any other business, profession, vocation, or employment of a substantial nature in which the investment adviser, and each director, executive officer or partner of the investment adviser is or has been during the past two fiscal years, engaged in for his or her own account or in the capacity of director, officer, employee, partner or trustee, is set forth in this Registration Statement in the section entitled “Management.”

Item 32. Location of Accounts and Records

The books and records required to be maintained by Section 31(a) of the Investment Company Act of 1940, as amended (the “1940 Act”), are in the possession and custody of the Registrant’s administrator, U.S. Bancorp Fund Services, LLC, 615 East Michigan Street, Milwaukee, Wisconsin 53202.

Item 33. Management Services

Not applicable.

Item 34. Undertakings

1. The Registrant undertakes to suspend the offering of its Rights until the prospectus is amended if (1) subsequent to the effective date of this registration statement, the net asset value declines more than ten percent from its net asset value as of the effective date of the registration statement or (2) the net asset value increases to an amount greater than its net proceeds as stated in the prospectus.

2. Not applicable.

3. Not applicable.

4. Not applicable.

5. The Registrant undertakes that:

(a) for the purpose of determining any liability under the Securities Act of 1933, as amended, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant under Rule 497(h) under the 1933 Act shall be deemed to be part of this registration statement as of the time it was declared effective; and

(b) for the purpose of determining any liability under the Securities Act of 1933, as amended, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

6. Not applicable.

SIGNATURES

Pursuant to requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of New York, and the State of New York, on the 16th day of May, 2012.

SPECIAL OPPORTUNITIES FUND, INC.
By:	/s/ Andrew Dakos
	Name: Andrew Dakos Title: President (Principal Executive Officer)

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ *	President  (Principal Executive Officer)	May 16, 2012
Andrew Dakos
/s/ *	Treasurer (Principal Financial Officer and Principal	May 16, 2012
Gerald Hellerman	Accounting Officer)
/s/ *	Director	May 16, 2012
Phillip Goldstein
/s/ *	Director	May 16, 2012
James Chadwick
/s/ *	Director	May 16, 2012
Ben Harris
/s/ *	Director	May 16, 2012
Charles Walden

*  By Andrew Dakos, Attorney-In-Fact under Powers of Attorney

/s/ Andrew Dakos                                           

ANDREW DAKOS

INDEX TO EXHIBITS

Exhibit No Description

2(a)(iii)	Articles Supplementary **
2(d)	Form of Transferable Subscription Rights Certificate**
2(j)	Custody Agreement between the Fund and U.S. Bank National Association**
2(k)(i)	Transfer Agent Servicing Agreement between the Fund and American Stock Transfer and Trust Company, LLC**
2(k)(ii)	Administration Agreement**
2(l)	Opinion and Consent of Counsel**
2(n)	Consent of Independent Auditor
2(r)(i)	Code of Ethics of the Fund**
2(r)(ii)	Code of Ethics of the Adviser**

EX-99.2(A)(III)

SPECIAL OPPORTUNITIES FUND, INC.

ARTICLES SUPPLEMENTARY

ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES OF

A SERIES OF CONVERTIBLE PREFERRED STOCK

Special Opportunities Fund, Inc., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland as follows:

FIRST:Pursuant to the authority expressly vested in the Board of Directors of the Corporation (the “Board”) by Article Sixth of its Articles of Incorporation, as supplemented (which as hereafter amended, restated and supplemented from time to time, is together with these Articles Supplementary, the “Charter”) and Section 2-208 of the Maryland General Corporation Law (“MGCL”), the Board has duly adopted resolutions reclassifying authorized but unissued shares of common stock, par value $0.001 per share, of the Corporation (the “Common Stock”) into 749,086 shares of preferred stock, par value $0.001 per share, of the Corporation.

SECOND:The designations, preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, terms and conditions of redemption and other provisions of the shares of preferred stock referenced in Article FIRST are as follows:

(1)Designation; Number of Shares.  A series of preferred stock, designated as “3.00% Convertible Preferred Stock, Series A”, par value $0.001 per share, is hereby established.  The number of shares constituting such series shall be 749,086 (the “Series A Preferred Stock”).

(2)Voting Rights.  For so long as the Corporation is subject to the Investment Company Act of 1940, as amended (the “1940 Act”), the holders of Series A Preferred Stock, voting separately as a single class, shall have the right to elect two (2) members of the Board at any annual or special meeting of stockholders or by a written consent in lieu of a meeting undertaken by the holders of at least a majority of the outstanding shares of Series A Preferred Stock.  Any director elected by the holders of Series A Preferred Stock may be removed at any time with or without cause by and only by the vote of the holders of a majority of the shares of Series A Preferred Stock then outstanding at any annual or special meeting of the stockholders of the Corporation, or by a written consent in lieu of a meeting undertaken by the holders of at least a majority of the outstanding shares of Series A Preferred Stock, and any vacancy occurring by reason of such removal or by reason of death, resignation or inability to serve of any director so elected, shall be filled by and only by a vote of the holders of a majority of the Series A Preferred Stock then outstanding at any annual or special meeting of the stockholders of the Corporation or by a written consent in lieu of a meeting undertaken by the holders of at least a majority of the outstanding shares of Series A Preferred Stock.  Any director so elected under this paragraph shall serve until his or her successor is duly elected and qualified or his or her earlier death, resignation or removal as provided herein.  In addition to any approval by stockholders that might otherwise be required, the approval of the holders of a majority of the outstanding Series A Preferred Stock, voting separately as a class, shall be required to (i) adopt any plan of reorganization that would adversely affect the Series A Preferred Stock, and (ii) take any action requiring a vote of security holders under Section 13(a) of the 1940 Act, including, among other things, changes in the Corporation’s subclassification as a closed-end investment company or changes in its fundamental investment restrictions.

(3)Dividends.

(a)The holders of Series A Preferred Stock shall be entitled to receive, when, as and if authorized by the Board and declared by the Corporation, out of funds legally available therefor, cumulative cash dividends at the annual rate of 3.00% per share (computed on the basis of a 360-day year consisting of twelve 30-day months) of the initial liquidation preference of $50.00 per share on the Series A Preferred Stock and no more, payable quarterly on March 31, June 30, September 30 and December 31 in each year (each, a “Dividend Payment Date”), commencing June 30, 2012 (or if any such day is not a Business Day (as defined below), then on the next succeeding Business Day), to holders of record of Series A Preferred Stock as they appear on the stock register of the Corporation at the close of business on the date designated by the Board for the payment of dividends, in preference to dividends on shares of Common Stock and any other stock of the Corporation ranking junior to the Series A Preferred Stock in payment of dividends.  “Business Day” means a day on which the New York Stock Exchange is open for trading and which is not a Saturday, Sunday or other day on which banks in the New York, New York are authorized or obligated by law to close.

(b)Dividends on shares of Series A Preferred Stock shall accumulate from the date on which the first such shares of Series A Preferred Stock are originally issued (“Date of Original Issue”).  Each period beginning on and including a Dividend Payment Date (or the Date of Original Issue, in the case of the first dividend period after issuance of such shares) and ending on but excluding the next succeeding Dividend Payment Date is referred to herein as a “Dividend Period”.  Dividends on account of arrears for any past Dividend Period may be declared and paid at any time, without reference to any Dividend Payment Date, to holders of record on such date.

(c)For so long as shares of Series A Preferred Stock are outstanding, the Corporation shall not declare, pay or set apart for payment any dividend or other distribution (other than a dividend or distribution paid in shares of, or options, warrants or rights to subscribe for or purchase, Common Stock or other shares of capital stock, if any, ranking junior to the Series A Preferred Stock as to dividends) with respect to Common Stock or any other shares of the Corporation ranking junior to or on a parity with the Series A Preferred Stock as to dividends, unless (i) immediately after such transaction the Corporation would have asset coverage of at least 200% after deducting the amount of such dividend or distribution, as the case may be, (ii) full cumulative dividends on the Series A Preferred Stock due on or prior to the date of the transaction have been declared and paid and (iii) the Corporation has redeemed the full number of shares of Series A Preferred Stock required to be redeemed by any provision for mandatory redemption contained in these Articles Supplementary.

(4)Liquidation Rights.

(a)Upon the dissolution, liquidation or winding up of the affairs of the Corporation, whether voluntary or involuntary, the holders of shares of Series A Preferred Stock shall be entitled to receive and to be paid out of the assets of the Corporation (or the proceeds thereof) available for distribution to its stockholders after satisfaction of claims of creditors of the Corporation, but before any distribution or payment shall be made in respect of Common Stock, an amount equal to the liquidation preference with respect to such shares.  The liquidation preference for the Series A Preferred Stock shall be $50.00 per share, plus an amount equal to all accumulated dividends thereon (whether or not earned or declared but without interest) to the date payment of such distribution is made in full or a sum sufficient for the payment thereof is set apart with the Dividend Disbursing Agent (as defined below).  In determining whether a distribution (other than upon voluntary or involuntary liquidation), by dividend, redemption or otherwise, is permitted under the MGCL, amounts that would be needed, if the Corporation were to be dissolved at the time of distribution, to satisfy the liquidation preference of the Series A Preferred Stock will not be added to the Corporation’s total liabilities.  “Dividend Disbursing Agent” means American Stock Transfer & Trust Company, LLC, unless and until another entity appointed by a resolution of the Board enters into an agreement with the Corporation to serve as Dividend Disbursing Agent.

2 

(b)If, upon any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, the assets of the Corporation available for distribution among the holders of all preferred stock of the Corporation, including the Series A Preferred Stock, then outstanding shall be insufficient to permit the payment in full to the holders thereof of the amounts to which they are entitled, then the available assets shall be distributed among such holders ratably in any distribution of assets according to the respective amounts which would be payable on all the shares if all amounts thereon were paid in full.

(c)Upon the dissolution, liquidation or winding up of the affairs of the Corporation, whether voluntary or involuntary, until payment in full is made to the holders of Series A Preferred Stock of the liquidation distribution to which they are entitled, (i) no dividend or other distribution shall be made to the holders of Common Stock or any other class of shares of capital stock of the Corporation ranking junior to the Series A Preferred Stock upon dissolution, liquidation or winding up and (ii) no purchase, redemption or other acquisition for any consideration by the Corporation shall be made in respect of the Common Stock or any other class of shares of capital stock of the Corporation ranking junior to the Series A Preferred Stock upon dissolution, liquidation or winding up.

(d)After payment to the holders of preferred stock of the full preferential amounts provided for in this Section 4, the holders of preferred stock as such shall have no right or claim to any of the remaining assets of the Corporation.

(e)Subject to the rights of the holders of shares of any series or class or classes of stock ranking on a parity with the Series A Preferred Stock with respect to the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Corporation, after payment shall have been made in full to the holders of the Series A Preferred Stock as provided in Section 4(a), but not prior thereto, any other series or class or classes of stock ranking junior to the Series A Preferred Stock with respect to the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Corporation shall, subject to any respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series A Preferred Stock shall not be entitled to share therein.

3 

(5)Mandatory Redemption by the Corporation.

(a)On the fifth (5th) anniversary of the Date of Original Issue, in accordance with the notice procedures set forth below, the Corporation shall, to the extent permitted by the 1940 Act and the MGCL, redeem all but not less than all outstanding shares of Series A Preferred Stock at a redemption price per share payable in cash equal to $50.00 together with accumulated dividends thereon to the date fixed for redemption.

(b)Notice of any redemption pursuant to this Section shall be sent by or on behalf of the Corporation prior to the date specified for redemption in such notice, by first class mail, postage prepaid, to all holders of record of Series A Preferred Stock at their last addresses as they shall appear on the books of the Corporation; provided, however, that no failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series A Preferred Stock except as to the holder to whom the Corporation has failed to give notice or except as to the holder to whom notice was defective.  In addition to any information required by law, such notice shall state: (i) the redemption date, (ii) the redemption price, (iii) the procedures that the holders must follow to redeem such shares, and (iv) that dividends on the shares to be redeemed will cease to accumulate on the redemption date.

(c)If notice has been mailed in accordance with Section 5(b) and provided that the Corporation pays, or sets aside for payment, the applicable redemption price, on or before the redemption date specified in such notice, then, from and after the redemption date, dividends on the shares of the Series A Preferred Stock so called for redemption shall cease to accumulate, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of Series A Preferred Stock, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the redemption price) shall cease.  Upon surrender, in accordance with said notice, any shares so redeemed shall be redeemed by the Corporation at the redemption price.

(d)If the Corporation shall not have funds legally available for the redemption of, or is otherwise unable to redeem, all the shares of Series A Preferred Stock in accordance with this Section 5, the Corporation shall redeem on such redemption date the number of shares of Series A Preferred Stock for which it shall have legally available funds, or is otherwise able, to redeem ratably from each holder thereof, and the remainder of the shares of Series A Preferred Stock shall be redeemed on the earliest practicable date on which the Corporation shall have funds legally available for the redemption of, or is otherwise able to redeem, such shares upon notice of redemption.

(6)Conversion.

(a)Right to Convert.  Subject to the adjustments contemplated by Section 7 hereof, shares of Series A Preferred Stock may be converted, in whole or in part, at any time after the issuance thereof until the close of business on the last Trading Day (defined below) prior to the date fixed for redemption of such shares or the liquidation, dissolution or winding up of the Corporation, by the holder thereof, without the payment of any additional consideration, into shares of Common Stock.  Each share of Series A Preferred Stock initially shall be convertible into three (3) shares of Common Stock (the “Conversion Rate”), subject to adjustment from time to time in accordance with the provisions of Section 7.  Upon conversion, any accumulated dividends shall, in the Corporation’s discretion, be payable in the form of either shares of Common Stock (valued at the Closing Price of the Common Stock on the Business Day prior to the date of conversion) or cash.

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(b)Mandatory Conversion.  If, at any time from and after the Date of Original Issue, the net asset value of the Common Stock is equal to or greater than $20.00 per share (as adjusted for distributions), the Corporation may, at its option, require the holders of Series A Preferred Stock to convert all or any part of their shares of Series A Preferred Stock into shares of Common Stock at the Conversion Rate, as adjusted for distributions pursuant to Section 7 (a “Mandatory Conversion”).  The Corporation may exercise its right to require conversion under this Section 6(b) by delivering within not more than ten (10) Trading Days following the date on which the net asset value of the Common Stock is equal to or greater than $20.00 per share a written notice thereof to all, but not less than all, of the holders of Series A Preferred Stock and the Corporation’s transfer agent (the “Mandatory Conversion Notice” and the date all of the holders received such notice is referred to as the “Mandatory Conversion Notice Date”).  The Mandatory Conversion Notice shall state (i) the Trading Day selected for the Mandatory Conversion in accordance herewith (the “Mandatory Conversion Date”), and (ii) the number of shares of Common Stock to be issued to the holder on the Mandatory Conversion Date.  The mechanics of conversion set forth in Section 6(b) shall apply to any Mandatory Conversion as if the Corporation and the transfer agent had received from the holder on the Mandatory Conversion Date a Conversion Notice (as defined below).

(c)Exercise of Right to Convert.  The right to convert shares of Series A Preferred Stock into shares of Common Stock may be exercised by the holder of Series A Preferred Stock only by delivering a written notice to convert to the Corporation’s transfer agent stating that the holder elects to convert all or a stated number of shares of the Series A Preferred Stock into shares of Common Stock and identifying the name or names (with address and social security or taxpayer identification number) in which the shares of Common Stock issuable upon such conversion shall be issued (each, a “Conversion Notice”).  Notwithstanding the foregoing, the Conversion Notice shall comply with the applicable procedures of Depository Trust Company (“DTC”).

(d)Issuance of Shares. As promptly as practicable after the receipt by the Corporation of a Conversion Notice, the Corporation shall issue and deliver, or cause to be issued and delivered, to the holder the number of duly authorized and issued, fully paid and nonassessable shares of Common Stock to which the holder of shares of Series A Preferred Stock so converted shall be entitled in accordance with the procedures of DTC applicable to stock represented by a global stock certificate.

(e)Effect of Conversion.

(i)Any conversion of shares of the Series A Preferred Stock made pursuant to Section 6(a) shall be deemed to have been made at the close of business on the date the Corporation receives the Conversion Notice, and the rights of the holder thereof with respect to the shares of Series A Preferred Stock being converted shall cease, except that the holder thereof shall thereafter have and retain (A) the right to receive shares of Common Stock in respect of the converted shares of Series A Preferred Stock in accordance with Section 6(d) and (B) the right to vote such shares of Series A Preferred Stock in connection with any matters submitted to a vote of the stockholders or to receive distributions with respect to such shares of Series A Preferred Stock, in either case as to which the applicable record date established by the Board for determining stockholders entitled to vote on such matter or entitled to receive distributions, as the case may be, shall occur prior to the date on which such holder shall have delivered the Conversion Notice to the Corporation.  The Person(s) (as defined below) entitled to receive the shares of Common Stock upon the conversion of the shares of Series A Preferred Stock shall be treated for all purposes as having become the record holder of such shares of Common Stock as of the close of business on the date such shares are converted.  “Person” shall mean any individual, corporation, partnership, limited liability company, limited liability partnership, trust, unincorporated association or other entity.

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(f)No Fractional Shares.  No fractional shares or scrip representing fractional shares shall be issued upon conversion of any shares of Series A Preferred Stock into Common Stock.  If any fractional share of Common Stock would be issuable upon the conversion of any share or shares of Series A Preferred Stock but for the provisions of the first sentence of this Section 6(f), the Corporation, in lieu of delivering such fractional share, shall pay to the holder of the shares of Series A Preferred Stock surrendered for conversion an amount in cash equal to the Current Market Price (as defined below) of such fractional share.

(7)Adjustments to the Conversion Rate.  In the event the Corporation shall make or declare, or fix a record date for the determination of holders of shares of Common Stock entitled to receive, a dividend or other distribution payable in cash or Common Stock or authorize any split or reverse split of the Common Stock, the Conversion Rate shall be adjusted accordingly.  In addition, the Board of Directors may determine, in its sole discretion, it to be in the best interests of the Corporation to adjust the Conversion Rate in other instances.

(8)Reports of Adjustments.  Upon any adjustment of the Conversion Rate, the Corporation shall give written notice thereof to each holder of shares of Series A Preferred Stock, which notice shall state the adjusted Conversion Rate and setting forth in reasonable detail the facts requiring such adjustment and the method upon which such adjustment was made, and the effective date of such adjustment.

(9)Notices.  Whenever (i) the Corporation shall declare any dividend upon the shares of its capital stock payable in cash or stock or other securities or make any other distribution to the holders of shares of its capital stock, (ii) the Corporation shall offer for subscription to the holders of the shares of its capital stock any additional shares of stock of any class or other rights, (iii) there shall be any capital reorganization or reclassification of the capitalstock of the Corporation, or a consolidation or merger of the Corporation with or into, or a sale of all or substantially all its assets to, another entity or entities, or (iv) there shall be a liquidation, dissolution or winding up of the Corporation, then, in each such event, the Corporation shall give, by first class mail, postage prepaid, addressed to each holder of shares of Series A Preferred Stock at the address of such holder as shown on the books of the Corporation, a notice stating (A) in the case of any dividend or distribution referred to in clause (i) above, the date on which the books of the Corporation shall close or a record shall be taken for determining stockholders entitled to receive such dividend or distribution and (B) in the case of any reorganization, reclassification, consolidation, merger, share exchange, sn, dissolution or winding up of the Corporation, the date on which the books of the Corporation shall close or a record shall be taken for determining stockholders entitled to vote upon such transaction and the date, if any is to be fixed, on which the holders of shares of Common Stock shall be entitled to exchange such shares for securities or other property in connection with any such transaction.

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(10)Stock to be Reserved.  The Corporation will at all times reserve and keep available out of its authorized Common Stock, free from preemptive rights, solely for the purpose of issuance upon the conversion of the shares of Series A Preferred Stock as herein provided, such number of shares of Common Stock as shall then be issuable upon the conversion of all outstanding shares of Series A Preferred Stock.

(11)No Reissuance of Converted Shares.  Each share of Series A Preferred Stock converted by the holder thereof into shares of Common Stock as provided herein shall be canceled and retired and shall not be reissued.

(12)Closing of Books.  The Corporation will at no time close its transfer books against the transfer of any shares of Series A Preferred Stock or of any shares of Common Stock issued or issuable upon the conversion of the shares of Series A Preferred Stock in any manner which interferes with the timely conversion of the shares of Series A Preferred Stock, except as may otherwise be required to comply with applicable securities laws.

(13)Rank.  The shares of the Series A Preferred Stock shall rank prior to all shares of any other class or series of capital stock of the Corporation, unless such other class or series by its terms ranks senior to the shares of Series A Preferred Stock, with respect to voting powers, preferences and relative, participating, optional and other special rights of the shares of such series and the qualifications, limitations and restrictions thereof, including, without limitation, with respect to the payment of dividends and the distribution of assets, whether upon liquidation or otherwise.

THIRD:The Series A Preferred Stock has been classified and designated by the Board under the authority contained in the Charter.

FOURTH:These Articles Supplementary have been approved by the Board in the manner and by the vote required by law.

FIFTH:These Articles Supplementary shall be effective at the time the State Department of Assessments and Taxation of Maryland accepts these Articles Supplementary for record.

SIXTH:The undersigned President of the Corporation acknowledges these Articles Supplementary to be the act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

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IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed in its name and on its behalf by its President and attested to by its Secretary on this 15th day of May, 2012.

SPECIAL OPPORTUNITIES FUND, INC.
By:	/s/ Andrew Dakos
	Name: Andrew Dakos
	Title: President
ATTEST:
By:	/s/ Phillip Goldstein
	Name:  Phillip Goldstein
	Title:    Secretary

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EX-99.2(D)

RIGHTS CERTIFICATE #:	NUMBER OF RIGHTS
THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE COMPANY'S PROSPECTUS DATED _____ __, 2012 (THE "PROSPECTUS") AND ARE INCORPORATED HEREIN BY REFERENCE.   COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM PHOENIX ADVISORY PARTNERS, THE INFORMATION AGENT.
Special Opportunities Fund, Inc.
Incorporated under the laws of the State of Maryland
TRANSFERABLE SUBSCRIPTION RIGHTS CERTIFICATE
Evidencing Transferable Subscription Rights to Purchase Shares of 3.00% Convertible Preferred Stock, Series A, par value $0.001 per share of Special Opportunities Fund, Inc.
Subscription Price:	$50.00 per Share
THE SUBSCRIPTION RIGHTS WILL EXPIRE IF NOT EXERCISED PRIOR TO 5:00 P.M., EASTERN STANDARD TIME, ON _______ __, 2012, UNLESS EXTENDED BY THE COMPANY
REGISTERED
OWNER:
THIS CERTIFIES THAT the registered owner whose name is inscribed hereon is the owner of the number of transferable subscription rights (“Rights”) set forth above.  Each whole Right entitles the holder thereof to subscribe for and purchase one share of 3.00% convertible preferred stock, Series A, par value $0.001 per share (“Convertible Preferred Stock”) of Special Opportunities Fund, Inc., a Maryland corporation, at a subscription price  of $50.00  per  share  (the  “Basic  Subscription  Privilege”),  pursuant  to  a  rights  offering  (the “Rights Offering”), on the terms and subject to the conditions set forth in the Prospectus and the “Instructions as to Use of Special Opportunities Fund, Inc.  Rights Certificates” accompanying this Subscription Rights Certificate.   If any shares of Convertible Preferred Stock available for purchase in the Rights Offering are not purchased by other holders of Rights pursuant to the exercise of their Basic Subscription Privilege, any Rights holder that exercises its Basic Subscription Privilege in full may subscribe for a number of additional shares pursuant to the terms and conditions of the Rights Offering, subject to proration, as described in the Prospectus (the “Over-Subscription Privilege”).   The Rights represented by this Subscription Rights Certificate may be exercised by completing Form 1 and any other appropriate forms on the reverse side hereof and by retuning the full payment of the subscription price for each share of Convertible Preferred Stock in accordance with the “Instructions as to Use of Special Opportunities Fund, Inc.  Rights Certificates” that accompany this Subscription Rights Certificate. This Subscription Rights Certificate is not valid unless countersigned by the subscription agent and registered by the registrar. Witness the seal of Special Opportunities Fund, Inc. and the signatures of its duly authorized officers. Dated:
_________________________________	_________________________________
President	Secretary

DELIVERY OPTIONS FOR SUBSCRIPTION RIGHTS CERTIFICATE

Delivery other than in the manner or to the addresses listed below will not constitute valid delivery.

If delivering by hand: American Stock Transfer & Trust Company, LLC Attn: Reorganization Department 6201 15th Avenue Brooklyn, New York 11219 If delivering by mail or overnight courier: American Stock Transfer & Trust Company, LLC Operations Center Attn: Reorganization Department 6201 15th Avenue Brooklyn, New York 11219

PLEASE PRINT ALL INFORMATION CLEARLY AND LEGIBLY.

FORM 1-EXERCISE OF SUBSCRIPTION RIGHTS To subscribe for shares pursuant to your Basic Subscription Right, please complete lines (a) and (c) and sign under Form 4 below.  To subscribe for shares pursuant to your Over-Subscription Right, please also complete line (b) and sign under Form 4 below.  To the extent you subscribe for more Shares than you are entitled under either the Basic Subscription Right or the Over-Subscription Right, you will be deemed to have elected to purchase the maximum number of shares for which you are entitled to subscribe under the Basic Subscription Right or Over-Subscription Right, as applicable. (a) EXERCISE OF BASIC SUBSCRIPTION RIGHT: I apply for ______________ shares x $ 50.00 =   $_______________                    (no. of new shares)   (subscription price) (amount enclosed) (b) EXERCISE OF OVER-SUBSCRIPTION RIGHT If you have exercised your Basic Subscription Right in full and wish to subscribe for additional shares for which you are otherwise entitled to subscribe pursuant to your Over-Subscription Right: I apply for ______________ shares x $ 50.00 =   $_______________                   (no. of new shares)   (subscription price) (amount enclosed) (c) Total Amount of Payment Enclosed   =   $__________________ METHOD OF PAYMENT (CHECK ONE) ¨ Check or bank draft payable to “American Stock Transfer & Trust Company, LLC as Subscription Agent.” ¨ Wire transfer of immediately available funds directly to the account maintained by American Stock Transfer & Trust Company, LLC, as Subscription Agent, for purposes of accepting subscriptions in this Rights Offering at JPMorgan Chase Bank, 55 Water Street, New York, New York 10005, ABA #021000021, Account # 530-354624 American Stock Transfer, LLC FBO Special Opportunities Fund, Inc., with reference to the rights holder's name. FORM  2-TRANSFER  TO  DESIGNATED  TRANSFEREE To transfer your subscription rights to another person, complete this Form 2 and have your signature guaranteed under Form 5. For value received ______________ of the subscription rights represented by this Subscription Rights Certificate are assigned to: ________________________________________________________________ ________________________________________________________________ Social Security # __________________________________________________ Signature(s): ______________________________________________________ IMPORTANT: The signature(s) must correspond with the name(s) as printed on the reverse of this Subscription Rights Certificate in every particular, without alteration or enlargement, or any other change whatsoever. FORM 3-DELIVERY TO DIFFERENT ADDRESS If you wish for the Common Stock underlying your subscription rights, a certificate representing unexercised subscription rights or the proceeds of any sale of subscription rights to be delivered to an address different from that shown on the face of this Subscription Rights Certificate, please enter the alternate address below, sign under Form 4 and have your signature guaranteed under Form 5. ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ FORM 4-SIGNATURE TO SUBSCRIBE: I acknowledge that I have received the Prospectus for this Rights Offering and I hereby irrevocably subscribe for the number of shares indicated above on the terms and conditions specified in the Prospectus.  By signing below I confirm that (1) after giving effect to the exercise of my Rights, I will not beneficially own, as determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, more than 14.99% of the Company’s outstanding shares of Common Stock (calculated immediately upon the closing of the rights offering, as described in the Prospectus) and (2), if I already beneficially own, as determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, in excess of 14.99% of the Company’s outstanding shares of Common Stock I will not, via the exercise of the Rights, increase my proportionate interest in the Company’s Common Stock (with respect to (1) or (2), any such excess shares, the “Excess Shares”).  With respect to any such Excess Shares, I hereby (1) irrevocably appoint and constitute the Company, each of its authorized officers and their designees, and each of them, with full power of substitution, as my proxy and attorney in fact with full authority to vote and act by written consent with respect to any such Excess Shares on any matter submitted to shareholders for a vote or action by written consent, in the discretion of such proxy, to the same extent I would have the power to vote or act by written consent and (2) grant the Company a right for 90 days from the closing of the rights offering to repurchase such Excess Shares at the lesser of the $50.00 per share subscription price and the closing price of the Company’s Common Stock on the New York Stock Exchange on the trading day immediately prior to the date on which notice is sent to the holder of the Company’s intent to exercise such right, which notice must be sent prior to the expiration of such 90 day period.  I agree to cooperate with the Company and provide to the Company any and all information requested by the Company in connection with the exercise of the rights granted in the previous sentence. Signature(s): ______________________________________________________ IMPORTANT: The signature(s) must correspond with the name(s) as printed on the reverse of this Subscription Rights Certificate in every particular, without alteration or enlargement, or any other change whatsoever. FORM 5-SIGNATURE GUARANTEE This form must be completed if you have completed any portion of Forms 2 or 3. Signature Guaranteed: _______________________________________________  (Name of Bank or Firm) By:______________________________________________________________  (Signature of Officer) IMPORTANT:  The signature(s) should be guaranteed by an eligible guarantor institution (bank, stock broker, savings & loan association or credit union) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15.

FOR INSTRUCTIONS ON THE USE OF SPECIAL OPPORTUNITIES FUND, INC.  RIGHTS CERTIFICATES, CONSULT PHOENIX ADVISORY PARTNERS, THE INFORMATION AGENT, AT (877) 478-5038.

EX-99.2(J)

CLOSED-END FUND

CUSTODY AGREEMENT

THIS AGREEMENT is made and entered into as of 15th day of October, 2009, by and between INSURED MUNICIPAL INCOME FUND INC. (the “Fund”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America with its principal place of business at Minneapolis, Minnesota (the “Custodian”).

WHEREAS, the Fund is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified closed-end management investment company, and is authorized to issue shares of common stock ; and

WHEREAS, the Custodian is a bank having the qualifications prescribed in Section 26(a)(1) of the 1940 Act;

WHEREAS, the Fund desires to retain the Custodian to act as custodian of the cash and securities of the Fund(s) listed on Exhibit C hereto (as amended from time to time); and

WHEREAS, the Board of Directors of the Fund has delegated to the Custodian the responsibilities set forth in Rule 17f-5(c) under the 1940 Act and the Custodian is willing to undertake the responsibilities and serve as the foreign custody manager for the Fund.

NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

Whenever used in this Agreement, the following words and phrases shall have the meanings set forth below unless the context otherwise requires:

1.01 “Authorized Person” means any Officer or person (including an investment advisor or other agent) who has been designated by written notice as such from the Fund or the Fund’s investment advisor or other agent and is named in Exhibit A attached hereto.  Such officer or person shall continue to be an Authorized Person until such time as the Custodian receives Written Instructions from the Fund or the Fund’s investment advisor or other agent that any such person is no longer an Authorized Person.

1.02“Board of Directors” shall mean the directors from time to time serving under the Fund’s Articles of Incorporation, as amended from time to time.

1.03“Book-Entry System” shall mean a federal book-entry system as provided in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFR Part 350, or in such book-entry regulations of federal agencies as are substantially in the form of such Subpart O.

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1.04“Business Day” shall mean any day recognized as a settlement day by The New York Stock Exchange, Inc., and any other day for which the Fund computes the net asset value of Shares of the Fund.

1.05“Eligible Foreign Custodian” has the meaning set forth in Rule 17f-5(a)(1), including a majority-owned or indirect subsidiary of a U.S. Bank (as defined in Rule 17f-5), a bank holding company meeting the requirements of an Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate action of the SEC), or a foreign branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of the 1940 Act; the term does not include any Eligible Securities Depository.

1.06“Eligible Securities Depository” shall mean a system for the central handling of securities as that term is defined in Rule 17f-4 and 17f-7 under the 1940 Act.

1.07“Foreign Securities” means any of the Fund’s investments (including foreign currencies) for which the primary market is outside the United States and such cash and cash equivalents as are reasonably necessary to effect the Fund’s transactions in such investments.

1.08“Fund Custody Account” shall mean any of the accounts in the name of the Fund, which is provided for in Section 3.2 below.

1.09“IRS” shall mean the Internal Revenue Service.

1.10“FINRA” shall mean The Financial Industry Regulatory Authority.

1.11“Officer” shall mean the Chairman, President, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Fund.

1.12“Oral Instructions” shall mean instructions orally transmitted to and accepted by the Custodian because such instructions are:  (i) reasonably believed by the Custodian to have been given by any two Authorized Persons, (ii) recorded and kept among the records of the Custodian made in the ordinary course of business, and (iii) orally confirmed by the Custodian.  The Fund shall cause all Oral Instructions to be confirmed by Written Instructions prior to the end of the next Business Day.  If such Written Instructions confirming Oral Instructions are not received by the Custodian prior to a transaction, it shall in no way affect the validity of the transaction or the authorization thereof by the Fund.  If Oral Instructions vary from the Written Instructions that purport to confirm them, the Custodian shall notify the Fund of such variance but such Oral Instructions will govern unless the Custodian has not yet acted.

1.13“Proper Instructions” shall mean Oral Instructions or Written Instructions.

1.14“SEC” shall mean the Securities and Exchange Commission.

1.15“Securities” shall include, without limitation, common and preferred stocks, bonds, call options, put options, debentures, notes, bank certificates of deposit, bankers' acceptances, mortgage-backed securities or other obligations, and any certificates, receipts, warrants or other instruments or documents representing rights to receive, purchase or subscribe for the same, or evidencing or representing any other rights or interests therein, or any similar property or assets that the Custodian or its agents have the facilities to clear and service.

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1.16“Securities Depository” shall mean The Depository Trust Company and any other clearing agency registered with the SEC under Section 17A of the Securities Exchange Act of 1934, as amended (the “1934 Act”), which acts as a system for the central handling of Securities where all Securities of any particular class or series of an issuer deposited within the system are treated as fungible and may be transferred or pledged by bookkeeping entry without physical delivery of the Securities.

1.17“Shares” shall mean, with respect to a Fund, the shares of common stock issued by the Fund on account of the Fund.

1.18“Sub-Custodian” shall mean and include (i) any branch of a “U.S. bank,” as that term is defined in Rule 17f-5 under the 1940 Act, and (ii) any “Eligible Foreign Custodian” having a contract with the Custodian which the Custodian has determined will provide reasonable care of assets of the Fund based on the standards specified in Section 3.3 below.  Such contract shall be in writing and shall include provisions that provide: (i) for indemnification or insurance arrangements (or any combination of the foregoing) such that the Fund will be adequately protected against the risk of loss of assets held in accordance with such contract; (ii) that the Foreign Securities will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the Sub-Custodian or its creditors except a claim of payment for their safe custody or administration, in the case of cash deposits, liens or rights in favor of creditors of the Sub-Custodian arising under bankruptcy, insolvency, or similar laws; (iii) that beneficial ownership for the Foreign Securities will be freely transferable without the payment of money or value other than for safe custody or administration; (iv) that adequate records will be maintained identifying the assets as belonging to the Fund or as being held by a third party for the benefit of the Fund; (v) that the Fund’s independent public accountants will be given access to those records or confirmation of the contents of those records; and (vi) that the Fund will receive periodic reports with respect to the safekeeping of the Fund’s assets, including, but not limited to, notification of any transfer to or from a Fund's account or a third party account containing assets held for the benefit of the Fund.  Such contract may contain, in lieu of any or all of the provisions specified in (i)-(vi) above, such other provisions that the Custodian determines will provide, in their entirety, the same or a greater level of care and protection for Fund assets as the specified provisions.

1.19“Written Instructions” shall mean (i) written communications actually received by the Custodian and signed by any Authorized Person (ii) communications by telex or internet e-mail or any other such system from one or more persons reasonably believed by the Custodian to be Authorized Persons, or (iii) communications between electro-mechanical or electronic devices provided that the use of such devices and the procedures for the use thereof shall have been approved by resolutions of the Board of Directors, a copy of which, certified by an Officer, shall have been delivered to the Custodian.

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ARTICLE II.

APPOINTMENT OF CUSTODIAN

2.01Appointment.  The Fund hereby appoints the Custodian as custodian of all Securities and cash owned by or in the possession of the Fund at any time during the period of this Agreement, on the terms and conditions set forth in this Agreement, and the Custodian hereby accepts such appointment and agrees to perform the services and duties set forth in this Agreement.  The Fund hereby delegates to the Custodian, subject to Rule 17f-5(b), the responsibilities with respect to the Fund’s Foreign Securities, and the Custodian hereby accepts such delegation as foreign custody manager with respect to the Fund.  The services and duties of the Custodian shall be confined to those matters expressly set forth herein, and no implied duties are assumed by or may be asserted against the Custodian hereunder.

2.02Documents to be Furnished.  The following documents, including any amendments thereto, will be provided contemporaneously with the execution of the Agreement to the Custodian by the Fund:

(a)     A copy of the Fund’s Articles of Incorporation, certified by the Secretary;

(b)     A copy of the resolution of the Board of Directors of the Fund appointing the Custodian, certified by the Secretary;

(c)     A copy of the current prospectus of the Fund (the “Prospectus”);

(d)     A certification of the Chairman or the President and the Secretary of the Fund setting forth the names and signatures of the current Officers of the Company and other Authorized Persons; and

(e)     An executed authorization required by the Shareholder Communications Act of 1985, attached hereto as Exhibit E.

2.03Notice of Appointment of Transfer Agent.  The Fund agrees to notify the Custodian in writing of the appointment, termination or change in appointment of any transfer agent of the Fund.

ARTICLE III.

CUSTODY OF CASH AND SECURITIES

3.01Segregation.  All Securities and non-cash property held by the Custodian for the account of the Fund (other than Securities maintained in a Securities Depository, Eligible Securities Depository or Book-Entry System) shall be physically segregated from other Securities and non-cash property in the possession of the Custodian (including the Securities and non-cash property of the other series of the Fund, if applicable) and shall be identified as subject to this Agreement.

3.02Fund Custody Accounts.  The Custodian shall open and maintain in its trust department a custody account in the name of the Fund coupled with the name of the Fund, subject only to draft or order of the Custodian, in which the Custodian shall enter and carry all Securities, cash and other assets of the Fund which are delivered to it.

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3.03Appointment of Agents.

(a)   In its discretion, the Custodian may appoint one or more Sub-Custodians to establish and maintain arrangements with (i) Eligible Securities Depositories or (ii) Eligible Foreign Custodians who are members of the Sub-Custodian’s network to hold Securities and cash of the Fund and to carry out such other provisions of this Agreement as it may determine; provided, however, that the appointment of any such agents and maintenance of any Securities and cash of the Fund shall be at the Custodian's expense and shall not relieve the Custodian of any of its obligations or liabilities under this Agreement.  The Custodian shall be liable for the actions of any Sub-Custodians (regardless of whether assets are maintained in the custody of a Sub-Custodian, a member of its network or an Eligible Securities Depository) appointed by it as if such actions had been done by the Custodian.

(b)   If, after the initial appointment of Sub-Custodians by the Board of Directors in connection with this Agreement, the Custodian wishes to appoint other Sub-Custodians to hold property of the Fund, it will so notify the Fund and make the necessary determinations as to any such new Sub-Custodian's eligibility under Rule 17f-5 under the 1940 Act.

(c)   In performing its delegated responsibilities as foreign custody manager to place or maintain the Fund’s assets with a Sub-Custodian, the Custodian will determine that the Fund’s assets will be subject to reasonable care, based on the standards applicable to custodians in the country in which the Fund’s assets will be held by that Sub-Custodian, after considering all factors relevant to safekeeping of such assets, including, without limitation the factors specified in Rule 17f-5(c)(1).

(d)   The agreement between the Custodian and each Sub-Custodian acting hereunder shall contain the required provisions set forth in Rule 17f-5(c)(2) under the 1940 Act.

(e)   At the end of each calendar quarter, the Custodian shall provide written reports notifying the Board of Directors of the withdrawal or placement of the Securities and cash of the Fund with a Sub-Custodian and of any material changes in the Fund’s arrangements.  Such reports shall include an analysis of the custody risks associated with maintaining assets with any Eligible Securities Depositories.  The Custodian shall promptly take such steps as may be required to withdraw assets of the Fund from any Sub-Custodian arrangement that has ceased to meet the requirements of Rule 17f-5 or Rule 17f-7 under the 1940 Act, as applicable.

(f)   With respect to its responsibilities under this Section 3.3, the Custodian hereby warrants to the Fund that it agrees to exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of property of the Fund.  The Custodian further warrants that the Fund's assets will be subject to reasonable care if maintained with a Sub-Custodian, after considering all factors relevant to the safekeeping of such assets, including, without limitation:  (i) the Sub-Custodian's practices, procedures, and internal controls for certificated securities (if applicable), its method of keeping custodial records, and its security and data protection practices;  (ii)  whether the Sub-Custodian has the requisite financial strength to provide reasonable care for Fund assets; (iii)  the Sub-Custodian's general reputation and standing and, in the case of a Securities Depository, the Securities Depository's operating history and number of participants; and (iv)  whether the Fund will have jurisdiction over and be able to enforce judgments against the Sub-Custodian, such as by virtue of the existence of any offices of the Sub-Custodian in the United States or the Sub-Custodian's consent to service of process in the United States.

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(g)   The Custodian shall establish a system or ensure that its Sub-Custodian has established a system to monitor on a continuing basis (i) the appropriateness of maintaining the Fund’s assets with a Sub-Custodian or Eligible Foreign Custodians who are members of a Sub-Custodian’s network; (ii) the performance of the contract governing the Fund’s arrangements with such Sub-Custodian or Eligible Foreign Custodian’s members of a Sub-Custodian’s network; and (iii) the custody risks of maintaining assets with an Eligible Securities Depository.  The Custodian must promptly notify the Fund or its investment adviser of any material change in these risks.

(h)   The Custodian shall use reasonable commercial efforts to collect all income and other payments with respect to Foreign Securities to which the Fund shall be entitled and shall credit such income, as collected, to the Fund.  In the event that extraordinary measures are required to collect such income, the Fund and Custodian shall consult as to the measurers and as to the compensation and expenses of the Custodian relating to such measures.

3.04Delivery of Assets to Custodian.  The Fund shall deliver, or cause to be delivered, to the Custodian all of the Fund's Securities, cash and other investment assets, including (i) all payments of income, payments of principal and capital distributions received by the Fund with respect to such Securities, cash or other assets owned by the Fund at any time during the period of this Agreement, and (ii) all cash received by the Fund for the issuance of Shares.  The Custodian shall not be responsible for such Securities, cash or other assets until actually received by it.

3.05Securities Depositories and Book-Entry Systems.  The Custodian may deposit and/or maintain Securities of the Fund in a Securities Depository or in a Book-Entry System, subject to the following provisions:

(a)   The Custodian, on an on-going basis, shall deposit in a Securities Depository or Book-Entry System all Securities eligible for deposit therein and shall make use of such Securities Depository or Book-Entry System to the extent possible and practical in connection with its performance hereunder, including, without limitation, in connection with settlements of purchases and sales of Securities, loans of Securities, and deliveries and returns of collateral consisting of Securities.

(b)   Securities of the Fund kept in a Book-Entry System or Securities Depository shall be kept in an account (“Depository Account”) of the Custodian in such Book-Entry System or Securities Depository which includes only assets held by the Custodian as a fiduciary, custodian or otherwise for customers.

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(c)   The records of the Custodian with respect to Securities of the Fund maintained in a Book-Entry System or Securities Depository shall, by book-entry, identify such Securities as belonging to the Fund.

(d)   If Securities purchased by the Fund are to be held in a Book-Entry System or Securities Depository, the Custodian shall pay for such Securities upon (i) receipt of advice from the Book-Entry System or Securities Depository that such Securities have been transferred to the Depository Account, and (ii) the making of an entry on the records of the Custodian to reflect such payment and transfer for the account of the Fund.  If Securities sold by the Fund are held in a Book-Entry System or Securities Depository, the Custodian shall transfer such Securities upon (i) receipt of advice from the Book-Entry System or Securities Depository that payment for such Securities has been transferred to the Depository Account, and (ii) the making of an entry on the records of the Custodian to reflect such transfer and payment for the account of the Fund.

(e)   The Custodian shall provide the Fund with copies of any report (obtained by the Custodian from a Book-Entry System or Securities Depository in which Securities of the Fund are kept) on the internal accounting controls and procedures for safeguarding Securities deposited in such Book-Entry System or Securities Depository.

(f)   Notwithstanding anything to the contrary in this Agreement, the Custodian shall be liable to the Fund for any loss or damage to the Fund resulting from (i) the use of a Book-Entry System or Securities Depository by reason of any negligence or willful misconduct on the part of the Custodian or any Sub-Custodian, or (ii) failure of the Custodian or any Sub-Custodian to enforce effectively such rights as it may have against a Book-Entry System or Securities Depository.  At its election, the Fund shall be subrogated to the rights of the Custodian with respect to any claim against a Book-Entry System or Securities Depository or any other person from any loss or damage to the Fund arising from the use of such Book-Entry System or Securities Depository, if and to the extent that the Fund has not been made whole for any such loss or damage.

(g)   With respect to its responsibilities under this Section 3.5 and pursuant to Rule 17f-4 under the 1940 Act, the Custodian hereby warrants to the Fund that it agrees to (i) exercise due care in accordance with reasonable commercial standards in discharging its duty as a securities intermediary to obtain and thereafter maintain such assets, (ii) provide, promptly upon request by the Fund, such reports as are available concerning the Custodian’s internal accounting controls and financial strength, and (iii) require any Sub-Custodian to exercise due care in accordance with reasonable commercial standards in discharging its duty as a securities intermediary to obtain and thereafter maintain assets corresponding to the security entitlements of its entitlement holders.

3.06Disbursement of Moneys from Fund Custody Account.  Upon receipt of Proper Instructions, the Custodian shall disburse moneys from the Fund Custody Account but only in the following cases:

(a)   For the purchase of Securities for the Fund but only in accordance with Section 4.1 of this Agreement and only (i) in the case of Securities (other than options on Securities, futures contracts and options on futures contracts), against the delivery to the Custodian (or any Sub-Custodian) of such Securities registered as provided in Section 3.9 below or in proper form for transfer, or if the purchase of such Securities is effected through a Book-Entry System or Securities Depository, in accordance with the conditions set forth in Section 3.5 above; (ii) in the case of options on Securities, against delivery to the Custodian (or any Sub-Custodian) of such receipts as are required by the customs prevailing among dealers in such options; (iii) in the case of futures contracts and options on futures contracts, against delivery to the Custodian (or any Sub-Custodian) of evidence of title thereto in favor of the Fund or any nominee referred to in Section 3.9 below; and (iv) in the case of repurchase or reverse repurchase agreements entered into between the Fund and a bank which is a member of the Federal Reserve System or between the Fund and a primary dealer in U.S. Government securities, against delivery of the purchased Securities either in certificate form or through an entry crediting the Custodian's account at a Book-Entry System or Securities Depository with such Securities;

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(b)   In connection with the conversion, exchange or surrender, as set forth in Section 3.7(f) below, of Securities owned by the Fund;

(c)   For the payment of any dividends or capital gain distributions declared by the Fund;

(d)   In payment of the repurchase price of Shares as provided in Section 5.1 below;

(e)   For the payment of any expense or liability incurred by the Fund, including, but not limited to, the following payments for the account of the Fund:  interest; taxes; administration, investment advisory, accounting, auditing, transfer agent, custodian, director and legal fees; and other operating expenses of the Fund; in all cases, whether or not such expenses are to be in whole or in part capitalized or treated as deferred expenses;

(f)   For transfer in accordance with the provisions of any agreement among the Fund, the Custodian and a broker-dealer registered under the 1934 Act and a member of FINRA, relating to compliance with rules of the Options Clearing Corporation and of any registered national securities exchange (or of any similar organization or organizations) regarding escrow or other arrangements in connection with transactions by the Fund;

(g)   For transfer in accordance with the provisions of any agreement among the Fund, the Custodian and a futures commission merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission and/or any contract market (or any similar organization or organizations) regarding account deposits in connection with transactions by the Fund;

(h)   For the funding of any uncertificated time deposit or other interest-bearing account with any banking institution (including the Custodian), which deposit or account has a term of one year or less; and

(i)   For any other proper purpose, but only upon receipt, in addition to Proper Instructions, of a copy of a resolution of the Board of Directors, certified by an Officer, specifying the amount and purpose of such payment, declaring such purpose to be a proper corporate purpose, and naming the person or persons to whom such payment is to be made.

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3.07Delivery of Securities from Fund Custody Account.  Upon receipt of Proper Instructions, the Custodian shall release and deliver, or cause the Sub-Custodian to release and deliver, Securities from the Fund Custody Account but only in the following cases:

(a)   Upon the sale of Securities for the account of the Fund but only against receipt of payment therefor in cash, by certified or cashiers check or bank credit;

(b)   In the case of a sale effected through a Book-Entry System or Securities Depository, in accordance with the provisions of Section 3.5 above;

(c)   To an offeror’s depository agent in connection with tender or other similar offers for Securities of the Fund; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian;

(d)   To the issuer thereof or its agent (i) for transfer into the name of the Fund, the Custodian or any Sub-Custodian, or any nominee or nominees of any of the foregoing, or (ii) for exchange for a different number of certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new Securities are to be delivered to the Custodian;

(e)   To the broker selling the Securities, for examination in accordance with the “street delivery” custom;

(f)   For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the issuer of such Securities, or pursuant to provisions for conversion contained in such Securities, or pursuant to any deposit agreement, including surrender or receipt of underlying Securities in connection with the issuance or cancellation of depository receipts; provided that, in any such case, the new Securities and cash, if any, are to be delivered to the Custodian;

(g)   Upon receipt of payment therefor pursuant to any repurchase or reverse repurchase agreement entered into by the Fund;

(h)   In the case of warrants, rights or similar Securities, upon the exercise thereof, provided that, in any such case, the new Securities and cash, if any, are to be delivered to the Custodian;

(i)   For delivery in connection with any loans of Securities of the Fund, but only against receipt of such collateral as the Fund shall have specified to the Custodian in Proper Instructions;

(j)   For delivery as security in connection with any borrowings  by the Fund requiring a pledge of assets by the Fund, but only against receipt by the Custodian of the amounts borrowed;

(k)   Pursuant to any authorized plan of liquidation, reorganization, merger, consolidation or recapitalization of the Fund;

(l)   For delivery in accordance with the provisions of any agreement among the Fund, the Custodian and a broker-dealer registered under the 1934 Act and a member of FINRA, relating to compliance with the rules of the Options Clearing Corporation and of any registered national securities exchange (or of any similar organization or organizations) regarding escrow or other arrangements in connection with transactions by the Fund;

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(m)   For delivery in accordance with the provisions of any agreement among the Fund, the Custodian and a futures commission merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission and/or any contract market (or any similar organization or organizations) regarding account deposits in connection with transactions by the Fund;

(n)   For any other proper corporate purpose, but only upon receipt, in addition to Proper Instructions, of a copy of a resolution of the Board of Directors, certified by an Officer, specifying the Securities to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purpose to be a proper corporate purpose, and naming the person or persons to whom delivery of such Securities shall be made; or

(o)   To brokers, clearing banks or other clearing agents for examination or trade execution in accordance with market custom; provided that in any such case the Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Custodian’s own negligence or willful misconduct.

3.08Actions Not Requiring Proper Instructions.  Unless otherwise instructed by the Fund, the Custodian shall with respect to all Securities held for the Fund:

(a)   Subject to Section 9.4 below, collect on a timely basis all income and other payments to which the Fund is entitled either by law or pursuant to custom in the securities business;

(b)   Present for payment and, subject to Section 9.4 below, collect on a timely basis the amount payable upon all Securities which may mature or be called, redeemed, or retired, or otherwise become payable;

(c)   Endorse for collection, in the name of the Fund, checks, drafts and other negotiable instruments;

(d)   Surrender interim receipts or Securities in temporary form for Securities in definitive form;

(e)   Execute, as custodian, any necessary declarations or certificates of ownership under the federal income tax laws or the laws or regulations of any other taxing authority now or hereafter in effect, and prepare and submit reports to the IRS and the Fund at such time, in such manner and containing such information as is prescribed by the IRS;

(f)   Hold for the Fund, either directly or, with respect to Securities held therein, through a Book-Entry System or Securities Depository, all rights and similar Securities issued with respect to Securities of the Fund; and

(g)   In general, and except as otherwise directed in Proper Instructions, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with Securities and other assets of the Fund.

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3.09Registration and Transfer of Securities.  All Securities held for the Fund that are issued or issuable only in bearer form shall be held by the Custodian in that form, provided that any such Securities shall be held in a Book-Entry System if eligible therefor.  All other Securities held for the Fund may be registered in the name of the Fund, the Custodian, a Sub-Custodian or any nominee thereof, or in the name of a Book-Entry System, Securities Depository or any nominee of either thereof.  The records of the Custodian with respect to foreign securities of the Fund that are maintained with a Sub-Custodian in an account that is identified as belonging to the Custodian for the benefit of its customers shall identify those securities as belonging to the Fund.  The Fund shall furnish to the Custodian appropriate instruments to enable the Custodian to hold or deliver in proper form for transfer, or to register in the name of any of the nominees referred to above or in the name of a Book-Entry System or Securities Depository, any Securities registered in the name of the Fund.

3.10Records.

(a)   The Custodian shall maintain complete and accurate records with respect to Securities, cash or other property held for the Fund, including (i) journals or other records of original entry containing an itemized daily record in detail of all receipts and deliveries of Securities and all receipts and disbursements of cash; (ii) ledgers (or other records) reflecting (A) Securities in transfer, (B) Securities in physical possession, (C) monies and Securities borrowed and monies and Securities loaned (together with a record of the collateral therefor and substitutions of such collateral), (D) dividends and interest received, and (E) dividends receivable and interest receivable; (iii) canceled checks and bank records related thereto; and (iv) all records relating to its activities and obligations under this Agreement.  The Custodian shall keep such other books and records of the Fund as the Fund shall reasonably request, or as may be required by the 1940 Act, including, but not limited to, Section 31 of the 1940 Act and Rule 31a-2 promulgated thereunder.

(b)   All such books and records maintained by the Custodian shall (i) be maintained in a form acceptable to the Fund and in compliance with the rules and regulations of the SEC, (ii) be the property of the Fund and at all times during the regular business hours of the Custodian be made available upon request for inspection by duly authorized officers, employees or agents of the Fund and employees or agents of the SEC, and (iii) if required to be maintained by Rule 31a-1 under the 1940 Act, be preserved for the periods prescribed in Rules 31a-1 and 31a-2 under the 1940 Act.

3.11Fund Reports by Custodian.  The Custodian shall furnish the Fund with a daily activity statement and a summary of all transfers to or from each Fund Custody Account on the day following such transfers.  At least monthly, the Custodian shall furnish the Fund with a detailed statement of the Securities and moneys held by the Custodian and the Sub-Custodians for the Fund under this Agreement.

3.12Other Reports by Custodian.  As the Fund may reasonably request from time to time, the Custodian shall provide the Fund with reports on the internal accounting controls and procedures for safeguarding Securities which are employed by the Custodian or any Sub-Custodian.

3.13Proxies and Other Materials.  The Custodian shall cause all proxies relating to Securities which are not registered in the name of the Fund to be promptly executed by the registered holder of such Securities, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Fund such proxies, all proxy soliciting materials and all notices relating to such Securities.  With respect to the foreign Securities, the Custodian will use reasonable commercial efforts to facilitate the exercise of voting and other shareholder rights, subject to the laws, regulations and practical constraints that may exist in the country where such securities are issued.  The Fund acknowledges that local conditions, including lack of regulation, onerous procedural obligations, lack of notice and other factors may have the effect of severely limiting the ability of the Fund to exercise shareholder rights.

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3.14Information on Corporate Actions.  The Custodian shall promptly deliver to the Fund all information received by the Custodian and pertaining to Securities being held by the Fund with respect to optional tender or exchange offers, calls for redemption or purchase, or expiration of rights as described in the Standards of Service Guide attached as Exhibit B.  If the Fund desires to take action with respect to any tender offer, exchange offer or other similar transaction, the Fund shall notify the Custodian at least three Business Days prior to the date on which the Custodian is to take such action.  The Fund will provide or cause to be provided to the Custodian all relevant information for any Security which has unique put/option provisions at least three Business Days prior to the beginning date of the tender period.

ARTICLE IV.

PURCHASE AND SALE OF INVESTMENTS OF THE FUND

4.01Purchase of Securities.  Promptly upon each purchase of Securities for the Fund, Written Instructions shall be delivered to the Custodian, specifying (i) the name of the issuer or writer of such Securities, and the title or other description thereof, (ii) the number of shares, principal amount (and accrued interest, if any) or other units purchased, (iii) the date of purchase and settlement, (iv) the purchase price per unit, (v) the total amount payable upon such purchase, and (vi) the name of the person to whom such amount is payable.  The Custodian shall upon receipt of such Securities purchased by the Fund pay out of the moneys held for the account of the Fund the total amount specified in such Written Instructions to the person named therein.  The Custodian shall not be under any obligation to pay out moneys to cover the cost of a purchase of Securities for the Fund, if in the Fund Custody Account there is insufficient cash available to the Fund for which such purchase was made.

4.02Liability for Payment in Advance of Receipt of Securities Purchased.  In any and every case where payment for the purchase of Securities for the Fund is made by the Custodian in advance of receipt of the Securities purchased and in the absence of specified Written Instructions to so pay in advance, the Custodian shall be liable to the Fund for such payment.

4.03Sale of Securities.  Promptly upon each sale of Securities by the Fund, Written Instructions shall be delivered to the Custodian, specifying (i) the name of the issuer or writer of such Securities, and the title or other description thereof, (ii) the number of shares, principal amount (and accrued interest, if any), or other units sold, (iii) the date of sale and settlement, (iv) the sale price per unit, (v) the total amount payable upon such sale, and (vi) the person to whom such Securities are to be delivered.  Upon receipt of the total amount payable to the Fund as specified in such Written Instructions, the Custodian shall deliver such Securities to the person specified in such Written Instructions.  Subject to the foregoing, the Custodian may accept payment in such form as shall be satisfactory to it, and may deliver Securities and arrange for payment in accordance with the customs prevailing among dealers in Securities.

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4.04Delivery of Securities Sold.  Notwithstanding Section 4.03 above or any other provision of this Agreement, the Custodian, when instructed to deliver Securities against payment, shall be entitled, if in accordance with generally accepted market practice, to deliver such Securities prior to actual receipt of final payment therefor.  In any such case, the Fund shall bear the risk that final payment for such Securities may not be made or that such Securities may be returned or otherwise held or disposed of by or through the person to whom they were delivered, and the Custodian shall have no liability for any for the foregoing.

4.05Payment for Securities Sold.  In its sole discretion and from time to time, the Custodian may credit the Fund Custody Account, prior to actual receipt of final payment thereof, with (i) proceeds from the sale of Securities which it has been instructed to deliver against payment, (ii) proceeds from the redemption of Securities or other assets of the Fund, and (iii) income from cash, Securities or other assets of the Fund.  Any such credit shall be conditional upon actual receipt by Custodian of final payment and may be reversed if final payment is not actually received in full.  The Custodian may, in its sole discretion and from time to time, permit the Fund to use funds so credited to the Fund Custody Account in anticipation of actual receipt of final payment.  Any such funds shall be repayable immediately upon demand made by the Custodian at any time prior to the actual receipt of all final payments in anticipation of which funds were credited to the Fund Custody Account.

4.06Advances by Custodian for Settlement.  The Custodian may, in its sole discretion and from time to time, advance funds to the Fund to facilitate the settlement of a Fund's transactions in the Fund Custody Account.  Any such advance shall be repayable immediately upon demand made by Custodian.

ARTICLE V.

REPURCHASE OF FUND SHARES

5.01Transfer of Funds.  From such funds as may be available for the purpose in the relevant Fund Custody Account, and upon receipt of Proper Instructions specifying that the funds are required to repurchase Shares of the Fund, the Custodian shall wire each amount specified in such Proper Instructions to or through such bank or broker-dealer as the Fund may designate.

5.02No Duty Regarding Paying Banks.  Once the Custodian has wired amounts to a bank or broker-dealer pursuant to Section 5.1 above, the Custodian shall not be under any obligation to effect any further payment or distribution by such bank or broker-dealer.

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ARTICLE VI.

SEGREGATED ACCOUNTS

Upon receipt of Proper Instructions, the Custodian shall establish and maintain a segregated account or accounts for and on behalf of the Fund, into which account or accounts may be transferred cash and/or Securities, including Securities maintained in a Depository Account:

(a)   in accordance with the provisions of any agreement among the Fund, the Custodian and a broker-dealer registered under the 1934 Act and a member of FINRA (or any futures commission merchant registered under the Commodity Exchange Act), relating to compliance with the rules of the Options Clearing Corporation and of any registered national securities exchange (or the Commodity Futures Trading Commission or any registered contract market), or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Fund;

(b)   for purposes of segregating cash or Securities in connection with securities options purchased or written by the Fund or in connection with financial futures contracts (or options thereon) purchased or sold by the Fund;

(c)   which constitute collateral for loans of Securities made by the Fund;

(d)   for purposes of compliance by the Fund with requirements under the 1940 Act for the maintenance of segregated accounts by registered investment companies in connection with reverse repurchase agreements and when-issued, delayed delivery and firm commitment transactions; and

(e)   for other proper corporate purposes, but only upon receipt of, in addition to Proper Instructions, a certified copy of a resolution of the Board of Directors, certified by an Officer, setting forth the purpose or purposes of such segregated account and  declaring such purposes to be proper corporate purposes.

Each segregated account established under this Article VI shall be established and maintained for the Fund only.  All Proper Instructions relating to a segregated account shall specify the Fund.

ARTICLE VII.

COMPENSATION OF CUSTODIAN

7.01Compensation.  The Custodian shall be compensated for providing the services set forth in this Agreement in accordance with the fee schedule set forth on Exhibit D hereto (as amended from time to time).  The Custodian shall also be compensated for such out-of-pocket expenses (e.g., telecommunication charges, postage and delivery charges, and reproduction charges) as are reasonably incurred by the Custodian in performing its duties hereunder.  The Fund shall pay all such fees and reimbursable expenses within 30 calendar days following receipt of the billing notice, except for any fee or expense subject to a good faith dispute.  The Fund shall notify the Custodian in writing within 30 calendar days following receipt of each invoice if the Fund is disputing any amounts in good faith. The Fund shall pay such disputed amounts within 10 calendar days of the day on which the parties agree to the amount to be paid.  With the exception of any fee or expense the Fund is disputing in good faith as set forth above, unpaid invoices shall accrue a finance charge of 1½% per month after the due date. Notwithstanding anything to the contrary, amounts owed by the Fund to the Custodian shall only be paid out of the assets and property of the particular Fund involved.

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7.02Overdrafts.  The Fund is responsible for maintaining an appropriate level of short term cash investments to accommodate cash outflows.  The Fund may, but is under no obligation to, obtain a formal line of credit for potential overdrafts of its custody account.  In the event of an overdraft or in the event the line of credit is insufficient to cover an overdraft, the overdraft amount or the overdraft amount that exceeds the line of credit will be charged in accordance with the fee schedule set forth on Exhibit D hereto (as amended from time to time)

ARTICLE VIII.

REPRESENTATIONS AND WARRANTIES

8.01Representations and Warranties of the Fund.  The Fund hereby represents and warrants to the Custodian, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:

(a)   It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;

(b)   This Agreement has been duly authorized, executed and delivered by the Fund in accordance with all requisite action and constitutes a valid and legally binding obligation of the Fund, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties; and

(c)   It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement.

8.02Representations and Warranties of the Custodian.  The Custodian hereby represents and warrants to the Fund, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:

(a)   It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;

(b)   It is a U.S. Bank as defined in section (a)(7) of Rule 17f-5.

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(c)   This Agreement has been duly authorized, executed and delivered by the Custodian in accordance with all requisite action and constitutes a valid and legally binding obligation of the Custodian, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties; and

(d)   It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement.

ARTICLE IX.

 CONCERNING THE CUSTODIAN

9.01Standard of Care.  The Custodian shall exercise reasonable care in the performance of its duties under this Agreement.  The Custodian shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with its duties under this Agreement, except a loss arising out of or relating to the Custodian’s (or a Sub-Custodian’s) refusal or failure to comply with the terms of this Agreement (or any sub-custody agreement) or from its (or a Sub-Custodian’s) bad faith, negligence or willful misconduct in the performance of its duties under this Agreement (or any sub-custody agreement).  The Custodian shall be entitled to rely on and may act upon advice of counsel on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice.  The Custodian shall promptly notify the Fund of any action taken or omitted by the Custodian pursuant to advice of counsel.

9.02Actual Collection Required.  The Custodian shall not be liable for, or considered to be the custodian of, any cash belonging to the Fund or any money represented by a check, draft or other instrument for the payment of money, until the Custodian or its agents actually receive such cash or collect on such instrument.

9.03No Responsibility for Title, etc.  So long as and to the extent that it is in the exercise of reasonable care, the Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received or delivered by it pursuant to this Agreement.

9.04Limitation on Duty to Collect.  Custodian shall not be required to enforce collection, by legal means or otherwise, of any money or property due and payable with respect to Securities held for the Fund if such Securities are in default or payment is not made after due demand or presentation.

9.05Reliance Upon Documents and Instructions.  The Custodian shall be entitled to rely upon any certificate, notice or other instrument in writing received by it and reasonably believed by it to be genuine.  The Custodian shall be entitled to rely upon any Oral Instructions and any Written Instructions actually received by it pursuant to this Agreement.

9.06Cooperation.  The Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the Fund to keep the books of account of the Fund and/or compute the value of the assets of the Fund.  The Custodian shall take all such reasonable actions as the Fund may from time to time request to enable the Fund to obtain, from year to year, favorable opinions from the Fund's independent accountants with respect to the Custodian's activities hereunder in connection with (i) the preparation of the Fund's reports on Form N-SAR and any other reports required by the SEC or any future registration statement on Form N-2, and (ii) the fulfillment by the Fund of any other requirements of the SEC.

16

ARTICLE X.

INDEMNIFICATION

10.01Indemnification by Fund.  The Fund shall indemnify and hold harmless the Custodian, any Sub-Custodian and any nominee thereof (each, an “Indemnified Party” and collectively, the “Indemnified Parties”) from and against any and all claims, demands, losses, expenses and liabilities of any and every nature (including reasonable attorneys' fees) that an Indemnified Party may sustain or incur or that may be asserted against an Indemnified Party by any person arising directly or indirectly (i) from the fact that Securities are registered in the name of any such nominee, (ii) from any action taken or omitted to be taken by the Custodian or such Sub-Custodian (a) at the request or direction of or in reliance on the advice of the Fund, or (b) upon Proper Instructions, or (iii) from the performance of its obligations under this Agreement or any sub-custody agreement, provided that neither the Custodian nor any such Sub-Custodian shall be indemnified and held harmless from and against any such claim, demand, loss, expense or liability arising out of or relating to its refusal or failure to comply with the terms of this Agreement (or any sub-custody agreement), or from its bad faith, negligence or willful misconduct in the performance of its duties under this Agreement (or any sub-custody agreement).  This indemnity shall be a continuing obligation of the Fund, its successors and assigns, notwithstanding the termination of this Agreement.  As used in this paragraph, the terms “Custodian” and “Sub-Custodian” shall include their respective directors, officers and employees.

10.02Indemnification by Custodian.  The Custodian shall indemnify and hold harmless the Fund from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that the Fund may sustain or incur or that may be asserted against the Fund by any person arising directly or indirectly out of any action taken or omitted to be taken by an Indemnified Party as a result of the Indemnified Party’s refusal or failure to comply with the terms of this Agreement (or any sub-custody agreement), or from its bad faith, negligence or willful misconduct in the performance of its duties under this Agreement (or any sub-custody agreement).  This indemnity shall be a continuing obligation of the Custodian, its successors and assigns, notwithstanding the termination of this Agreement.  As used in this paragraph, the term “Fund” shall include the Fund’s directors, officers and employees.

10.03Security.  If the Custodian advances cash or Securities to the Fund for any purpose, either at the Fund's request or as otherwise contemplated in this Agreement, or in the event that the Custodian or its nominee incurs, in connection with its performance under this Agreement, any claim, demand, loss, expense or liability (including reasonable attorneys' fees) (except such as may arise from its or its nominee's bad faith, negligence or willful misconduct), then, in any such event, any property at any time held for the account of the Fund shall be security therefor, and should the Fund fail promptly to repay or indemnify the Custodian, the Custodian shall be entitled to utilize available cash of such Fund and to dispose of other assets of such Fund to the extent necessary to obtain reimbursement or indemnification.

17

10.04Miscellaneous.

(a)     Neither party to this Agreement shall be liable to the other party for consequential, special or punitive damages under any provision of this Agreement.

(b)     The indemnity provisions of this Article shall indefinitely survive the termination and/or assignment of this Agreement.

(c)     In order that the indemnification provisions contained in this Article shall apply, it is understood that if in any case the indemnitor may be asked to indemnify or hold the indemnitee harmless, the indemnitor shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the indemnitee will use all reasonable care to notify the indemnitor promptly concerning any situation that presents or appears likely to present the probability of a claim for indemnification. The indemnitor shall have the option to defend the indemnitee against any claim that may be the subject of this indemnification.  In the event that the indemnitor so elects, it will so notify the indemnitee and thereupon the indemnitor shall take over complete defense of the claim, and the indemnitee shall in such situation initiate no further legal or other expenses for which it shall seek indemnification under this section.  The indemnitee shall in no case confess any claim or make any compromise in any case in which the indemnitor will be asked to indemnify the indemnitee except with the indemnitor’s prior written consent.

ARTICLE XI.

FORCE MAJEURE

Neither the Custodian nor the Fund shall be liable for any failure or delay in performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fires; floods; wars; civil or military disturbances; acts of terrorism; sabotage; strikes; epidemics; riots; power failures; computer failure and any such circumstances beyond its reasonable control as may cause interruption, loss or malfunction of utility, transportation, computer (hardware or software) or telephone communication service; accidents; labor disputes; acts of civil or military authority; governmental actions; or inability to obtain labor, material, equipment or transportation; provided, however, that in the event of a failure or delay, the Custodian (i) shall not discriminate against the Fund in favor of any other customer of the Custodian in making computer time and personnel available to input or process the transactions contemplated by this Agreement, and (ii) shall use its best efforts to ameliorate the effects of any such failure or delay.

ARTICLE XII.

PROPRIETARY AND CONFIDENTIAL INFORMATION

12.01The Custodian agrees on behalf of itself and its directors, officers, and employees to treat confidentially and as proprietary information of the Fund, all records and other information relative to the Fund and prior, present, or potential shareholders of the Fund (and clients of said shareholders), and not to use such records and information for any purpose other than the performance of its responsibilities and duties hereunder, except (i) after prior notification to and approval in writing by the Fund, which approval shall not be unreasonably withheld and may not be withheld where the Custodian may be exposed to civil or criminal contempt proceedings for failure to comply, (ii) when requested to divulge such information by duly constituted authorities, or (iii) when so requested by the Fund.  Records and other information which have become known to the public through no wrongful act of the Custodian or any of its employees, agents or representatives, and information that was already in the possession of the Custodian prior to receipt thereof from the Fund or its agent, shall not be subject to this paragraph.

18

12.02Further, the Custodian will adhere to the privacy policies adopted by the Fund pursuant to Title V of the Gramm-Leach-Bliley Act, as may be modified from time to time.  In this regard, the Custodian shall have in place and maintain physical, electronic and procedural safeguards reasonably designed to protect the security, confidentiality and integrity of, and to prevent unauthorized access to or use of, records and information relating to the Fund and its shareholders.

ARTICLE XIII.

EFFECTIVE PERIOD; TERMINATION

13.01Effective Period.  This Agreement shall become effective as of the date first written above and will continue in effect for a period of three years (3) years.Thereafter, if not terminated as herein provided, the Agreement shall continue in effect automatically as to the Fund.

13.02Termination.  This Agreement may be terminated by either party upon giving 90 days prior written notice to the other party or such shorter period as is mutually agreed upon by the parties.  Notwithstanding the foregoing, this Agreement may be terminated by any party upon the breach of the other party of any material term of this Agreement if such breach is not cured within 15 days of notice of such breach to the breaching party.  In addition, the Fund may, at any time, immediately terminate this Agreement in the event of the appointment of a conservator or receiver for the Custodian by regulatory authorities or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction.

13.03Early Termination.  In the absence of any material breach of this agreement, should the Fund elect to terminate this agreement prior to the end of the term, the Fund agrees to pay the following fees:

a) All the monthly fees through the life of the Agreement; b) All out-of-pocket fees associated with converting services to successor service provider;

c) All fees associated with any record retention and/or tax reporting

obligations that may not be eliminated due to the conversion to a

successor service provider;

d) All out-of-pocket costs associated with a) thru c) above.

19

13.04Appointment of Successor Custodian.  If a successor custodian shall have been appointed by the Board of Directors, the Custodian shall, upon receipt of a notice of acceptance by the successor custodian, on such specified date of termination (i) deliver directly to the successor custodian all Securities (other than Securities held in a Book-Entry System or Securities Depository) and cash then owned by the Fund and held by the Custodian as custodian, and (ii) transfer any Securities held in a Book-Entry System or Securities Depository to an account of or for the benefit of the Fund at the successor custodian, provided that the Fund shall have paid to the Custodian all fees, expenses and other amounts to the payment or reimbursement of which it shall then be entitled.  In addition, the Custodian shall, at the expense of the Fund (in the absence of a material breach by the Custodian, in which case all expenses shall be borne by the Custodian), transfer to such successor all relevant books, records, correspondence, and other data established or maintained by the Custodian under this Agreement in a form reasonably acceptable to the Fund (if such form differs from the form in which the Custodian has maintained the same, the Fund shall pay any expenses associated with transferring the data to such form), and will cooperate in the transfer of such duties and responsibilities, including provision for assistance from the Custodian’s personnel in the establishment of books, records, and other data by such successor.  Upon such delivery and transfer, the Custodian shall be relieved of all obligations under this Agreement.

13.05Failure to Appoint Successor Custodian.  If a successor custodian is not designated by the Fund on or before the date of termination of this Agreement, then the Custodian shall have the right to deliver to a bank or trust company of its own selection, which bank or trust company (i) is a “bank” as defined in the 1940 Act, and (ii) has aggregate capital, surplus and undivided profits as shown on its most recent published report of not less than $25 million, all Securities, cash and other property held by Custodian under this Agreement and to transfer to an account of or for the Fund at such bank or trust company all Securities of the Fund held in a Book-Entry System or Securities Depository.  Upon such delivery and transfer, such bank or trust company shall be the successor custodian under this Agreement and the Custodian shall be relieved of all obligations under this Agreement.  In addition, under these circumstances, all books, records and other data of the Fund shall be returned to the Fund.

ARTICLE XIV.

CLASS ACTIONS

The Custodian shall use its best efforts to identify and file claims for the Fund(s) involving any class action litigation that impacts any security the Fund(s) may have held during the class period.  The Fund agrees that the Custodian may file such claims on its behalf and understands that it may be waiving and/or releasing certain rights to make claims or otherwise pursue class action defendants who settle their claims.  Further, the Fund acknowledges that there is no guarantee these claims will result in any payment or partial payment of potential class action proceeds and that the timing of such payment, if any, is uncertain.

However, the Fund may instruct the Custodian to distribute class action notices and other relevant documentation to the Fund(s) or its designee and, if it so elects, will relieve the Custodian from any and all liability and responsibility for filing class action claims on behalf of the Fund(s).

20

In the event the Fund(s) are closed, the Custodian shall only file the class action claims upon written instructions by an authorized representative of the closed Fund(s).  Any expenses associated with such filing will be assessed against the proceeds received of any class action settlement.

ARTICLE XV.

MISCELLANEOUS

15.01Compliance with Laws.  The Fund has and retains primary responsibility for all compliance matters relating to the Fund, including but not limited to compliance with the 1940 Act, the Internal Revenue Code of 1986, the Sarbanes-Oxley Act of 2002, the USA Patriot Act of 2001 and the policies and limitations of the Fund relating to its portfolio investments as set forth in its Prospectus and statement of additional information.  The Custodian’s services hereunder shall not relieve the Fund of its responsibilities for assuring such compliance or the Board of Director’s oversight responsibility with respect thereto.

15.02    Amendment.  This Agreement may not be amended or modified in any manner except by written agreement executed by the Custodian and the Fund, and authorized or approved by the Board of  Directors.

15.03     Assignment.  This Agreement shall extend to and be binding upon the parties hereto and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Fund without the written consent of the Custodian, or by the Custodian without the written consent of the Fund accompanied by the authorization or approval of the Board of Directors.

15.04     Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota, without regard to conflicts of law principles.  To the extent that the applicable laws of the State of Minnesota, or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the latter shall control, and nothing herein shall be construed in a manner inconsistent with the 1940 Act or any rule or order of the SEC thereunder.

15.05     No Agency Relationship.  Nothing herein contained shall be deemed to authorize or empower either party to act as agent for the other party to this Agreement, or to conduct business in the name, or for the account, of the other party to this Agreement.

15.06    Services Not Exclusive.  Nothing in this Agreement shall limit or restrict the Custodian from providing services to other parties that are similar or identical to some or all of the services provided hereunder.

15.07     Invalidity. Any provision of this Agreement which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  In such case, the parties shall in good faith modify or substitute such provision consistent with the original intent of the parties.

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15.08     Notices.  Any notice required or permitted to be given by either party to the other shall be in writing and shall be deemed to have been given on the date delivered personally or by courier service, or three days after sent by registered or certified mail, postage prepaid, return receipt requested, or on the date sent and confirmed received by facsimile transmission to the other party’s address set forth below:

Notice to the Custodian shall be sent to:

U.S Bank, N.A.

1555 N. Rivercenter Dr., MK-WI-S302

Milwaukee, WI 53212

Attn:  Tom Fuller

Phone: 414-905-6118

Fax: 866-350-5066

and notice to the Fund shall be sent to:

Insured Municipal Income Fund Inc.

c/o Brooklyn Capital Management, LLC

60 Heritage Dr.

Pleasantville, NY 10570

15.09      Multiple Originals.  This Agreement may be executed on two or more counterparts, each of which when so executed shall be deemed an original, but such counterparts shall together constitute but one and the same instrument.

15.10      No Waiver.  No failure by either party hereto to exercise, and no delay by such party in exercising, any right hereunder shall operate as a waiver thereof.  The exercise by either party hereto of any right hereunder shall not preclude the exercise of any other right, and the remedies provided herein are cumulative and not exclusive of any remedies provided at law or in equity.

15.11      References to Custodian.  The Fund shall not circulate any printed matter which contains any reference to Custodian without the prior written approval of Custodian, excepting printed matter contained in the Prospectus or statement of additional information for the Fund and such other printed matter as merely identifies Custodian as custodian for the Fund.  The Fund shall submit printed matter requiring approval to Custodian in draft form, allowing sufficient time for review by Custodian and its counsel prior to any deadline for printing.

22

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer on one or more counterparts as of the date first above written.

INSURED MUNICIPAL INCOME FUND INC.	U.S. BANK NATIONAL ASSOCIATION
By: /s/ Gerald Hellerman	By:  /s/ Michael R. McVoy
Name:  /s/ Gerald Hellerman	Name:  Michael R. McVoy
Title:  Director	Title:  Executive Vice President

23 

EXHIBIT A

AUTHORIZED PERSONS

Set forth below are the names and specimen signatures of the persons authorized by the Fund to administer the Fund Custody Accounts.

Authorized Persons	Specimen Signatures
President:
Secretary:
Treasurer:
Vice President:
Other:

24 

EXHIBIT B

U.S. Bank Institutional Custody Services

Standards of Service Guide

U.S. Bank, N.A. (“USBank”) is committed to providing superior quality service to all customers and their agents at all times.  We have compiled this guide as a tool for our clients to determine our standards for the processing of security settlements, payment collection, and capital change transactions.  Deadlines recited in this guide represent the times required for USBank to guarantee processing.  Failure to meet these deadlines will result in settlement at our client's risk.  In all cases, USBank will make every effort to complete all processing on a timely basis.

USBank is a direct participant of the Depository Trust Company, a direct member of the Federal Reserve Bank of Cleveland, and utilizes the Bank of New York as its agent for ineligible and foreign securities.

For corporate reorganizations, USBank utilizes SEI's Reorg Source, Financial Information, Inc., XCITEK, DTC Important Notices, Capital Changes Daily (CCH) and the Wall Street Journal.

For bond calls and mandatory puts, USBank utilizes SEI's Bond Source, Kenny Information Systems, Standard & Poor's Corporation, XCITEK, and DTC Important Notices.  USBank will not notify clients of optional put opportunities.

Any securities delivered free to USBank or its agents must be received three (3) business days prior to any payment or settlement in order for the USBank standards of service to apply.

Should you have any questions regarding the information contained in this guide, please feel free to contact your account representative.

The information contained in this Standards of Service Guide is subject to change.  Should any changes be made USBank will provide you with an updated copy of its Standards of Service Guide.

25 

U.S. Bank Security Settlement Standards

Transaction Type	Instructions Deadlines-Central Time
Securities Eligible for DTC ·     Equities ·     Corporate & municipal bonds ·     Commercial paper ·     Medium-term notes ·     Collateralized mortgage issues ·     Zero coupon bonds (already at DTC)	1:00 p.m. on Settlement Date
Federal Reserve book-entry securities (includes treasuries, agencies, GNMAs)	12:30 p.m. on Settlement Date
Bank of New York – physical securities	11::00 a.m. on  Settlement Date minus one
Purchase of physical security to be held in Milwaukee vault.  Includes private placements	1 day prior to Settlement Date
Sale of physical security held in Milwaukee vault Proper documents must be included if asset in customer’s name	2 days prior to Settlement Date

26

U.S. Bank Payment Standards

Security Type	Income	Principal
Equities	Payable Date
Municipal Bonds*	Payable Date	Payable Date
Corporate Bonds*	Payable Date	Payable Date
Federal Reserve Bank Book Entry*	Payable Date	Payable Date
PTC GNMA's (P&I)	Payable Date + 1	Payable Date + 1
CMOs *
DTC	Payable Date + 1	Payable Date + 1
SBA Loan Certificates	When Received	When Received
Unit Investment Trust Certificates*	Payable Date	Payable Date
Certificates of Deposit*	Payable Date + 1	Payable Date + 1
Limited Partnerships	When Received	When Received
Foreign Securities	When Received	When Received
*Variable Rate Securities
Federal Reserve Bank Book Entry	Payable Date	Payable Date
DTC	Payable Date + 1	Payable Date + 1

NOTE: If a payable date falls on a weekend or bank holiday, payment will be made on the immediately following business day.

27

U.S. Bank Corporate Reorganization Standards

Type of Action	Deadline for Client Instructions to U.S. Bank – Central Time
Voluntary offers including:     ·    Rights     ·    Warrants     ·    Election mergers     ·    Mandatory puts with option to retain     ·   Optional puts     ·    Voluntary tenders     ·    Consents     ·    Exchanges     ·    Conversions	24 hours prior to expiration

28 

EXHIBIT C

to the Custody Agreement

Fund Names

Insured Municipal Income Fund

29 

EXHIBIT D to the Custody Agreement – Insured Municipal Income Fund Inc.

CLOSED-END FUND

CUSTODY SERVICES – Annual Fee Schedule at October, 2009

NOTE: All schedules subject to change depending upon the use of derivatives – options, futures, short sales, etc.  Conversion, multiple classes, master/feeder and multiple manager funds, and extraordinary services quoted separately.

Chief Compliance Officer Support Fee*

§   $[ ] /service per year

Custody Annual Fee Based Upon Market Value Per Fund*

[ ] basis point on average daily market value

Minimum annual fee per fund - $[ ]

Plus portfolio transaction fees

Custody Portfolio Transaction Fees

$[ ] per book entry DTC transaction/Federal Reserve transaction/principal paydown

$[ ] per short sale

$[ ] per U.S. Bank repurchase agreement transaction

$[ ] per option/future contract written, exercised or expired

$[ ] per mutual fund trade/Fed wire/margin variation Fed wire

$[ ] per physical transaction

$[ ] per disbursement (waived if U.S. Bancorp is Administrator)

$[ ] per segregated account per year

§   A transaction is a purchase/sale of a security, free receipt/free delivery, maturity, tender, or exchange.

§   No charge for the initial conversion free receipt.

§   Overdrafts – charged to the account at prime interest rate plus 2.

Out-Of-Pocket Expenses

Including but not limited to expenses incurred in the safekeeping, delivery and receipt of securities, shipping, transfer fees, extraordinary expenses based upon complexity, and all other out-of-pocket expenses.  Out of pocket expenses invoiced to the Fund shall be the same as USBFS’ cost.

Fees are billed monthly.

*Subject to annual CPI increase, Milwaukee MSA.

30 

EXHIBIT E

SHAREHOLDER COMMUNICATIONS ACT AUTHORIZATION

INSURED MUNICIPAL INCOME FUND INC.

The Shareholder Communications Act of 1985 requires banks and trust companies to make an effort to permit direct communication between a company which issues securities and the shareholder who votes those securities.

Unless you specifically require us to NOT release your name and address to requesting companies, we are required by law to disclose your name and address.

Your “yes” or “no” to disclosure will apply to all securities U.S. Bank holds for you now and in the future, unless you change your mind and notify us in writing.

______ YES	U.S. Bank is authorized to provide the Fund’s name, address and security position to requesting companies whose stock is owned by the Company.
X       NO	U.S. Bank is NOT authorized to provide the Fund’s name, address and security position to requesting companies whose stock is owned by the Company.

INSURED MUNICIPAL INCOME FUND INC.

By:  /s/ Gerald Hellerman                                             

Title:     Director                                                            

Date:    10/15/09                                                            

31

EX-99.2(K)(I)

CERTIFICATE OF APPOINTMENT OF AMERICAN STOCK TRANSFER & TRUST

COMPANY

BY

Special Opportunities Fund, Inc. (the “Company”)

a Maryland Corporation

The Company is authorized to issue the following shares/units:

Class of Stock	Par Value	Number of Shares/Units Authorized
Common	$0.001	199,995,800

The address of the Company to which Notices may be sent is:

615 East Michigan Street

Milwaukee, WI 53202

The name and address of legal counsel for the Company is:

Blank Rome LLP

The Chrysler Building

405 Lexington Avenue

New York, NY 10174

Attached are true copies of the certificate of incorporation and bylaws (or such other comparable documents for non-corporate entities), as amended, of the Company.

If any provision of the certificate of incorporation or by-laws of the Corporation, any court or administrative order, or any other document, affects any transfer agency or registrar function or responsibility relating to the shares, attached is a statement of each such provision.

All shares issued and outstanding as of the date hereof, or to be issued during the term of this appointment, are/shall be duly authorized, validly issued, fully paid and non-assessable. All such shares are (or, in the case of shares that have not yet been issued, will be) duly registered under the Securities Act of 1933 and the Securities Act of 1934. Any shares not so registered were or shall be issued or transferred in a transaction or series of transactions exempt from the registration provisions, of the relevant Act, and in each such issuance or transfer, the Corporation was or shall be so advised by its legal counsel and all shares issued or to be issued bear or shall bear all appropriate legends.

American Stock Transfer & Trust Company (“AST”) is hereby appointed as transfer agent and registrar for the shares/units of the Company set forth above, in accordance with the general practices of AST and its regulations set forth in the pamphlet entitled Regulations of American Stock Transfer & Trust Company, a copy of which we have received and reviewed.

The initial term of this Certificate of Appointment shall be three (3) years from the date of this Certificate of Appointment and the appointment shall automatically be renewed for further three years successive terms without further action of the parties, unless written notice is provided by either party at least 90 days prior to the end of the initial or any subsequent three year period. The term of this appointment shall be governed in accordance with this paragraph, notwithstanding the cessation of active trading in the capital stock of the Company.

The Corporation will advise AST promptly of any change in any information contained in this Certificate by a supplemental Certificate or otherwise in writing.

WITNESS my hand this 22nd day of January, 2010.

By:  /s/ Andrew Dakos                                 

Title:  President                                              

2

Exhibit A

to the

Fund Accounting Servicing Agreement

Fund Names

Name of Fund

Insured Municipal Income Fund

B-1

Exhibit B (continued) to the

Fund Accounting Servicing Agreement – Insured Municipal Income Fund

CLOSED-END FUND

FUND ACCOUNTING

ANNUAL FEE SCHEDULE at October, 2009

Fund Accounting Services Per Fund*

$[ ] on the first $100 million

[ ] basis points on the next $200 million

[ ] basis point on the balance

NOTE: All schedules subject to change depending upon the use of derivatives – options, futures, short sales, etc.  Conversion, multiple classes, master/feeder and multiple manager funds, and extraordinary services quoted separately.

Chief Compliance Officer Support Fee*

§$[ ] /service per year

FUND ACCOUNTING SERVICES

SUPPLEMENTAL SERVICES

FEE SCHEDULE at October, 2009

All fees are billed monthly plus out-of-pocket expenses, including pricing, corporate action, and factor services:

§Pricing Services

        −$[ ] Domestic and Canadian Equities/Options

        −$[ ] Corp/Gov/Agency Bonds/International Equities/Futures

        −$[ ] CMOs/Municipal Bonds/Money Market Instruments/International Bonds

        −$[ ] /Fund per Day - Bank Loans

        −$[ ] /Fund per Day - Credit Default Swaps

        −$[ ] /Fund per Day - Basic Interest Rate Swaps

        −$[ ]/Fund per Month - Mutual Fund Pricing

        −$[ ] /Foreign Equity Security per Month for Corporate Action Service

        −$[ ] /Month Manual Security Pricing (>10/day)

§Factor Services (BondBuyer)

        −$[ ]/CMO/Month

        −$[ ] /Mortgage Backed/Month

        −$[ ] /Month Minimum/Fund Group

§Fair Value Services (FT Interactive)

        −$[ ] on the First 100 Securities/Day

        −$[ ] on the Balance of Securities/Day

NOTE: Prices above are based on using IDC as the primary pricing service.  Use of an alternative price source may require amendments to these fees.

Fees are billed monthly.  *Subject to annual CPI increase, Milwaukee, MSA

2

EX-99.2(K)(II)

FUND ADMINISTRATION SERVICING AGREEMENT

THIS AGREEMENT is made and entered into this 15th day of October, 2009, by and between INSURED MUNICIPAL INCOME FUND INC., (the “Fund”) and U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited liability company (“USBFS”).

     WHEREAS, the Fund is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a closed-end, non-diversified management investment company, and is authorized to issue shares of beneficial interest; and

WHEREAS, USBFS is, among other things, in the business of providing fund administration services for the benefit of its customers; and

WHEREAS, the Fund desires to retain USBFS to provide fund administration services to the Fund(s) listed on Exhibit A hereto.

     NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:

1.   Appointment of USBFS as Administrator

The Fund hereby appoints USBFS as administrator of the Fund on the terms and conditions set forth in this Agreement, and USBFS hereby accepts such appointment and agrees to perform the services and duties set forth in this Agreement.  The services and duties of USBFS shall be confined to those matters expressly set forth herein, and no implied duties are assumed by or may be asserted against USBFS hereunder.

2.   Services and Duties of USBFS

USBFS shall provide the following administration services to the Fund:

A.  General Fund Management:

(1)  Act as liaison among Fund service providers.

(2)  Supply:

a.  Corporate secretarial services.

b.  Office facilities (which may be in USBFS’s, or an affiliate’s, own offices).

c.  Non-investment-related statistical and research data as needed.

(3)  Coordinate the Fund’s board of directors (the “Board of Directors” or the “Directors”) communications, such as:

a.  Prepare meeting agendas and resolutions, with the assistance of Fund counsel.

1

b.  Prepare reports for the Board of Directors based on financial and administrative data.

c.  Evaluate independent auditor.

d.  Secure and monitor fidelity bond and director and officer liability coverage, and make the necessary Securities and Exchange Commission (the “SEC”) filings relating thereto.

e.  Prepare minutes of meetings of the Board of Directors and Fund shareholders.

f.  Recommend dividend declarations to the Board of Directors and prepare and distribute to appropriate parties notices announcing declaration of dividends and other distributions to shareholders.

g.  Attend Board of Directors meetings and present materials for Directors’ review at such meetings.

(4)  Audits:

a.  Prepare appropriate schedules and assist independent auditors.

b.  Provide information to the SEC and facilitate audit process.

c.  Provide office facilities.

(5)  Assist in overall operations of the Fund.

(6)  Pay Fund expenses upon written authorization from the Fund.

(7)  Keep the Fund’s governing documents, including its charter, bylaws and minute books, but only to the extent such documents are provided to USBFS by the Fund or its representatives for safe keeping.

B.  Compliance:

(1)  Regulatory Compliance:

a.  Monitor compliance with the 1940 Act requirements, including:

(i) Asset diversification tests.

(ii) Total return and SEC yield calculations.

(iii) Maintenance of books and records under Rule 31a-3.

(iv) Code of ethics requirements under Rule 17j-1 for the disinterested Directors.

b.  Monitor Fund's compliance with the policies and investment limitations as set forth in its prospectus (the “Prospectus”) and statement of additional information (the “SAI”).

c.  Perform its duties hereunder in compliance with all applicable laws and regulations and provide any sub-certifications reasonably requested by the Fund in connection with any certification required of the Fund pursuant to the Sarbanes-Oxley Act of 2002 (the “SOX Act”) or any rules or regulations promulgated by the SEC thereunder, provided the same shall not be deemed to change USBFS’s standard of care as set forth herein.

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d.  Monitor applicable regulatory and operational service issues, and update Board of Directors periodically.

(2)  Blue Sky Compliance:

Monitor sales of Shares and prepare and timely file (or pre-file, as required) with the SEC and applicable state securities commissioners all applicable filings with respect to the sale of such Shares under the 1933 Act and applicable rules and regulations adopted thereunder, including preparation, amendment and filing of Form D and related documents required under any applicable state securities laws.

(3)  SEC Registration and Reporting:

a.  Assist Fund counsel in annual update of the Prospectus and SAI and in preparation of proxy statements as needed.

b.  Prepare and file annual and semiannual shareholder reports, Form N-SAR, Form N-CSR, and Form N-Q filings and Rule 24f-2 notices.  As requested by the Fund, prepare and file Form N-PX filings.

c.  Coordinate the printing, filing and mailing of Prospectuses and shareholder reports, and amendments and supplements thereto.

d.  File fidelity bond under Rule 17g-1.

e.  Monitor sales of Fund shares and ensure that such shares are properly registered or qualified, as applicable, with the SEC and the appropriate state authorities.

(4)  IRS Compliance:

a.  Monitor the Fund’s status as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), including without limitation, review of the following:

(i) Asset diversification requirements.

(ii) Qualifying income requirements.

(iii) Distribution requirements.

b.  Calculate required distributions (including excise tax distributions).

C.  Financial Reporting:

(1)  Provide financial data required by the Prospectus and SAI.

(2)  Prepare financial reports for officers, shareholders, tax authorities, performance reporting companies, the Board of Directors, the SEC, and independent accountants.

(3)  Supervise the Fund’s custodian and fund accountants in the maintenance of the Fund’s general ledger and in the preparation of the Fund’s financial statements, including oversight of expense accruals and payments, the determination of net asset value and the declaration and payment of dividends and other distributions to shareholders.

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(4)  Compute the yield, total return, expense ratio and portfolio turnover rate of each class of the Fund.

(5)  Monitor the expense accruals and notify the Fund’s management of any proposed adjustments.

(6)  Prepare quarterly financial statements, which include, without limitation, the following items:

a.  Schedule of Investments

b.  Schedule of Capital Gains and Losses

(7)  Prepare semi-annual  financial statements, which include, without limitation, the following items:

a.  Statement of Assets and Liabilities.

b.  Statement of Operations.

c.  Statement of Changes in Net Assets.

(8)  Prepare quarterly broker security transaction summaries.

D.  Tax Reporting:

(1)  Prepare and file on a timely basis appropriate federal and state tax returns including, without limitation, Forms 1120/8613, with any necessary schedules.

(2)  Prepare state income breakdowns where relevant.

(3)  File Form 1099 for payments to disinterested Directors and other service providers.

(4)  Monitor wash sale losses.

(5)  Calculate eligible dividend income for corporate shareholders.

3.   Compensation

USBFS shall be compensated for providing the services set forth in this Agreement in accordance with the fee schedule set forth on Exhibit B hereto (as amended from time to time).  USBFS shall also be compensated for such out-of-pocket expenses (e.g., telecommunication charges, postage and delivery charges, and reproduction charges) as are reasonably incurred by USBFS in performing its duties hereunder.  The Fund shall pay all such fees and reimbursable expenses within thirty (30) calendar days following receipt of the billing notice, except for any fee or expense subject to a good faith dispute.  The Fund shall notify USBFS in writing within thirty (30) calendar days following receipt of each invoice if the Fund is disputing any amounts in good faith. The Fund shall pay such disputed amounts within ten (10) calendar days of the day on which the parties agree to the amount to be paid.  With the exception of any fee or expense the Fund is disputing in good faith as set forth above, unpaid invoices shall accrue a finance charge of 1½% per month after the due date. Notwithstanding anything to the contrary, amounts owed by the Fund to USBFS shall only be paid out of the assets and property of the particular Fund involved.

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4.   Representations and Warranties

A.  The Fund hereby represents and warrants to USBFS, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:

(1) It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;

(2) This Agreement has been duly authorized, executed and delivered by the Fund in accordance with all requisite action and constitutes a valid and legally binding obligation of the Fund, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties; and

(3) It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement.

B.  USBFS hereby represents and warrants to the Fund, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:

(1) It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;

(2) This Agreement has been duly authorized, executed and delivered by USBFS in accordance with all requisite action and constitutes a valid and legally binding obligation of USBFS, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties; and

(3) It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement.

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5.   Standard of Care; Indemnification; Limitation of Liability

A.  USBFS shall exercise reasonable care in the performance of its duties under this Agreement.  USBFS shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with its duties under this Agreement, including losses resulting from mechanical breakdowns or the failure of communication or power supplies beyond USBFS’s control, except a loss arising out of or relating to USBFS’s refusal or failure to comply with the terms of this Agreement or from its bad faith, negligence, or willful misconduct in the performance of its duties under this Agreement.  Notwithstanding any other provision of this Agreement, if USBFS has exercised reasonable care in the performance of its duties under this Agreement, the Fund shall indemnify and hold harmless USBFS from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that USBFS may sustain or incur or that may be asserted against USBFS by any person arising out of any action taken or omitted to be taken by it in performing the services hereunder (i) in accordance with the foregoing standards, or (ii) in reliance upon any written or oral instruction provided to USBFS by any duly authorized officer of the Fund, as approved by the Board of Directors of the Fund, except for any and all claims, demands, losses, expenses, and liabilities arising out of or relating to USBFS’s refusal or failure to comply with the terms of this Agreement or from its bad faith, negligence or willful misconduct in the performance of its duties under this Agreement.  This indemnity shall be a continuing obligation of the Fund, its successors and assigns, notwithstanding the termination of this Agreement.  As used in this paragraph, the term “USBFS” shall include USBFS’s directors, officers and employees.

USBFS shall indemnify and hold the Fund harmless from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that the Fund may sustain or incur or that may be asserted against the Fund by any person arising out of any action taken or omitted to be taken by USBFS as a result of USBFS’s refusal or failure to comply with the terms of this Agreement, or from its bad faith, negligence, or willful misconduct in the performance of its duties under this Agreement.  This indemnity shall be a continuing obligation of USBFS, its successors and assigns, notwithstanding the termination of this Agreement.  As used in this paragraph, the term “Fund” shall include the Fund’s directors, officers and employees.

Neither party to this Agreement shall be liable to the other party for consequential, special or punitive damages under any provision of this Agreement.

In the event of a mechanical breakdown or failure of communication or power supplies beyond its control, USBFS shall take all reasonable steps to minimize service interruptions for any period that such interruption continues.  USBFS will make every reasonable effort to restore any lost or damaged data and correct any errors resulting from such a breakdown at the expense of USBFS.  USBFS agrees that it shall, at all times, have reasonable contingency plans with appropriate parties, making reasonable provision for emergency use of electrical data processing equipment to the extent appropriate equipment is available.  Representatives of the Fund shall be entitled to inspect USBFS’s premises and operating capabilities at any time during regular business hours of USBFS, upon reasonable notice to USBFS.  Moreover, USBFS shall provide the Fund, at such times as the Fund may reasonably require, copies of reports rendered by independent accountants on the internal controls and procedures of USBFS relating to the services provided by USBFS under this Agreement.

6

Notwithstanding the above, USBFS reserves the right to reprocess and correct administrative errors at its own expense.

B.  In order that the indemnification provisions contained in this section shall apply, it is understood that if in any case the indemnitor may be asked to indemnify or hold the indemnitee harmless, the indemnitor shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the indemnitee will use all reasonable care to notify the indemnitor promptly concerning any situation that presents or appears likely to present the probability of a claim for indemnification. The indemnitor shall have the option to defend the indemnitee against any claim that may be the subject of this indemnification.  In the event that the indemnitor so elects, it will so notify the indemnitee and thereupon the indemnitor shall take over complete defense of the claim, and the indemnitee shall in such situation initiate no further legal or other expenses for which it shall seek indemnification under this section.  The indemnitee shall in no case confess any claim or make any compromise in any case in which the indemnitor will be asked to indemnify the indemnitee except with the indemnitor’s prior written consent.

C.  The indemnity and defense provisions set forth in this Section 5 shall indefinitely survive the termination and/or assignment of this Agreement.

D.  If USBFS is acting in another capacity for the Fund pursuant to a separate agreement, nothing herein shall be deemed to relieve USBFS of any of its obligations in such other capacity.

6.   Data Necessary to Perform Services

The Fund or its agent shall furnish to USBFS the data necessary to perform the services described herein at such times and in such form as mutually agreed upon.

7

7.   Proprietary and Confidential Information

USBFS agrees on behalf of itself and its directors, officers, and employees to treat confidentially and as proprietary information of the Fund, all records and other information relative to the Fund and prior, present, or potential shareholders of the Fund (and clients of said shareholders), and not to use such records and information for any purpose other than the performance of its responsibilities and duties hereunder, except (i) after prior notification to and approval in writing by the Fund, which approval shall not be unreasonably withheld and may not be withheld where USBFS may be exposed to civil or criminal contempt proceedings for failure to comply, (ii) when requested to divulge such information by duly constituted authorities, or (iii) when so requested by the Fund.  Records and other information which have become known to the public through no wrongful act of USBFS or any of its employees, agents or representatives, and information that was already in the possession of USBFS prior to receipt thereof from the Fund or its agent, shall not be subject to this paragraph.

Further, USBFS will adhere to the privacy policies adopted by the Fund pursuant to Title V of the Gramm-Leach-Bliley Act, as may be modified from time to time.  In this regard, USBFS shall have in place and maintain physical, electronic and procedural safeguards reasonably designed to protect the security, confidentiality and integrity of, and to prevent unauthorized access to or use of, records and information relating to the Fund and its shareholders.

8.   Records

USBFS shall keep records relating to the services to be performed hereunder in the form and manner, and for such period, as it may deem advisable and is agreeable to the Fund, but not inconsistent with the rules and regulations of appropriate government authorities, in particular, Section 31 of the 1940 Act and the rules thereunder.  USBFS agrees that all such records prepared or maintained by USBFS relating to the services to be performed by USBFS hereunder are the property of the Fund and will be preserved, maintained, and made available in accordance with such applicable sections and rules of the 1940 Act and will be promptly surrendered to the Fund or its designee on and in accordance with its request.

8

9.   Compliance with Laws

The Fund has and retains primary responsibility for all compliance matters relating to the Fund, including but not limited to compliance with the 1940 Act, the Code, the SOX Act, the USA Patriot Act of 2001 and the policies and limitations of the Fund relating to its portfolio investments as set forth in its Prospectus and SAI.  USBFS’s services hereunder shall not relieve the Fund of its responsibilities for assuring such compliance or the Board of Director’s oversight responsibility with respect thereto.

10.   Term of Agreement; Amendment

This Agreement shall become effective as of the date first written above and will continue in effect for a period of three (3) years.  This Agreement may be terminated by either party upon giving 90 days prior written notice to the other party or such shorter period as is mutually agreed upon by the parties.  Notwithstanding the foregoing, this Agreement may be terminated by any party upon the breach of the other party of any material term of this Agreement if such breach is not cured within 15 days of notice of such breach to the breaching party.  This Agreement may not be amended or modified in any manner except by written agreement executed by USBFS and the Fund, and authorized or approved by the Board of Directors.

11.   Duties in the Event of Termination

In the event that, in connection with termination, a successor to any of USBFS’s duties or responsibilities hereunder is designated by the Fund by written notice to USBFS, USBFS will promptly, upon such termination and at the expense of the Fund, transfer to such successor all relevant books, records, correspondence, and other data established or maintained by USBFS under this Agreement in a form reasonably acceptable to the Fund (if such form differs from the form in which USBFS has maintained the same, the Fund shall pay any expenses associated with transferring the data to such form), and will cooperate in the transfer of such duties and responsibilities, including provision for assistance from USBFS’s personnel in the establishment of books, records, and other data by such successor.  If no such successor is designated, then such books, records and other data shall be returned to the Fund.

12.           Early Termination

In the absence of any material breach of this Agreement, should the Fund elect to terminate this Agreement prior to the end of the term, the Fund agrees to pay the following fees:

a.  All the fees through the life of the Agreement, including the rebate of any negotiated discounts;

b.  all fees associated with converting services to successor service provider;

12

c.  all fees associated with any record retention and/or tax reporting obligations that may not be eliminated due to the conversion to a successor service provider;

d.  all out-of-pocket costs associated with a-c above.

13.           Assignment

This Agreement shall extend to and be binding upon the parties hereto and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Fund without the written consent of USBFS, or by USBFS without the written consent of the Fund accompanied by the authorization or approval of the Fund’s Board of Directors.

14.           Governing Law

This Agreement shall be construed in accordance with the laws of the State of Wisconsin, without regard to conflicts of law principles.  To the extent that the applicable laws of the State of Wisconsin, or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the latter shall control, and nothing herein shall be construed in a manner inconsistent with the 1940 Act or any rule or order of the SEC thereunder.

15.           No Agency Relationship

Nothing herein contained shall be deemed to authorize or empower either party to act as agent for the other party to this Agreement, or to conduct business in the name, or for the account, of the other party to this Agreement.

16.           Services Not Exclusive

Nothing in this Agreement shall limit or restrict USBFS from providing services to other parties that are similar or identical to some or all of the services provided hereunder.

17.           Invalidity

Any provision of this Agreement which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  In such case, the parties shall in good faith modify or substitute such provision consistent with the original intent of the parties.

10

18.           Legal-Related Services

Nothing in this Agreement shall be deemed to appoint USBFS and its officers, directors and employees as the Fund attorneys, form attorney-client relationships or require the provision of legal advice.  The Fund acknowledges that in-house USBFS attorneys exclusively represent USBFS and rely on outside counsel retained by the Fund to review all services provided by in-house USBFS attorneys and to provide independent judgment on the Fund’s behalf.  Because no attorney-client relationship exists between in-house USBFS attorneys and the Fund, any information provided to USBFS attorneys may not be privileged and may be subject to compulsory disclosure under certain circumstances.  USBFS represents that it will maintain the confidentiality of information disclosed to its in-house attorneys on a best efforts basis.

19.           Notices

Any notice required or permitted to be given by either party to the other shall be in writing and shall be deemed to have been given on the date delivered personally or by courier service, or three days after sent by registered or certified mail, postage prepaid, return receipt requested, or on the date sent and confirmed received by facsimile transmission to the other party’s address set forth below:

Notice to USBFS shall be sent to:

U.S. Bancorp Fund Services, LLC

615 East Michigan Street

Milwaukee, WI 53202

and notice to the Fund shall be sent to:

Insured Municipal Income Fund Inc.

c/o Brooklyn Capital Management, LLC

Park 80 West

Saddle Brook, NJ 07663

Attn:

Phone:

20.           Multiple Originals

This Agreement may be executed on two or more counterparts, each of which when so executed shall be deemed to be an original, but such counterparts shall together constitute but one and the same instrument.

11

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer on one or more counterparts as of the date first above written.

INSURED MUNICIPAL INCOME FUND INC.	U.S. BANCORP FUND SERVICES, LLC
By: /s/ Gerald Hellerman	By:  /s/ Michael R. McVoy
Name:  Gerald Hellerman	Name:  Michael R. McVoy
Title:  Director	Title:  Executive Vice President

12 

Exhibit A

to the

Fund Administration Servicing Agreement

Fund Names

Name of Fund

Insured Municipal Income Fund

A-1 

Exhibit B

to the

Fund Administration Servicing Agreement -  Insured Municipal Income Fund Inc.

CLOSED-END FUND

ADMINISTRATION SERVICES

ANNUAL FEE SCHEDULE at October, 2009

Fund Administration Services Per Fund*

[ ] basis points on the first $100 million

[ ] basis points on the next $200 million

[ ] basis points on the balance above $300 million

Minimum annual fee:  $[ ] per portfolio

Advisor Information Source Web Portal

§$[ ] /fund/month

§ $[ ] /fund/month for clients using an external administration service

§Specialized projects will be analyzed and an estimate will be provided prior to work being performed.

NOTE: All schedules subject to change depending upon the use of derivatives – options, futures, short sales, etc.  Conversion, multiple classes, master/feeder and multiple manager funds, and extraordinary services quoted separately.

Chief Compliance Officer Support Fee*

§$[ ] /service per year

Out-Of-Pocket Expenses

Including but not limited to expenses incurred in the safekeeping, delivery and receipt of securities, shipping, transfer fees, extraordinary expenses based upon complexity, and all other out-of-pocket expenses. Out of pocket expenses invoiced to the Fund shall be the same as USBFS’ cost.

Fees are billed monthly

*Subject to annual CPI increase, Milwaukee MSA

B-1

EX-99.2)L)

[Blank Rome LLP Letterhead]

May 15, 2012

Special Opportunities Fund, Inc.

615 East Michigan Street

Milwaukee, WI 53202

Ladies and Gentlemen:

We have acted as counsel to Special Opportunities Fund, Inc. (the “Fund”), a Maryland corporation, in connection with the Registration Statement on Form N-2 filed with the Securities and Exchange Commission on January 9, 2012, as amended by Pre-Effective Amendment No. 1 on Form N-2/A filed on April 13, 2012 and Pre-Effective Amendment No. 2 on Form N-2/A filed on the date hereof (the “Registration Statement”).  The Registration Statement covers shares of convertible preferred stock with a par value of $0.001 per share (the “Shares”) to be issued pursuant to the exercise of rights (the “Rights”) to be issued to the stockholders of record of outstanding shares of common stock of the Fund.  The Rights entitle such stockholders to purchase one Share of the Fund for every Right held.

For purposes of rendering this opinion, our examination of documents has been limited to the examination of executed or conformed counterparts, or copies otherwise proved to our satisfaction, of the following documents:

a)    The Registration Statement;

b)    The Amended and Restated Articles of Incorporation, as amended, of the Fund as incorporated by reference to the Registration Statement (the “Articles”);

c)    By-Laws of the Fund as incorporated by reference to the Registration Statement (the “Bylaws”);

d)    The Articles Supplementary of the Fund relating to the designation of the Shares and filed as an exhibit to the Registration Statement (the “Articles Supplementary”);

e)    Resolutions of the Board of Directors dated September 22, 2011 with respect to the Registration Statement (the “Resolutions”); and

f)    Officer’s Certificate dated the date hereof with respect to the Articles, Bylaws, Articles Supplementary and Resolutions.

Special Opportunities Fund, Inc.

May 15, 2012

Page 2

For purposes of this opinion, we have not reviewed any documents other than those documents listed in paragraphs (a) through (f) above.  In particular, we have not reviewed any document (other than the documents listed in paragraphs (a) through (f) above) that may be referred to in or incorporated by reference into any document reviewed by us.  We have assumed that there exists no provision in any document that we have not reviewed that is inconsistent with the opinions stated herein.  We have conducted no independent factual investigation of our own, but rather have relied solely upon the foregoing documents, the statements and information set forth therein, and the additional matters stated or assumed herein, all of which we have assumed to be true, complete and accurate in all respects.

With respect to all documents examined by us, we have assumed that: (i) all signatures on such documents are genuine; (ii) all documents submitted to us as originals are authentic and complete; and (iii) all documents submitted to us as copies conform to the originals of those documents.

This opinion letter is limited to the laws of the State of Maryland, and we have not considered, and express no opinion on, the laws of any other jurisdiction, including, without limitation, federal laws and rules and regulations relating thereto.  Our opinions are rendered only with respect to Maryland laws and rules, regulations and orders thereunder and reported decisions of Maryland courts in effect on the date hereof.

We understand that all of the foregoing assumptions and limitations are acceptable to you.

Based upon the foregoing, we are of the opinion that the Shares, when sold, paid for and issued in accordance with the terms of the Registration Statement pursuant to the exercise of the Rights, will be validly issued, fully paid and non-assessable.

We have assumed and have not verified that each of the representations and warranties made or given by the Fund in the Registration Statement are true, correct and complete, and that any information delivered or otherwise disclosed in the Registration Statement by the Fund is true, correct and complete.

The opinions expressed herein are expressed as of the date hereof, and we assume no obligation to update or supplement this opinion to reflect any facts or circumstances which hereafter may come to our attention, or to reflect any changes in any facts, circumstances or law which may hereafter occur.

Special Opportunities Fund, Inc.

May 15, 2012

Page 3

We hereby consent to the use of this opinion as Exhibit 2(l) to the Registration Statement and to the reference to this firm in the Fund’s Prospectus and the Statement of Additional Information, in each case, included as part of the Registration Statement.  In giving this consent, we do not hereby concede that we come within the categories of persons whose consent is required by the Securities Act of 1933, as amended, or the general rules and regulations promulgated thereunder.  Nothing in this paragraph shall be deemed to change the effective date of this opinion.

Very truly yours,

/s/ Blank Rome LLP                        

BLANK ROME LLP

EX-99.2(N)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the references to our firm in the Registration Statement on Form N-2 of the Special Opportunities Fund and to the use of our report dated February 16, 2012 on the financial statement of the Special Opportunities Fund.

TAIT, WELLER & BAKER LLP

Philadelphia, Pennsylvania

June 6, 2012

EX-99.2(R)(I)

INSURED MUNICIPAL INCOME FUND INC.

CODE OF ETHICS

I. Introduction.

The purpose of this Code of Ethics is to prevent Access Persons (as defined below) of INSURED MUNICIPAL INCOME FUND INC. (the “Fund”) from engaging in any act, practice or course of business prohibited by paragraph (b) of Rule 17j-1 (the “Rule”) under the Investment Company Act of 1940, as amended (the “Act”).  This Code of Ethics is required by paragraph (c) of the Rule.  A copy of the Rule is available from the Fund’s Compliance Officer upon request.

Access Persons of the Fund, in conducting their personal securities transactions, owe a fiduciary duty to the shareholders of the Fund.  The fundamental standard to be followed in personal securities transactions is that Access Persons may not take inappropriate advantage of their positions.  All personal securities transactions by Access Persons must be conducted in such a manner as to avoid any actual or potential conflict of interest between the Access Person’s interest and the interests of the Fund, or any abuse of an Access Person’s position of trust and responsibility.  Potential conflicts arising from personal investment activities could include buying or selling securities based on knowledge of the Fund’s trading position or plans (sometimes referred to as front-running), and acceptance of personal favors that could influence trading judgments on behalf of the Fund.  While this Code of Ethics is designed to address identified conflicts and potential conflicts, it cannot possibly be written broadly enough to cover all potential situations and, in this regard, Access Persons are expected to adhere not only to the letter, but also the spirit, of the policies contained herein.

II. Definitions.

In order to understand how this Code of Ethics applies to particular persons and transactions, familiarity with the key terms and concepts used in this Code of Ethics is necessary.  Those key terms and concepts are:

1.“Access Person” means any director, officer or “advisory person” of the Fund.

2.“Advisory Person” means (a) any employee of the Fund or of any company in a control relationship to the Fund, who, in connection with his regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of a security by the Fund, or whose functions relate to the making of any recommendations with respect to such purchases or sales; and (b) any natural person in a control relationship to the Fund who obtains information concerning recommendations made to the Fund with regard to the purchase or sale of a security.

3.“Beneficial Ownership” has the meaning set forth in Rule 16a-1(a)(2) of the Securities Exchange Act of 1934, as amended, a copy of which is available from the Fund’s Compliance Officer upon request.  The determination of direct or indirect beneficial ownership shall apply to all securities which an Access Person has or acquires.

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4.“Control” has the meaning set forth in Section 2(a)(9) of the Act.

5.“Independent Director” means a director of the Fund who is not an “interested person” of the Fund within the meaning of Section 2(a)(19) of the Act.

6.“Purchase or Sale of a Security” includes, among other things, the purchase or sale of an equivalent security, such as the writing of an option to purchase or sell a security.

7.“Security” has the meaning set forth in Section 2(a)(36) of the Act, except that it shall not include “long-term” debt securities (securities with a remaining maturity of more than 397 days) issued by the Government of the United States or “short-term” debt securities (securities with a remaining maturity of 397 days or less) issued or guaranteed as to principal or interest by the Government of the United States or by a person controlled or supervised by and acting as an instrumentality of the Government of the United States, bankers’ acceptances, bank certificates of deposit, commercial paper and shares of registered open-end investment companies.

III.           Prohibitions; Exemptions.

1.  Prohibited Purchases and Sales.

No Access Person may purchase or sell, directly or indirectly, any security in which that Access Person has, or by reason of the transaction would acquire, any direct or indirect beneficial ownership and which to the actual knowledge of that Access Person at the time of such purchase or sale:

A.           is being considered for purchase or sale by the Fund; or

B.           is being purchased or sold by the Fund.

2.Exemptions From Certain Prohibitions.

The prohibited purchase and sale transactions described in paragraph III.1. above do not apply to the following personal securities transactions:

A. purchases or sales effected in any account over which the Access Person has no direct or indirect influence or control;

2

B. purchases or sales which are non-volitional on the part of either the Access Person or the Fund;

C. purchases which are part of an automatic dividend reinvestment plan (other than pursuant to a cash purchase plan option);

D. purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent the rights were acquired from that issuer, and sales of the rights so acquired;

E. any purchase or sale, or series of related transactions, involving 500 shares or less in the aggregate, if the issuer has a market capitalization (outstanding shares multiplied by the current price per share) greater than $1 billion;

F. purchases or sales of (i) “long-term” debt securities (securities with a remaining maturity of more than 397 days) issued by the U.S. Government or “short-term” debt securities (securities with a remaining maturity of 397 days or less) issued or guaranteed as to principal or interest by the U.S. Government or by a person controlled or supervised by and acting as an instrumentality of the U.S. Government, (ii) bankers’ acceptances and bank certificates of deposit, (iii) commercial paper, and (iv) shares of registered open-end investment companies (each of the foregoing being referred to herein as “Exempt Securities”);

G. any purchase or sale which the Chairman of the Fund’s Audit Committee, or in the event of such Chairman’s unavailability or if such purchase or sale is to be undertaken by the Chairman of the Fund’s Audit Committee, any other member of the Fund’s Audit Committee, approves on the grounds that its potential harm to the Fund is remote; and

H. any purchase or sale of the Fund’s shares by an Access Person or any affiliated person of the Fund, directly or indirectly, during any time period that the Board of Directors has authorized the Fund to engage in a share buyback program provided that: (i) the Board has determined that any potential harm to the Fund is remote and (ii) proper dissemination of any material non-public information has been made on a timely basis.

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3.           Prohibited Recommendations.

Subject to certain exceptions for Exempt Securities, as indicated below, an Access Person may not recommend the purchase or sale of any security to or for the Fund without having disclosed his or her interest, if any, in such security or the issuer thereof, including without limitation:

A.           any direct or indirect beneficial ownership of any security of such issuer, including any security received in a private securities transaction (other than an Exempt Security);

B.           any contemplated purchase or sale by such person of such security (other than an Exempt Security);

C.           any position with such issuer or its affiliates; and

D.           any present or proposed business relationship between such issuer or its affiliates and such person or any party in which such person has a significant interest.

IV.           Reporting.

1.Quarterly Reporting.

A.           Subject to the provisions of paragraph B below, every Access Person shall either report to the Fund the information described in paragraph C below with respect to transactions in any security in which the Access Person has, or by reason of the transaction acquires, any direct or indirect beneficial ownership in the security or, in the alternative, make the representation in paragraph D below, or by submitting a copy of the quarterly reporting form to be used in complying with this section IV, attached to this Code of Ethics as Appendix A.

B.           (1)           An Access Person is not required to make a report with respect to any transaction effected for any account over which the Access Person does not have any direct or indirect influence; provided, however, that if the Access Person is relying upon the provisions of this paragraph B(1) to avoid making such a report, the Access Person shall, not later than ten (10) days after the end of each calendar quarter, identify any such account in writing and certify in writing that he or she had no direct or indirect influence over any such account.

(2)           An independent director of the Fund who would be required to make a report pursuant to paragraph A above solely by reason of being a director of the Fund is required to report a transaction in a security only if the independent director, at the time of the transaction knew or, in the ordinary course of fulfilling the independent director’s official duties as a director of the Fund, should have known that (a) the Fund has engaged in a transaction in the same security within the last fifteen (15) days or is engaging or going to engage in a transaction in the same security within the next fifteen (15) days, or (b) the Fund has within the last fifteen (15) days considered a transaction in the same security or is considering a transaction in the same security or within the next fifteen (15) days is going to consider a transaction in the same security.

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C.           Every report shall be made not later than ten (10) days after the end of the calendar quarter in which the transaction to which the report relates was effected and shall contain the following information:

   (i)the date of the transaction, the title and the number of shares and the principal amount of each security involved;

 (ii)the nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);

 (iii)the price at which the transaction was effected;

 (iv)the name of the broker, dealer or bank with or through whom the transaction was effected; and

  (v)a description of any factors potentially relevant to a conflict of interest analysis, including the existence of any substantial economic relationship between the transaction and securities held or to be acquired by the Fund.

D.           If no transactions were conducted by an Access Person during a calendar quarter that are subject to the reporting requirements described above, such Access Person shall, not later than ten (10) days after the end of that calendar quarter, provide a written representation to that effect to the Fund.

2.  Annual Reporting and Certification.

All Access Persons are required to certify annually that they have read and understand this Code of Ethics and recognize that they are subject to the provisions hereof and will comply with the policy and procedures stated herein.  Further, all Access Persons are required to certify annually that they have complied with the requirements of this Code of Ethics and that they have reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of such policies.  A copy of the certification form to be used in complying with this paragraph 2 is attached to this Code of Ethics as Appendix B.

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3. Miscellaneous.

Any report under this Code of Ethics may contain a statement that the report shall not be construed as an admission by the person making the report that the person has any direct or indirect beneficial ownership in the securities to which the report relates.

V.           Confidentiality.

No Access Person shall reveal to any other person (except in the normal course of his or her duties on behalf of the Fund) any information regarding securities transactions by the Fund or consideration by the Fund of any such securities transaction.

All information obtained from any Access Person hereunder shall be kept in strict confidence, except that reports of securities transactions hereunder will be made available to the Securities and Exchange Commission or any other regulatory or self-regulatory organization to the extent required by law or regulation.

VI.           Sanctions.

Upon discovering a violation of this Code of Ethics, the Board of Directors of the Fund may impose any sanctions it deems appropriate, including a letter of censure, the suspension or termination of any director or officer of the Fund, or the recommendation to the employer of the violator of the suspension or termination of the employment of the violator.

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INSURED MUNICIPAL INCOME FUND INC.

SECURITY TRANSACTION REPORT

For the Calendar Quarter Ended __________

Instructions

1.           If you are Director who is not an “interested person” of the Fund and who would be required to report solely by reason of being a Director, you need only report transactions in Covered Securities if you knew or, in the ordinary course of fulfilling your duties as a Director, you should have known that during the 15-day period immediately preceding or after the date of the transaction, such security is or was purchased or sold, or was considered for purchase or sale, by the Fund.

2.           List transactions in securities (other than Exempt Securities) (“Covered Securities”) held in any account in which you may be deemed to have Beneficial Ownership as of the date indicated above. You are deemed to have Beneficial Ownership of accounts of your immediate family members.  You may exclude any of such accounts from this report, however, if you have no direct or indirect influence or control over those accounts.

3.           Write “none” if you had no transactions in Covered Securities during the quarter.

4.           You must submit this form within 10 days after the end of the calendar quarter.

5.           If you submit copies of your monthly brokerage statements to the Fund or its designee, and those monthly brokerage statements disclose the required information with respect to all Covered Securities in which you may be deemed to have Beneficial Ownership, you need not file this form unless you established a new brokerage account during the quarter.

6.           For each account that you established during the previous quarter that held securities for your direct or indirect benefit, state the name of the broker, dealer or bank with whom you established the account, the account number and the date you established the account.

A-1

Name of Security1 Date of Transaction Purchase/ Sale No. of Shares or Principal Amount Price Broker, Dealer or Other Party Through Whom Transaction Was Made

During the previous quarter, I established the following accounts with a broker, dealer or bank:

Broker, Dealer or Bank Account Number Date Established

Certifications:  I hereby certify that:

1.           The information provided above is correct.

2.           This report excludes transactions with respect to which I had no direct or indirect influence or control.

Date:	Signature:
Name:

1 Including interest rate and maturity, if applicable.

A-2

INSURED MUNICIPAL INCOME FUND INC.

ANNUAL ASSET CERTIFICATION OF ACCESS PERSONS

For the Year Ended __________

Instructions

1.           If you are Director who is not an “interested person” of the Fund and who would be required to report solely by reason of being a Director, you need not submit this report.

2.           List each Covered Security held in any account in which you may be deemed to have Beneficial Ownership as of the date indicated above. You are deemed to have Beneficial Ownership of accounts of your immediate family members.  You are deemed to have Beneficial Ownership of accounts of your immediate family members.  You may exclude any of such accounts from this report, however, if you have no direct or indirect influence or control over those accounts.

3.           Write “none” if you did not hold any Covered Securities at year end.

4.           You must submit this form no later than January 30, _____.

5.           You must complete and sign this form for annual certification whether or not you or your broker sends statements directly to the Fund or its designee.

Name of Security2 No. of Shares or Principal Amount Registration on Security or Account Nature of Interest Broker, Dealer or Bank

2 Including interest rate and maturity, if applicable.

B-1

Certifications:  I hereby certify that:

1.           The securities listed above, or listed in the brokerage statements that I have provided, reflect all the Covered Securities in which I may be deemed to have Beneficial Ownership at the end of the period.

2.           I have read the Code of Ethics and certify that I am in compliance with it.

3.           This report excludes holdings with respect to which I had no direct or indirect influence or control.

Date:	Signature:
	Name:

B-2

EX-99.2(R)(II)

BROOKLYN CAPITAL MANAGEMENT, LLC

KIMBALL & WINTHROP, INC.

KIMBALL & WINTHROP, LLC

FULL VALUE ADVISORS, LLC

FULL VALUE SPECIAL SITUATIONS FUND GP, LLC

CODE OF ETHICS

Dated: March 2012

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I.                  INTRODUCTION

         This Code of Ethics sets forth the ethical principles of Brooklyn Capital Management, LLC, Kimball & Winthrop, Inc., Kimball & Winthrop, LLC, Full Value Advisors, LLC and Full Value Special Situations Fund GP, LLC (collectively, “Bulldog Investors”). It also sets forth certain policies and procedures for our principals and employees that are intended to promote behavior that is consistent with these principles.

It is impossible to contemplate every situation and contingency. If you are ever unsure as to whether to take an action that may be inconsistent with our core values, please consult with the Chief Compliance Officer before acting.

A.              The Code's Principles. The Code is based on the following principles:

Clients Come First.

Supervised Persons of Bulldog Investors owe a fiduciary duty to clients of Bulldog Investors and must try to minimize activities, interests and relationships that might interfere with making decisions in the best interests of clients.  A Supervised Person shall not induce a client to take action, or not to take action, for the Supervised Person's personal benefit, rather than for the benefit of such client. For example, a Supervised Person would violate this Code by causing a client to purchase a Security owned by the Supervised Person for the purpose of increasing the price of that Security.

Do Not Take Advantage.

Supervised Persons may not use their knowledge of open, executed, or pending client portfolio transactions to profit by the market effect of such transactions, nor may they use their knowledge of the identity, size, or price of a client’s portfolio holding to engage in short-term or other abusive trading.

Avoid Conflicts of Interest.

Supervised Persons must try to avoid activities, perquisites, gifts, or receipt of investment opportunities that could interfere with the Supervised Person's ability to act objectively and effectively in the best interests of Bulldog Investors and its clients.

Compliance with Applicable Law.

The Federal Securities Laws require us to include a provision in the Code that requires Supervised Persons to comply with applicable Federal Securities Laws.  Please consult with the Chief Compliance Officer if you are unsure whether your conduct complies with the Federal Securities Laws.

B.              Duty to Report Violations. Supervised Persons must promptly report all violations of this Code to the Chief Compliance Officer.

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II.            PERSONAL SECURITIES TRANSACTIONS

A.               Prohibited Purchases and Sales.

1.           No Access Person may purchase or sell, directly or indirectly, any security in which that Access Person has, or by reason of the transaction would acquire, any direct or indirect beneficial ownership and which to the actual knowledge of that Access Person at the time of such purchase or sale, has been purchased or sold by a Fund within the past thirty days.  However, such purchases or sales are not prohibited with respect to any security that is no longer held in the Fund’s account, if such purchases or sales occur after the Fund has fully liquidated its position in such security and at the time of such purchase or sale the portfolio managers do not intend to reinvest in such security in the foreseeable future.

2.           No Access Person may purchase or sell, directly or indirectly, any security in which that Access Person has, or by reason of the transaction would acquire, any direct or indirect beneficial ownership, on the same day that such security is purchased or sold by a Fund.  In the event that an Access Person engages in such trading activity and receives a better price with respect to such trade than a Fund, such Access Person should disgorge the difference to a nationally-recognized charity.  However, such Access Person shall not be required to disgorge the difference to a nationally-recognized charity if the total dollar amount of such difference amounts to $100 or less.

3.           When trades are being considered for a Fund in securities in which any Access Person has recently traded, and such Access Person has actual knowledge that such security is now being considered for a Fund, the following steps shall be taken:

a.  Such Access Person shall complete the Trade Disclosure Form attached hereto as Appendix 6 to disclose to the Chief Compliance Officer that he has recently traded in such security and to provide information to the Chief Compliance Officer with respect to the date he placed the trade, the amount of shares traded, and the purchase or sale price obtained;

b.  The Chief Compliance Officer shall review such Trade Disclosure Form to ensure that the security was not being considered for a Fund at the time of such Access Person’s trade; and

c.         The Chief Compliance Officer will maintain a copy of such Form in his files.

4.           Although the purchase or sale of shares of SPE by Access Persons is not otherwise prohibited by this Code, no Access Person may purchase or sell shares of SPE while in possession of material, nonpublic information that could reasonably be expected to affect the market price and/or net asset value of SPE.

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B.               Exemptions From Certain Prohibitions.  The prohibited purchase and sale transactions described in paragraph II A. above do not apply to:

1.any personal securities transaction which is non-volitional on the part of the Access Person;

2.any purchase effected upon the exercise of rights issued by (and acquired from) an issuer pro rata to all holders of a class of its securities, and sales of the rights so acquired and any sale pursuant to a tender offer;

3.           any purchase or sale which the Chief Compliance Officer, or in the event of such Chief Compliance Officer’s unavailability or if such purchase or sale is to be undertaken by the Chief Compliance Officer, a member of Bulldog Investors and the legal counsel of Bulldog Investors, approve(s) on the grounds that its potential harm to the Funds is remote, and that such purchase or sale would not otherwise be prohibited by the Federal Securities Laws.  See Appendix 2.

C.           Preclearance of Certain Trades.  Access Persons may only purchase a Security in an initial public offering or a private placement after receiving approval from the Chief Compliance Officer.  Prior to entering an order for a Securities Transaction that requires preclearance, the Access Person must complete a Trade Authorization Request form and submit the completed form to the Chief Compliance Officer. The form requires Access Persons to provide certain information and to make certain representations. A copy of the Trade Authorization Request form is attached as Appendix 2.

D.              Reporting Requirements.

1.           Initial and Periodic Disclosure of Personal Holdings by Access Persons. Within ten (10) days of being designated as an Access Person and thereafter on an annual basis, Bulldog Investors shall provide each Access Person a copy of this Code, and each Access Person must acknowledge in writing its receipt and review of the Code.  In addition, on an annual basis, each Access Person must identify all Securities in which such Access Person has a Beneficial Interest.  Such acknowledgment and identification of Securities shall be made on the Acknowledgement of Receipt of Code of Ethics and Personal Holdings Report or by alternative means approved by the Chief Compliance Officer.  A copy of the Report is attached as Appendix 1. The information regarding Securities holdings must be current as of a date no more than 45 days prior to the individual becoming an Access Person or the submission of the annual acknowledgment and report.

2.           Transaction and Statement Reporting Requirements.  An Access Person must arrange for the Chief Compliance Officer to have electronic access to, or receive directly from any broker, dealer, or bank that effects any Securities Transaction in which the Access Person has or acquires a Beneficial Interest, duplicate statements for each Brokerage Account in which such Access Person has a Beneficial Interest.

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If an Access Person opens an account at a broker, dealer, bank, or mutual fund that has not previously been disclosed, the Access Person must promptly notify the Chief Compliance Officer in writing of the existence of the account and make arrangements to comply with the requirements set forth herein.

3.         Exception from Reporting Requirements.  Access Persons need not submit any report with respect to Securities held in accounts over which the Access Person has no direct or indirect influence or control.

4.           Availability of Reports. All information supplied pursuant to this Code may be made available for inspection to the members of Bulldog Investors, SPE and its board, the Chief Compliance Officer, any individual or entity conducting an internal audit or examination of Bulldog Investors, any party to which any investigation is referred by any of the foregoing, and any attorney or agent of the foregoing.

E.                 Review of Reports.  The Chief Compliance Officer shall review at least quarterly all reports submitted by Access Persons under this Code of Ethics, or statements to which the Chief Compliance Officer has been granted electronic access or has received directly from any broker, dealer, or bank pursuant to paragraph II.D.2 of this Code, and shall compare such individual reports or statements with reports of transactions entered into by the Funds.  The Chief Compliance Officer shall report to the members of Bulldog Investors promptly following the receipt of any report which indicates that an Access Person entered into a Securities Transaction which violated the prohibitions contained in Section II of this Code.  The Chief Compliance Officer shall also report to the members any apparent violations of the reporting requirement, any transaction not required to be reported but which the Chief Compliance Officer nevertheless believes to be a violation of this Code of Ethics, and any other act or practice which the Chief Compliance Officer believes to be a violation of this Code of Ethics.

III.              FIDUCIARY DUTIES

A.                 Confidentiality. Supervised Persons are prohibited from revealing nonpublic information relating to a Fund, or a Fund’s portfolio holdings, except to persons whose responsibilities require knowledge of the information or in the ordinary course of business.

B.                 Gifts and Entertainment. The following provisions on Gifts and Entertainment apply to all Supervised Persons.

1.           Prohibition Against Giving or Receiving Cash or Cash Equivalents. Without the prior, written approval of the Chief Compliance Officer, a Supervised Person and members of his or her Immediate Family may not offer, give, solicit, or receive cash or cash equivalents to or from any prospects, clients, brokers, vendors or other firms or persons with which Bulldog Investors does, or may do, business.  Cash equivalents include gratuities, loans, and expense reimbursements.

2.           Accepting Gifts and Entertainment. On occasion, because of their position with Bulldog Investors, Supervised Persons may be offered, or may receive without notice, Gifts or Entertainment from clients, brokers, vendors, or other persons affiliated with such entities.  In no event may a Supervised Person accept a Gift or Entertainment if that person feels that he or she will become obligated to repay the donor with corporate business.  Gifts or Entertainment of a nominal value (i.e., gifts from one source that have a value reasonably determined by the Supervised Person of no more than $250 per year) may be accepted. If a Supervised Person receives any Gift or Entertainment that has more than a nominal value (greater than $250 per year, as reasonably determined by the Supervised Person), the Supervised Person must immediately inform the Chief Compliance Officer and may not accept such Gift or Entertainment without the prior written consent of the Chief Compliance Officer.

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3.           Prohibition Against Soliciting Gifts or Entertainment.  Supervised Persons may not solicit Gifts, gratuities, or Entertainment.

4.           Giving Gifts or Entertainment. Without the written approval of the Chief Compliance Officer, neither Bulldog Investors nor any Supervised Person may give Gifts or Entertainment with an aggregate value in excess of $250 per year to financial organizations, including exchanges, other member organizations, commodity firms, news media, or SPE.

5.           Recordkeeping. The Chief Compliance Officer will maintain a written log of all Gifts and Entertainment that have been reported or approved and exceed the nominal value.

C.                 Corporate Opportunities. Supervised Persons may not take personal advantage of any opportunity properly belonging to a client.  For example, a Supervised Person should not request permission to acquire a Beneficial Interest in a Security pursuant to a private placement or initial public offering without first evaluating whether such Security is appropriate for a client.

D.                 Undue Influence.  Supervised Persons may not cause or attempt to cause a client to purchase, sell or hold any Security in a manner calculated to create any personal benefit to the Supervised Person.  If a Supervised Person stands to benefit materially from an investment decision for a client, and the Supervised Person is making or participating in the investment decision, then the Supervised Person must disclose the potential benefit to a Portfolio Manager and the Chief Compliance Officer.  The Chief Compliance Officer must determine whether or not the Supervised Person will be restricted in making or participating in the investment decision.

E.              Avoid Conflicts of Interest. Supervised Persons must be cognizant of potential conflicts of interest that may call into question the independence of their judgment. This may include Gifts, personal relationships, or business dealings. Supervised Persons are required to disclose any relationships that may present a potential conflict of interest when they are designated an Access Person, as well as on an annual basis. The Disclosure Statement for Potential Conflicts of Interest is attached as Appendix 4. Supervised Persons should also promptly update their conflict disclosure form if they become aware of any new relationships that could present a potential conflict of interest.

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F.                 Outside Business Activities. All Supervised Persons are required to disclose their Outside Business Activities. Outside Business Activities should be disclosed when the Supervised Person is designated a Supervised Person, as well as on an annual basis.  The Outside Business Activities Disclosure form is attached as Appendix 5. Supervised Persons should also promptly update their Outside Business Activities Disclosure form if they engage in a previous unreported outside business activity.

No Supervised Person may serve on the board of directors of a publicly-held company (other than SPE, Mexico Equity and Income Fund, Brantley Capital Corporation, ASA Gold and Precious Metals Limited, Korea Equity Fund and Imperial Holdings) absent written notification to the Chief Compliance Officer.

IV.              COMPLIANCE WITH THE CODE OF ETHICS

A.              Administration of the Code of Ethics

1.           Investigating Violations of the Code. The Chief Compliance Officer is responsible for investigating any suspected violation of the Code and shall, as necessary, report the results of each investigation to the members of Bulldog Investors and to SPE if it requires such information.  Material violations of the Code shall be reported to the chief compliance officer of SPE.

2.           Periodic Review. The Chief Compliance Officer will review the Code periodically in light of legal and business developments and experience in implementing the Code, and will recommend such amendments as are deemed appropriate. Promptly following each material amendment, a new version of the Code will be delivered to each Supervised Person and each Supervised Person will be required to acknowledge in writing his receipt of any new version of the Code.

B.              Remedies

1.           Sanctions. If the Chief Compliance Officer determines that a Supervised Person has committed a violation of the Code, Bulldog Investors may impose sanctions and take other actions as deemed appropriate.

C.              Exceptions to the Code. The Chief Compliance Officer may grant exceptions to the procedural requirements of the Code on a case by case basis if, in his opinion, the proposed conduct involves negligible opportunity for abuse.

D.              Inquiries Regarding the Code. The Chief Compliance Officer or an authorized designee will answer any questions about this Code or any related matters.

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V.              DEFINITIONS

When used in the Code, the following terms have the meanings set forth below:

"Access Person" means:

(1) every member or officer of Bulldog Investors;

(2) every employee of Bulldog Investors who (a) has access to nonpublic information regarding any client’s purchase or sale of securities, or nonpublic information regarding the portfolio holdings of SPE, or (b) is involved in making security recommendations to clients or has access to such recommendations that are nonpublic; and

(3) such other persons as the Chief Compliance Officer shall designate.

Any uncertainty as to whether an individual is an Access Person should be brought to the attention of the Chief Compliance Officer. Such questions will be resolved in accordance with, and this definition shall be subject to, the definition of "Access Person" found in Rule 204A-1 promulgated under the Investment Advisers Act of 1940, as amended.

"Beneficial Interest" means the opportunity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, to profit, or share in any profit derived from, a transaction in the subject Securities.

An Access Person is deemed to have a Beneficial Interest in the following:

(1)  any Security owned individually by the Access Person;

(2) any Security owned jointly by the Access Person with others (for example, joint accounts, spousal accounts, partnerships, trusts and controlling interests in corporations); and

(3) any Security in which a member of the Access Person's Immediate Family has a Beneficial Interest if the Security is held in an account over which the Access Person has decision making authority (for example, the Access Person acts as trustee, executor, or guardian).

In addition, an Access Person is presumed to have a Beneficial Interest in any Security in which a member of the Access Person's Immediate Family has a Beneficial Interest if the Immediate Family member resides in the same household as the Access Person. This presumption may be rebutted if the Access Person provides the Chief Compliance Officer with satisfactory assurances that the Access Person does not have an ownership interest, individual or joint, in the Security and exercises no influence or control over investment decisions made regarding the Security. Access Persons may use the form attached as Appendix 3 (Certification of No Beneficial Interest) in connection with such requests.

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Any uncertainty as to whether an Access Person has a Beneficial Interest in a Security should be brought to the attention of the Chief Compliance Officer. Such questions will be resolved in accordance with, and this definition shall be subject to, the definition of "beneficial owner" found in Rules 16a-1(a)(2) and (5) promulgated under the Securities Exchange Act of 1934, as amended.

"Brokerage Account" means any account in which a Supervised Person can transact in Securities, including dividend reinvestment programs.

"Chief Compliance Officer" means Stephanie Darling.

"Entertainment" means any social event, hospitality event, charitable event, sporting event, entertainment event, meal, leisure activity or event of like nature or purpose where the provider accompanies or participates with the Supervised Person. If the provider does not accompany or participate with the Supervised Person, then the Entertainment is considered a gift.

"Federal Securities Laws" means the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the Investment Company Act of 1940, the Investment Advisers Act of 1940, Title V of the Gramm-Leach-Bliley Act, and any rules adopted by the Securities and Exchange Commission under any of these statutes, the Bank Secrecy Act as it applies to funds and investment advisers, and any rules adopted thereunder by the Securities and Exchange Commission or the Department of the Treasury.

"Fund" means Special Opportunities Fund, Inc., and any private investment funds for which Bulldog Investors currently or in the future serves as investment adviser.

"Gift" means any good or service that has value. Customary promotional items, such as t-shirts, pens, and similar items that include the provider's logo are not considered gifts.

"Immediate Family" of an Access Person means any of the following persons: child, stepchild, spouse, sibling, parent, stepparent, grandchild, grandparent, son-in-law, daughter-in-law, mother-in-law, father-in-law, sister-in-law and brother-in-law.

Immediate Family includes adoptive relationships and other relationships (whether or not recognized by law) that the Chief Compliance Officer determines could lead to possible conflicts of interest, diversions of corporate opportunity, or appearances of impropriety which this Code is intended to prevent.

"Outside Business Activities" means any activities that a Supervised Person may be engaged in outside of their employment with Bulldog Investors, including, but not limited to, service as an officer, director, partner, employee, consultant or independent contractor with any for profit or non-profit organization. A person may be engaged in an outside business activity if they are a) employed by any other person or entity; b) receiving compensation from any other person or entity; c) serving as an officer, director, or partner of another entity; or d) serving in a fiduciary capacity (e.g., trustee, executor or power of attorney) for someone other than a family member.

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"Portfolio Manager" means a person who has or shares primary responsibility for the day-to-day management of a Fund’s portfolio.

"Securities Transaction" means a purchase or sale of Securities in which an Access Person has or acquires a Beneficial Interest.

"Security" includes stock, notes, closed-end funds, registered open-end investment companies, exchange traded funds (ETFs), bonds, debentures, and other evidences of indebtedness (including loan participations and assignments), limited partnership interests, investment contracts, and all derivative instruments of the foregoing, such as options and warrants. "Security" does not include futures or options on futures, but the purchase and sale of such instruments are nevertheless subject to the reporting requirements of the Code.

“SPE” means Special Opportunities Fund, Inc.

"Supervised Person" means any member, officer, or employee of Bulldog Investors.

VI.              APPENDICES TO THE CODE

The following appendices are attached to and are a part of the Code:

Appendix 1. Acknowledgement of Receipt of Code of Ethics and Personal Holdings Report

Appendix 2.  Trade Authorization Request for Access Persons

Appendix 3.  Certification of No Beneficial Interest

Appendix 4.  Disclosure Statement for Potential Conflicts of Interest

Appendix 5.  Outside Business Activities Disclosure

Appendix 6.  Trade Disclosure Form for Access Persons

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Appendix 1

ACKNOWLEDGEMENT OF RECEIPT OF CODE OF ETHICS

AND PERSONAL HOLDINGS REPORT

1.              By signing below, you acknowledge the following:

You have read the Code of Ethics and understand that it applies to you and to all Securities in which you have or acquire any Beneficial Interest. You have read the definition of "Beneficial Interest" and understand that you may be deemed to have a Beneficial Interest in Securities owned by members of your Immediate Family and that Securities Transactions effected by members of your Immediate Family may be subject to the Code.

You agree to comply with all of the provisions of the Code that apply to you.

You understand that you may be required to disgorge and forfeit any profits on prohibited transactions in accordance with the requirements of the Code.

The information in this report is, to the best of your knowledge, accurate and complete.

2.              Please list below all Brokerage Accounts and Mutual Fund Accounts that hold Securities in which you may be deemed to have a Beneficial Interest. Please ensure that you have arranged for the Chief Compliance Officer to have electronic access to, or receive from each broker, duplicates of each account statement.

A.              Brokerage Accounts: If this is the first time you have identified an account, please provide to the Chief Compliance Officer the most recent account statement (current as of a date no more than 45 days prior to the date you execute this report). If you do not have a Beneficial Interest in any Brokerage Accounts, please indicate "None" below.

Name of Brokerage Firm   Account Title Account Number

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B.           Other Securities: If you have a Beneficial Interest in any Securities that are not held in a Brokerage account (e.g., private investments, limited partnership interests), please list the Securities below. The list of Securities must be current as of a date no more than 45 days prior to the date you execute this report. Indicate "None" if appropriate.

Owner of Security   Name of Security Number of Shares/Principal Amount

(Attach a separate sheet if more space is necessary)

C.           401(k) Accounts: If you have a Beneficial Interest in any Securities that are held in 401(k) accounts over which you have direct or indirect influence or control, please include the account information below.  If this is the first time you have identified an account, please provide to the Chief Compliance Officer the most recent account statement (current as of a date no more than 45 days prior to the date you execute this report). If you do not have a Beneficial Interest in any 401(k) accounts, please indicate "None" below.

Name of 401(k) Sponsoring Company   Account Title Account Number

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The information in this report is, to the best of your knowledge, accurate and complete

______________________________________

Access Person's Name

______________________________________                                                                                                            ________________________

Access Person's Signature                                                                                                                   Date

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Revised October 2010

Appendix 2

TRADE AUTHORIZATION REQUEST FOR ACCESS PERSONS

1.              Name of Access Person:__________________________________________________

2.              Account Title:__________________________________________________________

3.              Account Number:_______________________________________________________

4.              Name of Security:_______________________________________________________

5. Maximum number of shares or units to be purchased or sold or amount of bond:

______________________________________________________________________

6.              Name and phone number of broker to effect transaction: ________________________

______________________________________________________________________

7.              Check all that apply: ___Purchase   ___Sale   ___Market Order   ___Limit Order

8. In connection with the foregoing transaction, I hereby make the following representations and warranties:

(a) I do not possess any material nonpublic information regarding the Security or the issuer of the Security.

(b) By entering this order, I am not using knowledge of any open, executed, or pending transaction by a Fund.

(c) The Security is not being acquired in an initial public offering or, if it is, I have reviewed Section II.C of the Code and have attached hereto a written explanation of such transaction.

(d) The Security is not being acquired in a private placement or, if it is, I have reviewed Section II.C of the Code and have attached hereto a written explanation of such transaction.

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(e) I believe that the proposed trade is not prohibited by the Federal Securities Laws.

(f) I believe that the proposed trade will have no adverse impact on the Funds because:

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

__________________________________                                                                _____________________________

Access Person's Signature                                                                                                Date

For use by Chief Compliance Officer Only:

I hereby approve the proposed transaction based on the above representations.  My approval is based on my conclusion that as a result of the above representations, and based on my understanding of the facts, any potential harm to the Funds in connection with such transaction is remote, that such transaction would not otherwise be prohibited by the Federal Securities Law, and that the Access Person is not benefitting as the result of a Fund’s pending or completed transactions.

Approved:

______________________________     ____________________     ____________________

Signature of Chief Compliance Officer                          Date                                          Time

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Appendix 3

CERTIFICATION OF NO BENEFICIAL INTEREST

I have read the Code and I understand that it applies to me and to all Securities in which I have or acquire any Beneficial Interest. I have read the definition of "Beneficial Interest" and understand that I may be deemed to have a Beneficial Interest in Securities owned by certain members of my Immediate Family and that Securities Transactions effected by members of my Immediate Family may therefore be subject to the Code.

The following accounts are maintained by one or more members of my Immediate Family who reside in my household:

Account Name Account Number Relationship of Immediate Family Member Brokerage Firm

I certify that with respect to each of the accounts listed above (initial each line):

_____  I do not own individually or jointly with others any of the securities held in the account.

_____  I do not influence or control investment decisions for the account.

I agree that I will notify the Chief Compliance Officer immediately if any of the information I have provided in this certification becomes inaccurate or incomplete.

____________________________________                                                                       ____________________

Access Person's Signature                                                                                                            Date

____________________________________

Print Name

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Appendix 4

DISCLOSURE STATEMENT FOR POTENTIAL CONFLICTS OF INTEREST

Bulldog Investors maintains policies and procedures to identify potential conflicts of interest that may arise as a result of relationships that employees have with (i) issuers of securities that Bulldog Investors holds for its clients, (ii) any other public companies, and (iii) broker-dealers that execute transactions for Bulldog Investors’ clients. To assist with the administration of these policies and procedures, please respond to the following questions:

Are you, or to the best of your knowledge is any member of your immediate family, affiliated with an issuer of securities held by clients of Bulldog Investors? [Note: ownership of securities does not create an affiliation.]   _____ Yes_____ No

If your answer is Yes, please describe affiliation below:

______________________________________________________________________________

Are you, or to the best of your knowledge is any member of your immediate family, affiliated with any other public company?  _____ Yes_____ No

If your answer is Yes, please describe affiliation below:

______________________________________________________________________________

Are you, or to the best of your knowledge is any member of your immediate family, affiliated with any broker-dealer?  ____ Yes____ No

If your answer is Yes, please describe affiliation below:

______________________________________________________________________________

Are there any relationships that you maintain that have the potential for a conflict of interest with Bulldog Investors and its activities?  _____  Yes_____  No

If your answer is Yes, please describe relationships below:

______________________________________________________________________________

________________________________

Access Person's Name

________________________________                                                                   ________________________________

Access Person's Signature                                                                                               Date

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Appendix 5

OUTSIDE BUSINESS ACTIVITIES DISCLOSURE

If you are associated with an organization that is not affiliated with Bulldog Investors as an employee, officer, director, consultant, independent contractor, or otherwise, please provide the following information:

1.           Name and Address of Organization

2.           Nature of Organization, Description of Business

3.           Your Title, Position, or Association

4. Brief Description of Your Duties (specify if responsibilities include handling the organization's financial affairs)

5.           Amount of Time You Devote (or Plan to Devote) to Organization

6.           Percentage of Time You Devote to Organization During Normal Business Hours

7. Amount of Any Compensation You Receive, if any, and the Frequency With Which it is Received

________________________________                                                   ________________________

Signature                                                                                                            Date

________________________________

Name

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Appendix 6

Trade Disclosure Form for Access Persons

I have recently traded in a security that I am now aware is currently being considered for purchase or sale on behalf of a Fund.  Information with respect to my trade is as follows:

1.              Name of Access Person:__________________________________________________

2.              Account Title:__________________________________________________________

3.              Account Number:_______________________________________________________

4.              Name of Security:_______________________________________________________

5. Number of shares purchased or sold:  ____________________________

6.              Nature of Trade: ___Purchase   ___Sale

7.              Date That Trade was Placed:  _____________________________

8. Per Share Price:  _________________

__________________________________                                                               _____________________________

Access Person's Signature                                                                                               Date

Chief Compliance Officer Certification:

I have reviewed the information above and hereby certify that at the time the trade disclosed above was placed, such security was not being considered for purchase or sale on behalf of a Fund.

______________________________     ____________________

Stephanie Darling, CCO                                                                    Date

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EX-99

INVESTMENT MANAGEMENT AGREEMENT

THIS INVESTMENT MANAGEMENT AGREEMENT dated and effective as of December 10, 2009 between Insured Municipal Income Fund, Inc., a Maryland corporation (herein referred to as the "Fund"), and Brooklyn Capital Management, LLC, a Delaware limited liability company (herein referred to as the "Investment Manager").

WHEREAS, the Fund and the Investment Manager desire to enter into an investment management agreement whereby the terms of said agreement are set forth herein.

NOW THEREFORE, in consideration of the mutual covenants herein contained, it is agreed by the parties as follows:

           1.           APPOINTMENT OF INVESTMENT MANAGER.  The Investment Manager hereby undertakes and agrees, upon the terms and conditions herein set forth, to provide overall investment management services for the Fund, and in connection therewith to (i) supervise the Fund's investment program, including advising and consulting with the Fund's Board of Directors regarding the Fund's overall investment strategy; (ii) make, in consultation with the Fund's Board of Directors, investment strategy decisions for the Fund; (iii) manage the investing and reinvesting of the Fund's assets; (iv) place purchase and sale orders on behalf of the Fund;    (v) advise the Fund with respect to all matters relating to the Fund's use of leveraging  techniques;  and (vi) provide or procure the provision of research and statistical data to the Fund in relation to investing and other matters within the scope of the investment objective and limitations of the Fund.  The Investment Manager may delegate any of the foregoing responsibilities to a third party with the consent of the Board of Directors.

           2.           EXPENSES.  In connection herewith, the Investment Manager agrees to maintain a staff within its organization to furnish the above services to the Fund. The Investment Manager shall bear all expenses arising out of its duties hereunder.

           Except as provided in Section 1 hereof, the Fund shall be responsible for all of the Fund's expenses and liabilities, including expenses for legal, accounting and auditing services; taxes and governmental fees; dues and expenses incurred in connection with membership in investment company organizations; fees and expenses incurred in connection with listing the Fund's shares on any stock exchange; costs of printing and distributing shareholder reports, proxy materials, prospectuses, stock certificates and distribution of dividends; charges of the Fund's custodians and sub-custodians, administrators and sub-administrators, registrars, transfer agents, dividend disbursing agents and dividend reinvestment plan agents; payment for portfolio pricing services to a pricing agent, if any; registration and filing fees of the Securities and Exchange Commission; expenses of registering or qualifying securities of the Fund for sale in the various states; freight and other charges in connection with the shipment of the Fund's portfolio securities; fees and expenses of non-interested directors or non-interested members of any advisory or investment board, committee or panel of the Fund; fees and expenses of any officers and directors of the Fund who are not affiliated with the Investment Manager, the Fund’s administrator or their respective affiliates; travel expenses or an appropriate portion thereof of directors and officers of the Fund, or members of any advisory or investment board, committee or panel of the Fund, to the extent that such expenses relate to attendance at meetings of the Board of Directors or any committee thereof, or of any such advisory or investment board, committee or panel; salaries of shareholder relations personnel; costs of shareholders meetings; insurance; interest; brokerage costs; and litigation and other extraordinary or non-recurring expenses.

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           3.           TRANSACTIONS WITH AFFILIATES.  The Investment Manager is authorized on behalf of the Fund, from time to time when deemed to be in the best interests of the Fund and to the extent permitted by applicable law, to purchase and/or sell securities in which the Investment Manager or any of its affiliates underwrites, deals in and/or makes a market and/or may perform or seek to perform investment banking services for issuers of such securities. The Investment Manager is further authorized, to the extent permitted by applicable law, to select brokers (including any brokers affiliated with the Investment Manager) for the execution of trades for the Fund.

           4.           BEST EXECUTION; RESEARCH SERVICES.  The Investment Manager is authorized, for the purchase and sale of the Fund's portfolio services, to employ such dealers and brokers as may, in the judgment of the Investment Manager, implement the policy of the Fund to obtain the best results taking into account such factors as price, including dealer spread, the size, type and difficulty of the transaction involved, the firm's general execution and operational facilities and the firm's risk in positioning the securities involved. Consistent with this policy, the Investment Manager is authorized to direct the execution of the Fund's portfolio transactions to dealers and brokers furnishing statistical information or research deemed by the Investment Manager to be useful or valuable to the performance of its investment advisory functions for the Fund. It is understood that in these circumstances, as contemplated by Section 28(e) of the Securities Exchange Act of 1934, the commissions paid may be higher than those that the Fund might otherwise have paid to another broker if those services had not been provided.  Information so received will be in addition to and not in lieu of the services required to be performed by the Investment Manager. It is understood that the expenses of the Investment Manager will not necessarily be reduced as a result of the receipt of such information or research. Research services furnished to the Investment Manager by brokers who effect securities transactions for the Fund may be used by the Investment Manager in servicing other investment companies and accounts that it manages. Similarly, research services furnished to the Investment Manager by brokers who effect securities transactions for other investment companies and accounts that the Investment Manager manages may be used by the Investment Manager in servicing the Fund.  It is understood that not all of these research services are used by the Investment Manager in managing any particular account, including the Fund.

5.           REMUNERATION.  In consideration of the services to be rendered by the Investment Manager under this Agreement, the Fund shall pay the Investment Manager a monthly fee in United States dollars for the previous month at an annual rate of one (1.00%) percent of the Fund's average weekly total assets. If the fee payable to the Investment Manager pursuant to this paragraph 5 begins to accrue before the end of any month or if this Agreement terminates before the end of any month, the fee for the period from such date to the end of such month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.  For purposes of calculating each such monthly fee, the value of the Fund's total assets shall be computed at the time and in the manner specified in the Registration Statement.

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           6.           REPRESENTATIONS AND WARRANTIES.  The Investment Manager represents and warrants that it is duly registered and authorized as an investment adviser under the Investment Advisers Act of 1940, as amended, and the Investment Manager agrees to maintain effective all requisite registrations, authorizations and licenses, as the case may be, until the termination of this Agreement.

           7.           SERVICES NOT DEEMED EXCLUSIVE.  The services provided hereunder by the Investment Manager are not to be deemed exclusive and the Investment Manager and any of its affiliates or related persons are free to render similar services to others and to use the research developed in connection with this Agreement for other clients or affiliates. Nothing herein shall be construed as constituting the Investment Manager an agent of the Fund.

           8.           LIMIT OF LIABILITY.  The Investment Manager shall exercise its best judgment in rendering the services in accordance with the terms of this Agreement. The Investment Manager shall not be liable for any error of judgment or mistake of law or for any act or omission or any loss suffered by the Fund in connection with the matters to which this Agreement relates, provided that nothing herein shall be deemed to protect or purport to protect the Investment Manager against any liability to the Fund or its shareholders to which the Investment Manager would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement ("disabling conduct"). The Fund will indemnify the Investment Manager against, and hold it harmless from, any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses), including any amounts paid in satisfaction of judgments, in compromise or as fines or penalties, not resulting from disabling conduct by the Investment Manager. Indemnification shall be made only following: (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Investment Manager was not liable by reason of disabling conduct, or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Investment Manager was not liable by reason of disabling conduct by (a) the vote of a majority of a quorum of directors of the Fund who are neither "interested persons" of the Fund nor parties to the proceeding ("disinterested non-party directors"), or (b) an independent legal counsel in a written opinion. The Investment Manager shall be entitled to advances from the Fund for payment of the reasonable expenses (including reasonable counsel fees and expenses) incurred by it in connection with the matter as to which it is seeking indemnification in the manner and to the fullest extent permissible under law.

Prior to any such advance, the Investment Manager shall provide to the Fund a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Fund has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Investment Manager shall provide a security in form and amount acceptable to the Fund for its undertaking; (b) the Fund is insured against losses arising by reason of the advance; or (c) a majority of a quorum of disinterested non-party directors, or independent legal counsel, in a written opinion, shall have determined, based on a review of facts readily available to the Fund at the time the advance is proposed to be made, that there is reason to believe that the Investment Manager will ultimately be found to be entitled to indemnification.

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           9.           DURATION AND TERMINATION.  This Agreement shall have an initial term beginning December 10, 2009 and ending December 9, 2011, and then shall continue in effect thereafter for successive annual periods, but only so long as such continuance is specifically approved at least annually by the affirmative vote of (i) a majority of the members of the Fund's Board of Directors who are not parties to this Agreement or "interested persons" (as defined in the Investment Company Act of 1940 (the "1940 Act")) of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (ii) the Fund's Board of Directors or the holders of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund.

           Notwithstanding the above, this Agreement (a) may nevertheless be terminated at any time, without penalty, by the Fund's Board of Directors, by vote of holders of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund or by the Investment Manager, upon sixty (60) days' written notice delivered to each party hereto, and (b) shall automatically be terminated in the event of its assignment (as defined in the 1940 Act). Any such notice shall be deemed given when received by the addressee.

           10.         GOVERNING LAW.  This Agreement shall be governed, construed and interpreted in accordance with the laws of the State of New York, provided, however, that nothing herein shall be construed as being inconsistent with the 1940 Act.

           11.         NOTICES.  Any notice hereunder shall be in writing and shall be delivered in person or by facsimile (followed by delivery in person) to the parties at the addresses set forth below:

IF TO THE FUND:
 

INSURED MUNICIPAL INCOME FUND, INC.

615 East Michigan Street

Milwaukee, WI 53202

IF TO THE INVESTMENT MANAGER:

BROOKLYN CAPITAL MANAGEMENT, LLC

60 Heritage Drive

Pleasantville, NY 10570

Attention:  Mr. Phillip Goldstein

Telephone No.: (914) 747-5262

Fax No.:  (914) 747-2150

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or to such other address as to which the recipient shall have informed the other party in writing.

            Unless specifically provided elsewhere, notice given as provided above shall be deemed to have been given, if by personal delivery, on the day of such delivery, and, if by facsimile and mail, on the date on which such facsimile or mail is sent.

          12.          COUNTERPARTS.  This Agreement may be executed in two counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto caused their duly authorized signatories to execute this Agreement as of the day and year first written above.

INSURED MUNICIPAL INCOME FUND, INC.
	By:  /s/ Phillip Goldstein
	Name:   Phillip Goldstein
	Title:     Chairman of the Board
	By:   /s/ Gerald Hellerman
	Name:    Gerald Hellerman
	Title:      Board Director
BROOKLYN CAPITAL MANAGEMENT, LLC
	By:  /s/ Andrew Dakos
	Name:   Andrew Dakos
	Title:     Member

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EX-99

FUND ACCOUNTING SERVICING AGREEMENT

THIS AGREEMENT is made and entered into as of this 15th day of  October, 2009, by and between INSURED MUNICIPAL INCOME FUND INC.,  (the “Fund”) and U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited liability company (“USBFS”).

WHEREAS, the Fund is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a closed-end, non-diversified management investment company, and is authorized to issue shares of beneficial interest; and

WHEREAS, USBFS is, among other things, in the business of providing fund accounting services for the benefit of its customers; and

WHEREAS, the Fund desires to retain USBFS to provide accounting services to the Fund(s) listed on Exhibit A hereto.

NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:

1.   Appointment of USBFS as Accountant

The Fund hereby appoints USBFS as fund accountant of the Fund on the terms and conditions set forth in this Agreement, and USBFS hereby accepts such appointment and agrees to perform the services and duties set forth in this Agreement.  The services and duties of USBFS shall be confined to those matters expressly set forth herein, and no implied duties are assumed by or may be asserted against USBFS hereunder.

2.   Services and Duties of USBFS

USBFS shall provide the following accounting services to the Fund:

A. Portfolio Accounting Services:

(1)  Maintain portfolio records on a trade date+1 basis using security trade information communicated from the Fund’s investment adviser.

(2)  For each valuation date, obtain prices from a pricing source approved by the board of directors of the Fund (the “Board of Directors”) and apply those prices to the portfolio positions.  For those securities where market quotations are not readily available, the Board of Directors shall approve, in good faith, procedures for determining the fair value for such securities.

(3)  Identify interest and dividend accrual balances as of each valuation date and calculate gross earnings on investments for each accounting period.

(4)  Determine gain/loss on security sales and identify them as short-term or long-term; account for periodic distributions of gains or losses to shareholders and maintain undistributed gain or loss balances as of each valuation date.

(5)  On a daily basis, reconcile cash of the Fund with the Fund’s custodian.

(6)  Transmit a copy of the portfolio valuation to the Fund’s investment adviser daily.

(7)  Review the impact of current day’s activity on a per share basis, and review changes in market value.

B. Expense Accrual and Payment Services:

(1)  For each valuation date, calculate the expense accrual amounts as directed by the Fund as to methodology, rate or dollar amount.

(2)  Process and record payments for Fund expenses upon receipt of written authorization from the Fund.

(3)  Account for Fund expenditures and maintain expense accrual balances at the level of accounting detail, as agreed upon by USBFS and the Fund.

(4)  Provide expense accrual and payment reporting.

C. Fund Valuation and Financial Reporting Services:

(1)  Account for Fund share purchases, sales, exchanges, transfers, dividend reinvestments, and other Fund share activity as reported by the Fund’s transfer agent on a timely basis.

(2)  Apply equalization accounting as directed by the Fund.

(3)  Determine net investment income (earnings) for the Fund as of each valuation date.  Account for periodic distributions of earnings to shareholders and maintain undistributed net investment income balances as of each valuation date.

(4)  Maintain a general ledger and other accounts, books, and financial records for the Fund in the form as agreed upon.

(5)  Determine the net asset value of the Fund according to the accounting policies and procedures set forth in the Fund's current prospectus.

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(6)  Calculate per share net asset value, per share net earnings, and other per share amounts reflective of Fund operations at such time as required by the nature and characteristics of the Fund.

(7)  Communicate to the Fund, at an agreed upon time, the per share net asset value for each valuation date.

(8)  Prepare monthly reports that document the adequacy of accounting detail to support month-end ledger balances.

(9)  Prepare monthly security transactions listings.

D. Tax Accounting Services:

(1)  Maintain accounting records for the investment portfolio of the Fund to support the tax reporting required for “regulated investment companies” under the Internal Revenue Code of 1986, as amended (the “Code”).

(2)  Maintain tax lot detail for the Fund’s investment portfolio.

(3)  Calculate taxable gain/loss on security sales using the tax lot relief method designated by the Fund.

(4)  Provide the necessary financial information to calculate the taxable components of income and capital gains distributions to support tax reporting to the shareholders.

E. Compliance Control Services:

(1)  Support reporting to regulatory bodies and support financial statement preparation by making the Fund's accounting records available to the Fund, the Securities and Exchange Commission (the “SEC”), and the independent accountants.

(2)  Maintain accounting records according to the 1940 Act and regulations provided thereunder.

(3)  Perform its duties hereunder in compliance with all applicable laws and regulations and provide any sub-certifications reasonably requested by the Fund in connection with any certification required of the Fund pursuant to the Sarbanes-Oxley Act of 2002 (the “SOX Act”) or any rules or regulations promulgated by the SEC thereunder, provided the same shall not be deemed to change USBFS’s standard of care as set forth herein.

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(4)  Cooperate with the Fund’s independent accountants and take all reasonable action in the performance of its obligations under this Agreement to ensure that the necessary information is made available to such accountants for the expression of their opinion on the Fund’s financial statements without any qualification as to the scope of their examination.

3.   License of Data; Warranty; Termination of Rights

A.  The valuation information and evaluations being provided to the Fund by USBFS pursuant hereto (collectively, the “Data”) are being licensed, not sold, to the Fund.  The Fund has a limited license to use the Data only for purposes necessary to valuing the Fund’s assets and reporting to regulatory bodies (the “License”).  The Fund does not have any license nor right to use the Data for purposes beyond the intentions of this Agreement including, but not limited to, resale to other users or use to create any type of historical database.  The License is non-transferable and not sub-licensable.  The Fund’s right to use the Data cannot be passed to or shared with any other entity.

The Fund acknowledges the proprietary rights that USBFS and its suppliers have in the Data.

B.  THE FUND HEREBY ACCEPTS THE DATA AS IS, WHERE IS, WITH NO WARRANTIES, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY OR FITNESS FOR ANY PURPOSE OR ANY OTHER MATTER.

C.  USBFS may stop supplying some or all Data to the Fund if USBFS’s suppliers terminate any agreement to provide Data to USBFS.  Also, USBFS may stop supplying some or all Data to the Fund if USBFS reasonably believes that the Fund is using the Data in violation of the License, or breaching its duties of confidentiality provided for hereunder, or if any of USBFS’s suppliers demand that the Data be withheld from the Fund.  USBFS will provide notice to the Fund of any termination of provision of Data as soon as reasonably possible.

4.   Pricing of Securities

A.  For each valuation date, USBFS shall obtain prices from a pricing source recommended by USBFS and approved by the Board of Directors and apply those prices to the portfolio positions of the Fund.  For those securities where market quotations are not readily available, the Board of Directors shall approve, in good faith, procedures for determining the fair value for such securities.

If the Fund desires to provide a price that varies from the price provided by the pricing source, the Fund shall promptly notify and supply USBFS with the price of any such security on each valuation date.  All pricing changes made by the Fund will be in writing and must specifically identify the securities to be changed by CUSIP, name of security, new price or rate to be applied, and, if applicable, the time period for which the new price(s) is/are effective.

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B.  In the event that the Fund at any time receives Data containing evaluations, rather than market quotations, for certain securities or certain other data related to such securities, the following provisions will apply:  (i) evaluated securities are typically complicated financial instruments.  There are many methodologies (including computer-based analytical modeling and individual security evaluations) available to generate approximations of the market value of such securities, and there is significant professional disagreement about which method is best.  No evaluation method, including those used by USBFS and its suppliers, may consistently generate approximations that correspond to actual “traded” prices of the securities; (ii) methodologies used to provide the pricing portion of certain Data may rely on evaluations; however, the Fund acknowledges that there may be errors or defects in the software, databases, or methodologies generating the evaluations that may cause resultant evaluations to be inappropriate for use in certain applications; and (iii) the Fund assumes all responsibility for edit checking, external verification of evaluations, and ultimately the appropriateness of using Data containing evaluations, regardless of any efforts made by USBFS and its suppliers in this respect.

5.   Changes in Accounting Procedures

Any resolution passed by the Board of Directors that affects accounting practices and procedures under this Agreement shall be effective upon written receipt of notice and acceptance by USBFS.

6.   Changes in Equipment, Systems, Etc.

USBFS reserves the right to make changes from time to time, as it deems advisable, relating to its systems, programs, rules, operating schedules and equipment, so long as such changes do not adversely affect the services provided to the Fund under this Agreement.

7.   Compensation

USBFS shall be compensated for providing the services set forth in this Agreement in accordance with the fee schedule set forth on Exhibit B hereto (as amended from time to time).  USBFS shall also be compensated for such out-of-pocket expenses (e.g., telecommunication charges, postage and delivery charges, and reproduction charges) as are reasonably incurred by USBFS in performing its duties hereunder.  The Fund shall pay all such fees and reimbursable expenses within 30 calendar days following receipt of the billing notice, except for any fee or expense subject to a good faith dispute.  The Fund shall notify USBFS in writing within 30 calendar days following receipt of each invoice if the Fund is disputing any amounts in good faith.  The Fund shall pay such disputed amounts within 10 calendar days of the day on which the parties agree to the amount to be paid.  With the exception of any fee or expense the Fund is disputing in good faith as set forth above, unpaid invoices shall accrue a finance charge of 1½% per month after the due date.  Notwithstanding anything to the contrary, amounts owed by the Fund to USBFS shall only be paid out of the assets and property of the particular Fund involved.

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8.   Representations and Warranties

A.  The Fund hereby represents and warrants to USBFS, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:

(1) It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;

(2) This Agreement has been duly authorized, executed and delivered by the Fund in accordance with all requisite action and constitutes a valid and legally binding obligation of the Fund, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties; and

(3) It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement.

B.  USBFS hereby represents and warrants to the Fund, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:

(1) It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;

(2) This Agreement has been duly authorized, executed and delivered by USBFS in accordance with all requisite action and constitutes a valid and legally binding obligation of USBFS, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties; and

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(3) It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement.

9.   Standard of Care; Indemnification; Limitation of Liability

A.  USBFS shall exercise reasonable care in the performance of its duties under this Agreement.  Neither USBFS nor its suppliers shall be liable for any error of judgment or mistake of law or for any loss suffered by the Fund or any third party in connection with its duties under this Agreement, including losses resulting from mechanical breakdowns or the failure of communication or power supplies beyond USBFS’s control, except a loss arising out of or relating to USBFS’s refusal or failure to comply with the terms of this Agreement or from its bad faith, negligence, or willful misconduct in the performance of its duties under this Agreement.  Notwithstanding any other provision of this Agreement, if USBFS has exercised reasonable care in the performance of its duties under this Agreement, the Fund shall indemnify and hold harmless USBFS and its suppliers from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that USBFS or its suppliers may sustain or incur or that may be asserted against USBFS or its suppliers by any person arising out of or related to (X) any action taken or omitted to be taken by it in performing the services hereunder (i) in accordance with the foregoing standards, or (ii) in reliance upon any written or oral instruction provided to USBFS by any duly authorized officer of the Fund, as approved by the Board of Directors of the Fund, or (Y) the Data, or any information, service, report, analysis or publication derived therefrom, except for any and all claims, demands, losses, expenses, and liabilities arising out of or relating to USBFS’s refusal or failure to comply with the terms of this Agreement or from its bad faith, negligence or willful misconduct in the performance of its duties under this Agreement.  This indemnity shall be a continuing obligation of the Fund, its successors and assigns, notwithstanding the termination of this Agreement.  As used in this paragraph, the term “USBFS” shall include USBFS’s directors, officers and employees.

The Fund acknowledges that the Data are intended for use as an aid to institutional investors, registered brokers or professionals of similar sophistication in making informed judgments concerning securities.  The Fund accepts responsibility for, and acknowledges it exercises its own independent judgment in, its selection of the Data, its selection of the use or intended use of such, and any results obtained.  Nothing contained herein shall be deemed to be a waiver of any rights existing under applicable law for the protection of investors.

7

USBFS shall indemnify and hold the Fund harmless from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys' fees) that the Fund may sustain or incur or that may be asserted against the Fund by any person arising out of any action taken or omitted to be taken by USBFS as a result of USBFS’s refusal or failure to comply with the terms of this Agreement, or from its bad faith, negligence, or willful misconduct in the performance of its duties under this Agreement.  This indemnity shall be a continuing obligation of USBFS, its successors and assigns, notwithstanding the termination of this Agreement.  As used in this paragraph, the term “Fund” shall include the Fund’s directors, officers and employees.

In the event of a mechanical breakdown or failure of communication or power supplies beyond its control, USBFS shall take all reasonable steps to minimize service interruptions for any period that such interruption continues.  USBFS will make every reasonable effort to restore any lost or damaged data and correct any errors resulting from such a breakdown at the expense of USBFS.  USBFS agrees that it shall, at all times, have reasonable contingency plans with appropriate parties, making reasonable provision for emergency use of electrical data processing equipment to the extent appropriate equipment is available.  Representatives of the Fund shall be entitled to inspect USBFS’s premises and operating capabilities at any time during regular business hours of USBFS, upon reasonable notice to USBFS.  Moreover, USBFS shall provide the Fund, at such times as the Fund may reasonably require, copies of reports rendered by independent accountants on the internal controls and procedures of USBFS relating to the services provided by USBFS under this Agreement.

Notwithstanding the above, USBFS reserves the right to reprocess and correct administrative errors at its own expense.

In no case shall either party be liable to the other for (i) any special, indirect or consequential damages, loss of profits or goodwill (even if advised of the possibility of such); (ii) any delay by reason of circumstances beyond its control, including acts of civil or military authority, national emergencies, labor difficulties, fire, mechanical breakdown, flood or catastrophe, acts of God, insurrection, war, riots, or failure beyond its control of transportation or power supply.

B.  In order that the indemnification provisions contained in this section shall apply, it is understood that if in any case the indemnitor may be asked to indemnify or hold the indemnitee harmless, the indemnitor shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the indemnitee will use all reasonable care to notify the indemnitor promptly concerning any situation that presents or appears likely to present the probability of a claim for indemnification.  The indemnitor shall have the option to defend the indemnitee against any claim that may be the subject of this indemnification.  In the event that the indemnitor so elects, it will so notify the indemnitee and thereupon the indemnitor shall take over complete defense of the claim, and the indemnitee shall in such situation initiate no further legal or other expenses for which it shall seek indemnification under this section.  The indemnitee shall in no case confess any claim or make any compromise in any case in which the indemnitor will be asked to indemnify the indemnitee except with the indemnitor’s prior written consent.

8

C.  The indemnity and defense provisions set forth in this Section 9 shall indefinitely survive the termination and/or assignment of this Agreement.

D.  If USBFS is acting in another capacity for the Fund pursuant to a separate agreement, nothing herein shall be deemed to relieve USBFS of any of its obligations in such other capacity.

10.   Notification of Error

The Fund will notify USBFS of any discrepancy between USBFS and the Fund, including, but not limited to, failing to account for a security position in the Fund’s portfolio, upon the later to occur of: (i) three business days after receipt of any reports rendered by USBFS to the Fund; (ii) three business days after discovery of any error or omission not covered in the balancing or control procedure; or (iii) three business days after receiving notice from any shareholder regarding any such discrepancy.

11.   Data Necessary to Perform Services

The Fund or its agent shall furnish to USBFS the data necessary to perform the services described herein at such times and in such form as mutually agreed upon.

12.   Proprietary and Confidential Information

A.  USBFS agrees on behalf of itself and its directors, officers, and employees to treat confidentially and as proprietary information of the Fund, all records and other information relative to the Fund and prior, present, or potential shareholders of the Fund (and clients of said shareholders), and not to use such records and information for any purpose other than the performance of its responsibilities and duties hereunder, except (i) after prior notification to and approval in writing by the Fund, which approval shall not be unreasonably withheld and may not be withheld where USBFS may be exposed to civil or criminal contempt proceedings for failure to comply, (ii) when requested to divulge such information by duly constituted authorities, or (iii) when so requested by the Fund.  Records and other information which have become known to the public through no wrongful act of USBFS or any of its employees, agents or representatives, and information that was already in the possession of USBFS prior to receipt thereof from the Fund or its agent, shall not be subject to this paragraph.

9

Further, USBFS will adhere to the privacy policies adopted by the Fund pursuant to Title V of the Gramm-Leach-Bliley Act, as may be modified from time to time.  In this regard, USBFS shall have in place and maintain physical, electronic and procedural safeguards reasonably designed to protect the security, confidentiality and integrity of, and to prevent unauthorized access to or use of, records and information relating to the Fund and its shareholders.

B.  The Fund, on behalf of itself and its directors, officers, and employees, will maintain the confidential and proprietary nature of the Data and agrees to protect it using the same efforts, but in no case less than reasonable efforts, that it uses to protect its own proprietary and confidential information.

13.   Records

USBFS shall keep records relating to the services to be performed hereunder in the form and manner, and for such period, as it may deem advisable and is agreeable to the Fund, but not inconsistent with the rules and regulations of appropriate government authorities, in particular, Section 31 of the 1940 Act and the rules thereunder.  USBFS agrees that all such records prepared or maintained by USBFS relating to the services to be performed by USBFS hereunder are the property of the Fund and will be preserved, maintained, and made available in accordance with such applicable sections and rules of the 1940 Act and will be promptly surrendered to the Fund or its designee on and in accordance with its request.

14.   Compliance with Laws

The Fund has and retains primary responsibility for all compliance matters relating to the Fund, including but not limited to compliance with the 1940 Act, the Code, the SOX Act, the USA Patriot Act of 2001 and the policies and limitations of the Fund relating to its portfolio investments as set forth in its current prospectus and statement of additional information.  USBFS’s services hereunder shall not relieve the Fund of its responsibilities for assuring such compliance or the Board of Director’s oversight responsibility with respect thereto.

15.   Term of Agreement; Amendment

This Agreement shall become effective as of the date first written above and will continue in effect for a period of three (3) years.  This Agreement may be terminated by either party upon giving 90 days prior written notice to the other party or such shorter period as is mutually agreed upon by the parties.  Notwithstanding the foregoing, this Agreement may be terminated by any party upon the breach of the other party of any material term of this Agreement if such breach is not cured within 15 days of notice of such breach to the breaching party.  This Agreement may not be amended or modified in any manner except by written agreement executed by USBFS and the Fund, and authorized or approved by the Board of Directors.

10

16.   Duties in the Event of Termination

In the event that, in connection with termination, a successor to any of USBFS’s duties or responsibilities hereunder is designated by the Fund by written notice to USBFS, USBFS will promptly, upon such termination and, in the absence of material breach by USBFS, at the expense of the Fund, transfer to such successor all relevant books, records, correspondence and other data established or maintained by USBFS under this Agreement in a form reasonably acceptable to the Fund (if such form differs from the form in which USBFS has maintained the same, the Fund shall pay any expenses associated with transferring the data to such form), and will cooperate in the transfer of such duties and responsibilities, including provision for assistance from USBFS’s personnel in the establishment of books, records and other data by such successor.  If no such successor is designated, then such books, records and other data shall be returned to the Fund.

17. Early Termination

In the absence of any material breach of this Agreement, should the Fund elect to terminate this Agreement prior to the end of the term, the Fund agrees to pay the following fees:

a.     all the fees throughout the life of the Agreement, including the rebate of any negotiated discounts;

b.     all fees associated with converting services to successor service provider;

c.     all fees associated with any record retention and/or tax reporting obligations that may not be eliminated due to the conversion to a successor service provider;

d.     all out-of-pocket costs associated with a-c above.

18.           Assignment

This Agreement shall extend to and be binding upon the parties hereto and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Fund without the written consent of USBFS, or by USBFS without the written consent of the Fund accompanied by the authorization or approval of the Fund’s Board of Directors.

11

19.           Governing Law

This Agreement shall be construed in accordance with the laws of the State of Wisconsin, without regard to conflicts of law principles.  To the extent that the applicable laws of the State of Wisconsin, or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the latter shall control, and nothing herein shall be construed in a manner inconsistent with the 1940 Act or any rule or order of the SEC thereunder.

20.           No Agency Relationship

Nothing herein contained shall be deemed to authorize or empower either party to act as agent for the other party to this Agreement, or to conduct business in the name, or for the account, of the other party to this Agreement.

21.           Services Not Exclusive

Nothing in this Agreement shall limit or restrict USBFS from providing services to other parties that are similar or identical to some or all of the services provided hereunder.

22.           Invalidity

Any provision of this Agreement which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  In such case, the parties shall in good faith modify or substitute such provision consistent with the original intent of the parties.

23.           Notices

Any notice required or permitted to be given by either party to the other shall be in writing and shall be deemed to have been given on the date delivered personally or by courier service, or three days after sent by registered or certified mail, postage prepaid, return receipt requested, or on the date sent and confirmed received by facsimile transmission to the other party’s address set forth below:

Notice to USBFS shall be sent to:

U.S. Bancorp Fund Services, LLC

615 East Michigan Street

Milwaukee, WI  53202

12

and notice to the Fund shall be sent to:

Insured Municipal Income Fund Inc.

c/o Brooklyn Capital Management, LLC

Park 80 West

Saddle Brook, NJ 07663

24.           Multiple Originals

This Agreement may be executed on twoor more counterparts, each of which when so executed shall be deemed to be an original, but such counterparts shall together constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer on one or more counterparts as of the date first above written.

INSURED MUNCIPAL INCOME FUND INC.	U.S. BANCORP FUND SERVICES, LLC
By: /s/ Gerald Hellerman	By:  /s/ Michael R. McVoy
Name:  Gerald Hellerman	Name:  Michael R. McVoy
Title:  Director	Title:  Executive Vice President

13 

Exhibit A

to the

Fund Accounting Servicing Agreement

Fund Names

Name of Fund

Insured Municipal Income FundDate Added

B-1 

Exhibit B (continued) to the

Fund Accounting Servicing Agreement – Insured Municipal Income Fund

 

CLOSED-END FUND

FUND ACCOUNTING

ANNUAL FEE SCHEDULE at October, 2009

Fund Accounting Services Per Fund*

$[ ] on the first $100 million

[ ] basis points on the next $200 million

[ ] basis point on the balance

NOTE: All schedules subject to change depending upon the use of derivatives – options, futures, short sales, etc.  Conversion, multiple classes, master/feeder and multiple manager funds, and extraordinary services quoted separately.

Chief Compliance Officer Support Fee*

§$[ ] /service per year

FUND ACCOUNTING SERVICES

SUPPLEMENTAL SERVICES

FEE SCHEDULE at October, 2009

All fees are billed monthly plus out-of-pocket expenses, including pricing, corporate action, and factor services:

§Pricing Services

        −$[ ] Domestic and Canadian Equities/Options

        −$[ ] Corp/Gov/Agency Bonds/International Equities/Futures

        −$[ ] CMOs/Municipal Bonds/Money Market Instruments/International Bonds

        −$[ ] /Fund per Day - Bank Loans

        −$[ ] /Fund per Day - Credit Default Swaps

        −$[ ] /Fund per Day - Basic Interest Rate Swaps

        −$[ ]/Fund per Month - Mutual Fund Pricing

        −$[ ] /Foreign Equity Security per Month for Corporate Action Service

        −$[ ] /Month Manual Security Pricing (>10/day)

§Factor Services (BondBuyer)

        −$[ ]/CMO/Month

        −$[ ] /Mortgage Backed/Month

        −$[ ] /Month Minimum/Fund Group

§Fair Value Services (FT Interactive)

        −$[ ] on the First 100 Securities/Day

        −$[ ] on the Balance of Securities/Day

NOTE: Prices above are based on using IDC as the primary pricing service.  Use of an alternative price source may require amendments to these fees.

Fees are billed monthly.  *Subject to annual CPI increase, Milwaukee, MSA

2

EX-99

FIRST AMENDMENT TO THE

 FUND ADMINISTRATION SERVICING AGREEMENT

    THIS FIRST AMENDMENT dated as of the 8th day of February, 2010, to the Fund Administration Servicing Agreement, dated as of October 15, 2009 (the "Agreement"), is entered into by and between SPECIAL OPPORTUNITIES FUND, INC. f/k/a INSURED MUNICIPAL INCOME FUND INC., a Maryland corporation (the “Fund”) and U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited liability company ("USBFS").

RECITALS

WHEREAS, the parties have entered into the Agreement; and

WHEREAS, the Fund and USBFS desire to amend said Agreement referencing a name change; and

NOW THEREFORE, the Fund and USBFS agree as follows:

Effective December 15, 2009, the name Insured Municipal Income Fund Inc. was changed to Special Opportunities Fund, Inc.  Accordingly, all references to Insured Municipal Income Fund Inc. in the Agreement should be replaced with Special Opportunities Fund, Inc.

.

Exhibit A is hereby superseded and replaced with Amended Exhibit A attached hereto.

Except to the extent amended hereby, the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be executed by a duly authorized officer on one or more counterparts as of the date and year first written above.

SPECIAL OPPORTUNITIES FUND, INC.	U.S. BANCORP FUND SERVICES, LLC
By:  /s/ Andrew Dakos	By:  /s/ Joe D. Redwine
Name:  Andrew Dakos	Name:  Joe D. Redwine
Title:    President	Title:  President

2010

Amended Exhibit A

to the

Fund Administration Servicing Agreement

Fund Names

Name of Fund

Special Opportunities Fund

2010 

EX-99

FIRST AMENDMENT TO THE

 FUND ACCOUNTING SERVICING AGREEMENT

      THIS FIRST AMENDMENT dated as of the 8th day of February, 2010, to the Fund Accounting Servicing Agreement, dated as of October 15, 2009 (the "Agreement"), is entered into by and between SPECIAL OPPORTUNITIES FUND, INC. f/k/a INSURED MUNICIPAL INCOME FUND INC., a Maryland corporation (the “Fund”) and U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited liability company ("USBFS").

RECITALS

WHEREAS, the parties have entered into the Agreement; and
 

WHEREAS, the Fund and USBFS desire to amend said Agreement referencing a name change; and

NOW THEREFORE, the Fund and USBFS agree as follows:

Effective December 15, 2009, the name Insured Municipal Income Fund Inc. was changed to Special Opportunities Fund, Inc.  Accordingly, all references to Insured Municipal Income Fund Inc. in the Agreement should be replaced with Special Opportunities Fund, Inc.

.

Exhibit A is hereby superseded and replaced with Amended Exhibit A attached hereto.

Except to the extent amended hereby, the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be executed by a duly authorized officer on one or more counterparts as of the date and year first written above.

SPECIAL OPPORTUNITIES FUND, INC.	U.S. BANCORP FUND SERVICES, LLC
By:  /s/ Andrew Dakos	By:  /s/ Joe D. Redwine
Name:  Andrew Dakos	Name:  Joe D. Redwine
Title:    President	Title:  President

2010

Amended Exhibit A

to the

Fund Accounting Servicing Agreement

Fund Names

Name of Fund

Special Opportunities Fund

2010

EX-99

FIRST AMENDMENT TO THE CUSTODY AGREEMENT

     THIS FIRST AMENDMENT dated as of the 8th day of February, 2010, to the Custody Agreement, dated as of October 15, 2009 (the "Agreement"), is entered into by and between SPECIAL OPPORTUNITIES FUND, INC. f/k/a INSURED MUNICIPAL INCOME FUND INC., a Maryland corporation (the “Fund”),and U.S. BANK NATIONAL ASSOCIATION, a national banking association (the "Custodian").

RECITALS

WHEREAS, the parties have entered into the Agreement; and

WHEREAS, the Fund and the Custodian desire to amend said Agreement referencing a name change; and

WHEREAS, Article XV, Section 15.02 of the Agreement allows for its amendment by a written instrument executed by both parties and authorized or approved by the Board of Directors.

NOW THEREFORE, the Fund and the Custodian agree as follows:

Effective December 15, 2009, the name Insured Municipal Income Fund Inc. was changed to Special Opportunities Fund, Inc.  Accordingly, all references to Insured Municipal Income Fund in the Agreement should be replaced with Special Opportunities Fund, Inc.

Exhibit C is hereby superseded and replaced with Amended Exhibit C attached hereto.

Except to the extent amended hereby, the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be executed by a duly authorized officer on one or more counterparts as of the date and year first written above.

SPECIAL OPPORTUNITIES FUND, INC.	U.S. BANK NATIONAL ASSOCIATION
By:  /s/ Andrew Dakos	By:  /s/ Michael R. McVoy
Name:  Andrew Dakos	Name:  Michael R. McVoy
Title:    President	Title:  Vice President

2010

1 

AMENDED EXHIBIT C

to the Custody Agreement

Fund Names

Special Opportunities Fund

2010  2

EX-99

SECOND AMENDMENT TO THE

 FUND ADMINISTRATION SERVICING AGREEMENT

     THIS SECOND AMENDMENT dated as of the 1ST day of February, 2011, to the Fund Administration Servicing Agreement, dated as of October 15, 2009, as amended February 8, 2010 (the "Agreement"), is entered into by and between SPECIAL OPPORTUNITIES FUND, INC., a Maryland corporation (the “Fund”) and U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited liability company ("USBFS").

RECITALS

WHEREAS, the parties have entered into the Agreement; and

WHEREAS, the Fund and USBFS desire to amend the Agreement; and

NOW THEREFORE, the Fund and USBFS agree as follows:

Exhibit B is hereby superseded and replaced with Amended Exhibit B attached hereto.

Except to the extent amended hereby, the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be executed by a duly authorized officer on one or more counterparts as of the date and year first written above.

SPECIAL OPPORTUNITIES FUND, INC.	U.S. BANCORP FUND SERVICES, LLC
By: /s/ Gerald Hellerman	By:  /s/ Michael R. McVoy
Name:  /s/ Gerald Hellerman	Name:  Michael R. McVoy
Title:  Director - CFO	Title:  Executive Vice President

2/1/2011

Amended Exhibit B

to the

Fund Administration Servicing Agreement – Special Opportunities Fund, Inc.

CLOSED-END FUND

ADMINISTRATION SERVICES

ANNUAL FEE SCHEDULE at  February 1, 2011

Fund Administration Services Per Fund*

[ ] basis points on the first $100 million

[ ] basis points on the next $200 million

[ ] basis points on the balance above $300 million

Minimum annual fee:  $[ ] per portfolio

If the Fund becomes leveraged, USBFS will calculate the Fund Administration Fee paid by the Fund to USBFS using total assets (including assets attributable to leverage) minus operating liabilities (not including liabilities attributable to leverage).

Advisor Information Source Web Portal

§$[ ] /fund/month

§$[ ] /fund/month for clients using an external administration service

§Specialized projects will be analyzed and an estimate will be provided prior to work being performed.

NOTE: All schedules subject to change depending upon the use of derivatives – options, futures, short sales, etc.  Conversion, multiple classes, master/feeder and multiple manager funds, and extraordinary services quoted separately.

Chief Compliance Officer Support Fee*

§$[ ] /service per year

Out-Of-Pocket Expenses

Including but not limited to expenses incurred in the safekeeping, delivery and receipt of securities, shipping, transfer fees, extraordinary expenses based upon complexity, and all other out-of-pocket expenses. Out of pocket expenses invoiced to the Fund shall be the same as USBFS’ cost.

Fees are billed monthly

*Subject to annual CPI increase, Milwaukee MSA

2/1/2011

EX-99

SECOND AMENDMENT TO THE

 FUND ACCOUNTING SERVICING AGREEMENT

     THIS SECOND AMENDMENT dated as of the 1st day of February, 2011, to the Fund Accounting Servicing Agreement, dated as of October 15, 2009, as amended February 8, 2010 (the "Agreement"), is entered into by and between SPECIAL OPPORTUNITIES FUND, INC., a Maryland corporation (the “Fund”) and U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited liability company ("USBFS").

RECITALS

WHEREAS, the parties have entered into the Agreement; and

WHEREAS, the Fund and USBFS desire to amend the Agreement; and

NOW THEREFORE, the Fund and USBFS agree as follows:

Exhibit B is hereby superseded and replaced with Amended Exhibit B attached hereto.

Except to the extent amended hereby, the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be executed by a duly authorized officer on one or more counterparts as of the date and year first written above.

SPECIAL OPPORTUNITIES FUND, INC.	U.S. BANCORP FUND SERVICES, LLC
By: /s/ Gerald Hellerman	By:  /s/ Michael R. McVoy
Name:  Gerald Hellerman	Name:  Michael R. McVoy
Title:  Director - CFO	Title:  Executive Vice President

2/1/2011

Amended Exhibit B

to the

Fund Accounting Servicing Agreement – Special Opportunities Fund, Inc.

  

CLOSED-END FUND

FUND ACCOUNTING

ANNUAL FEE SCHEDULE at February 1, 2011

Fund Accounting Services Per Fund*

$[ ] on the first $100 million

[ ] basis points on the next $200 million

[ ] basis point on the balance

If the Fund becomes leveraged, USBFS will calculate the Fund Accounting Fee paid by the Fund to USBFS using total assets (including assets attributable to leverage) minus operating liabilities (not including liabilities attributable to leverage).

NOTE: All schedules subject to change depending upon the use of derivatives – options, futures, short sales, etc.  Conversion, multiple classes, master/feeder and multiple manager funds, and extraordinary services quoted separately.

Chief Compliance Officer Support Fee*

§ $[ ] /service per year

FUND ACCOUNTING SERVICES

SUPPLEMENTAL SERVICES

FEE SCHEDULE at February 1, 2011

All fees are billed monthly plus out-of-pocket expenses, including pricing, corporate action, and factor services:

§Pricing Services

        −$[ ] Domestic and Canadian Equities/Options

        −$[ ] Corp/Gov/Agency Bonds/International Equities/Futures

        −$[ ] CMOs/Municipal Bonds/Money Market Instruments/International Bonds

        −$[ ] /Fund per Day - Bank Loans

        −$[ ] /Fund per Day - Credit Default Swaps

        −$[ ] /Fund per Day - Basic Interest Rate Swaps

        −$[ ] /Fund per Month - Mutual Fund Pricing

        −$[ ] /Foreign Equity Security per Month for Corporate Action Service

        −$[ ] /Month Manual Security Pricing (>10/day)

§Factor Services (BondBuyer)

       −$[ ] /CMO/Month

       −$[ ] /Mortgage Backed/Month

       −$[ ] /Month Minimum/Fund Group

§Fair Value Services (FT Interactive)

       −$[ ] on the First 100 Securities/Day

       −$[ ] on the Balance of Securities/Day

NOTE: Prices above are based on using IDC as the primary pricing service.  Use of an alternative price source may require amendments to these fees.

Fees are billed monthly.  *Subject to annual CPI increase, Milwaukee, MSA

2/1/2011