SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

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

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


                   (Name of Person(s) Filing Proxy Statement)

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[ X ] No fee required.

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               pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[GRAPHIC OMITTED]                                     FIRST FINANCIAL FUND, INC.
                                                     1680 38TH STREET, SUITE 800
                                                        BOULDER, COLORADO  80301


June 15, 2004


Dear Fellow Stockholder,

     You are cordially invited to attend the 2004 Annual Meeting of Stockholders
of First  Financial  Fund,  Inc.,  which will be held on August 18, 2004 at 9:00
a.m. Eastern  Daylight Time at the Langham Hotel,  250 Franklin Street,  Boston,
Massachusetts  02110. Details of the business to be presented at the meeting can
be found in the accompanying Notice of Annual Meeting and Proxy Statement.

     This is a very  important  meeting  at which  the  Board of  Directors  has
proposed to change the Fund's fundamental  concentration  policy and implement a
number of corporate governance initiatives.  The concentration policy change and
the "Corporate Governance Proposals" are described in detail in the accompanying
Proxy Statement.  Your prompt  consideration  and participation in voting on the
various proposals is strongly encouraged.

     There are two  categories of  proposals:  The first is a proposal to change
the  Fund's  fundamental  policy  of  investing  at least  65% of its  assets in
securities  issued  by  "savings  and  banking  institutions,  mortgage  banking
institutions  and holding  companies of savings,  banking and  mortgage  banking
institutions".  This  proposal  would broaden the universe of companies in which
the Fund could  invest and is  intended to give the Fund's  investment  adviser,
Wellington  Management,  and its portfolio manger, Nick Adams, needed investment
flexibility and options.  Because of a consolidation  in the financial  services
industry,  Nick is finding it more and more difficult to find  investments  that
fit into the narrow definition  required under the Fund's current  concentration
policy.  Proposal 10 is intended to  accomplish  the broadened  flexibility  and
options.

     The  second is a  comprehensive  set of  proposals  which are  intended  to
implement  a number  of what  might  be  referred  to as  "shareholder-friendly"
practices in the corporate governance area. Generally, these proposals eliminate
or modify a number of current charter or bylaw  provisions that are often viewed
as limiting  accountability  and insulating  management  from  stockholders.  In
particular, one of the proposals seeks to "declassify" the Board of Directors so
that each  Director is elected  annually.  The Board of  Directors  thinks it is
important for  stockholders to have an enhanced say in the direction of the Fund
and believes that the corporate  governance  proposals  effectively promote this
goal.

     As Chairman of the Board,  I encourage you to support all of the proposals.
After careful and extensive  review by the independent  directors,  the Board of
Directors  unanimously  approved and has recommended to  stockholders  that they
approve all of the proposals as well.

     We hope you plan to attend the meeting. Your vote is important.  Whether or
not you are able to attend,  it is important  that your shares be represented at
the  Meeting.  Accordingly,  we ask that you  please  sign,  date and return the
enclosed  Proxy Card or vote via  telephone  or the  Internet  at your  earliest
convenience.

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

Sincerely,

/s/ Joel W. Looney

Joel W. Looney
Chairman of the Board






          If you have any questions concerning the accompanying Proxy
             Statement or need help voting your shares, please call:

                            MacKenzie Partners, Inc.
                               [GRAPHIC OMITTED]
                               105 Madison Avenue
                            New York, New York 10016
                       email: proxy@mackenziepartners.com
                          Call Collect: (212) 929-5500
                          or Toll Free: (800) 322-2885



[GRAPHIC OMITTED]                                     FIRST FINANCIAL FUND, INC.
                                                     1680 38TH STREET, SUITE 800
                                                        BOULDER, COLORADO  80301


                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                         To Be Held on August 18, 2004


To the Stockholders:

     Notice is hereby  given that the Annual  Meeting of  Stockholders  of First
Financial Fund, Inc. (the "Fund"), a Maryland  corporation,  will be held at the
Langham Hotel, 250 Franklin Street,  Boston,  Massachusetts  02110 at 9:00 a.m.
Eastern Daylight Time, on August 18, 2004, to consider and vote on the following
matters:

1.   The election of Directors of the Fund (Proposal 1).

2.   An amendment to the Fund's bylaws (the  "Bylaws") to  declassify  the Board
     and an  amendment  to the Fund's  charter  (the  "Charter")  to provide for
     annual election of Directors (Proposal 2).

3.   An amendment to the Charter  providing that Directors shall be elected by a
     plurality of votes cast at a meeting at which a quorum is present (Proposal
     3).

4.   An amendment to the Charter  providing that the Secretary of the Fund shall
     call a special stockholders meeting upon the written request of the holders
     of at  least  25% of all the  votes  entitled  to be  cast  at the  meeting
     (Proposal 4).

5.   An amendment to the Charter vesting in the  stockholders the power to amend
     or adopt Bylaws by the affirmative vote of a majority of all votes entitled
     to be cast on the matter (Proposal 5).

6.   An  amendment  to the  Charter  prohibiting  the Fund from  opting into any
     provision of the Maryland Unsolicited Takeovers Act (Proposal 6).

7.   An amendment to the Charter repealing Article Ninth and replacing it with a
     provision  providing  that  no (a)  business  combination  (e.g.,  mergers,
     consolidation,  share exchanges), (b) voluntary liquidation or dissolution,
     (c) stockholder  proposal  regarding  specific  investment  decisions,  (d)
     proposal to open-end the Fund,  or (e) self tender for more than 25% of the
     Fund's  shares in any  twelve-month  period,  may be  effected  without the
     affirmative  vote of the  holders  of at least  two-thirds  of  outstanding
     shares entitled to be cast on the matter (Proposal 7).

8.   An amendment  to the Charter to  establish  the number of Directors at five
     (5) (Proposal 8).

9.   A proposal to amend and restate the Charter, the implementation of which is
     contingent on the approval of Proposals 2 through 9 (Proposal 9).

10.  A proposal to change the Fund's current industry  concentration policies so
     that Fund shall invest at least 65% of its assets in the financial services
     industry and to make the Fund's  policy of  investing  80% of its assets in
     financial services companies non-fundamental (Proposal 10).

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

     The Board of  Directors of the Fund has fixed the close of business on June
9, 2004 as the record date for the  determination  of  stockholders  of the Fund
entitled to notice of and to vote at the Annual Meeting.

                                 By Order of the Board of Directors,

                                 /s/ Stephanie Kelley

                                 STEPHANIE KELLEY
                                 Secretary
June 15, 2004






--------------------------------------------------------------------------------
STOCKHOLDERS  WHO DO NOT EXPECT TO ATTEND THE ANNUAL  MEETING ARE  REQUESTED  TO
COMPLETE,  SIGN AND DATE THE  ENCLOSED  PROXY  CARD.  THE PROXY  CARD  SHOULD BE
RETURNED  IN THE  ENCLOSED  ENVELOPE,  WHICH  NEEDS NO  POSTAGE IF MAILED IN THE
UNITED STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH ON
THE INSIDE COVER.

STOCKHOLDERS  WHO HAVE  QUESTIONS  OR NEED  ASSISTANCE  IN  VOTING  MAY  CONTACT
MACKENZIE   PARTERNS,   INC.  TOLL  FREE  AT   1-800-322-2885  OR  BY  EMAIL  AT
PROXY@MACKENZIEPARTNERS.COM
--------------------------------------------------------------------------------


                      INSTRUCTIONS FOR SIGNING PROXY CARDS


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

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

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

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



                                                                    
            Registration                                               Valid Signature

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

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

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







[GRAPHIC OMITTED]                                     FIRST FINANCIAL FUND, INC.
                                                     1680 38TH STREET, SUITE 800
                                                        BOULDER, COLORADO  80301


             QUESTIONS & ANSWERS REGARDING THE MEETING AND PROPOSALS

Question 1: What is the purpose of the Annual Meeting?

Answer:  At the Meeting  stockholders  will be asked to vote on the  election of
directors,  to change the Fund's industry  concentration policy, and a number of
important corporate  governance proposals embodied in Proposals 2 through 8 (the
"Corporate Governance Proposals"),  all of which involve amending the Charter or
Bylaws.  In  particular,  Proposal 2  recommends  that  stockholders  approve an
amendment to the Bylaws to declassify the Board and amend the Charter to provide
that the election of all  Directors  will be held  annually.  If  approved,  the
declassification will apply to the elections held at this Meeting.

Question 2: Why is the Board recommending  changing the Fund's concentration and
investment policies?

Answer:  Presently,  the Fund has a fundamental policy of investing at least 65%
of its  assets  in  securities  issued by  "savings  and  banking  institutions,
mortgage  banking  institutions  and holding  companies of savings,  banking and
mortgage  banking  institutions"  and  a  fundamental   investment   restriction
requiring the Fund to concentrate in these companies. These policies have worked
well for the  Fund  because,  until  recently,  there  was a broad  and  diverse
universe of  investment  opportunities  (i.e.,  savings,  banking  and  mortgage
institutions).  However,  as a result of recent  consolidation  in the financial
services industry,  the investment options  permissible under the Fund's current
concentration policies have narrowed significantly. Making things more difficult
is the fact that many companies not  traditionally in the "savings,  banking and
mortgage"  industries  have  expanded  their  businesses,  taking on many of the
attributes  and core  businesses of "savings,  banking and  mortgage"  companies
(e.g., insurance companies,  securities brokerages,  etc.). This industry change
has affected the Fund in two ways:  First,  because these new financial  hybrids
compete  with the type of  companies in which the Fund  currently  invests,  the
opportunities to buy attractive savings, banking and mortgage companies are more
scarce and the  companies  are  generally  less  attractive  than certain  other
financial  services  companies.  Second,  because the hybrids may evolve into de
facto financial service  companies,  they may become good investment  candidates
for the Fund because their primary focus is on the financial  services industry.
However,  because  the  Fund  currently  has the  relatively  narrow  policy  of
investing  primarily in and concentrating  its investments in "savings,  banking
and mortgage"  companies,  it is limited in the extent to which it can invest in
these and other otherwise  appropriate and possibly  attractive hybrid financial
services companies.

In addition to the two overlapping  policies described above, the Fund currently
has a fundamental industry investment policy generally requiring it to invest at
least  80%  of  its  assets  in  securities  issued  by  finance  and  financial
service-related   companies,   including   savings  and  banking   institutions,
securities  issued by mortgage  banking  institutions,  real  estate  investment
trusts, and consumer and industrial finance,  insurance,  brokerage,  investment
banking, asset management, and other financial service companies, as well as the
holding companies of the foregoing.

Proposal  10  would  change  and  consolidate  the  two  concentration  policies
described above such that, under normal market conditions, the Fund would invest
at least 65% of its assets in financial services companies. Under current market
conditions,  the Fund would define "financial service companies" to include, but
not  be  limited  to,  savings  and  banking   institutions,   mortgage  banking
institutions,  real estate investment trusts, consumer finance companies, credit
collection and related  service  companies,  insurance  companies,  security and
commodity   brokerage   companies,   investment  advisory  firms  and  financial
conglomerates,  and holding  companies  of any of these  companies.  The new 65%
investment  policy would remain a fundamental  policy of the Fund and thus could
not change  without  stockholder  approval.  Proposal  10 would also  change the
Fund's industry investment policy (i.e., the policy of investing at least 80% of
Fund  assets  in  financial   services   companies)   from  a   fundamental   to
non-fundamental  policy. Thus, despite the 65% minimum described above, the Fund
will  normally  invest at least 80% of its total  assets in  financial  services
companies.



Question 3: Why is the Board recommending the Corporate Governance Proposals?

Answer:  The  Board's  recommendation  to  declassify  and to  effect  the other
Corporate Governance Proposals is part of an ongoing corporate governance review
and  initiative and in keeping with the Board's goal of ensuring that the Fund's
corporate  governance  policies maximize Board and management  accountability to
stockholders.  The Board  believes  that  corporate  power in America has subtly
shifted from the hands of  owners/stockholders  to those of boards and managers.
The  Board   believes  that  this  power  should  be   rightfully   returned  to
stockholders.  The  Corporate  Governance  Proposals  seek  to  accomplish  this
return-of-power  by giving back to stockholders  the ability to effect or have a
voice in effecting certain fundamental corporate changes. The Fund would support
these same corporate governance  initiatives in any company in which it seeks to
invest  as they  are  simply  sound  policies.  Notably,  most of the  Corporate
Governance Proposals are contained in the Fund's proxy voting guidelines.  Thus,
if we are going to "practice what we preach",  the Fund should  similarly  adopt
the governance  proposals it expects of other companies.  At the end of the day,
the Board believes all stockholders  will benefit long-term by returning control
of the Fund back to the owners and that the Fund's value and  performance may be
enhanced thereby.

Question 4: Who is being nominated for election at the Meeting?

Answer:  On the assumption  that Proposal 2 (regarding  declassification  of the
Board) will be approved at the Meeting,  the Board has  nominated  the following
five  Directors,  each to serve a one-year term until the annual meeting in 2005
and until their  successors are duly elected and qualify:  Richard I. Barr, Joel
W. Looney,  Dr. Dean  Jacobson,  Susan L.  Ciciora,  and Stephen C.  Miller.  If
stockholders do not approve Proposal 2, the Board has nominated  Richard I. Barr
to serve for a three-year  term expiring in 2007 and until his successor is duly
elected and qualifies.

Question 5: What is meant by "Declassify the Board" under Proposal 2?

Answer: A "classified" or "staggered"  board is divided into several classes and
directors  of only one class are  elected  each  year.  Currently,  the Board is
classified  into three  separate  classes and staggered  such that each Director
stands for  election  every three years rather than  annually.  Proposal 2 would
"declassify" the Board so that each Director will stand for election every year.
If Proposal 2 is  approved  by  stockholders,  the  "declassifying"  will become
effective at this Meeting such that all of the Directors will stand for election
at this Meeting and annually thereafter.  By declassifying the Board,  directors
become removable by stockholders without cause under Maryland law.

Question 6: Why is the Board recommending declassification?

Answer: The election of Directors is the primary means for stockholders to
exercise influence over the Fund and its policies. Your Board believes that
classified boards have the effect of reducing the accountability of directors to
a company's stockholders. A classified board prevents stockholders from electing
all directors on an annual basis and may discourage proxy contests in which
stockholders have an opportunity to vote for a competing slate of nominees.
While classified boards are viewed by many companies as increasing the long-term
stability and continuity of a board, the Board believes that long-term stability
and continuity should result from the annual election of Directors, which
provides stockholders with the opportunity to evaluate Director performance,
both individually and collectively, on an annual basis.

Question 7: How do Proposal 2 and other Corporate  Governance  Proposals benefit
or  otherwise  affect  the  Fund's  largest   stockholder   (i.e.,  the  Horejsi
Affiliates)?

Answer:  The Horejsi  Affiliates  (defined  below)  currently  own an  effective
controlling  interest in the Fund (see "Security Ownership of Certain Beneficial
Owners" in the Proxy Statement).  Horejsi  Affiliates also own the Administrator
(defined  below).  Under  Proposal 2, if a  large-block  stockholder  is able to
significantly  influence  elections,  and all Board  members are up for election
annually (i.e., a declassified  board),  the Horejsi  Affiliates would likely be
able to effect a change of control  with respect to the entire Board in a single
election  whereas under the current  classified  structure,  such a change would
take two years. Similarly,  several of the Corporate Governance Proposals either
grant stockholders voting power or decrease the voting requirement necessary for
stockholders to take certain actions (e.g.,  Proposal 4 would give  stockholders
the power to compel a special stockholder meeting with 25% of outstanding shares
and Proposal 5 would give  stockholders  the power to amend the Fund's  Bylaws).
Because the Horejsi  Affiliates own a large block of the Fund's  shares,  if the
Corporate  Governance  Proposals are approved,  the Affiliates will have greater
influence over the adoption or failure of certain  corporate  actions  requiring
stockholder vote. In particular,  the Horejsi  Affiliates would have the ability
to  compel  a  special  meeting   without  the  support  of  other   non-Horejsi
stockholders.  Nonetheless,  since all of the other  actions under the Corporate
Governance  Proposals  would  require  the  support  of  either  a  majority  or
two-thirds  of  outstanding  shares for a future  change,  although  the Horejsi
Affiliates could significantly influence adoption of future proposals,  assuming
the Horejsi Affiliates  maintain effective control, it would remain difficult to
accomplish without first soliciting Board approval and non-Horejsi  support.  In
these  instances,  where an action  requires a  majority  or  two-thirds  voting
approval,  the Horejsi  Affiliates will have an actual or effective veto,  again
assuming that they  maintain  their  current  shareholdings.  It should be noted
that, even in the absence of adopting the Corporate  Governance  Proposals,  the
Horejsi Affiliates already have significant influence over the election of Board
members and the  adoption or failure of certain  corporate  actions  requiring a
stockholder vote.


Question  8:  How do the  Horejsi  Affiliates  intend  to vote on the  Corporate
Governance Proposals?

Answer: The Horejsi Affiliates intend to vote in favor of each of the Proposals,
including each Corporate Governance Proposal.

Question 9: What does it mean that Directors are elected by a plurality of votes
cast (Proposal 3)?

Answer: Election by a "plurality of votes cast" simply means that in an election
where there are more candidates  than there are vacancies to be filled,  so long
as a quorum is present,  the person  receiving the most votes wins.  Most public
office elections are determined by a "plurality".

Question 10: Why is the Board recommending reducing to 25% the percentage of the
Fund's  outstanding  shares required to compel a special meeting of stockholders
to be held (Proposal 4)?

Answer:  Presently,  under the Fund's  Bylaws,  stockholders  cannot  compel the
Fund's Secretary to call a special meeting unless a written request is submitted
by the  holders of a majority  of  outstanding  shares  entitled  to vote at the
meeting.  This ownership  threshold  restricts a  stockholder's  right to call a
meeting.  Proposal 4 would amend the Charter to reduce the percentage  ownership
level from a "majority" to 25% of outstanding  shares, thus making the potential
for a  stockholder  or group of  stockholders  to call a  special  meeting  more
realistic and useful.

Question 11: Why is the Board recommending that the Charter be amended to permit
stockholders to amend the Fund's Bylaws (Proposal 5)?

Answer:  The Board  believes that all  stockholders  benefit if they have better
access and more  influence in the Fund's  governance.  The Fund's Bylaws contain
important  policies  affecting the  day-to-day  management of the Fund which the
Board  believes  stockholders  should  have a voice in  establishing.  Under the
Charter,  the  stockholders  do not  currently  have the  authority to amend the
Fund's  Bylaws.  If approved,  Proposal 5 would amend the Charter to vest in the
stockholders the power to make,  alter,  amend or repeal Bylaws and ensure that,
if stockholders do make a change,  the Directors will not be able to override or
modify what the stockholders have decided upon.

Question 12: What is the  Maryland  Unsolicited  Takeovers  Act and why does the
Board  recommend  that  the  Fund be  prohibited  from  becoming  subject  to it
(Proposal 6)?

Answer:  The Maryland  Unsolicited  Takeovers Act ("MUTA") is a Maryland statute
pursuant to which the Board, among other things, could effect one or more of the
following actions:  classify the Board, place super-majority voting requirements
on  removal of  Directors  and  require a request  by  holders of a majority  of
outstanding shares to compel a special stockholders  meeting. The Board believes
MUTA only serves to lessen the stockholders' influence over a board and thus has
the potential to diminish a board's responsiveness and accountability. The Board
believes  that  amending  the Charter to prohibit the Fund from opting into MUTA
without  prior  approval  by  stockholders   enhances  the   responsiveness  and
accountability of the Board.

Question  13: Why is the Board  recommending  amending  the Charter to alter the
stockholder  vote  necessary  to  effect  "business   combinations"   and  other
extraordinary corporate actions (Proposal 7)?

Answer:   Proposal  7  would  amend  the  Charter  to  impose  a  super-majority
stockholder vote requirement to approve extraordinary  corporate actions such as
business   combinations  (e.g.,  mergers,   consolidations,   share  exchanges),
open-ending the Fund,  liquidation,  specific investment decisions,  and certain
self tenders.  The Board believes that most of the Fund's  stockholders seek the
long-term  stability and certainty offered by the closed-end  investment company
structure.  The Board  believes  that  adopting  this  Proposal will assure that
stockholder  proposals that could dramatically change the structure,  operations
or investments of the Fund are not implemented  except where there is widespread
stockholder  support.  The actions of  arbitrageurs,  who often have  short-term
goals at odds with  long-term  stockholders,  can increase  Fund expenses if the
Fund  is  forced  to  address   proposals  to  permit   stockholders  to  effect
extraordinary actions. Adopting the proposed change may avoid such expenses.



Question 14: How does the Board recommend that  stockholders vote on the various
proposals?

Answer: The Board, including all of the Independent  Directors,  has unanimously
recommended that stockholders vote FOR all of the Proposals.  If no instructions
are indicated on your proxy,  the  representatives  holding proxies will vote in
accordance with the recommendations of the Board.

Question 15: Are other  technical  amendments  contemplated  under the Corporate
Governance Proposals?

Answer:  Yes.  The Board has  recommended  Proposal 9 to amend and  restate  the
Charter. The purpose of this Proposal is to consolidate into one document all of
the provisions of the Charter (including amendments approved at the Meeting) and
to make technical  amendments in the event that the other  Corporate  Governance
Proposals  are approved.  If Proposals 2 through 9 are  approved,  the Fund will
file with the State Department of Assessments and Taxation of Maryland  ("SDAT")
Articles  of  Amendment  and  Restatement  attached to this Proxy  Statement  as
Exhibit A (the "Articles of Amendment and Restatement").

Question 16: What happens if certain Corporate Governance Proposals are approved
by stockholders and others are not?

Answer:  If  certain of the  Corporate  Governance  Proposals  are  approved  by
stockholders and others are not, the Fund will not implement Proposal 9 and will
not file the Articles of Amendment and Restatement.  Instead, the Fund will file
Articles of Amendment with the SDAT that will contain only the amendments of the
Charter approved by stockholders at the Meeting.

Question 17: Who is entitled to vote?

Answer:  Stockholders  of record at the close of  business  on June 9, 2004 (the
"Record Date") are entitled to notice of and to vote at the Meeting. Each of the
shares  outstanding  on the Record  Date is  entitled to one vote on each of the
Proposals.  As  explained  more  fully in the Proxy  Statement,  if  Proposal  2
(Declassification  of the Board) is approved at the Meeting,  then  stockholders
will be entitled to vote for the five  Directors  standing  for  election at the
Meeting.  If Proposal 2 is not  approved at the  Meeting,  stockholders  will be
entitled to vote for the one Director standing for election.

Question 18: What is the required quorum for the Meeting?

Answer: The holders of at least a majority of the outstanding common shares must
be  represented  at the  Meeting,  either in  person  or by  proxy,  in order to
constitute a quorum permitting  business to be conducted at the Meeting.  If you
have completed,  executed and returned valid proxy instructions (in writing,  by
phone or by Internet) or attend the Meeting and vote in person, your shares will
be counted for purposes of  determining  whether there is a quorum,  even if you
abstain from voting on any or all matters introduced at the Meeting.

Question 19: How do I vote?

Answer:  Your  vote is very  important.  Stockholders  can vote in person at the
Meeting or authorize proxies to cast their votes ("proxy voting") by proxy. Most
stockholders   will  have  a  choice  of  proxy  voting  over  the  Internet  at
http://www.proxyvote.com, by using a toll-free telephone number or by completing
a Proxy Card and mailing it in the postage-paid envelope provided.  Please refer
to your Proxy Card or the  information  forwarded by your bank,  broker or other
nominee to see which options are available to you. If you proxy vote by Internet
or  telephone,  you do NOT need to return your Proxy Card. If you vote by proxy,
the  individuals  named on the Proxy Card as proxy holders will vote your shares
in accordance with your instructions. You may specify whether your shares should
be voted for all,  some or none of the  nominees  for  director and whether your
shares  should be voted for or against  the other  proposals.  If you execute an
otherwise valid proxy but do not provide voting instructions,  the persons named
as proxies will cast your votes FOR all of the Proposals.

Question 20: Can I revoke or change my proxy?

Answer:  Yes. You may change or revoke your proxy at any time before the Meeting
by timely  delivery of a properly  executed,  later-dated  proxy  (including  an
Internet or phone vote), by sending a written revocation to the Secretary of the
Fund at the Fund's address listed on the accompanying  Notice of Meeting,  or by
attending  and voting in person at the Meeting.  The powers of the proxy holders
will be  suspended  with  respect to your  shares if you  attend the  meeting in
person and so request, but attendance at the Meeting will not by itself revoke a
previously granted proxy.




[GRAPHIC OMITTED]                                     FIRST FINANCIAL FUND, INC.
                                                     1680 38TH STREET, SUITE 800
                                                        BOULDER, COLORADO  80301

                         ANNUAL MEETING OF STOCKHOLDERS

                                 August 18, 2004

                                 PROXY STATEMENT

     This proxy statement ("Proxy  Statement") for First Financial Fund, Inc., a
Maryland   corporation  (the  "Fund"),  is  furnished  in  connection  with  the
solicitation  of proxies by the Fund's  Board of  Directors  (collectively,  the
"Board" and  individually,  the  "Directors")  for use at the Annual  Meeting of
Stockholders  of the Fund to be held on August 18,  2004,  at 9:00 a.m.  Eastern
Daylight Time, at the Langham Hotel, 250 Franklin Street, Boston,  Massachusetts
02110 and at any  adjournments  and  postponements  thereof (the  "Meeting").  A
Notice of Annual Meeting of  Stockholders  and proxy card for the Fund accompany
this Proxy Statement.  Proxy  solicitations will be made,  beginning on or about
June 15, 2004,  primarily by mail, but proxy  solicitations  may also be made by
telephone,  by Internet on the Fund's web site, telegraph or personal interviews
conducted  by officers of the Fund and PFPC Inc.,  the  co-administrator  of the
Fund, and by MacKenzie Partners, Inc. ("MacKenzie"), the Fund's proxy solicitor.
MacKenzie's  fee to assist in the  solicitation  of proxies is  estimated  to be
$7,500 plus expenses.  The costs of proxy  solicitation and expenses incurred in
connection  with the preparation of this Proxy Statement and its enclosures will
be paid by the Fund. The Fund also will reimburse brokerage firms and others for
their expenses in forwarding  solicitation  material to the beneficial owners of
its  shares.  The Board has fixed the close of  business  on June 9, 2004 as the
record date (the "Record Date") for the  determination of stockholders  entitled
to notice of and to vote at the Meeting.

     The Annual Report of the Fund,  including audited financial  statements for
the  fiscal  period  ended  March 31,  2004,  has been  mailed to  stockholders.
Additional  copies  are  available  upon  request,  without  charge,  by calling
EquiServe Trust Company,  N.A.  toll-free at (800) 451-6788.  The report is also
viewable online at the Fund's website at www.firstfinancialfund.com.  The report
is not to be regarded as proxy solicitation material.

     Wellington Management Company LLP ("Wellington" or the "Adviser"), 75 State
Street, Boston, MA 02109 currently serves as the investment adviser to the Fund.
Fund Administrative Services, L.L.C., serves as co-administrator to the Fund and
is located at 1680 38th Street,  Suite 800,  Boulder,  Colorado 80301. PFPC Inc.
acts as  co-administrator  to the Fund and is  located at 4400  Computer  Drive,
Westborough,  Massachusetts  01581.  EquiServe  Trust Company,  N.A. acts as the
transfer agent to the Fund and is located at Box 43011, Providence, Rhode Island
02940-3011.

     If the enclosed proxy is properly  executed and returned by August 18, 2004
in time to be voted at the Meeting,  the Shares (as defined  below)  represented
thereby will be voted in accordance with the instructions marked thereon. Unless
instructions to the contrary are marked  thereon,  a proxy will be voted FOR the
election of the nominees for Directors,  FOR each of the other Proposals and, in
the discretion of the proxy holders, on any other matters that may properly come
before  the  Meeting.  Any  stockholder  who has  given a proxy has the right to
revoke it at any time prior to its exercise  either by attending the Meeting and
casting his or her votes in person or by  submitting a letter of revocation or a
later-dated proxy to the Fund's Secretary at the above address prior to the date
of the Meeting.

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



     The Fund has one class of stock:  common stock,  par value $0.001 per share
(the "Common Stock" or the "Shares").  On the Record Date, there were 22,791,382
Shares issued and outstanding. Each Share is entitled to one vote at the Meeting
and fractional shares are entitled to proportionate shares of one vote.

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



              Name of Owner*                   Number of Shares          Number of Shares            Percentage
                                              Directly Owned (1)        Beneficially Owned       Beneficially Owned
------------------------------------------- ------------------------ -------------------------- ----------------------

                                                                                               
Badlands Trust Company  (1)(2)                               0               1,359,900                   5.97%
Stewart R. Horejsi Trust No. 2 (3)                   1,697,900               1,697,900                   7.45%
Ernest Horejsi Trust  No. 1B (1)                     1,795,100               1,795,100                   7.88%
Lola Brown Trust No. 1B (1)                          2,568,200               2,568,200                  11.27%
Mildred B. Horejsi Trust (1)                         1,922,400               1,922,400                   8.44%
Susan L. Ciciora Trust (1)                           1,359,800               1,359,800                   5.97%
John S. Horejsi Trust (1)                                  100                     100                   0.00%

                                            ------------------------ -------------------------- ----------------------
Aggregate Shares Owned by Horejsi                    9,343,500               9,343,500                  41.0%
Affiliates (defined below) **
------------------------------------------- ------------------------ -------------------------- ----------------------

T. Rowe Price Associates, Inc.***                    1,292,900               1,292,900                   5.67%



*    The address of each listed owner is c/o Badlands  Trust  Company,  POB 801,
     614 Broadway, Yankton, South Dakota 57078.

**   Aggregate  number  and  percentage  are less than the sum total of  amounts
     shown for each owner  because  the same  shares may be deemed  beneficially
     owned by more than one party (see Footnotes 1 through 4 below).

***  As  stated  in a  Schedule  13G  filed  with the  Securities  and  Exchange
     Commission on February 5, 2004.

(1)  Direct  Ownership.  John S. Horejsi Trust ("John Trust"),  Susan L. Ciciora
     Trust ("Susan Trust"),  Mildred B. Horejsi Trust (the "Mildred Trust"), the
     Lola Brown Trust No. 1B (the "Brown  Trust"),  the Ernest Horejsi Trust No.
     1B (the "EH Trust"),  Badlands Trust Company  ("Badlands"),  the Stewart R.
     Horejsi  Trust No. 2 (the "SRH  Trust")  and Stewart R.  Horejsi  are, as a
     group,  considered  to be a  "control  person" of the Fund (as that term is
     defined  in Section  2(a)(9)  of the  Investment  Company  Act of 1940,  as
     amended (the "1940 Act")). The John Trust, Susan Trust,  Mildred Trust, the
     Brown Trust,  the EH Trust and Badlands  directly own the shares  indicated
     for such entity in the table above,  totaling 9,343,500  (41.0%).  However,
     these entities and other trusts or companies with  interlocking  management
     and/or common  ownership may be deemed to indirectly  own  additional  Fund
     shares, which are included in the table above.

(2)  Ownership by Badlands.  The number shown in the table includes  shares that
     may be deemed to be  beneficially  owned  indirectly  by  Badlands  through
     direct or indirect  ownership by the Brown Trust, the EH Trust, the Mildred
     Trust, the Susan Trust and the John Trust.  Badlands is the sole trustee of
     the Susan Trust and the John Trust.  Badlands,  together  with Larry Dunlap
     and Susan Ciciora (Mr.  Horejsi's  daughter),  is one of three  trustees of
     both the Brown Trust and the EH Trust. Badlands,  together with Brian Sippy
     and Ms. Ciciora, is one of the trustees of the Mildred Trust.

     Badlands is a trust company organized under the laws of South Dakota, which
     is wholly owned by the SRH Trust,  an  irrevocable  trust  organized by Mr.
     Stewart Horejsi for the benefit of his issue. The directors of Badlands are
     Larry Dunlap,  Stephen C. Miller, Robert Ciciora, who is the brother of Mr.
     Horejsi's  son-in-law  (John  Ciciora),  Gail G.  Gubbels  and Marty  Jans.
     Badlands and its directors  disclaim  beneficial  ownership of shares owned
     directly by the Susan Trust,  the John Trust,  the Mildred Trust, the Brown
     Trust and the EH Trust.



(3)  Indirect  Ownership by SRH Trust.  The number  shown in the table  reflects
     shares that may be deemed to be beneficially  owned indirectly  through the
     SRH  Trust's  ownership  of  Badlands.  The  trustees  of the SRH Trust are
     Badlands,  Robert Ciciora and Brian Sippy.  Both the Trust and its trustees
     disclaim  beneficial  ownership of shares  beneficially  owned  directly or
     indirectly by Badlands.



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

The John Trust,  the Susan Trust,  the Mildred  Trust,  the Brown Trust,  the EH
Trust,  Badlands, and the SRH Trust , as well as other Horejsi affiliated trusts
and entities are  collectively  referred to herein as the "Horejsi  Affiliates".
Information  as to  beneficial  ownership  in the  previous  paragraph  has been
obtained from a representative of the beneficial  owners;  all other information
as to  beneficial  ownership is based on reports filed with the  Securities  and
Exchange Commission (the "SEC") by such beneficial owners.

     As of the Record Date, Cede & Co., a nominee  partnership of the Depository
Trust Company, held of record, but not beneficially, 21,860,336 shares or 95.92%
of Common Stock outstanding of the Fund.

     As of the Record Date, the executive officers and directors of the Fund, as
a group,  owned  9,350,274  shares of Common  Stock (this  amount  includes  the
aggregate  shares of Common  Stock  owned by the  Horejsi  Affiliates  set forth
above), representing 41.03% of Common Stock.

     In order  that your  Shares  may be  represented  at the  Meeting,  you are
requested to vote on the following matters:

                                   PROPOSAL 1

                        ELECTION OF DIRECTORS OF THE FUND

     The Bylaws provide that the Board is divided into three classes, each class
having a term of three  years.  Each year the term of one class  expires and the
individuals  elected to such class serve for a  three-year  term and until their
successors are duly elected and qualify.  The term of Richard I. Barr, Class III
Director of the Fund, expires at the Meeting.

     As discussed in Proposal 2 below, this Proxy Statement  contains a proposal
to amend the Bylaws to  "declassify"  the Board and to amend the Fund's  charter
(the  "Charter") to require annual  election of all Directors  beginning at this
Meeting.  If  Proposal  2 is  approved,  the  Directors  whose  terms  would not
otherwise  expire at the Meeting have agreed to resign and stand for  reelection
at  this  Meeting  for  one-year   terms  expiring  at  the  annual  meeting  of
stockholders in 2005.

     IF PROPOSAL 2 IS APPROVED.  If  stockholders  approve  Proposal 2 regarding
declassification  of the Board,  proxy  holders will propose and vote to adjourn
the  Meeting for a short time in order for the  amendments  to the Charter to be
filed  with the  State  Department  of  Assessments  and  Taxation  of  Maryland
("SDAT").  Once the proper  amending  documents  are filed,  the Meeting will be
reconvened  and the following  five  Director  nominees will stand for election,
each for a  one-year  term and  until  their  successors  are duly  elected  and
qualify:  Richard I. Barr, Joel W. Looney,  Dr. Dean Jacobson,  Susan L. Ciciora
and Stephen C. Miller.  The above  nominees have consented to serve as Directors
if elected at the Meeting for the one-year term.

     IF PROPOSAL 2 IS NOT APPROVED.  If stockholders  do not approve  Proposal 2
regarding  declassification  of the Board,  the Board has  nominated  Richard I.
Barr,  the current Class III Director,  to serve for a three-year  term to serve
until the Fund's annual  meeting in 2007 and until his successor is duly elected
and  qualifies.  Mr. Barr has  consented  to serve as Director if elected at the
Meeting for the three-year term.

     Susan L. Ciciora and Stephen C. Miller, each Class I Directors of the Fund,
were elected on August 19, 2003 for a three-year  term to serve until the Fund's
2005 annual meeting of stockholders  and until their successors are duly elected
and qualify.  Joel W. Looney and Dr. Dean Jacobson,  each a Class II Director of
the Fund,  were elected on August 19, 2003, for a three-year term to serve until
the Fund's 2006 annual meeting of  stockholders  and until their  successors are
duly elected and qualify.

     If any of the designated nominees declines or otherwise becomes unavailable
for  election,  however,  the proxy confers  discretionary  power on the persons
named therein to vote in favor of a substitute nominee or nominees.



     INFORMATION ABOUT DIRECTORS AND OFFICERS.  Set forth in the following table
is information about the nominees for election to the Board of Directors, all of
whom are currently Directors of the Fund:



---------------------- ------------------------------ ---------------------------------------------------------
Name, Address*, Age         Position, Length of         Principal Occupation(s) and Other Directorships Held
                         Term Served, and Term of                    During the Past Five Years
                                  Office
---------------------- ------------------------------ ---------------------------------------------------------

Independent Directors
---------------------- ------------------------------ ---------------------------------------------------------
                                                

Dr. Dean Jacobson      Director of the Fund since     Founder and President of Forensic Engineering, Inc.
Age: 66                August 2003. Current term      (expert witness for litigation); since 1997 Professor
                       expires at the 2006 annual     Emeritus  at  Arizona  State  University;  prior to 1997
                       meeting, unless Proposal 2     Professor of Engineering at Arizona State University.
                       is approved

Richard I. Barr        Director of the Fund since     Retired; from 1963-2001,  Manager of Advantage Sales and
Age:  65               August 2001.  Current          Marketing,  Inc;  Director,  Boulder  Total Return Fund,
                       Nominee for a term to expire   Inc., since 1999 and Chairman of the Board since 2003;
                       at the 2007 annual             Director, Boulder Growth & Income Fund, Inc., since
                       meeting, unless Proposal 2     January 2002.
                       is approved

Joel W. Looney         Director and Chairman of the   Partner,  Financial  Management  Group,  LLC since  July
Age:  42               Board of the Fund since        1999; CFO,  Bethany  College from  1995-1999;  Director,
                       August 2003. Current term      Boulder  Total Return Fund,  Inc.,  since  January 2001;
                       expires at the 2006 annual     Director,  Boulder  Growth &  Income  Fund,  Inc.  since
                       meeting, unless Proposal 2     January 2002.
                       is approved

Interested Directors**
-----------------------------------------------------------------------------------------------------------------

Susan L. Ciciora       Director since August 2003.    Owner,  Superior  Interiors  (interior design for custom
Age: 40                Current term expires at the    homes) since 1995; Corporate  Secretary,  Ciciora Custom
                       2005 annual meeting, unless    Builders, LLC since 1995; Trustee of the Brown Trust
                       Proposal 2 is approved         and the EH Trust; Director, Boulder Growth & Income
                                                      Fund,  Inc.,  since  January,  2002;  Director,  Boulder
                                                      Total Return Fund since November 2001.


Stephen C. Miller      Director since August 2003.    President of and General Counsel for Boulder  Investment
Age:  51               President of the Fund.         Advisers,  LLC; Manager,  Fund Administrative  Services,
                       Current term expires at the    LLC ("FAS"); Vice President of Stewart Investment
                       2005 annual meeting, unless    Advisers; Director and President of Boulder Total
                       Proposal 2 is approved         Return Fund, Inc., since 1999; Director, President and
                                                      Chairman of the Board, Boulder Growth & Income Fund, Inc. since
                                                      January 2002; President and General Counsel, Horejsi, Inc.
                                                      (liquidated in 1999); General Counsel, Brown Welding Supply, LLC
                                                      (sold in 1999); officer of various other Horejsi Affiliates; Of Counsel,
                                                      Krassa & Miller, LLC since 1991.



* Unless otherwise specified,  the Directors' respective addresses are c/o First
Financial Fund, Inc., 1680 38th Street, Suite 800, Boulder, Colorado 80301.

** Mr. Miller and Ms. Ciciora are each an "interested person" as a result of the
extent of beneficial ownership of Fund shares.



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

     From the late 1980's until January,  2001,  Mr. Looney had served,  without
compensation,  as  one of  three  trustees  of the  Mildred  Horejsi  Trust,  an
affiliate of the EH Trust.



     The names of the executive officers of the Fund (other than Mr. Miller, who
is described  above) are listed in the table below.  Each officer was elected to
office by the Board at a meeting held on August 19, 2003.  This table also shows
certain  additional  information.  Each  officer  will hold such office  until a
successor has been elected by the Board.




------------------------------ -------------------------- ----------------------------------------------------------
                                  Position, Length of
Name, Address, Age             Term Served, and Term of     Principal Occupation(s) and Other Directorships held
                        Office During the Past Five Years
------------------------------ -------------------------- ----------------------------------------------------------
                                                    

Carl D. Johns                  Chief Financial Officer,   Vice President and Treasurer of BIA and Assistant
1680 38th Street,              Chief Accounting           Manager of FAS, since April, 1999; Vice President, Chief
Suite 800                      Officer, Vice President    Financial Officer and Chief Accounting Officer, Boulder
Boulder, CO 80301              and Treasurer since        Total Return Fund, Inc., since 1999; Vice President,
Age: 41                        August 2003.  Appointed    Chief Financial Officer and Chief Accounting Officer,
                               annually.                  Boulder Growth & Income Fund, Inc., since January 2002.

Stephanie Kelley               Secretary since January    Secretary, Boulder Total Return Fund, Inc., since
1680 38th Street,              2002.  Appointed           October 27, 2000; Secretary, Boulder Growth & Income
Suite 800                      annually.                  Fund, Inc., since January 2002; Assistant Secretary and
Boulder, CO 80301                                         Assistant Treasurer of various Horejsi Affiliates;
Age:  47                                                  employee of FAS since March 1999.



     Set forth in the  following  table are the  nominees  for  election  to the
Board, assuming Proposal 2 is approved (all of whom are current Directors of the
Fund) together with the dollar range of equity securities  beneficially owned by
each Director as of the Record Date.




-------------------------------------- --------------------------------
 Independent Directors and Nominees        Dollar Range of Equity Securities in the Fund

                                         
           Dean Jacobson                    $10,001 to $50,000
           Richard I. Barr                  $50,001 to $100,000
           Joel W. Looney                   $10,001 to $50,000

  Interested Directors and Nominees
-------------------------------------- --------------------------------

           Susan L. Ciciora                 Over $100,000+
           Stephen C. Miller                Over $100,000++



+ 9,343,500 Shares of the Fund are held  collectively by the Horejsi  Affiliates
(defined  above).  Accordingly,  Ms.  Ciciora  may be  deemed  to have  indirect
beneficial  ownership of such Shares.  Ms. Ciciora disclaims all such beneficial
ownership. Ms. Ciciora does not directly own any shares of the Fund.

++ Mr.  Miller is also a director  and officer of  Badlands  Trust  Company.  By
virtue of such  relationship,  Mr.  Miller  may be deemed to share the  indirect
power to vote and direct the disposition of the Shares directly and beneficially
held by the Horejsi  Affiliates.  Mr. Miller disclaims  beneficial  ownership of
such Shares. Mr. Miller does not directly own any shares of the Fund.



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

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



     DIRECTOR AND OFFICER  COMPENSATION.  The following table sets forth certain
information  regarding the  compensation of the Fund's  Directors for the fiscal
year ended March 31, 2004. No persons (other than the independent Directors,  as
set forth below) currently  receive  compensation  from the Fund for acting as a
Director or officer. Directors and executive officers of the Fund do not receive
pension or retirement  benefits from the Fund.  Directors receive  reimbursement
for travel and other out of pocket  expenses  incurred in connection  with Board
meetings.



                                              Aggregate
                                             Compensation
Name of Person and Position with the        from the Fund
Fund                                           Paid to
                                              Directors
----------------------------------------- -------------------
                                            
Dean Jacobson, Director                        $11,386

Richard I. Barr, Director                      $17,065

Joel W. Looney, Director and Chairman          $14,386
of the Board

Susan L. Ciciora, Director                        $0

                                                  $0
Stephen C. Miller, President of the
Fund and Director



Prior to October  15,  2003,  each  Director  of the Fund who is not a director,
officer or employee of one of the Advisers, or any of their affiliates, received
$5,000 per annum  plus $500 for each  committee  meeting  held the same day as a
Board  meeting,  $500 for each  telephone  meeting and $1,000 for each in-person
special Board or committee meeting. As of October 15, 2003, each Director of the
Fund who was not a director,  officer or employee of one of the Advisers, or any
of their affiliates,  receives a fee of $8,000 per annum plus $4,000 for each in
person meeting ($5,000 for the independent Chairman of the Board), $500 for each
Audit  Committee  meeting  ($1,000  for the  independent  Chairman  of the Audit
Committee) and $500 for each telephonic  meeting of the Board.  Each Director of
the Fund is reimbursed for travel and  out-of-pocket  expenses  associated  with
attending Board and Committee meetings. The Board held eleven meetings (seven of
which were held by telephone conference call) during the fiscal year ended March
31, 2004. Each Director currently serving in such capacity attended at least 75%
of the meetings of  Directors  and any  Committee  of which he is a member.  The
aggregate  remuneration  paid to the  Directors  of the Fund for  acting as such
during the fiscal year ended March 31, 2004 amounted to $57,598.

                      COMMITTEES OF THE BOARD OF DIRECTORS

     AUDIT  COMMITTEE;  REPORT OF AUDIT  COMMITTEE.  The  purposes  of the Audit
Committee are to assist Board oversight of the integrity of the Fund's financial
statements,  the Fund's compliance with legal and regulatory  requirements,  the
independent auditor's qualifications and independence and the performance of the
Fund's independent  auditors.  The Audit Committee reviews the scope and results
of  the  Fund's  annual  audit  with  the  Fund's  independent  accountants  and
recommends  the  engagement  of  such  accountants.   Management,   however,  is
responsible  for the  preparation,  presentation  and  integrity  of the  Fund's
financial  statements,  and the  independent  accountants  are  responsible  for
planning  and carrying  out proper  audits and  reviews.  The Board of Directors
adopted a written  charter for the Audit  Committee  on August 19, 2003 and most
recently  amended the Charter on January 23, 2004. A copy of the Audit Committee
Charter  is  attached  hereto as  Exhibit  B. The Audit  Committee  is  composed
entirely of the Fund's  independent  Directors,  consisting of Dr.  Jacobson and
Messrs. Barr and Looney.  Each member of the Audit Committee is independent,  as
that term is defined by the NYSE Listing Standards.  The Audit Committee met two
times during the fiscal year ended March 31, 2004.

     In  connection  with the  audited  financial  statements  as of and for the
period ended March 31, 2004  included in the Fund's Annual Report for the period
ended March 31, 2004 (the "Annual Report"), at meetings held on May 18, 2004 and
May 24, 2004, the Audit Committee considered and discussed the audited financial
statements with management and the  independent  accountants,  and discussed the
audit of such financial statements with the independent accountants.



     The Audit  Committee has received the written  disclosures  and letter from
the independent  accountants  required by Independence  Standards Board Standard
No. 1 (Independence  Discussions  with Audit  Committees) and has discussed with
independent  accountants their independence.  The Audit Committee discussed with
the independent  accountants the accounting  principles  applied by the Fund and
such  other  matters  brought to the  attention  of the Audit  Committee  by the
independent  accountants  required by  Statement of Auditing  Standards  No. 61,
Communications With Audit Committees, as currently modified or supplemented.

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

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

     Submitted by the Audit Committee of the Fund's Board of Directors:

                  Dean Jacobson.
                  Richard I. Barr
                  Joel W. Looney

     NOMINATING  COMMITTEE.  The Board of Directors  has a nominating  committee
(the  "Nominating  Committee")  consisting of Dr. Jacobson and Messrs.  Barr and
Looney,  which is  responsible  for  considering  candidates for election to the
Board in the  event a  position  is  vacated  or  created.  Each  member  of the
Nominating Committee is independent, as that term is defined by the NYSE Listing
Standards. The Nominating Committee met twice during the fiscal year ended March
31,  2004.  The Board of  Directors  has  adopted a charter  for the  Nominating
Committee that is available on the Fund's website, www.firstfinancialfund.com.

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

     The Nominating Committee would consider director candidates  recommended by
stockholders  (if a vacancy  were to exist) and  submitted  in  accordance  with
applicable  law and  procedures  as  described  in  this  Proxy  Statement  (see
"Submission of Stockholder  Proposals" below).  Such  recommendations  should be
forwarded to the Secretary of the Fund.

     The Fund does not have a compensation committee.



                          OTHER BOARD-RELATED MATTERS.

     Stockholders who wish to send  communications to the Board should send them
to the  address  of  the  Fund  and to the  attention  of the  Board.  All  such
communications will be directed to the Board's attention.

     The Fund does not have a formal policy regarding Board member attendance at
the Annual Meeting of  Stockholders;  however,  all of the Directors of the Fund
attended the August 19, 2003 Annual Meeting of Stockholders.

REQUIRED VOTE.

If Stockholders  Approve Proposal 2. If stockholders approve Proposal 2 and thus
declassify the Board, the election of Dr.  Jacobson,  Messrs.  Barr,  Looney and
Miller and Ms.  Ciciora as  Directors  will  require the  affirmative  vote of a
plurality  of the votes cast by holders  of the Common  Stock at the  Meeting in
person or by proxy on Proposal 1.

If  Stockholders  Do Not  Approve  Proposal  2. If  stockholders  do not approve
Proposal 2, and thus the Board remains  classified,  the election of Mr. Barr as
Class III Director will require the affirmative vote of a plurality of the votes
cast by the holders of the Common  Stock at the Meeting in person or by proxy on
Proposal 1.

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

                                   PROPOSAL 2

          AMENDMENT TO THE BYLAWS TO DECLASSIFY THE BOARD AND AMENDMENT
           TO THE CHARTER TO PROVIDE FOR ANNUAL ELECTION OF DIRECTORS

     Article  III,  Section 2 of the Bylaws  provides  that the Board is divided
into three  classes with each class to be nearly as equal in number as possible.
This Bylaw also  provides  that the three  classes of Directors  have  staggered
terms,  so that the term of only one class  expires  at each  annual  meeting of
stockholders and each class is elected for a three-year term. The Board proposes
and unanimously  recommends that stockholders approve an amendment to the Bylaws
to repeal  Article III,  Section 2 to declassify the Board and amend the Charter
to  expressly  provide for the annual  election of  Directors  beginning at this
Meeting (the "Declassification  Proposal").  If the Declassification Proposal is
approved  by  stockholders,  because the  Charter  does not  provide  otherwise,
Directors may thereafter be removed by the stockholders "without cause".

     If the stockholders  approve the Declassification  Proposal,  the Fund will
take action to  implement  declassification  by filing the  appropriate  charter
documents with the SDAT adding the following language:

     The directors  shall be elected at each annual meeting of the  stockholders
     commencing  in 2004,  except as necessary to fill any  vacancies,  and each
     director  elected  shall hold  office  until his or her  successor  is duly
     elected and qualifies,  or until his or her earlier resignation,  death, or
     removal.

If Proposal 2 is approved by stockholders,  any subsequent proposal to amend the
Charter or Bylaws to classify the Board would require the affirmative  vote of a
majority  of all the  votes  entitled  to be cast on the  matter.  In  addition,
Article  III,  Section 2 of the  Bylaws  would be  repealed  and  replaced  with
language consistent with the Declassification  Proposal.  The Board also intends
to  consider  certain  additional  corporate  governance-related  changes to the
Bylaws,  including  modifying  the  provision  setting  forth the  prior  notice
required for  stockholders  to propose  matters to be considered at a regular or
special meeting.

Purpose of the Amendment. The Board is submitting the Declassification  Proposal
to stockholders as part of its ongoing corporate  governance  initiatives and in
keeping with its goal of ensuring that the Fund's corporate  governance policies
maximize management accountability to stockholders. The election of Directors is
the primary means for  stockholders to exercise  influence over the Fund and its
policies.  Your Board believes that classified boards are often viewed as having
the effect of reducing the  accountability  and responsiveness of directors to a
company's  stockholders.  A classified board limits the power of stockholders to
elect all  directors on an annual  basis and may  discourage  proxy  contests in
which  stockholders  have  an  opportunity  to vote  for a  competing  slate  of
nominees.  Moreover,  accumulations of large stockholder positions are sometimes
followed by proxy contests. Declassifying the Board could therefore make it more
likely that an acquirer may precipitate  actions that would result in the Fund's
stockholders  receiving a premium over the Fund's then current  market price for
their shares. However, if the Declassification  Proposal is approved, the entire
Board could be removed in any single year, which could make it more difficult to
discourage  persons from engaging in proxy contests or otherwise seeking control
of the Fund on terms that the  then-incumbent  Board did not  believe are in the
best  interest of the Fund.  In addition,  classified  boards are viewed by many
companies as increasing  the long-term  stability and  continuity of a board and
the company it serves;  however, the Board believes that long-term stability and
continuity  should result from the annual election of Directors,  which provides
stockholders with the opportunity to evaluate the Directors'  performance,  both
individually and collectively, on an annual basis.



Effect of the Approval of the Amendment on Election of Directors.  As more fully
discussed above, if the Declassification  Proposal is approved, the Meeting will
be recessed briefly so that (i) the appropriate  charter  documents may be filed
with the SDAT, (ii) all of the Directors whose terms would not otherwise  expire
at the  Meeting  may resign  and (iii) the  incumbent  Directors  will stand for
re-election.

Board Considerations  Regarding  Declassification and Other Corporate Governance
Proposals.  The Board first considered the  Declassification  Proposal and other
Corporate  Governance  Proposals at its regularly  scheduled  meeting in January
2004. At the January  meeting,  the Board held informal  meetings and a separate
executive  session  during  which  the  significant  aspects  of  the  Corporate
Governance  Proposals were discussed in detail. Also at the January meeting, the
Directors who are not  "interested  persons" of the Fund, as defined in the 1940
Act (the  "Independent  Directors")  met separately with Fund counsel as well as
counsel  for the  Independent  Directors  to  generally  discuss  the  Corporate
Governance  Proposals.  At that time, the Board  determined that it should defer
any action on the Corporate  Governance  Proposals  pending further analysis and
consideration.  Based on questions raised during the January meeting,  the Board
directed  management to prepare additional  materials and analysis to refine the
Corporate   Governance   Proposals  for  the  Board's   subsequent   review  and
consideration.  At a special  meeting of the Board held in  February  2004,  the
Board again met to discuss the  Corporate  Governance  Proposals and to consider
the supplementary analysis and materials prepared by management. The Independent
Directors met  separately  with Fund counsel,  the Fund's  Maryland  counsel and
counsel  for the  Independent  Directors  to discuss the  refined  proposal  and
supplementary  materials.  Again, at this meeting, the Board determined to defer
any  immediate  action on the  proposals  and  directed  management  to  prepare
additional  materials  including  specific language for amending the Charter for
each of the Corporate Governance Proposals. At meetings held on March 17 and May
18,  2004,  management  presented  specific  language and  additional  requested
materials for each of the Corporate Governance  Proposals.  At this meeting, the
Board,  including the Independent  Directors,  unanimously resolved to recommend
the Corporate Governance Proposals, including the Declassification Proposal, for
approval by stockholders.

     In considering the Declassification Proposal, the Board recognized that the
Horejsi  Affiliates  own an  effective  controlling  interest  in the Fund  (see
"Security  Ownership  of Certain  Beneficial  Owners"  above) and a  controlling
interest in FAS, the Fund's Administrator.  The Board recognized that, because a
large-block  stockholder is able to significantly  influence  elections,  if all
Board members were elected  annually (i.e., a declassified  board),  the Horejsi
Affiliates would be able to significantly effect a change of the entire Board in
a single  election.  However,  the Board  noted  that,  even  under the  current
classified structure,  such a change would likely only take two years, depending
on which  classes  were  standing  for  election.  Moreover,  notwithstanding  a
classified  structure,  the Horejsi Affiliates or any other significant group of
stockholders  could seek to replace a majority of the Directors in a single year
by  soliciting  the votes of enough other  holders of Common Stock to remove the
Directors as permitted under the Fund's current  Charter  (although there is, of
course,  no  assurance  that  the  Horejsi  Affiliates  or such  other  group of
stockholders would be successful in any such effort).

     The Board  noted that the  potential  ability to replace a majority  of the
Board in a single year may have the effect of increasing the Horejsi Affiliates'
influence  over the  Board,  including  with  respect  to  matters  on which the
interests  of  the  Horejsi  Affiliates,   on  one  hand,  and  the  non-Horejsi
stockholders,  on the other, might diverge. For example, if the Declassification
Proposal  is  approved,   the  Horejsi   Affiliates  may  be  viewed  as  having
significantly  greater  influence  over the Board  with  respect  to the  future
placement  and  renewal of the Fund's  investment  advisory  and  administrative
contracts  (the  administrative  contract  is  currently  with  FAS,  a  company
presently  owned by the Horejsi  Affiliates).  The Board also noted that, in the
unlikely event that the Horejsi  Affiliates were able to effect repeated changes
in the composition of the Board, the continuity of experience on the Board could
be diminished,  the Fund's ability to attract qualified  director  candidates to
serve on the Board could be lessened, and the Board might find it more difficult
to engage in strategic,  long-term planning.  Although one of the effects of the
Declassification  Proposal  would be that the  Horejsi  Affiliates  would have a
greater influence in unseating the entire Board in a single year, or may be able
to initiate repeated attempts to change the Board's composition, representatives
of the Horejsi  Affiliates  have advised the Fund that they have no current plan
or intention to take any such steps.  Similarly,  as  indicated  above,  another
effect of the Declassification Proposal would be that the Horejsi Affiliates may
have  greater  influence in the  placement  or renewal of the advisory  contract
which is currently with Wellington Management Company  ("Wellington").  However,
representatives  of the Horejsi  Affiliates  have advised the Fund that they are
satisfied  with the Adviser and portfolio  manager  (Wellington  and Nick Adams,
respectively) and that they have no current plan or intention of replacing them.



     In its consideration of the Declassification Proposal, the Board noted that
one  perceived  benefit  of a  classified  Board is that it  lengthens  the time
required for a substantial  stockholder  to gain control of the Board.  Thus, if
the Board is  classified,  it may  discourage  attempts to remove  Directors and
could serve to prevent a sudden change of control. Under a classified structure,
the Board would have more time to review any proposed  business  transaction and
consider all relevant  factors,  in an open and orderly  process,  and the Board
would have more negotiating  leverage and flexibility to make decisions that are
in the best interests of the Fund. In the case of the Fund,  however,  the Board
concluded that the Horejsi Affiliates' current ownership of approximately 41% of
the voting power of the outstanding Common Stock may dissuade any acquisition of
control of the Fund by another party, and therefore,  for so long as the Horejsi
Affiliates  retain  an  influential  ownership  in the  Fund  and act  together,
eliminating  the  classified   Board  is  not  likely  to  increase  the  Fund's
vulnerability  to attempts  to remove  Directors  in any  material  respect.  If
ownership by the Horejsi Affiliates is significantly reduced, the Board believes
that it  nonetheless  would be able to  fulfill  its  duties  to the Fund in the
circumstances described in this paragraph.

     Because  the  Declassification  Proposal  may give the  Horejsi  Affiliates
greater influence over the Board, and therefore the interests of the non-Horejsi
stockholders  and the Horejsi  Affiliates  may diverge  with  respect to certain
aspects  of the  decision  whether to  declassify  the  Board,  the  Independent
Directors,  who  comprise  a  majority  of the Board,  met  separately  (without
representatives  of  management  or  the  interested  Directors)  at  all of the
meetings  discussed  above,  and consulted  with Fund  counsel,  counsel for the
Independent Directors and the Fund's Maryland counsel, as to the advisability of
all  of the  Corporate  Governance  Proposals,  including  the  Declassification
Proposal.  The  Independent  Directors  observed  that the  Horejsi  Affiliates'
ownership of the Fund has historically  provided,  and, based on representations
made by a  representative  of the Horejsi  Affiliates,  would likely continue to
provide, significant stability and continuity in the governance of the Fund. The
Independent  Directors further observed that the Horejsi  Affiliates have stated
that they value the contributions made to the Board by the Independent Directors
and noted  that the  Horejsi  Affiliates,  by their  actions  during  the recent
history of their stock  ownership,  have  demonstrated  their awareness that any
arbitrary  exercise of their influence to replace Directors would likely make it
more  difficult for the Fund to attract  qualified  individuals  to serve on the
Board in the future.

     The  Independent   Directors  determined  that,  in  their  judgment,   the
elimination  of the  classified  Board  would  not  significantly  increase  the
influence of the Horejsi Affiliates,  because the declassification only shortens
the period for  replacement of a majority of directors,  and does not change the
relative  voting  power  of the  Horejsi  Affiliates  compared  to  that  of the
non-Horejsi stockholders. In addition, it does not diminish or change in any way
the  Directors'  duties  to the Fund and its  stockholders,  including  minority
non-Horejsi  stockholders.  The Independent Directors also concluded that having
annual  elections of all Directors would give all stockholders a more direct and
effective means to express their  evaluation of the Directors'  performance than
exists currently with the classified  Board system in which Directors,  although
always subject to removal by the stockholders, are as a practical matter subject
to  stockholder  evaluation  only once every  three  years  with the  three-year
election cycle. The Independent Directors believe that the annual election cycle
thus would provide significant  benefits to the Fund's non-Horejsi  stockholders
that would  outweigh any  disadvantage  resulting  from the potential  increased
influence of the Horejsi Affiliates.

     In  approving  the  Declassification   Proposal  and  the  other  Corporate
Governance Proposals, the Board was aware of their impact given the current size
of the Horejsi  Affiliates'  holdings in the Fund.  In  general,  the  Corporate
Governance Proposals make it harder for both the Board and other stockholders to
effect significant changes to the Fund that the Horejsi Affiliates might oppose.
The Board also noted that there is no requirement for the Horejsi  Affiliates to
maintain  their  current  dominant  position  in the  Fund,  and  that at  lower
ownership  levels,  the ability of the Horejsi  Affiliates to effectively  block
certain changes is reduced.  The Board also believed that,  notwithstanding  the
effect of the  Corporate  Governance  Proposals in light of current  stockholder
demographics,  the  Proposals  are  part of a  consistent  philosophy  of  Board
accountability to Fund stockholders.

     Accordingly,  after due  consideration of the various arguments in favor of
and against a classified board, and after taking into account the support of the
Horejsi Affiliates and the unanimous support of the Independent  Directors,  the
full  Board  has  concluded  that it is in the  best  interests  of the  Fund to
declassify the Board and to implement the  Declassification  Proposal as well as
the other Corporate Governance Proposals.

Vote Required.  Proposal 2 requires the  affirmative  vote of a majority of the
votes entitled to be cast on the matter by the holders of the Common Stock.

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



                                   PROPOSAL 3

           AMENDMENT TO THE CHARTER PROVIDING THAT DIRECTORS SHALL BE
              ELECTED BY A PLURALITY OF VOTES CAST AT A MEETING AT
                            WHICH A QUORUM IS PRESENT

     The Board proposes and unanimously  recommends that stockholders approve an
amendment to the Fund's  Charter to provide that the Directors  shall be elected
by a  "plurality"  of votes  cast at a meeting at which a quorum is  present.  A
"plurality of votes cast" simply means that, in an election where there are more
than two nominees for a single  position,  the person  receiving  the most votes
wins.  Most public office  elections are decided by a "plurality" of votes cast.
If Proposal 3 is approved by stockholders,  any subsequent proposal to amend the
Charter to amend the plurality vote  requirement  would require the  affirmative
vote of the  holders of a majority  of all the votes  entitled to be cast on the
matter.

     If  stockholders  approve  this  Proposal,  the Fund  will  take  action to
implement the Proposal by filing the appropriate charter documents with the SDAT
adding the following provision to the Charter:

     A plurality of all the votes cast at a meeting at which a quorum is present
     shall be sufficient to elect a director.

Purpose  of  the  Amendment.  The  Board  is  submitting  this  Proposal  to the
stockholders  as part of its ongoing  corporate  governance  initiatives  and in
keeping with its goal of ensuring that the Fund's corporate  governance policies
maximize management  accountability to stockholders.  Under current Article III,
Section 3 of the  Bylaws,  as well as under  Maryland  General  Corporation  Law
("MGCL"),  a plurality vote is the vote currently required to elect directors of
the Fund.  Also under  current  Article  III,  Section 3, the  plurality  voting
requirement  can not be amended without a vote of the Fund's  stockholders.  The
proposed Charter provision would prohibit the Board from  unilaterally  changing
the  plurality   requirement  to  increase  the  vote  requirement   (e.g.,  the
affirmative vote of the holders of a majority of the outstanding shares entitled
to vote in the  election  of  directors)  which  is  otherwise  permitted  under
Maryland  law.  As a  practical  matter,  Proposal  3 does not change the Fund's
current  plurality voting  requirement as contained in the Bylaws.  Nonetheless,
the Board believes it is important that this voting  requirement be explicit and
incorporated into the Charter, which is more readily available to the public. By
doing so, the plurality voting  requirement will, by default under Maryland law,
be subject to change only by the  affirmative  vote of the holders of a majority
of all the votes entitled to be cast on the matter. Consequently,  the effect of
Proposal  3, if  approved,  would  be to  amend  the  Charter  to add the  above
language,  which will  supersede  the similar  Bylaw  provision  and  thereafter
preclude the Board from  changing the plurality  vote through a Bylaw  amendment
without a stockholder vote.

     Generally, higher-than-plurality requirements to elect directors are viewed
as having the effect of  reducing  accountability  of  directors  to a company's
stockholders  and  violating  the  principle  that a simple  plurality of voting
shares  should be all that is  necessary to effect  change  regarding a board of
directors.  Requiring a higher voting standard may permit management to entrench
itself in  contested  elections.  It is the Board's  belief  that  election by a
"plurality"  is an  essential  element of good  corporate  democracy  and is the
fairest  means of electing the  Directors.  Notably,  under  Maryland  law, once
approved,  the  plurality  voting  requirement  under this  Proposal  may not be
changed without the  affirmative  vote of a majority of the votes entitled to be
cast on the matter by the holders of the Fund's Common Stock.

     The  Board  considered  this  Proposal  as  well  as  the  other  Corporate
Governance  Proposals  over  four  meetings  held  in  early  2004  (see  "Board
Considerations   Regarding   Declassification  and  Other  Corporate  Governance
Proposals"  beginning  on Page 9  above).  The Board  has  determined  that this
Proposal  furthers  the goal of ensuring  that the Fund's  corporate  governance
policies maximize Board and management accountability to stockholders.

Vote  Required.  Approval  of  Proposal 3  requires  the  affirmative  vote of a
majority  of the votes  entitled  to be cast on the matter by the holders of the
Common Stock.

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



                                   PROPOSAL 4

           AMENDMENT TO THE CHARTER PROVIDING THAT THE SECRETARY SHALL
            CALL A SPECIAL MEETING OF STOCKHOLDERS UPON THE REQUEST
               OF HOLDERS OF 25% OF THE FUND'S OUTSTANDING SHARES

     The Board proposes and unanimously  recommends that stockholders approve an
amendment to the Charter to provide that the  Secretary of the Fund shall call a
special meeting of stockholders at the request of stockholders  entitled to cast
at least 25% of all votes  entitled to be cast at the meeting.  If Proposal 4 is
approved,  any  subsequent  proposal  to amend  the  Charter  to  increase  this
threshold would require the affirmative vote of the holders of a majority of all
votes entitled to be cast on the matter.

     If  stockholders  approve  this  Proposal,  the Fund  will  take  action to
implement  the Proposal by filing the  appropriate  charter  documents  with the
SDAT.  If approved  by  stockholders,  the  Charter  would be amended to add the
following provision:

     The  Secretary  of the  Corporation  shall  call a special  meeting  of the
     stockholders  on the written  request of  stockholders  entitled to cast at
     least twenty-five percent (25%) of all the votes entitled to be cast at the
     meeting.

Purpose  of  the  Amendment.  The  Board  is  submitting  this  Proposal  to the
stockholders  as part of its ongoing  corporate  governance  initiatives  and in
keeping with its goal of ensuring that the Fund's corporate  governance policies
maximize  management  accountability to stockholders.  This Proposal would allow
stockholders  holding  shares  entitled  to cast at least  25% of all the  votes
entitled  to be cast at the  meeting to compel the  Secretary  to call a special
meeting of stockholders.  Most state corporation  statutes allow stockholders to
compel a special  meeting when they want to take action on certain  matters that
arise between regularly scheduled annual meetings.  Sometimes this right applies
only if a  stockholder,  or  group of  stockholders,  owns a  minimum  threshold
percentage  of   outstanding   shares.   In  terms  of  day-to-day   governance,
stockholders  may lose an important right (e.g., the ability to remove directors
or  initiate  a  stockholder  resolution  without  having  to wait  for the next
scheduled meeting) if they are unable to compel a special meeting. The inability
to compel a special  meeting and the resulting  insulation  of management  could
result in suffering corporate  performance and stockholder  returns. In summary,
excessive ownership  requirements for calling meetings constrains the ability of
stockholders to act independently and hold the Board and management accountable.

     Presently  the  Charter is silent on the  ownership  threshold  to compel a
special meeting, although the Fund's Bylaws provide that a special meeting shall
be called by the  Secretary  upon the request of "holders of shares  entitled to
not less than a majority of all the votes  entitled to be cast at such meeting".
If approved, Proposal 4 would reduce the ownership threshold necessary to compel
a special meeting to shares entitled to cast 25% of all the votes entitled to be
cast at a meeting and would  supersede the  corresponding  Bylaw  provision.  If
Proposal 4 is approved,  this Bylaw  provision  will be removed by Board action.
Notably,  the 25%  requirement for compelling a special meeting is the threshold
provided  under the MGCL (see MGCL  ss.2-502) in the absence of a contrary bylaw
or charter provision.

     The  Board  considered  this  Proposal  as  well  as  the  other  Corporate
Governance  Proposals  over four  meetings  held in the first  half of 2004 (see
"Board Considerations Regarding  Declassification and Other Corporate Governance
Proposals"  beginning  on Page 9 above).  The Board  noted  that,  if  approved,
because the Horejsi Affiliates own approximately 41.0% of the Shares, Proposal 4
would  allow the  Horejsi  Affiliates  to compel a special  meeting at any time;
whereas under the present Bylaw provision, they would have to acquire additional
Fund  shares  or  garner  the  support  of  other   stockholders  to  reach  the
majority-of-outstanding-shares  threshold  to compel a  meeting.  The Board also
considered  the  possibility  of  additional  expenses  associated  with special
meetings and the  potential  disruption  to Fund  business and  diversion of the
attention of Fund management should special meetings be called. Notwithstanding,
the Board determined that the majority-of-outstanding-shares threshold is simply
too high and only serves to insulate the Board from its stockholders.  The Board
has determined that this Proposal  furthers the goal of ensuring that the Fund's
corporate  governance  policies maximize Board and management  accountability to
stockholders and would, if approved,  better allow  stockholders the opportunity
to register their views on the performance of the Fund and the Board.

Vote  Required.  Approval  of  Proposal 4  requires  the  affirmative  vote of a
majority  of the votes  entitled  to be cast on the matter by the holders of the
Common Stock.

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



                                   PROPOSAL 5

         AMENDMENT TO THE CHARTER VESTING IN THE STOCKHOLDERS THE POWER
                            TO AMEND OR ADOPT BYLAWS

     Under  the  Fund's  Charter,  the Board  has  exclusive  power to amend the
Bylaws. The Board proposes and unanimously  recommends that stockholders approve
an amendment to the Charter to (i) vest  stockholders  with the concurrent power
to make, amend, adopt or repeal Bylaws by the affirmative vote of the holders of
a majority of all votes entitled to be cast on the matter, and (ii) prohibit the
Board from making,  amending,  adopting or repealing  any Bylaw which  conflicts
with or otherwise attempts to alter the effect of  stockholder-approved  Bylaws.
If Proposal 5 is approved, any subsequent proposal to amend the Charter to alter
stockholders'  power to amend the Bylaws would require the  affirmative  vote of
the holders of a majority of all votes entitled to be cast on the matter.

     If  stockholders  approve  this  Proposal,  the Fund  will  take  action to
implement  the Proposal by filing the  appropriate  charter  documents  with the
SDAT. If approved by stockholders, the Charter will be amended to repeal Article
Seventh, Section (b) and add the following provisions:

     The Bylaws of the Corporation, whether adopted by the Board of Directors or
     the stockholders,  shall be subject to amendment, alteration or repeal, and
     new Bylaws may be made, by either (a) the affirmative vote of a majority of
     all the  votes  entitled  to be cast on the  matter;  or (b) the  Board  of
     Directors; provided, however, that the Board of Directors may not (i) amend
     or repeal a Bylaw that allocates  solely to stockholders the power to amend
     or repeal  such  Bylaw,  or (ii) amend or repeal  Bylaws or make new Bylaws
     that conflict with or otherwise alter in any material respect the effect of
     Bylaws previously adopted by the stockholders.

Purpose  of  the  Amendment.  The  Board  is  submitting  this  Proposal  to the
stockholders  as part of its ongoing  corporate  governance  initiatives  and in
keeping with its goal of ensuring that the Fund's corporate  governance policies
maximize  Board and management  accountability  to  stockholders.  This Proposal
would amend the Charter to vest in the stockholders  the power to amend,  repeal
or adopt Bylaws and prevent the Board's  unilaterally  changing Bylaw amendments
that are approved by  stockholders.  Your Board  believes that all  stockholders
benefit if they have better access and more influence in the Fund's  governance.
The Fund's Bylaws contain important policies affecting the day-to-day management
of the  Fund  which  the  Board  believes  stockholders  should  have a voice in
establishing.

     Presently the Charter  authorizes the Board to "adopt,  alter or repeal the
Bylaws of the [Fund]  except to the extent that the Bylaws  otherwise  provide",
and thus,  under the  Charter,  the  authority to make,  alter or repeal  Bylaws
resides  exclusively  with the Board.  The Board  believes that the authority to
make, alter or repeal Bylaws should be a shared authority  between the Board and
stockholders.  This permits the Board to be responsive to  house-keeping as well
as substantive matters regarding Fund operations,  while at the same time giving
stockholders  the power to effect changes should they choose to do so. The Board
also believes that when stockholders  "speak" by adopting a Bylaw,  their action
should not be subject to being overturned or altered by unilateral Board action.
The Board believes that this Proposal will  accommodate  the  practicalities  of
managing  the Fund  while at the same  time  protecting  an  important  right of
stockholders.  Proposal 5 codifies in the Charter the shared  authority to make,
alter or repeal Bylaws,  while at the same time making it clear that Bylaws that
are  adopted  by   stockholders   cannot  be  altered,   repealed  or  otherwise
circumvented without the affirmative approval of stockholders.

     The  Board  considered  this  Proposal  as  well  as  the  other  Corporate
Governance  Proposals  over four  meetings  held in the first  half of 2004 (see
"Board Considerations Regarding  Declassification and Other Corporate Governance
Proposals"  beginning  on Page 9  above).  The Board  has  determined  that this
Proposal  furthers  the goal of ensuring  that the Fund's  corporate  governance
policies maximize Board and management  accountability to stockholders and allow
stockholders  better  and  consistent  access  to effect  change  in the  Fund's
governing documents.

Vote  Required.  Approval  of  Proposal 5  requires  the  affirmative  vote of a
majority  of the votes  entitled  to be cast on the matter by the holders of the
Common Stock.

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



                                   PROPOSAL 6

         AMENDMENT TO THE CHARTER PROHIBITING THE FUND FROM OPTING INTO
            ANY PROVISION OF THE MARYLAND UNSOLICITED TAKEOVERS ACT

     The Board proposes and unanimously  recommends that stockholders approve an
amendment to the Charter that would  prohibit the Fund from being subject to the
provisions of the Maryland  Unsolicited  Takeovers Act, MGCL ss.ss.3-801 through
805  ("MUTA").  Under  MUTA,  a  Maryland  corporation  with  three  independent
directors  and a class of equity  securities  registered  under the 1933 Act may
elect to be subject,  by provision  in its charter or bylaws or a resolution  of
its board of directors and notwithstanding any contrary provision in the charter
or bylaws, to any or all of five statutory  provisions:  (i) a classified board,
(ii) a two-thirds vote requirement for removing a director,  (iii) a requirement
that the  number of  directors  be fixed only by vote of the  directors,  (iv) a
requirement  that a  vacancy  on the  board  be  filled  only  by the  remaining
directors  and for the  remainder  of the full term of the class of directors in
which the vacancy occurred,  and (v) a majority  requirement for stockholders to
compel the calling of a special meeting of stockholders. If approved, Proposal 6
would amend the Charter to prohibit the Board from  unilaterally  electing to be
subject  to  any  of  MUTA's  provisions  without  first  obtaining  stockholder
approval.  Such approval, or any subsequent amendment to the Charter to alter or
repeal this prohibition, would require the affirmative vote of a majority of all
the votes entitled to be cast on the matter.

     If  stockholders  approve  this  Proposal,  the Fund  will  take  action to
implement  the Proposal by filing the  appropriate  charter  documents  with the
SDAT.  If approved  by  stockholders,  the  Charter  would be amended to add the
following provision:

     The  Corporation is prohibited from electing to be subject to any provision
     of Title 3,  Subtitle 8 of the MGCL,  as amended from time to time,  or any
     successor to such provisions.

Purpose  of  the  Amendment.  The  Board  is  submitting  this  Proposal  to the
stockholders  as part of its ongoing  corporate  governance  initiatives  and in
keeping with its goal of ensuring that the Fund's corporate  governance policies
maximize Board and management  accountability to stockholders.  Under several of
the Corporate Governance Proposals,  the Board is recommending that stockholders
(i) declassify the Board (Proposal 2), (ii) require the Secretary of the Fund to
call special  meetings of the stockholders on the written request of the holders
of 25% of  outstanding  shares  (Proposal  4) and  (iii)  limit  the  number  of
directorships  to five (Proposal 8). MUTA conflicts with each of these Proposals
and, if the Board has the authority to elect on behalf of the Fund to be subject
to MUTA, it could circumvent each of these measures which the stockholders  have
duly approved.

     MUTA may be perceived as having the effect of  entrenching  management  and
diminishing  stockholder  influence.  Where, as here, a fund's stockholders have
expressed an informed decision to maximize  stockholder  influence,  even at the
risk of  incurring  additional  expense  or  facilitating  unwanted  stockholder
action,  it would be anomalous  for the Board at a later date to overturn  those
decisions. The Board recognized that although adopting this Proposal would limit
its  options in certain  circumstances,  it is an  appropriate  step in order to
protect the decision  stockholders will have expressed in approving Proposals 2,
4 and 8.

     The  Board  considered  this  Proposal  as  well  as  the  other  Corporate
Governance  Proposals  over four  meetings  held in the first  half of 2004 (see
"Board Considerations Regarding  Declassification and Other Corporate Governance
Proposals"  beginning  on Page 9 above  and  "Purpose  of the  Amendment"  under
Proposals  2, 4 and 8). The Board has  determined  that  Proposal 6 furthers the
goal of ensuring that the Fund's corporate  governance  policies  maximize Board
and management accountability to stockholders.

Vote  Required.  Proposal 6 requires the  affirmative  vote of a majority of the
votes entitled to be cast on the matter by the holders of the Common Stock.

THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,  UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 6.



                                   PROPOSAL 7

          AMENDMENT TO THE CHARTER TO ALTER THE VOTE REQUIRED TO EFFECT
                  CERTAIN EXTRAORDINARY CORPORATE TRANSACTIONS

     The Board proposes and unanimously  recommends that stockholders approve an
amendment to the Charter that would repeal Article Ninth and replace it with new
provisions   providing  that  no  (a)  business   combination  (e.g.,   mergers,
consolidation,  share exchanges), (b) voluntary liquidation or dissolution,  (c)
stockholder  proposal regarding specific investment  decisions,  (d) proposal to
open-end  the Fund,  or (e) self tender for more than 25% of a Fund's  shares in
any twelve-month period (collectively, "Extraordinary Actions"), may be effected
without the vote of two-thirds of the Fund's  outstanding  shares, and that such
new provisions  cannot be amended,  altered or repealed  without the affirmative
vote of at least  two-thirds  of the votes  entitled  to be cast on the  matter.
Although the Charter's current Article Ninth also provides for a two-thirds vote
for these as well as other corporate  actions,  the Board believes the amendment
contemplated  under  Proposal 7 covers a broader  range of relevant  actions and
prevents  those actions from being altered or repealed  without the  affirmative
vote of at least two-thirds of outstanding shares.

     In  addition,  the Proposal  repeals two  provisions  that,  in the Board's
opinion,  adversely limit the Fund's investment flexibility (e.g.,  restrictions
on amending the  investment  objective  or changing  the industry  concentration
policy). These are discussed in greater detail below.

     Article Ninth currently provides in pertinent part as follows:

     A vote of at least 66 2/3% of the aggregate  number of votes entitled to be
     cast thereon shall be necessary to effect any of the following actions:

     1.  Any  proposal  amending,   modifying  or  restating  the  Corporation's
     investment objectives with respect to the Corporation's assets;

     2. Any  proposal  relating to the  Corporation's  policies  with respect to
     concentrating the Corporation's assets in a particular industry or group of
     industries (as required by section 8(B) (1) (E) of the  Investment  Company
     Act of 1940);

     3. Any business combination.

     For purposes of this Article NINTH, the term "business  combination"  shall
mean the following:

          a.   Any merger or  consolidation  of the Corporation with or into any
               principal stockholder;

          b.   Any sale, lease, exchange,  mortgage,  pledge,  transfer or other
               disposition (in one transaction or a series of  transactions)  to
               or  with  any  principal   stockholder   of  any  assets  of  the
               Corporation except for portfolio  transactions of the Corporation
               effected in the ordinary course of the Corporation's business; or

          c.   The issuance or transfer by the  Corporation  (in one transaction
               or a series of  transactions) of any shares of the Corporation to
               any  principal  stockholder  in exchange for cash,  securities or
               other property ( or a combination thereof) excluding sales of any
               shares of the  Corporation in connection  with a public  offering
               thereof.

          d.   For  purposes  of  this  Article  NINTH,   the  term   "principal
               stockholder" shall mean any Corporation, person, or group (within
               the meaning of Rule 13D-5 under the  Securities  Exchange  Act of
               1934), which is the beneficial owner, directly or indirectly,  of
               more than five percent of the outstanding  shares of the stock of
               the  Corporation and shall include any "affiliate" or "associate"
               of a  principal  stockholder,  as those terms are defined in Rule
               12B-2 under the Securities Exchange Act of 1934.

     Proposal 7 would  repeal  Sections 1 and 2 above in their  entirety,  would
have the effect of  modifying  and  expanding  on the  definition  of  "business
combination"  under Section 3 above, and would add certain corporate actions not
contemplated under current Article Ninth. If stockholders approve this Proposal,
the Fund will take action to implement  the  Proposal by filing the  appropriate
charter documents with the SDAT. If approved by stockholders,  the Charter would
be amended  to repeal  Article  Ninth in its  entirety  and  replace it with the
following provisions:

         (a)  In this Section, "Business Combination" means:
             (1) a merger or consolidation of the Corporation with or into any
     person other than an investment company in a family of investment companies
     having the same investment adviser or administrator as the Corporation;
             (2) the sale, lease, exchange, mortgage, pledge, transfer or other
     disposition (in one transaction or a series of transactions) to or with any
     other person of any assets of the Corporation except (x) for the payment of
     dividends or other distributions, (y) for portfolio transactions of the
     Corporation effected in the ordinary course of the Corporation's business,
     including permitted borrowings, or (z) in connection with a reorganization
     of the Corporation with another investment company in a family of
     investment companies having the same investment adviser or administrator as
     the Corporation; or



             (3) the issuance or transfer by the Corporation (in one transaction
     or a series of transactions) of any shares of the Corporation to any other
     person in exchange for cash, securities or other property of the
     Corporation (or a combination thereof), but excluding (v) sales of any
     shares of the Corporation in connection with a public offering thereof or
     for shares of preferred stock or debt securities of the Corporation in
     connection with a private placement thereof, (w) issuance of any securities
     of the Corporation upon the exercise of any stock subscription right issued
     by the Corporation, (x) with respect to the Corporation's dividend
     reinvestment and/or cash purchase plan, (y) in connection with a dividend
     or distribution made pro rata to all holders of stock of the same class, or
     (z) a transaction within the scope permitted under (a)(1) or (2) above.
         (b) In addition to the approval by the Board of Directors required by
     applicable law, the Charter or the Bylaws of the Corporation, the
     affirmative vote of the holders of shares entitled to cast at least
     two-thirds of all the votes entitled to be cast on the matter shall be
     required to approve:
             (1) a Business Combination;
             (2) a voluntary liquidation or dissolution of the Corporation;
             (3) a stockholder proposal as to specific investment decisions made
     or to be made with respect to the Corporation's assets;
             (4) an amendment to the Charter to convert the Corporation from a
     closed-end investment company to an open-end investment company or unit
     investment trust (as such terms are defined by the Investment Company Act
     of 1940, as amended), whether by merger or otherwise;
             (5) a self tender for, or acquisition by the Corporation of, more
     than 25% of the Corporation's outstanding shares of stock, in the
     aggregate, during any twelve-month period.
         (c) This Section may not be amended, altered or repealed without the
     affirmative vote of the holders of at least two-thirds of all the votes
     entitled to be cast on the matter.

Purpose of the  Amendment.  The Board is  submitting  this  Proposal for several
important  reasons.  First,  it will  eliminate what the Board believes to be an
unnecessary impediment to the Fund's investment flexibility. The current Article
Ninth imposes an  exceptionally  high burden on the Fund's ability to modify its
industry  concentration  policy or investment  objective,  requiring the Fund to
seek approval by a super-majority  of stockholders for any change.  For example,
under  Proposal 10 below,  the Board  recommends  changing  the Fund's  industry
concentration policy to expand the scope of financial service companies in which
the Fund will invest, a change requested by the Adviser. The Board believes such
a change is vital to the  long-term  health and  vitality of the Fund.  However,
under  current  Article  Ninth,  such a change  would  require  the  approval of
two-thirds of outstanding  shares, a difficult  threshold to achieve.  The Board
believes that imposing such a high threshold unduly restricts the Fund's ability
to effectively react to a changing financial services industry which it now must
do. Notably,  most investment  companies'  voting threshold for any such change,
including a change in the Fund's investment  objective,  would be governed under
the  typical and less  burdensome  provisions  of the 1940 Act (i.e.,  a "40 Act
Majority").  (ENDNOTE 1) For further discussion  regarding the need for changing
the industry  concentration policy, see text accompanying Proposal 10 on page 19
below.

     The second  reason for this  Proposal is to protect  the Fund's  closed-end
structure and certain other features and assure stockholders that these will not
be changed without substantial support of stockholders.  The Board believes that
a consistent legal and operating structure is essential to the Fund's long-range
planning  and  investment   horizons.   The  Board  believes  that  all  of  the
Extraordinary  Actions  described  in this  Proposal  have the  potential  to be
disruptive to the efficient and profitable  operation of the Fund. However,  the
Board  recognized  that  there  may be  times  when  Extraordinary  Actions  are
warranted  and  may  receive  substantial  support  of  stockholders.  In  these
circumstances,   if  the  Board  approves  such  a  transaction,  and  there  is
substantial  stockholder support, the Board believes that the transaction should
go forward.

Board  Considerations.  The Board  considered  Proposal 7 along with, and at the
same meetings at which it considered,  the other Corporate  Governance Proposals
(see  "Board  Considerations  Regarding  Declassification  and  Other  Corporate
Governance  Proposals" beginning on Page 9 above). The Board recognized that the
Charter  already  imposes a  two-thirds  voting  requirement  on the approval of
certain Extraordinary  Actions.  However, as discussed above, the Board believes
that  certain of these  actions  should not be  subject to any  enhanced  voting
thresholds  (e.g.,  changes in investment  objective and industry  concentration
policy) and that other  disruptive  actions  contemplated  under current Article
Ninth should be expanded or refined (e.g., business combinations).  In addition,
the Board believes it is important and appropriate to prevent the new provisions
from being  amended in the future  without  approval of holders of two-thirds of
all outstanding shares.



     The Board  recognized  that current Article Ninth was adopted in an attempt
to protect the Fund's  investment  objective or concentration  policy from being
changed  and  possibly  frustrating   stockholders  who  purchased  Fund  shares
expecting  it to remain  focused  and  concentrated  in the  financial  services
industry.  However,  the  Board  also  recognized  that the  financial  services
industry is not static,  that it has changed and will  continue to change in the
future.  The Board  believes that creating an  environment in which the Fund can
reasonably  adapt to a changing  market is in the best  interest of the Fund and
its  stockholders.  As noted above,  one effect of Proposal 7 would be to reduce
the current voting  requirement to change the Fund's  investment  objective from
two-thirds  to a  majority  of  outstanding  shares,  thus  making it easier for
stockholders  to  effect a  change.  It  should  be noted  that  Proposal  7, if
approved,  would make it easier for the Board or the Fund's largest stockholder,
the  Horejsi  Affiliates,  to  recommend  a  change  in  the  Fund's  investment
objective.  In recent years,  the Horejsi  Affiliates  have effected  investment
objective  changes in two other  closed-end  investment  companies,  the Boulder
Total Return Fund and the Boulder Growth & Income Fund. The Board has no current
intent to change the Fund's investment objective; similarly,  representatives of
the Horejsi  Affiliates  have  indicated  to the Board that they have no current
intent to recommend or encourage such a change.

     As  discussed  above and in detail  under  Proposal 10 below,  because of a
consolidation  in  the  financial  services  industry,  the  investment  options
permissible  under  the  Fund's  current   concentration  policy  have  narrowed
dramatically  over the past decade.  The Board  believes  that, in order for the
Fund to prosper and  continue to pursue its  investment  objective  of long-term
capital  appreciation,  it must have the flexibility to adapt its  concentration
policy without  having to jump the hurdle of achieving a two-thirds  stockholder
approval.  Proposal 7 would  accomplish  this goal by  removing  the  two-thirds
hurdle so that future changes (including the change  contemplated under Proposal
10) would be subject to approval by a 40 Act Majority.  Under Proposal 10 below,
the  Fund's  concentration  policy  would be changed so as to permit the Fund to
invest in a much broader range of financial  services  companies with respect to
which  it is  currently  restricted.  Since  current  Article  Ninth  imposes  a
two-thirds voting threshold on passage of any proposal which seeks to change the
Fund's  concentration  policy,  if Proposal 7 is not  approved by  stockholders,
passage of  Proposal  10 will  require  approval by  two-thirds  of  outstanding
shares;  however, if stockholders approve Proposal 7, thus repealing the current
Article  Ninth,  passage  of  Proposal  10  will  require  approval  by a 40 Act
Majority, as discussed in greater detail in the text accompanying Proposal 10.

     With  respect  to  the  other   super-majority   provisions  that  will  be
implemented  under Proposal 7, the Board  understands  that such  provisions are
often viewed as not being stockholder  friendly.  However, on balance, the Board
determined that the Proposal would result in a net benefit to stockholders.  The
Board determined that the Proposal would protect the Fund and stockholders  from
certain  stockholders  or the Fund's own  management  who may seek to change the
Fund's long-standing  closed-end investment structure,  or to effect a merger or
other  business  combination.  Because  such  changes  would be  disruptive  and
contrary to the expectations of many (if not most) stockholders and could result
in adverse economic  effects,  the Board determined that the special  provisions
contemplated by this Proposal are reasonable and justified. The Board recognized
that there may be  circumstances  where a proposed  Extraordinary  Action may be
warranted and in the best interest of the Fund and that the voting  requirements
contemplated  by the  Proposal  might  make such an  Extraordinary  Action  more
difficult  to  effect.  However,  if such a  proposal  was  clearly  in the best
interest of the Fund and stockholders, the proposal would likely be supported by
the Board and would  receive  substantial - and thus the necessary - stockholder
support for passage.  The Board noted that,  because of the Horejsi  Affiliates'
current control position in the Fund's shares, the effect of this Proposal would
be to give the Horejsi  Affiliates  considerable  influence in the  passage,  or
actual or de facto veto power over any of the Extraordinary Actions contemplated
by the Proposal.  Nonetheless, the Board determined that the net benefits to the
Fund outweighed any increase in influence of the Horejsi Affiliates because this
Proposal assures all stockholders of a stable and consistent operating structure
and  environment  within  which they can  further  their  investment  goals.  In
addition, the influential position of the Horejsi Affiliates,  assuming approval
of Proposal 7, is not  significantly  different from its position under existing
Charter provisions.

Vote  Required.  Approval  of  Proposal 7  requires  the  affirmative  vote of a
majority  of the votes  entitled  to be cast on the matter by the holders of the
Common Stock.

THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,  UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 7.



                                   PROPOSAL 8

          AMENDMENT TO THE CHARTER TO ESTABLISH THE NUMBER OF DIRECTORS
                                    AT FIVE

     The Board proposes and unanimously  recommends that stockholders approve an
amendment to the Charter  providing that the number of Directors  shall be five.
Any  subsequent  amendment  to this new  Charter  provision  would  require  the
affirmative  vote of the holders of a majority  of all the votes  entitled to be
cast on the matter.  If stockholders  approve this Proposal,  the Fund will take
action to implement  the Proposal by filing the  appropriate  charter  documents
with the SDAT.  If approved by  stockholders,  Article Sixth will be repealed in
its entirety and replaced by the following provision:

     The number of directors shall be five.

Purpose  of  the  Amendment.  The  Board  is  submitting  this  Proposal  to the
stockholders  as part of its ongoing  corporate  governance  initiatives  and in
keeping with its goal of ensuring that the Fund's corporate  governance policies
maximize Board and management  accountability to stockholders.  Company charters
often  contain  provisions  that set a high  upper-limit  on the number of board
seats,  permitting  the  company's  board to increase or decrease  the number of
board seats in their  discretion,  subject to this upper  limit.  Currently  the
Fund's  Charter  sets a lower  limit of three on the Board  size and the  Bylaws
contemplate a Board size of between three and eleven  Directors,  permitting the
Board to  increase or  decrease  its size  subject to the upper limit of eleven.
Often boards use such  provisions to quickly  increase or decrease their size in
an effort to dilute the voting  impact of  directors - such as those  elected in
proxy contests - with views contrary to those of management. The Board views the
ability to  manipulate  the number of  members on the Board as  unnecessary  and
ultimately  ineffective  in thwarting  stockholder  activism.  In  addition,  it
potentially  increases Fund expenses and insulates the Board from  stockholders.
Common  sense  suggests  that if the Fund has more  Board  seats,  it (and  thus
stockholders)  will spend more on Board  compensation.  The Board believes that,
because of the relatively narrow business focus of an investment company such as
the Fund, five Directors can adequately and efficiently fulfill their obligation
to oversee the  operations of the Fund and its management and act as "watchdogs"
for  stockholders.  The Board  believes  that the best approach is to seek a few
highly qualified  individuals to fill  directorships  and pay them fairly.  This
way,  stockholders  get more  "bang for the  buck" in their  Board and don't pay
unnecessary Board expenses.

Vote  Required.  Approval  of  Proposal 8  requires  the  affirmative  vote of a
majority  of the votes  entitled  to be cast on the matter by the holders of the
Common Stock.

THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,  UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 8.


                                   PROPOSAL 9

                PROPOSAL TO AMEND AND RESTATE THE FUND'S CHARTER

     The Board proposes and unanimously  recommends that stockholders  approve a
Proposal  to amend and  restate  the  Charter  as set forth in the  Articles  of
Amendment and Restatement attached hereto as Exhibit A.

Purpose  of the  Amendment.  There  are many  Charter  amendments  proposed  for
consideration  and  approval at this  Meeting.  Because,  if  approved,  so many
amendments  will be made to the  Charter all at once,  the  Meeting  presents an
opportunity to consolidate  all of the provisions of the Charter  (including the
amendments  approved at the  Meeting).  Various  conforming  and  organizational
amendments,  as well as the substantive  amendments  described under each of the
Corporate  Governance  Proposals  above,  are reflected in their entirety in the
attached Articles of Amendment and Restatement.

     If  stockholders  approve  Proposals  2  through  9, the Fund will file the
Articles of Amendment and Restatement with the SDAT. If certain of the Corporate
Governance  Proposals are approved by stockholders  and others are not, the Fund
will not  implement  Proposal 9 and will not file the Articles of Amendment  and
Restatement.  Instead,  the Fund will file with the SDAT  Articles of  Amendment
reflecting only those Charter amendments approved by stockholders at the Meeting

Vote Required.  Proposal y9 requires the  affirmative  vote of a majority of the
votes entitled to be cast on the matter by the holders of the Common Stock.

THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,  UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 9.



                                   PROPOSAL 10

       PROPOSAL TO AMEND THE FUND'S CONCENTRATION AND INVESTMENT POLICIES

     The Board proposes and unanimously  recommends that stockholders  approve a
Proposal  to amend the  Fund's  industry  concentration  policy  and  investment
policy. Presently, the Fund has a fundamental concentration policy requiring the
Fund to invest at least 65% of its assets in  securities  issued by "savings and
banking  institutions,  mortgage banking  institutions and holding  companies of
savings, banking and mortgage banking institutions". In addition, the Fund has a
duplicative fundamental investment restriction requiring the Fund, in effect, to
invest  at  least  25% of its  assets  in the  "savings,  banking  and  mortgage
industry".  Proposal  10 would  eliminate  these two  overlapping  policies  and
establish a single new concentration policy providing that:

     The Fund will invest,  under normal market conditions,  at least 65% of its
     assets in financial services companies.

     The new concentration policy (the "Concentration  Policy") would accomplish
the goal of the two old policies and would  remain a  fundamental  policy of the
Fund and thus could not be changed without stockholder  approval (e.g., a 40 Act
Majority;  although see Vote Required below). However, the underlying definition
of  "financial  services  companies"  could be  modified  by the  Board  without
shareholder  approval,  thus  permitting the Fund to quickly respond to changing
market  conditions.  Under  current  market  conditions,  the Fund would  define
"financial  service  companies" to include,  but not be limited to,  savings and
banking  institutions,  mortgage banking  institutions,  real estate  investment
trusts  ("REITs"),  consumer finance  companies,  credit  collection and related
service  companies,   insurance  companies,  security  and  commodity  brokerage
companies,  investment advisory firms and financial  conglomerates,  and holding
companies of any of these companies.

     In  addition  to the  two  overlapping  concentration  policies,  the  Fund
currently  has a  fundamental  investment  policy  requiring the Fund to invest,
under normal  circumstances,  at least 80% of its assets (net  assets,  plus the
amount of any borrowing for investment purposes) in securities issued by finance
and  financial   service-related   companies,   including  savings  and  banking
institutions,  securities  issued by mortgage banking  institutions,  REITs, and
consumer and industrial finance, insurance, brokerage, investment banking, asset
management,  and  other  financial  service  companies,  as well as the  holding
companies of the foregoing (the "Investment Policy").  The Investment Policy was
adopted  by the Fund to comply  with Rule 35d-1  under the 1940 Act (the  "names
rule") which  generally  requires funds with names  signifying a certain type of
investment to have an investment  policy  requiring  that 80% of their assets be
invested  in  such  investments.   Since  the  Fund's  name  includes  the  term
"financial",  which suggests a particular  type of investment,  the Fund adopted
the Investment  Policy.  Proposal 10 would change this Investment Policy to be a
"non-fundamental"  policy  of the Fund  and  would  conform  its  definition  of
"financial service companies" to be consistent with the definition recited above
in the  discussion of the  Concentration  Policy.  The practical  effect of this
change (i.e.,  changing from a fundamental to  non-fundamental  policy) would be
that the Board  would have the  authority  to change  and adjust the  Investment
Policy in the future in response  to changing  market  conditions  after  giving
shareholders 60 days prior notice.  Currently,  because the Investment Policy is
"fundamental" any such change would require  shareholder  approval.  There is no
current intent to change the Investment Policy beyond the change contemplated by
Proposal 10 (i.e., changing it from a fundamental to a non-fundamental  policy).
Notably,  as discussed  above, if Proposal 10 is approved,  despite changing the
Investment Policy to be non-fundamental, the Concentration Policy would remain a
fundamental  policy of the Fund,  thus requiring the Fund to invest at least 65%
of its assets in financial services  companies.  If Proposal 10 is adopted,  the
Fund intends to adopt a  non-fundamental  policy to invest,  under normal market
conditions,  at least 80% of its total  assets  (including  any  borrowings  for
investment  purposes) in financial services  companies,  as defined from time to
time by the Board.

Purpose of Change.  The original 65%  concentration  policy  discussed above was
conceived  in  the  mid-1980s   and  modified  in  the  early  1990s.   The  25%
concentration  policy  discussed  above was adopted by  stockholders in 1999. As
discussed  above,  the  Investment  Policy  was  adopted by the Board in 2002 in
response to Rule 35d-1 under the 1940 Act. While the Investment  Policy requires
the  Fund to  invest  at  least  80% of its net  assets  in  financial  services
companies,  the two  concentration  policies  require  that at least  65% of the
Fund's assets be invested in savings,  banking and mortgage  institutions.  As a
result,  the Fund's ability to invest in financial services companies other than
savings, banking and mortgage institutions has been limited. Nevertheless, these
policies  have not  hampered  the Fund  because  there was a broad  and  diverse
universe  of  investment  opportunities,  despite  the  concentration  policies'
relatively   narrow  scope  (i.e.,   savings,   banking  and  mortgage   banking
institutions).   However,  over  the  past  several  years  as  a  result  of  a
consolidation  in  the  financial  services  industry,  the  investment  options
permissible  under these  concentration  policies have  narrowed  significantly.
Making things more  difficult  for the Fund is the fact that many  companies not
traditionally  in the "savings,  banking and mortgage"  industries have expanded
their  businesses  taking  on many of the  attributes  and  core  businesses  of
"savings, banking and mortgage" companies (e.g., insurance companies, securities
brokerages,  etc.). This has affected the Fund in two ways: First, because these
new  financial  hybrids  compete  with the type of  companies  in which the Fund
currently  invests,  the  opportunities to buy attractive  savings,  banking and
mortgage  companies  are  more  scarce  and the  companies  are  generally  less
attractive than certain other financial services companies.  Second, because the
hybrids may evolve into de facto financial service companies,  they often become
good  investment  candidates  for the Fund because their primary focus is in the
financial  services  industry.  However,  because  the  Fund  currently  has the
relatively narrow  concentration  policy of investing at least 65% of its assets
in savings, banking and mortgage companies, it is limited in the extent to which
it can invest in these and other  otherwise  appropriate  and attractive  hybrid
financial services companies.



     The adoption of the Concentration  Policy under Proposal 10 would allow the
Fund to invest a greater portion of its assets in financial  services  companies
outside of savings,  banking and mortgage  banking  institutions,  providing the
Adviser with the ability to focus a larger portion of the Fund in other types of
financial  services  institutions.  The new Concentration  Policy would remain a
"fundamental  policy" of the Fund such that any amendment in the future would be
subject to stockholder approval (see Vote Required below).

     As discussed above, the Investment  Policy was adopted to conform with Rule
35d-1 under the 1940 Act.  Making the  Investment  Policy  "non-fundamental"  is
consistent  with the adoption of the new  Concentration  Policy and will provide
the Fund and its  Adviser  with  flexibility  in  adapting  to  changing  market
conditions.  If approved by stockholders,  it will avoid the time and expense of
having to seek  shareholder  approval  if in the future the Fund seeks to change
its  Investment  Policy or the scope of its  definition  of  "financial  service
companies" in order to adapt to a changing market, a process which is costly and
could take several months. In addition,  if the Concentration  Policy is adopted
as proposed,  the existing  Investment  Policy becomes redundant and, because of
the differing definitions of financial services companies, potentially confusing
to investors and more difficult for the Adviser to comply with.

Board  Considerations.  The Board considered  Proposal 10 along with, and at the
same meetings at which it considered  the Corporate  Governance  Proposals  (see
"Board Considerations Regarding  Declassification and Other Corporate Governance
Proposals"  beginning  on Page 9 above).  Prior to these  meetings,  on  several
occasions, the Fund's Adviser and its portfolio manager presented the Board with
a  overview  of the  financial  services  industry,  explaining  that its recent
consolidation  significantly  reduced the number of  companies in which the Fund
could invest under its current,  narrowly defined  concentration  policies.  The
Adviser  explained  that many of the businesses in which the Fund is required to
invest  primarily  (e.g.,  banking,  savings  and  mortgage  lending)  have been
assimilated  into  companies  in which the Fund is limited in  investing  (e.g.,
hybrid  financial  service  companies such as insurance  companies or securities
brokerages).  Many of these hybrid  financial  companies are good candidates for
the Fund and are consistent  with its historical  goal of investing in financial
related companies.  However,  under the Fund's current  concentration policy, it
must  invest at least 65% of its assets in "savings  and  banking  institutions,
mortgage  banking  institutions  and holding  companies of savings,  banking and
mortgage banking institutions".  Although under this policy, the Fund may invest
the remaining 35% of its assets in these hybrid financial  companies,  the other
65% must be  invested  in the  narrowly  defined  set of  "savings,  banking and
mortgage" companies.  The Adviser informed the Board that,  considering the size
of the Fund and the  consolidation of this already narrow business niche, it has
been increasingly  difficult to fill and maintain the 65% "savings,  banking and
mortgage"  basket with good  companies.  Proposal 10 would permit the Fund's 65%
basket to be filled with a much broader and diverse range of financial  services
companies,  a move  which  the  Board  and  Adviser  believe  will  inure to the
long-term benefit of the Fund and stockholders.

     In  addition,  the  Board  recognized  that the  recommended  change in the
Investment Policy (i.e.,  changing it from fundamental to  non-fundamental)  was
consistent  with the new  Concentration  Policy and was necessary to provide the
Board and Adviser with flexibility in adapting the Fund's  investment focus in a
rapidly  changing market.  The Board noted that, if approved,  the change in the
Investment  Policy  would  make it  easier  to change  or  redefine  the  Fund's
investment focus.  However,  the Board indicated no current intent to effect any
such  change.   In  the  end,  the  Board   determined  that  adopting  the  new
Concentration  Policy and  Investment  Policy  would  provide the Adviser with a
broader and more diverse  range of  investment  possibilities  while at the same
time respecting the Fund's historical investment focus on the financial services
industry,  was consistent  with and will have a beneficial  effect on the Fund's
primary investment  objective of long-term capital  appreciation,  and is in the
best interest of the Fund.



Risks Associated with Adopting the Concentration  Policy and Investment  Policy.
The  Board  also   considered  the  risks   associated  with  adopting  the  new
Concentration  Policy and Investment Policy. As a threshold  consideration,  the
Board noted that the Fund is already and has been since  inception  concentrated
in a narrow set of financial  services  industries (i.e.,  savings,  banking and
mortgage  banking)  which are subject,  as any specific  industry would be, to a
certain  inherent set of risks.  Specifically,  these  industries are especially
subject  to  the  effects  of  interest  rate  changes,  concentration  of  loan
portfolios in particular businesses such as real estate, energy,  agriculture or
high technology-related companies, federal and state regulation; and competition
within those  industries as well as with other types of financial  institutions.
Additionally,  the  shares  of many of the  small to  medium-sized  savings  and
banking  institutions  in which the Fund  currently  invests  are not  listed on
national  securities  exchanges or actively  traded.  As a result,  there may be
limitations  on the Fund's  ability to  dispose  of  securities  at times and at
prices that are most  advantageous  to the Fund.  However,  the closed-end  fund
format of the Fund mitigates this risk,  especially when compared to an open-end
fund.  Generally,  because of its Concentration Policy, the Fund's shares may be
subject  to  greater  risk than (i)  those of other  investment  companies  with
portfolios less concentrated in a single industry or group of related industries
and (ii) those with  portfolios  less committed to the securities of savings and
banking  institutions.  The Board  recognized that broadening the  Concentration
Policy  may have the effect of  mitigating  some of the  inherent  concentration
risks because the Fund should be able to diversify its investments across a much
broader  range  of  financial  services  companies  (i.e.,  companies  which  it
previously has been limited in  considering).  For example,  because Proposal 10
would permit more of the Fund's assets to be invested in the "hybrid"  financial
service  companies  discussed  above (e.g.,  insurance  companies),  regulations
pertaining primarily to savings and banking institutions  governed by the Office
of Thrift  Supervision  might have less of an effect on the Fund than  currently
might be the case. Similarly,  since Proposal 10 would permit a broader range of
investments,  increased  competition  in a  particular  sector of the  financial
services industry might not necessarily  affect the Fund's  investments in other
sectors of the industry.

     Nonetheless,  the Board recognized that adopting the  Concentration  Policy
might expose the Fund to risks which it had not been subject or as vulnerable to
in the past.  For example,  under Proposal 10 the Fund would be able to invest a
larger  percentage of its assets in the insurance  industry,  a very competitive
industry that may be adversely  affected by economic  conditions,  interest rate
fluctuations,  the  ability  or  inability  to raise  rates,  federal  and state
regulation  (including rate regulation),  or unanticipated  national or regional
disasters  or  terrorist  attacks.   The  removal  of  regulatory   barriers  to
participation  in certain  segments of the  financial  services  sector may also
increase competitive pressures (including market share and price competition) on
different  types of  firms.  The  availability  and  cost of funds to  financial
services  firms  is  crucial  to  their  profitability.  Consequently,  volatile
interest rates and unfavorable  economic  conditions can adversely  affect their
performance. In addition,  regulations of the Securities and Exchange Commission
limit a fund's  investment in the  securities of companies that derive more than
15% of  their  gross  revenues  from the  securities  of  investment  management
businesses.  Also,  broadening  the  Fund's  concentration  might  result in the
Adviser investing in a sector of the financial services industry with respect to
which it does not have demonstrated or extensive experience with respect to this
Fund.  Despite these and other risks inherent in adopting the new  Concentration
Policy, the Board determined that such risks were sufficiently outweighed by the
benefits of broadening the Fund's  existing  concentration  policy and expanding
and diversifying the universe of companies in which the Fund could invest.

Vote Required.  Under current  Article  Ninth,  the two  concentration  policies
cannot be changed without approval by at least two-thirds of outstanding shares.
However,  under  Proposal  7 above,  current  Article  Ninth is  proposed  to be
repealed in which case, the concentration  policies may be changed with approval
by a 40 Act  Majority.  The  Investment  Policy  cannot be changed  without  the
approval of a 40 Act Majority. Accordingly:

If Stockholders  Approve Proposal 7. If stockholders approve Proposal 7 and thus
repeal  current  Article  Ninth,   passage  of  Proposal  10  will  require  the
affirmative  vote of a 40 Act Majority  (i.e.,  the lesser of (A) 67% or more of
the voting  securities  present at a meeting at which a quorum is present or (B)
more than 50% of the outstanding voting securities).

If  Stockholders  Do Not  Approve  Proposal  7. If  stockholders  do not approve
Proposal 7, and thus Article Ninth remains  unchanged and effective,  passage of
Proposal 10 will require (i) with respect to the new 65%  Concentration  Policy,
the affirmative  vote of at least two-thirds of the votes entitled to be cast on
the matter by the holders of the Common  Stock and (ii) with  respect to the 25%
investment  restriction and the Investment  Policy, the affirmative vote of a 40
Act Majority.  The Fund will implement the change to the Investment  Policy even
if the new 65%  Concentration  Policy  is not  approved.  The  change to the 25%
investment   restriction   is   contingent  on  the  approval  of  the  new  65%
Concentration Policy.

THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,  UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 10.




                       SUBMISSION OF STOCKHOLDER PROPOSALS

     All proposals by stockholders of the Fund that are intended to be presented
at the Fund's next Annual Meeting of  stockholders to be held in 2005 must be in
writing and received by the Fund for  consideration  for inclusion in the Fund's
proxy  statement  relating to the meeting no later than March 17, 2005. Any such
proposal  shall set forth as to each  matter the  stockholder  proposes to bring
before the meeting (i) a brief description of the business desired to be brought
before the meeting and the reasons for conducting  such business at the meeting,
(ii)  the  name  and  address,  as  they  appear  on the  Fund's  books,  of the
stockholder proposing such business, (iii) the class and number of shares of the
capital stock of the Fund which are beneficially  owned by the stockholder,  and
(iv) any material  interest of the  stockholder  in such  business.  Stockholder
proposals,  including any accompanying supporting statement,  may not exceed 500
words.  A  stockholder  desiring  to  submit  a  proposal  must be a  record  or
beneficial owner of Shares with a market value of $2,000 and must have held such
Shares for at least one year.  Further,  the  stockholder  must continue to hold
such Shares through the date on which the meeting is held.  Documentary  support
regarding the  foregoing  must be provided  along with the  proposal.  There are
additional  requirements regarding proposals of stockholders,  and a stockholder
contemplating  submission  of a proposal is  referred to Rule 14a-8  promulgated
under the 1934 Act. The timely  submission  of a proposal does not guarantee its
inclusion in the Fund's proxy materials.

     Any  submission of a director  nomination  should  include at a minimum the
following   information:   As  to  each  individual  proposed  for  election  or
re-election as director, the name, age, business address,  residence address and
principal  occupation or employment of such  individual,  the class,  series and
number  of  shares  of  stock of the Fund  that are  beneficially  owned by such
individual,  the date shares were  acquired  and the  investment  intent of such
acquisition, whether such stockholder believes such individual is, or is not, an
"interested  person" of the Fund (as defined in the 1940 Act),  and  information
regarding  such  individual  that  is  sufficient,  in  the  discretion  of  the
Nominating  Committee,  to make such  determination,  and all other  information
relating to such  individual that is required to be disclosed in solicitation of
proxies for election of directors  in an election  contest  (even if an election
contest is not  involved) or is  otherwise  required,  in each case  pursuant to
Regulation 14A (or any successor provision) under the Securities Exchange Act of
1934, as amended, and the rules thereunder  (including such individual's written
consent to being named in the proxy  statement  as a nominee and to serving as a
director  (if  elected)).  In  the  case  of  the  Fund  holding  a  meeting  of
stockholders, any such submission in order to be considered for inclusion in the
Fund's proxy  statement,  should be submitted by a date not later than the 120th
calendar day before the date the Fund's proxy statement was released to security
holders in connection  with the Fund's previous year's annual meeting or, if the
Fund has changed the meeting date by more than 30 days or if no meeting was held
the previous year,  within a reasonable time before the Fund begins to print and
mail its proxy statement.

     A stockholder  may nominate an individual to serve as a director or propose
other business at an annual meeting, even if the stockholder does not submit the
nomination  or proposal for  inclusion in the Fund's  proxy  statement.  In this
case, the current Bylaws provide that the stockholder must provide notice to the
Fund,  including certain of the information  described above, on or before March
17, 2005.

                             ADDITIONAL INFORMATION

     INDEPENDENT  ACCOUNTANTS.  On January 23, 2004, the Audit  Committee of the
Board,  consisting  of those  Directors  who are not  "interested  persons"  (as
defined in the 1940 Act),  selected KPMG LLP ("KPMG"),  99 High Street,  Boston,
Massachusetts 02110-2371, as independent accountants for the Fund for the Fund's
fiscal year ending  March 31,  2004.  The  selection of KPMG was ratified by the
entire Board.  A  representative  of KPMG will not be present at the Meeting but
will be available by telephone and will have an  opportunity to make a statement
if the representative so desires and will be available to respond to appropriate
questions.

     PricewaterhouseCoopers  LLP ("PWC"), 1177 Avenue of the Americas, New York,
NY 10036,  served as  independent  accountants  for the Fund since  February 18,
1997. PWC's reports on the financial statements for the past two years contained
no adverse opinion or disclaimer of opinion and was not qualified or modified as
to  uncertainty,  audit scope or  accounting  principles.  During the two fiscal
years immediately preceding PWC's resignation,  there have been no disagreements
with such  accountants  on any matter of  accounting  principles  or  practices,
financial statement disclosure, or auditing scope or procedure.



     Set forth  below are audit fees and  non-audit  related  fees billed to the
Fund for professional  services received from PWC and KPMG for the Fund's fiscal
years ended March 31, 2003 and 2004, respectively.





              Fiscal Year Ended        Audit Fees       Audit-Related Fees       Tax Fees*          All Other Fees
              -----------------        ----------       ------------------       ---------          --------------
                                                                                             

                  3/31/2003              $26,000                $0                   $0                  $ 0

                  3/31/2004              $23,600                $0                 $5,600                $ 0


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



     The Audit Committee  Charter requires that the Audit Committee  pre-approve
all audit and non-audit services to be provided by the auditors to the Fund, and
all non-audit  services to be provided by the auditors to the Fund's  investment
adviser and any service  providers  controlling,  controlled  by or under common
control with the Fund's investment adviser  ("affiliates") that provide on-going
services to the Fund, if the engagement  relates  directly to the operations and
financial reporting of the Fund, or to establish detailed  pre-approval policies
and procedures for such services in accordance with applicable  laws. All of the
audit,  audit-related  and tax services  described  above for which PWC and KPMG
billed the Fund fees for the fiscal  years  ended  March 31,  2003 and March 31,
2004 were pre-approved by the Audit Committee.

     KPMG has  informed  the Fund that it has no direct  or  indirect  financial
interest in the Fund. For the Fund's fiscal year ended March 31, 2004,  KPMG did
not provide  any  non-audit  services or bill any fees for such  services to the
Adviser or any  affiliates  thereof that provide  services to the Fund.  For the
Fund's fiscal year ended March 31, 2003, the Fund's former auditor,  PWC, billed
fees to the Adviser in the amount of approximately  $910,000 for other non-audit
services  provided to the  Adviser.  For the Fund's  fiscal year ended March 31,
2004, PWC billed fees to the Adviser in the amount of approximately $797,000 for
other non-audit services provided to the Adviser.

     SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING  COMPLIANCE.  Section 16(a) of
the 1934 Act and Section 30(h) of the 1940 Act requires the Fund's Directors and
officers,  persons affiliated with the Fund's investment  advisers,  and persons
who own more than 10% of a registered  class of the Fund's  securities,  to file
reports of  ownership  and  changes of  ownership  with the SEC and the New York
Stock  Exchange.  Directors,  officers  and  greater-than-10%  stockholders  are
required by SEC regulations to furnish the Fund with copies of all Section 16(a)
forms they file. Based solely upon the Fund's review of the copies of such forms
it receives and written  representations  from such  persons,  the Fund believes
that  through the date hereof all such filing  requirements  applicable  to such
persons were complied with.

     BROKER  NON-VOTES  AND  ABSTENTIONS.  A proxy for shares held by brokers or
nominees as to which (i) instructions have not been received from the beneficial
owners or the persons  entitled to vote and (ii) the broker or nominee  does not
have  discretionary  voting power on a particular matter is a broker "non-vote".
Proxies   that   reflect   abstentions   or   broker   non-votes   (collectively
"abstentions")  will be counted as shares that are present and  entitled to vote
on the  matter  for  purposes  of  determining  the  presence  of a  quorum.  In
circumstances  where the vote to approve a matter is a percentage  of votes cast
(Proposal  y1),  abstentions  have no effect  because  they are not a vote cast.
Thus, they will be disregarded in determining the "votes cast" on the particular
issue. However, with respect to Proposals y2 through y9, where the vote required
to approve the matter is the affirmative  vote of the holders of a percentage of
the total  number of votes  entitled  to be cast,  an  abstention  will have the
effect of a vote "against" the respective proposals.  Similarly, with respect to
Proposal  10, where the vote  required to approve the matter is the  affirmative
vote of the  holders of either  (i) a  percentage  of the total  number of votes
entitled to be cast or (ii) a percentage of the voting securities present at the
meeting, an abstention will have the effect of a vote "against" the proposal.



                    OTHER MATTERS TO COME BEFORE THE MEETING

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




--------------------------------------------------------------------------------
IT IS  IMPORTANT  THAT  PROXIES BE RETURNED  PROMPTLY.  STOCKHOLDERS  WHO DO NOT
EXPECT TO ATTEND THE MEETING ARE  THEREFORE  URGED TO COMPLETE,  SIGN,  DATE AND
RETURN  ALL  PROXY  CARDS  AS  SOON AS  POSSIBLE  IN THE  ENCLOSED  POSTAGE-PAID
ENVELOPE.
--------------------------------------------------------------------------------



 If you have any questions concerning this Proxy Statement or need help voting
                           your shares, please call:

                            MacKenzie Parterns, Inc.
                               [GRAPHIC OMITTED]
                               105 Madison Avenue
                            New York, New York 10016
                       email: proxy@mackenziepartners.com
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                                    EXHIBIT A


                           FIRST FINANCIAL FUND, INC.

                      ARTICLES OF AMENDMENT AND RESTATEMENT

     FIRST:   First  Financial   Fund,   Inc.,  a  Maryland   corporation   (the
"Corporation"),  desires to amend and restate its charter as currently in effect
and as hereinafter amended.

     SECOND: The following provisions are all the provisions of the charter (the
"Charter") currently in effect and as hereinafter amended:

                                   ARTICLE I
                                      NAME
               The name of the corporation (the "Corporation") is:
                           First Financial Fund, Inc.

                                   ARTICLE II
                                     PURPOSE

     Section 2.1 (a) The purposes for which the Corporation is formed are to act
as a closed-end,  diversified  management  investment company registered as such
with the Securities and Exchange  Commission  pursuant to the Investment Company
Act of 1940 (the  "1940  Act"),  and to  exercise  and enjoy all of the  powers,
rights and privileges  granted to or conferred upon  corporations by the General
Laws of the State of Maryland now or hereafter in force, including:

          (1) To hold, invest and reinvest the funds of the Corporation,  and to
     purchase,  subscribe for or otherwise  acquire,  to hold for  investment or
     otherwise,  and in connection therewith to hold part or all of its funds in
     cash, to trade and deal in, sell, assign,  negotiate,  transfer,  exchange,
     lend,  pledge or otherwise  dispose of or turn to account or realize  upon,
     securities, (which term "securities" shall, for the purpose of this charter
     (the "Charter"),  include stocks,  shares, bonds,  debentures,  bills, time
     notes  and  deposits,  mortgages,  any other  obligations  or  evidence  of
     indebtedness  and  futures  contracts;  and  any  certificates,   receipts,
     warrants,  options or other instruments  representing rights or obligations
     to receive,  purchase,  subscribe  for or sell the same,  or  evidencing or
     representing  any  other  rights  or  interest,  including  all  rights  of
     equitable  ownership  therein  or  in  any  property  or  assets;  and  any
     negotiable  or  non-negotiable  instruments  and money market  instruments,
     including bank  certificates of deposit,  finance paper,  commercial paper,
     bankers'  acceptances  and all kind of  repurchase  and reverse  repurchase
     agreements)  of  any  corporation,   association,   trust,  firm  or  other
     organization  however and wherever  established  or  organized,  as well as
     securities  issued by any  government of any state,  municipality  or other
     political  subdivision  or any  other  governmental  or  quasi-governmental
     agency or instrumentality thereof.

          (2) To enjoy  all  rights,  powers  and  privileges  of  ownership  or
     interest in all securities held by the  Corporation  including the right to
     vote thereon and otherwise act with respect  thereto and to do all acts for
     the preservation,  protection,  improvement and enhancement in value of all
     such securities.

          (3) To issue and sell  shares of its own  stock,  including  shares in
     fractional denominations,  and securities convertible or exchangeable, with
     or without the payment of additional consideration, into such stock in such
     amounts and on such terms and  conditions,  for such  purposes and for such
     amount or kind of  consideration  (including  securities)  now or hereafter
     permitted by the laws of the State of Maryland  and by the Charter,  as its
     Board of Directors may, and which is hereby authorized to, determine.

          (4) To purchase,  repurchase,  or otherwise acquire, hold, dispose of,
     resell, transfer,  reissue or cancel shares of its stock, in any manner and
     to the  extent  now or  hereafter  permitted  by the  laws of the  State of
     Maryland and by the Charter.

          (5) To conduct and carry on its business, or any part thereof, to have
     one or more offices, and to exercise any or all of its corporate powers and
     rights,  in the State of  Maryland  and in any other  states,  territories,
     districts,  and  dependencies  of the  United  States,  and in any  foreign
     countries.

          (6) To aid by further  investment  any issuer,  any  obligation  of or
     interest in which is held by the Corporation or in the affairs of which the
     Corporation has any direct or indirect interest;  to do all acts and things
     designed  to  protect,  preserve,  improve  or  enhance  the  value of such
     obligation or interest;  to guarantee or become surety on any or all of the
     contracts,  stocks,  bonds, notes,  debentures and other obligations of any
     corporation, company, trust association or firm.

          (7) In general,  to carry on any other business in connection  with or
     incidental to its corporate purposes, to do everything necessary,  suitable
     or proper for the  accomplishment of such purposes or for the attainment of
     any object or the furtherance of any power  hereinbefore set forth,  either
     alone  or in  association  with  others,  to do  every  other  act or thing
     incidental  or  appurtenant  to or  growing  out of or  connected  with its
     business or purposes,  objects or powers, and, subject to the foregoing, to
     have and  exercise all the powers,  rights and  privileges  conferred  upon
     corporations  by the laws of the State of Maryland as in force from time to
     time.



               (b) The foregoing  clauses (a) (1) - (a) (7)  inclusive  shall be
          construed  both as objects and powers and the  enumeration of specific
          powers  shall  not be held to  limit or  restrict  in any  manner  the
          general powers of the Corporation.

     Section 2.2 Incident to meeting the purposes  specified in Section 2.1, the
Corporation also shall have the power:

          (1) To acquire (by  purchase,  lease or otherwise)  and to hold,  use,
     maintain,  develop and dispose (by sale or otherwise) of any property, real
     or personal, and any interest therein.

          (2) To borrow  money and,  in this  connection,  issue  notes or other
     evidence of indebtedness.

          (3) Subject to any applicable  provisions of law, to buy, hold,  sell,
     and otherwise deal in and with foreign exchange, including the purchase and
     sale of future contracts.

                                  ARTICLE III
                  PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT

     The  address of the  principal  office of the  Corporation  in the State of
Maryland is c/o The  Corporation  Trust  Incorporated,  300 East Lombard Street,
Baltimore,  Maryland 21202. The name of the resident agent of the Corporation in
the State of Maryland is The Corporation Trust  Incorporated  whose post address
is 300 East Lombard Street,  Baltimore,  Maryland 21202. The resident agent is a
Maryland corporation.

                                   ARTICLE IV
             AUTHORIZED STOCK AND PROVISIONS FOR DEFINING, LIMITING
                      AND REGULATING CERTAIN POWERS OF THE
                CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS

     Section  4.1 The number of the  Directors  shall be five.  The names of the
directors  who shall  serve until the next annual  meeting of  stockholders  and
until their successors are duly elected and qualify are: Dean Jacobson,  Richard
I. Barr, Joel W. Looney, Stephen C. Miller and Susan L. Ciciora.

     Section 4.2 The  Directors  shall be elected at each annual  meeting of the
stockholders commencing in 2004, except as necessary to fill any vacancies,  and
each  Director  elected  shall hold office  until his or her  successor  is duly
elected  and  qualifies,  or until his or her  earlier  resignation,  death,  or
removal.

     Section  4.3 A  plurality  of all the votes  cast at a  meeting  at which a
quorum is present shall be sufficient to elect a director.

     Section 4.4 The Secretary of the  Corporation  shall call a special meeting
of the  stockholders on the written request of stockholders  entitled to cast at
least 25% of all the votes entitled to be cast at the meeting.

     Section 4.5 The Bylaws of the Corporation,  whether adopted by the Board of
Directors or the  stockholders,  shall be subject to  amendment,  alteration  or
repeal,  and new Bylaws may be made,  by either  (a) the  affirmative  vote of a
majority of all votes  entitled  to be cast on the  matter;  or (b) the Board of
Directors;  provided,  however, that the Board of Directors may not (i) amend or
repeal a Bylaw  that  allocates  solely  to  stockholders  the power to amend or
repeal  such  Bylaw,  or (ii)  amend or repeal  Bylaws or make new  Bylaws  that
conflict  with or otherwise  alter in any material  respect the effect of Bylaws
previously adopted by the stockholders.

     Section  4.6 (a) All  corporate  powers and  authority  of the  Corporation
(except as at the time otherwise  provided by statute,  by the Charter or by the
Bylaws) shall be vested in and exercised by the Board of Directors.

          (b) The  Board of  Directors  shall  have  power  from time to time to
     determine  whether  and to what  extent,  and at what  times and places and
     under  what  conditions  and  regulations,  the  accounts  and books of the
     Corporation  (other than the stock  ledger) or any of them shall be open to
     the inspection of stockholders;  and no stockholder shall have any right to
     inspect any  account,  book or document  of the  Corporation  except to the
     extent permitted by statute or the Bylaws.



          (c) The  Board of  Directors  shall  have the power to  determine,  as
     provided  herein,  or if provision is not made herein,  in accordance  with
     generally  accepted  accounting  principles,  what  constitutes net income,
     total  assets and the net asset value of the shares of Common  Stock of the
     Corporation.  It may delegate such power and duty to any one or more of the
     directors  and  officers of the  Corporation,  to the  investment  adviser,
     administrator,  custodian or depositary of the Corporation's  assets, or to
     another agent of the Corporation appointed for such purpose.

          (d) The  Board  of  Directors  shall  have  the  power  to  distribute
     dividends from funds legally  available  therefor in such amounts,  if any,
     and in such manner and to the  stockholders  of record as of such date,  as
     the Board of Directors may determine.

     Section 4.7 Neither the stockholders personally nor their property shall be
liable to any extent for the payment of the corporate debts.

                                   ARTICLE V
                                      STOCK

     The total  number of shares of stock  that the  Corporation  shall have the
authority to issue is  50,000,000  shares of Common  Stock,  par value $.001 per
share  (the  "Common  Stock"),   having  an  aggregate  par  value  of  $50,000.
Stockholders  shall not have  preemptive  rights to  acquire  any  shares of the
Corporation's  stock; and any or all of such shares of the Corporation,  whether
now or hereafter  authorized  or created,  may be issued,  or may be reissued or
transferred  if  the  same  have  been   reacquired  to  such  persons,   firms,
corporations and associations,  and for such lawful  consideration,  and on such
terms as the Board of Directors in its discretion  may determine,  without first
offering the same, or any thereof,  to any said holder. All shares of authorized
Common Stock, when issued for such consideration or minimum consideration as the
Board of Directors may determine,  which consideration or minimum  consideration
may also be determined in accordance  with a formula or other method  prescribed
by the Board of Directors,  shall be fully paid and nonassessable.  Voting power
in the  election  of  directors  and for all  other  purposes  shall  be  vested
exclusively in the holders of Common Stock.

                                   ARTICLE VI
                              EXTRAORDINARY ACTIONS

     Section  6.1   Notwithstanding   any  provision  of  the  Maryland  General
Corporation  Law  requiring  a greater  proportion  than a majority of the votes
entitled to be cast in order to take or  authorize  any action,  any such action
may be taken or authorized  upon the  concurrence  of at least a majority of the
aggregate number of votes entitled to be cast thereon.

     Section 6.2 (1) In this Section, "Business Combination" means:

          (i) a merger  or  consolidation  of the  Corporation  with or into any
     person other than an investment company in a family of investment companies
     having the same investment adviser or administrator as the Corporation;

          (ii) the sale, lease, exchange,  mortgage,  pledge,  transfer or other
     disposition (in one transaction or a series of transactions) to or with any
     other person of any assets of the Corporation except (x) for the payment of
     dividends or other  distributions,  (y) for portfolio  transactions  of the
     Corporation effected in the ordinary course of the Corporation's  business,
     including permitted borrowings,  or (z) in connection with a reorganization
     of  the  Corporation  with  another  investment  company  in  a  family  of
     investment companies having the same investment adviser or administrator as
     the Corporation; or

          (iii) the issuance or transfer by the  Corporation (in one transaction
     or a series of  transactions) of any shares of the Corporation to any other
     person  in  exchange  for  cash,   securities  or  other  property  of  the
     Corporation  (or a  combination  thereof),  but  excluding (v) sales of any
     shares of the Corporation in connection  with a public offering  thereof or
     for shares of preferred  stock or debt  securities  of the  Corporation  in
     connection with a private placement thereof, (w) issuance of any securities
     of the Corporation upon the exercise of any stock subscription right issued
     by  the  Corporation,  (x)  with  respect  to  the  Corporation's  dividend
     reinvestment  and/or cash purchase plan, (y) in connection  with a dividend
     or distribution made pro rata to all holders of stock of the same class, or
     (z) a transaction within the scope permitted under (1)(i) or (ii) above.

     (2) In  addition  to the  approval  by the Board of  Directors  required by
applicable  law, the Charter or the Bylaws of the  Corporation,  the affirmative
vote of the holders of shares  entitled to cast at least  two-thirds  of all the
votes entitled to be cast on the matter shall be required to approve:

          (i) a Business Combination;

          (ii) a voluntary liquidation or dissolution of the Corporation;

          (iii) a stockholder  proposal as to specific investment decisions made
     or to be made with respect to the Corporation's assets;



          (iv) an  amendment  to the Charter to convert the  Corporation  from a
     closed-end  investment  company to an open-end  investment  company or unit
     investment  trust (as such terms are  defined by the 1940 Act),  whether by
     merger or otherwise;

          (v) a self tender for, or acquisition by the Corporation of, more than
     25% of the  Corporation's  outstanding  shares of stock,  in the aggregate,
     during any twelve-month period.

     (3) This  Section  may not be  amended,  altered or  repealed  without  the
affirmative  vote of the holders of shares entitled to cast at least  two-thirds
of all the votes entitled to be cast on the matter.

     Section 6.3 The  Corporation  is prohibited  from electing to be subject to
any  provision of Title 3, Subtitle 8 of the MGCL, as amended from time to time,
or any successor to such provisions.

                                   ARTICLE VII
                    LIMITATIONS ON LIABILITY; INDEMNIFICATION

     Section 7.1 To the maximum  extent  permitted by applicable  law (including
Maryland  law and the 1940 Act) as  currently  in effect or as may  hereafter be
amended:

          (1) No director or officer of the  Corporation  shall be liable to the
     Corporation or its stockholders for money damages; and

          (2) The Corporation  shall indemnify and advance  expenses as provided
     in the Bylaws to its present and past  directors,  officers,  employees and
     agents,  and  persons  who are serving or have served at the request of the
     Corporation in similar capacities for other entities.

     Section 7.2 No amendment,  alteration or repeal of this Article VII, or the
adoption,  alteration  or  amendment  of any other  provision  of the Charter or
Bylaws inconsistent with this Article VII, shall adversely affect any limitation
on  liability  or  indemnification  of any person  under this  Article  VII with
respect  to any act or failure to act which  occurred  prior to such  amendment,
alteration, repeal or adoption.

                                  ARTICLE VIII
                                   AMENDMENTS

     Section 8.1 Except as set forth in Section  8.2, any of the  provisions  of
the Charter may be amended, altered or repealed upon the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock.

     Section  8.2 Any  amendment,  alteration  or repeal of Section  6.2 or this
Article  VIII  requires  the  affirmative  vote or  consent  of the  holders  of
sixty-six and two-thirds  percent (66 2/3%) of the outstanding  shares of Common
Stock.

     THIRD:  The amendment to and  restatement of the Charter as hereinabove set
forth  have been duly  advised by the Board of  Directors  and  approved  by the
stockholders of the Corporation as required by law.

     FOURTH:  The current address of the principal  office of the Corporation is
as set forth in Article III of the foregoing  amendment and  restatement  of the
Charter.

     FIFTH: The name and address of the Corporation's  current resident agent is
as set forth in Article III of the foregoing  amendment and  restatement  of the
Charter.

     SIXTH:  The number of directors of the  Corporation  and the names of those
currently in office are as set forth in Article V of the foregoing amendment and
restatement of the Charter.

     SEVENTH: The undersigned President acknowledges these Articles of Amendment
and Restatement to be the corporate 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.

     IN WITNESS WHEREOF,  the Corporation has caused these Articles of Amendment
and  Restatement to be signed in its name and on its behalf by its President and
attested to by its Secretary on this _____ day of ____________, 2004.


ATTEST:                                    FIRST FINANCIAL FUND, INC.



__________________________                 By: _________________________(SEAL)
Stephanie Kelley, Secretary                    Stephen C. Miller, President






                                    EXHIBIT B

                           FIRST FINANCIAL FUND, INC.

                             AUDIT COMMITTEE CHARTER

     1. The Audit Committee shall be composed  entirely of directors who are not
"interested  persons" of the Fund within the meaning of the  Investment  Company
Act of 1940 ("independent directors") and who are free of any other relationship
that,  in the  opinion of the Board of  Directors,  would  interfere  with their
exercise of  independent  judgment as  Committee  members.  The Audit  Committee
Chairman shall be selected by the members of the Committee.  The Audit Committee
shall have at least three members,  all of whom shall be  financially  literate.
The  Chairman  of the  Committee  must  have  accounting  or  related  financial
management expertise, as determined by the Board in its judgment.

     At least annually,  the Board of Directors  shall determine  whether one or
more  "audit  committee  financial  experts,"  as such  term is  defined  by the
Securities and Exchange Commission, are members of the Committee and whether any
such expert is "independent."  For purposes of this finding only, in order to be
considered  "independent,"  any such  expert  may not,  other than in his or her
capacity as a member of the Committee,  the Board or any other Board  committee,
accept directly or indirectly any consulting, advisory or other compensatory fee
from the Fund (other than Board or committee  fees). The designation of a person
as an audit committee  financial  expert ("ACFE") shall not impose any liability
greater  than the  liability  imposed  on such  person  as a member of the Audit
Committee or the Board of Directors in the absence of such designation.

     2. The purposes of the Audit Committee are:

          (a) to  assist  Board  oversight  of

               1) the integrity of the Fund's financial statements,

               2) the Fund's compliance with legal and regulatory requirements,

               3) the independent auditor's qualifications and independence,

               4) the performance of the Fund's independent auditors,

          (b) to prepare an audit committee  report if required by the SEC to be
     included in the Fund's annual proxy statement;

          (c) to oversee the Fund's accounting and financial  reporting policies
     and  practices,  its internal  controls and, as  appropriate,  the internal
     controls of certain service providers;

          (d) to oversee  the quality and  objectivity  of the Fund's  financial
     statements and the independent audit thereof;

          (e) to determine the selection, appointment, retention and termination
     of the Fund's independent  auditors,  as well as approving the compensation
     of the auditors;

          (f) to pre-approve  all audit and non-audit  services  provided to the
     Fund and certain other persons (as described in 4(d) and (e) below) by such
     independent auditors; and

          (g) to act as a liaison  between the Fund's  independent  auditors and
     the full Board of Directors.

     The Fund's independent auditors shall report directly to the Committee.

     The  function of the  Committee  is  oversight.  The Fund's  management  is
responsible for (i) the  preparation,  presentation  and integrity of the Fund's
financial  statements,  (ii)  the  maintenance  of  appropriate  accounting  and
financial  reporting  principles  and  policies  and  (iii) the  maintenance  of
internal  controls and procedures  designed to assure compliance with accounting
standards and applicable laws and regulations.  The auditors are responsible for
planning and carrying out proper audits and reviews in accordance with generally
accepted auditing standards. In fulfilling their responsibilities  hereunder, it
is recognized  that members of the Committee are not full time  employees of the
Fund and are not, and do not represent themselves to be, accountants or auditors
by   profession   or  experts  in  the  fields  of   accounting   or   auditing,
notwithstanding  the  possibility  that one or more members may be designated an
ACFE.  As such,  it is not the duty or  responsibility  of the  Committee or its
members to conduct "field work" or other types of auditing or accounting reviews
or procedures. Each member of the Committee shall be entitled to rely on (i) the
integrity of those  persons and  organizations  within and outside the Fund from
which it receives  information,  (ii) the  accuracy of the  financial  and other
information,  including,  for example, the information contemplated by paragraph
4(b), provided to the Committee by such persons and organizations  absent actual
knowledge to the contrary (which shall be promptly reported to the Fund's Board)
and (iii)  statements made by the officers and employees of the Fund, the Fund's
adviser or other third parties as to any information technology,  internal audit
and other non-audit  services provided by the independent  auditors to the Fund.
In addition,  the evaluation of the Fund's financial statements by the Committee
is not of the same  scope as,  and does not  involve  the  extent of detail  as,
audits performed by the auditors, nor does the Committee's evaluation substitute
for the responsibilities of the Fund's management for preparing, or the auditors
for auditing,  the financial statements.  The designation of a person as an ACFE
is not intended to impose any greater responsibility or liability on that person
than the  responsibility  and liability  imposed on such a person as a member of
the  Committee,  nor does it decrease  the duties and  obligations  of the other
Committee members or the Board.



The Committee  shall have the  appropriate  resources and authority to discharge
its  responsibilities,  including  the authority to retain  special  counsel and
other experts or  consultants  at the expense of the Fund.  The Committee  shall
also have the authority to seek  information,  data and services from management
in order to carry out its responsibilities.

     3.  With  respect  to any  subsequent  changes  to the  composition  of the
Committee,  and otherwise  approximately  once each year, the Board of Directors
shall determine:

          (a) that each member of the Audit Committee is "independent"  pursuant
     to the NYSE's governance standards or applicable law or;

          (b) that each Audit Committee member is financially literate;

          (c) that at least  one of the  Committee  members  has  accounting  or
     related financial management expertise; and

          (d) the adequacy of the Charter.

     4. To carry out its purposes,  the Audit Committee shall have the following
duties and powers:

          (a) to select,  retain,  determine the  compensation  of, or terminate
     auditors and to oversee the work of the Fund's independent auditors (or any
     other public  accounting  firm engaged for the purpose of performing  other
     audit,  review or  attestation  services  for the Fund) and, in  connection
     therewith, to evaluate the independence of the auditors,  including whether
     the auditors provide any consulting  services to any service  provider,  to
     resolve any  disagreements  between  management and the Fund's  independent
     auditors regarding financial  reporting,  to receive the auditors' specific
     representations as to their independence at least annually and to recommend
     the  retention  of such  auditors to the  independent  directors  for their
     ratification and approval;

          (b) to meet with the Fund's independent  auditors,  including meetings
     apart from management,  as necessary (i) to review the arrangements for and
     scope of the annual audit and any special audits;  (ii) to discuss critical
     accounting  policies  and  practices to be used in the annual audit and all
     alternative  treatments of financial  information within generally accepted
     accounting  principles  that  have  been  discussed  with  management,  the
     ramifications of the use of such alternative treatments, and the treatments
     preferred  by the  auditor;  (iii) to discuss  any  matters  of  importance
     relating to the Fund's financial  statements,  including any adjustments to
     such  statements  recommended  by the  auditors,  or other  results of said
     audit(s);  (iv) to consider  the  auditors'  comments  with  respect to the
     acceptability  and   appropriateness  of  the  Fund's  financial  reporting
     policies,  procedures and internal  accounting  controls,  and management's
     responses  thereto;  (v) to review the form of opinion the auditors propose
     to  render  to the Board  and  shareholders;  (vi) to review  copies of any
     material written communication between the auditor and management,  such as
     any  management  letter or schedule  of  unadjusted  differences;  (vii) to
     review the adequacy and  effectiveness  of relevant  internal  controls and
     procedures  and the quality of the staff  implementing  those  controls and
     procedures and to obtain annually in writing from the independent  auditors
     their letter as to the adequacy of such controls as required by Form N-SAR;
     (viii) to receive periodic reports  concerning  regulatory  changes and new
     accounting pronouncements that significantly affect the value of the Fund's
     assets and its financial  reporting;  (ix) to discuss any audit problems or
     difficulties and management's  response,  including any restrictions on the
     scope of the auditor's  activities  or on access to requested  information,
     and any  significant  disagreements  with  management;  and (x) to  receive
     disclosure from the auditor  regarding all services provided by the auditor
     to the Fund,  including the fees associated  with those services,  at least
     annually, and if the annual communication is not made within 90 days before
     the filing of the Fund's annual report, to receive an update, in the 90 day
     period  before  the  filing,  of any  changes  to the  previously  reported
     information;

          (c) to consider the effect upon the Fund of any changes in  accounting
     principles or practices  proposed by  management  or the  auditors,  and to
     consider,  in  consultation  with  management  and the  Fund's  independent
     auditors,  any significant  changes to the Fund's tax accounting  policies,
     including those pertaining to its  qualification as a regulated  investment
     company under the Internal Revenue Code;

          (d) to review and  pre-approve  all auditing  services and permissible
     non-audit  services (e.g.,  tax services) to be provided to the Fund by the
     auditor, including the fees therefore. The Committee may delegate to one or
     more of its members the  authority to grant  pre-approvals.  In  connection
     with such delegation,  the Committee shall establish  pre-approval policies
     and procedures,  including the requirement that the decisions of any member
     to whom  authority  is  delegated  under  this  sub-section  (d)  shall  be
     presented  to the full  Committee  at each of its  scheduled  meetings.



               1) Pre-approval  for a permitted  non-audit  service shall not be
          required if: (1) the aggregate  amount of all such non-audit  services
          is not  more  than 5% of the  total  revenues  paid by the Fund to the
          auditor  in the  fiscal  year in  which  the  non-audit  services  are
          provided;  (2) such  services  were not  recognized by the Fund at the
          time of the engagement to be non-audit services; and (3) such services
          are promptly  brought to the  attention of the  Committee and approved
          prior to the  completion  of the audit by the  Committee  or by one or
          more  members  of the  Committee  to  whom  authority  to  grant  such
          approvals has been delegated by the Committee.

               2)  Additionally,  the Committee shall  pre-approve the auditor's
          engagements for non-audit services with the Fund's investment advisers
          (each, an "Adviser") and any service providers controlling, controlled
          by or under common control with an Adviser ("affiliate") that provides
          ongoing  services  to  the  Fund  in  accordance  with  the  foregoing
          paragraph,  if the engagement  relates  directly to the operations and
          financial  reporting of the Fund,  unless the aggregate  amount of all
          services  provided  constitutes no more than 5% of the total amount of
          revenues paid to the auditor by the Fund, an Adviser and any affiliate
          of the Adviser that provides  ongoing  services to the Fund during the
          fiscal year in which the services  are provided  that would have to be
          pre-approved  by the  Committee  pursuant to this  paragraph  (without
          regard to this exception).

               3)   Prohibited   Services  -  The   auditor   may  not   perform
          contemporaneously  any of the  following  non-audit  services  for the
          Fund:  bookkeeping or other services related to the accounting records
          or financial  statements of the Fund;  financial  information  systems
          design and implementation;  appraisal or valuation services,  fairness
          opinions,  or   contribution-in-kind   reports;   actuarial  services;
          internal audit  outsourcing  services;  management  functions or human
          resources; broker or dealer, investment adviser, or investment banking
          services;  legal services and expert services  unrelated to the audit;
          and any other  service that the Public  Company  Accounting  Oversight
          Board determines, by regulation, is impermissible;

          (e) to  consider  whether  the  provision  by the  Fund's  auditor  of
     non-audit  services to its  investment  adviser or adviser  affiliate  that
     provides ongoing services to the Fund, which services were not pre-approved
     by the Audit  Committee,  is  compatible  with  maintaining  the  auditor's
     independence;

          (f) to investigate any  improprieties  or suspected  improprieties  in
     fund operations and to establish procedures for the receipt, retention, and
     treatment of  complaints  received by the Fund with respect to  accounting,
     internal  accounting  controls,  or auditing  matters and the  confidential
     anonymous  submission by employees of the Fund and its service providers of
     concerns regarding questionable accounting or auditing matters;

          (g) to review the findings made in any regulatory  examinations of the
     Fund and consult with management on appropriate responses;

          (h) to review any  material  violations  of the Code of Ethics for the
     Fund and its Advisers and report the Committee's findings to the full Board
     with recommendations for appropriate action;

          (i) to review  with the  Fund's  principal  executive  officer  and/or
     principal  financial officer in connection with their certification of Form
     N-CSR any  significant  deficiencies in the design or operation of internal
     controls  which  could  adversely  affect  the  Fund's  ability  to record,
     process, summarize and report financial data or material weaknesses therein
     and any reported evidence of fraud involving  management of other employees
     who have a significant role in the Fund's internal controls;

          (j) to discuss with management policies and guidelines with respect to
     risk assessment and risk management and the system of internal control, and
     the steps taken to monitor and control such risks;

          (k) to meet periodically  with Fund management,  apart from the Fund's
     independent auditors;

          (l) to  discuss  the types of  information  to be  disclosed  in press
     releases concerning dividends, as well as financial information provided to
     analysts and rating agencies, and the type of presentation to be made;

          (m) to establish  hiring policies for employees or former employees of
     the auditor consistent with government regulations;

          (n) at least  annually,  to obtain  and  review a report by the Fund's
     independent  auditors  describing:  (1) the audit firm's  internal  quality
     control  procedures;  (2) any  material  issues  raised by the most  recent
     internal  quality  control review,  or peer review,  of the firm, or by any
     inquiry or  investigation  by  governmental  or  professional  authorities,
     within the preceding five years,  respecting one or more independent audits
     carried  out by the audit  firm,  and any steps taken to deal with any such
     issues;  and (3) for the purpose of assessing the  auditor's  independence,
     all relationships between the independent auditors and the Fund;

          (o)  to  review  and  evaluate  the  qualifications,  performance  and
     independence of the lead partner of the auditors;

          (p) to assure the regular  rotation of the lead audit  partner and the
     reviewing partner, and to consider whether there should be regular rotation
     of the audit firm itself;



          (q) to review and discuss the Fund's audited and unaudited  financials
     statements  with  management  and,  in the  case of the  audited  financial
     statements,  the independent  auditor,  including the Fund's  disclosure of
     management's discussion of Fund performance, and to recommend to the Board,
     as appropriate, the inclusion of the Fund's audited financial statements in
     the Fund's annual report;

          (r) to cause  the  preparation  of any  report  or  other  disclosures
     required by the New York Stock  Exchange  or the  Securities  and  Exchange
     Commission;

          (s) to oversee  the  Fund's  compliance  with 1940 Act asset  coverage
     tests and coverage tests under applicable  rating agency guidelines and the
     Fund's  Articles  Supplementary,  as amended or  supplemented  from time to
     time; and

          (t) to report  regularly  to the full Board any issues that arise with
     respect  to:  (1)  the  quality  or  integrity  of  the  Fund's   financial
     statements, (2) the Fund's compliance with legal or regulatory requirements
     and  (3)  the  performance  and  independence  of  the  Fund's  independent
     auditors,  and to make such  recommendations  with respect to the above and
     other matters as the Committee may deem necessary or appropriate.

     5. The Fund's independent auditors are ultimately  accountable to the Audit
Committee,  as representatives of the Board of Directors and the shareholders of
the Fund, and the Audit Committee has the ultimate  authority and responsibility
to select, evaluate and, where appropriate, replace the independent auditors (as
well as to nominate  the  independent  auditors to be proposed  for  shareholder
approval, if necessary), subject to ratification and approval of the independent
directors of the Fund.  The  Committee  will ensure that the Fund's  independent
auditors  submit to the Audit  Committee,  on a periodic basis, a formal written
statement delineating all relationships between the independent auditors and the
Fund and its service providers. The Committee will actively engage in a dialogue
with the Fund's independent auditors with respect to any disclosed relationships
or services that may impact the objectivity and  independence of the independent
auditors, and will consider recommending that appropriate action be taken by the
Board of Directors to ensure the independence of the independent auditors.

     6. The Committee  shall meet at least twice  annually,  which shall include
separate  executive  sessions  as the  Committee  may deem  appropriate,  and is
empowered to hold special meetings as circumstances require. The Committee shall
submit the minutes of all of its meetings  to, or discuss the matters  discussed
at each meeting with, the Board of Directors.

     7. The Committee  shall  regularly  meet with the Treasurer of the Fund and
with internal auditors,  if any, for the Fund's Advisers and/or administrator to
review  and   discuss   matters   relevant   to  the   Committee's   duties  and
responsibilities.

     8.  The  Committee   shall  be  responsible   for  reviewing  any  required
description of the Committee in the Fund's annual reports or proxy statements.

     9. The Committee will  periodically  assess the independence of its members
and will evaluate its performance under the Charter annually.

     10.  The  Committee  will  also  serve as the  Qualified  Legal  Compliance
Committee.  The following  procedures are designed to implement the Standards of
Professional Conduct for Attorneys pursuant to the Sarbanes-Oxley Act of 2002.

          (a) Provision of Information to Outside Counsel and Service Providers.
     To assist attorneys  employed by law firms retained by the Funds or service
     providers  engaged by the Funds,  the chief executive  officer of each Fund
     (the "CEO")  must send a notice to each such law firm and service  provider
     providing contact  information with respect to each Fund's Legal Compliance
     Committee Chairperson.  The CEO must send a similar notice to each law firm
     and  service  provider  when the  information  provided  in the most recent
     notice sent to such law firm or service provider has changed.

          (b) Investigations and Responses.  Upon receiving a report of evidence
     of a material  violation from an attorney employed by a law firm or service
     provider,  the CEO shall (i) record  receipt of the report and (ii)  report
     the matter promptly to the Legal  Compliance  Committee (the  "Committee").
     Upon  receiving  a report  of  evidence  of a  material  violation  from an
     attorney  employed by a law firm or service  provider or from the CEO,  the
     Committee  shall (i) record the  Committee's  receipt of the  report,  (ii)
     inform the Fund's CEO of the report (other than those received from the and
     (iii)  determine  whether  an  investigation  of a  material  violation  is
     necessary  or  appropriate.  In  determining  whether an  investigation  is
     necessary or  appropriate,  the Committee shall consider such factors as it
     considers  appropriate  under  the  circumstances,  which may  include  the
     seniority  of  the  alleged  wrongdoer,  the  seriousness  of  the  alleged
     violation  and  the  credibility  of  the  allegation.   If  the  Committee
     determines  that an  investigation  is necessary,  the  Committee  must (A)
     notify the Fund's Audit  Committee or the Board of Directors,  (B) initiate
     an  investigation  and (C) retain  additional  expert personnel as it deems
     necessary.  The Committee  shall have the  discretion  to engage  auditors,
     counsel or other experts to assist in the  investigation  of any report and
     in the analysis of results.



               1)  Investigations.  If the  Committee  deems it  necessary,  the
          Committee may direct outside counsel to conduct a preliminary internal
          investigation to determine whether the reported material violation has
          occurred,  is ongoing or is about to occur.  The  Committee may direct
          employees of the Funds'  investment  advisers or administrators or any
          officer(s) of the Funds to assist outside counsel.  If Fund counsel is
          the  reporting  counsel,  Fund counsel  nonetheless  may be engaged to
          conduct the preliminary internal investigation. If Fund counsel is the
          reporting  counsel,  Fund counsel may decline to lead the  preliminary
          internal   investigation   and  may  recommend   that  the  Fund  seek
          alternative counsel for purposes of conducting such investigation. Any
          investigation  may be conducted  by the  relevant  Fund's CEO or chief
          legal officer (or the  equivalent  thereof) if such officer is not the
          reporting  attorney  and is not the subject of the  alleged  violation
          described in the report.

               2)  Responses.  At  the  conclusion  of  any  investigation,  the
          Committee,  by majority vote,  shall  recommend that the relevant Fund
          implement an appropriate response to evidence of a material violation.
          What  constitutes an  appropriate  response will depend on whether the
          Committee  determines,  on the basis of the  facts and  circumstances,
          that a  material  violation  has  occurred,  is ongoing or is about to
          occur.

Unless  the  Committee  reasonably  believes  that  no  material  violation  has
occurred,  is  ongoing  or is about  to  occur,  the  Committee  shall  take all
reasonable  steps to cause the Funds to adopt an  appropriate  response.  If the
preliminary internal investigation is performed by outside counsel, such counsel
may recommend a proposed response for adoption by the Committee.

     Determination:  No Violation.  The Committee may determine that no material
     violation has occurred, is ongoing or is about to occur. That determination
     must be made on the basis that the Committee  "reasonably believes" that no
     material  violation  has  occurred,  is  ongoing  or  is  about  to  occur.
     "Reasonably  believes"  means that the  Committee  "believes  the matter in
     question  and  that the  circumstances  are such  that  the  belief  is not
     unreasonable."

     Determination:  Material Violation Has Occurred,  Is Ongoing or Is About to
     Occur. If the Committee  reasonably  believes that a material violation has
     occurred,  is ongoing or is about to occur, the following  responses should
     be considered:

     (1) A Material Violation Has Occurred If the Committee  reasonably believes
     that the reported material  violation has already  occurred,  the Committee
     should seek to remedy or  otherwise  address the  material  violation.  The
     Committee  should  explore what steps would be necessary or  appropriate to
     reduce the  likelihood  of a  recurrence  of the  material  violation.  The
     Committee  should  consider  recommending  that  sanctions  be  imposed  in
     connection  with the  violation.  Disclosure  to the  public  or to the SEC
     should be  considered,  depending on the nature of the  violation and other
     relevant factors.

     (2) A Material  Violation Is Ongoing If the Committee  reasonably  believes
     that the reported material violation is ongoing,  the Committee should seek
     to take or recommend steps,  measures and/or sanctions that are designed to
     (i) stop any material violations that are ongoing, (ii) remedy or otherwise
     appropriately  address  the  portion  of the  material  violation  that has
     already  occurred,  and (iii) reduce the  likelihood of a recurrence of the
     material  violation.  Disclosure  to the  public  or to the SEC  should  be
     considered,  depending on the nature of the  violation  and other  relevant
     factors.

     (3) A  Material  Violation  Has Yet to  Occur If the  Committee  reasonably
     believes that the reported  material  violation  has not yet occurred,  the
     Committee should seek to take or recommend steps and/or measures to prevent
     the  reported   material   violation  from  occurring.   Depending  on  the
     circumstances  of the  impending  violation,  actions to address  potential
     future violations,  including sanctions,  should be considered.  In unusual
     circumstances, disclosure to the SEC may also be appropriate. The Committee
     may retain  outside  counsel,  which may be Fund  counsel,  to  undertake a
     review of the reported evidence of a material  violation in order to assist
     the Committee in  determining  what remedial  measures would be appropriate
     under the circumstances.

     Other Action.  The Committee  shall have the authority and  responsibility,
     acting by majority vote, to take all other  appropriate  action,  including
     the  authority to notify the SEC, in the event a Fund fails in any material
     respect to implement a recommendation  that the Committee has made within a
     reasonable period of time.

          (c)  Reporting  and  Recordkeeping.  The  Committee  shall  inform the
     relevant Fund's CEO and chief legal officer (or the equivalent thereof) and
     the Board of Directors of the results of any investigation of a report of a
     material violation and any appropriate remedial measures to be adopted. The
     Committee  or its  delegate  shall  prepare,  or  cause to be  prepared,  a
     memorandum  reflecting  (i)  the  information  developed  in  any  internal
     investigation, (ii) any remedial recommendation made by the Committee or by
     outside counsel  retained to review any report of a material  violation and
     (iii) any remedial actions taken. The Committee should review these records
     periodically  to  determine  whether  there are any patterns of activity or
     violations that have emerged.

          (d)  Protection  of  Reporting  Attorneys.  The  Committee  shall  not
     retaliate, and shall not tolerate any retaliation by Fund management or any
     other person or group, directly or indirectly,  against anyone who, in good
     faith,  reports evidence of a material violation or provides  assistance to
     the  Committee  or  any  other  person  or  group,   including   regulatory
     authorities,  investigating a report.  The Committee shall seek to maintain
     the  confidentiality  of any person who  submits a report and who asks that
     his or her identity remain  confidential and shall not make any effort,  or
     tolerate  any effort made by any other person or group,  to  ascertain  the
     identity of any person who makes a report anonymously.



          (e) Oversight Responsibilities. The Committee will undertake an annual
     review of these Procedures and the reporting and  investigation  systems to
     determine whether they are functioning properly. The Boards of Directors of
     the Funds  have  reviewed  and  adopted  these  Procedures.  The  Boards of
     Directors  will review these  Procedures  periodically  to assure that they
     appropriately address then-existing requirements for attorney up-the-ladder
     reporting.

     11. The Committee shall review this Charter at least annually and recommend
any changes to the full Board of Directors.


     12. This Charter may be altered,  amended or repealed, or a new Charter may
be  adopted,  by the  Board by the  affirmative  vote of a  majority  of all the
members of the Board, including a majority of the "non-interested" Board members
(within the meaning of the Investment Company Act of 1940, as amended).

     13. The Chief  Executive  Officer  ("CEO") of the Fund shall certify to the
Audit  Committee of the Fund  annually  that he is not aware of any violation by
the Fund of any corporate  governance standards or policies to which the Fund is
subject.  In  addition,  the CEO of the Fund  must  promptly  notify  the  Audit
Committee in writing  after any  executive  officer of the Fund becomes aware of
any material  non-compliance  with any applicable  corporate  governance listing
standard or policy.

     14. The Fund shall provide the NYSE, with respect to any subsequent changes
to the composition of the Audit Committee or otherwise  approximately  once each
year, written confirmation of the determinations required by Section 3 above.

     15. The CEO of the Fund shall  certify to the NYSE  annually that he is not
aware of any  violation  by the Fund of the NYSE  corporate  governance  listing
standards and such  certification  shall be included in the Fund's annual report
to shareholders. If the CEO of the Fund provides notice to the NYSE upon receipt
of any report by any executive officer of any material  non-compliance  with any
applicable provisions of the NYSE corporate governance listing standards, copies
of any such  certification or notice shall be provided to the Audit Committee of
the Fund.

Adopted January 23, 2004







        If you have any questions concerning this Proxy Statement or need
                      help voting your shares, please call:

                            MacKenzie Partners, Inc.
                               [GRAPHIC OMITTED]
                               105 Madison Avenue
                            New York, New York 10016
                       email: proxy@mackenziepartners.com
                          Call Collect: (212) 929-5500
                          or Toll Free: (800) 322-2885







                                      PROXY


                           FIRST FINANCIAL FUND, INC.

                    PROXY SOLICITED BY THE BOARD OF DIRECTORS

The undersigned  holder of shares of Common Stock of First Financial Fund, Inc.,
a Maryland corporation (the "Fund"),  hereby appoints Stephen C. Miller, Carl D.
Johns,  and Thomas N. Calabria,  or any of them, as proxies for the undersigned,
with full powers of  substitution  in each of them, to attend the Annual Meeting
of  Stockholders  (the "Annual  Meeting") to be held at the Langham  Hotel,  250
Franklin Street, Boston, Massachusetts 02110 at 9:00 a.m. Eastern Daylight Time,
on August 18, 2004, and any  adjournments or postponements  thereof,  to cast on
behalf of the  undersigned all votes that the undersigned is entitled to cast at
the Annual  Meeting and to otherwise  represent  the  undersigned  at the Annual
Meeting with all the powers  possessed by the undersigned if personally  present
at the Meeting.  The votes entitled to be cast will be cast as instructed below.
If this Proxy is executed but no instruction is given,  the votes entitled to be
cast by the undersigned will be cast "FOR" each of the nominees for Director and
"FOR"  each  of the  other  proposals  described  in the  Proxy  Statement.  The
undersigned  hereby  acknowledges  receipt of the Notice of Annual  Meeting  and
Proxy Statement, which are incorporated herein. In their discretion, the proxies
are  authorized to vote upon such other business as may properly come before the
Meeting.  A majority of the proxies  present and acting at the Annual Meeting in
person or by  substitute  (or, if only one shall be so  present,  then that one)
shall  have and may  exercise  all of the power and  authority  of said  proxies
hereunder. The undersigned hereby revokes any proxy previously given.


                   CONTINUED AND TO BE SIGNED ON REVERSE SIDE





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

This proxy,  if properly  executed,  will be voted in the manner directed by the
undersigned  stockholder.  IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALs 1 THROUGH 10.

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

1    Election of Directors:  Nominees are Richard I. Barr,  Joel W. Looney,  Dr.
     Dean Jacobson, Susan L. Ciciora, and Stephen C. Miller.
     FOR____ WITHHOLD___ FOR ALL EXCEPT ___

Instruction:  If you do not wish your shares voted "for" a  particular  nominee,
mark the "For All  Except"  box and  strike a line  through  the  name(s) of the
nominee(s). Your shares will be voted "For" the remaining nominee(s).

THE BOARD OF DIRECTORS  RECOMMENDS THAT THE STOCKHOLDERS  VOTE "FOR" ELECTION OF
ALL THE NOMINEES

------------------------------------------------------------------------- ------
STOCKHOLDERS  MAY VOTE WITH  RESEPCT  TO ALL OF THE  PROPOSALS  2 THROUGH  10 BY
MAKING THE APPROPRIATE OMNIBUS SELECTION TO THE RIGHT

                                      FOR___      AGAINST ___        ABSTAIN ___
------------------------------------------------------------------------- ------


2    To declassify the Board and provide for annual election of Directors
     FOR___ AGAINST ___ ABSTAIN ___

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

3    To elect  directors  by a  plurality  of votes cast at a meeting at which a
     quorum is present FOR___ AGAINST ___ ABSTAIN ___

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

4    To call a special  stockholders  meeting  upon the  written  request of the
     holders of at least 25% of  the votes  entitled to be cast at the meeting
     FOR___ AGAINST ___ ABSTAIN ___

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

5    To vest  in  stockholders  the  power  to  amend  or  adopt  Bylaws  by the
     affirmative  vote of a  majority  of all votes  entitled  to be cast on the
     matter  FOR___ AGAINST ___ ABSTAIN ___

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

6    To  prohibit  the Fund  from  opting  into any  provision  of the  Maryland
     Unsolicited Takeovers Act FOR___ AGAINST ___ ABSTAIN ___

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

7    To repeal  Article Ninth and to alter the vote  required to effect  certain
     extraordinary corporate transactions FOR___ AGAINST ___ ABSTAIN ___

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

8    To establish the number of Directors at five FOR___ AGAINST ___ ABSTAIN ___

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



9    To amend and restate the Charter, the implementation of which is contingent
     on the approval of Proposals 2 through 9 FOR___ AGAINST ___ ABSTAIN ___

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

10   A. To change the Fund's current industry concentration policies so that the
     Fund  shall  invest at least 65% of its  assets in the  financial  services
     industry FOR___ AGAINST ___ ABSTAIN ___

     B. To make non-fundamental the Fund's policy of investing 80% of its assets
     in financial services companies FOR___ AGAINST ___ ABSTAIN ___

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

11   TO VOTE AND OTHERWISE  REPRESENT THE  UNDERSIGNED  ON ANY OTHER MATTER THAT
     MAY  PROPERLY  COME  BEFORE  THE  ANNUAL  MEETING  OR  ANY  ADJOURNMENT  OR
     POSTPONEMENT THEREOF IN THE DISCRETION OF THE PROXY HOLDER


MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT        ____

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

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

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

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

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

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


--------
ENDNOTES

1    Under the Section  2(42) of the 1940 Act, the voting  requirement  would be
     (A) 67% or more of the  voting  securities  present at a meeting at which a
     quorum  is  present  or  (B)  more  than  50%  of  the  outstanding  voting
     securities,  whichever is the less.  This is often referred to as a "40 Act
     Majority".