USLIFE INCOME FUND INC, DEFC14A, 1999-11-02

USLIFE INCOME FUND INC
DEFC14A, 1999-11-02

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

- --------------------------------------------------------------------------------
USLIFE INCOME FUND, INC.
(Name of Registrant as Specified in Its Charter)

n/a
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):

- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------
(5) Total fee paid:

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

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:

- --------------------------------------------------------------------------------
(3) Filing Party:

- --------------------------------------------------------------------------------
(4) Date Filed:

- --------------------------------------------------------------------------------
<PAGE> 2

USLIFE INCOME FUND, INC.

2929 ALLEN PARKWAY

HOUSTON, TX 77019

November 1, 1999

Dear USLIFE Income Fund Shareholder:

We are pleased to invite you to attend the 1999 Annual Meeting of
Shareholders of USLIFE Income Fund, Inc., which will be held on Friday, December
3, 1999 at 2:00 P.M. local time, at Meeting Room 3 of The Variable Annuity Life
Insurance Company, Plaza Level, The Woodson Tower, 2919 Allen Parkway, Houston,
Texas 77019.

The notice of the 1999 Annual Meeting and Fund's Proxy Statement accompany
this letter.

Your vote at this year's Annual Meeting is very important. The meeting,
which will be held on December 3, 1999, is only one month away, so we urge you
to sign, date and return the enclosed BLUE proxy card as promptly as possible.

We ask you to send in your BLUE proxy card even if you plan to attend the
meeting in person. Shareholders attending the meeting may, of course, vote in
person, and your vote at the meeting will revoke any prior proxy you may have
submitted.

Again, we appreciate your attention and ask you to send in your proxy now.
If you have any questions or need assistance in voting your shares, please call
our proxy solicitor, Georgeson Shareholder Communications, Inc., toll free at
1-800-223-2064.

Sincerely,

/s/ ALICE T. KANE

Alice T. Kane

President

<PAGE> 3

USLIFE INCOME FUND, INC.

NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 3, 1999

An annual meeting of the shareholders of USLIFE Income Fund, Inc. ("Fund")
will be held in Meeting Room 3 of The Variable Annuity Life Insurance Company,
Plaza Level, The Woodson Tower, 2919 Allen Parkway, Houston, Texas 77019, on
Friday, December 3, 1999 at 2:00 p.m. Central Time for the following purposes:

1. To elect four Directors to hold office until their successors are
elected and qualified.

2. To ratify the selection of KPMG LLP as independent auditor of the Fund
for the fiscal year ending June 30, 2000.

3. To transact such other business as may properly come before the meeting.

You will be entitled to vote at the meeting if you owned shares of the Fund
at the close of business on September 7, 1999. IF YOU ATTEND THE MEETING, YOU
MAY VOTE YOUR SHARES IN PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE SIGN, DATE AND RETURN THE ENCLOSED BLUE PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. IF YOU ATTEND THE MEETING AND PREFER TO VOTE IN PERSON,
YOU WILL BE ABLE TO DO SO AND YOUR VOTE AT THE MEETING WILL REVOKE ANY PROXY YOU
MAY SUBMIT. YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER HOW MANY OR HOW FEW
SHARES YOU OWN. PLEASE SEND IN YOUR BLUE PROXY CARD TODAY.

By Order of the Board of Directors

/s/ ALICE T. KANE
Alice T. Kane
President

November 1, 1999

2929 Allen Parkway
Houston, Texas 77019
<PAGE> 4

USLIFE INCOME FUND, INC.

2929 ALLEN PARKWAY
HOUSTON, TEXAS 77019
---------------------

PROXY STATEMENT

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

This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors ("Board") of USLIFE Income
Fund, Inc. ("Fund") for use at the Annual Meeting of the Fund's shareholders on
December 3, 1999 and at any adjournment or postponement thereof (the "Meeting").
The Meeting will be held in Meeting Room 3 of The Variable Annuity Life
Insurance Company ("VALIC" or the "Adviser"), an indirect wholly-owned
subsidiary of American General Corporation, Plaza Level, The Woodson Tower, 2919
Allen Parkway, Houston, Texas 77019 on December 3, 1999, at 2:00 p.m. Central
Time.

The Fund's shareholders of record as of the close of business on September
7, 1999 ("Record Date"), are entitled to notice of and to vote at the Meeting on
the following proposals:

1. To elect four Directors to the Board.

2. To ratify the selection of KPMG LLP as independent auditor of the Fund
for the fiscal year ending June 30, 2000.

3. To transact such other business as may properly come before the Meeting.

A COPY OF THE MOST RECENT ANNUAL REPORT FOR THE FUND CAN BE OBTAINED
WITHOUT CHARGE BY CALLING GEORGESON SHAREHOLDER COMMUNICATIONS, INC., 17 STATE
STREET, NEW YORK, NEW YORK 10004, TOLL-FREE AT 1-800-223-2064.

The Notice and Proxy Statement are being mailed to shareholders on or about
November 1, 1999.

Each full share outstanding on the Record Date is entitled to one vote with
respect to each matter voted upon by the shareholders of the Fund. As of the
Record Date, the Fund had 5,643,768 shares issued and outstanding. As of the
Record Date, no director or executive officer of the Fund owned, directly or
beneficially,
<PAGE> 5

any Fund shares. The persons who owned beneficially more than 5% of the
outstanding shares of the Fund as of the Record Date are set forth below:

<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OWNED
- ------------------- -------------------- -------
<S> <C> <C>
Ernest Horejsi Trust........................................ 348,000 6.17%
No. 1B*
122 South Phillips Avenue
Suite 220
Sioux Falls, South Dakota 57104
</TABLE>

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

* Based on information set forth in Amendment No. 1 to a Schedule 13D dated
October 13, 1999 (the "Schedule 13D") as filed with the Securities and
Exchange Commission ("SEC"). The Schedule 13D was filed on behalf of Ernest
Horejsi Trust No. 1B (the "Horejsi Trust") as the direct beneficial owner of
348,000 shares as of the Record Date (and of 376,800 shares as of October 13,
1999) and by Stewart R. Horejsi by virtue of his positions with certain
entities related to the Horejsi Trust. The Trustees of the Horejsi Trust are
Badlands Trust Company, Susan Ciciora and Larry Dunlap.

The individuals named as proxies on the enclosed BLUE proxy card will vote
in accordance with your directions as indicated thereon if your proxy is
received properly executed. If you properly execute your BLUE proxy card and
give no voting instructions, your shares will be voted FOR the election to the
Board of Directors of the four nominees named herein and FOR the ratification of
KPMG LLP as independent auditor of the Fund for the fiscal year ending June 30,
2000. You may revoke your proxy at any time prior to its exercise at the Meeting
by written notice to the Fund, by execution of a subsequent proxy or by voting
in person at the Meeting.

A quorum, which is a majority of the Fund's issued and outstanding voting
shares as of the close of business on the Record Date represented in person or
by proxy, must be present for the transaction of business at the Meeting.

If a shareholder participates in the Fund's Automatic Dividend Investment
Plan ("Plan") and holds shares in his or her name in addition to the shares held
in custody for the shareholder pursuant to the Plan, the proxy to vote shares
registered in the shareholder's name will serve as instructions for voting
shares held in custody for the shareholder pursuant to the Plan. If a
shareholder does not send a proxy to vote the shares registered in his or her
name, the shares held for the shareholder's account in the Plan will not be
voted.

Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and the broker does not have discretionary voting
authority. Abstentions and broker non-votes will be counted as shares present
for purposes of determining whether a quorum is present but will not be counted
as votes cast for purposes of determining whether sufficient votes have been
received to approve a proposal.

2
<PAGE> 6

YOUR VOTE AT THIS YEAR'S MEETING IS ESPECIALLY IMPORTANT, NO MATTER HOW
MANY OR HOW FEW SHARES YOU OWN. PLEASE SIGN AND DATE THE ENCLOSED BLUE PROXY
CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY.

A DISSIDENT SHAREHOLDER, THE HOREJSI TRUST, AND AN INDIVIDUAL NAMED STEWART
HOREJSI MAY SEND YOU SOLICITATION MATERIALS IN AN EFFORT TO SOLICIT YOUR VOTE TO
ELECT THEIR NOMINEES TO YOUR FUND'S BOARD OF DIRECTORS. THEY ALSO MAY SOLICIT
YOUR VOTE TO SUPPORT THEIR PROPOSAL TO CHANGE YOUR FUND'S INVESTMENT POLICY.
YOUR FUND'S BOARD UNANIMOUSLY BELIEVES THAT THE DISSIDENTS' ACTIONS ARE NOT IN
YOUR BEST INTERESTS AND WE URGE YOU NOT TO SIGN OR RETURN ANY WHITE PROXY CARD
THAT THESE DISSIDENTS MAY SEND YOU, EVEN AS A PROTEST AGAINST THEM.

IMPORTANT: If your shares are held in the name of a brokerage firm, bank,
nominee or other institution, only it can sign a BLUE proxy card with respect to
your shares and only upon specific instructions from you. Please contact the
person responsible for your account and give instructions for a BLUE proxy card
to be signed for your shares of the Fund's stock.

If you have any questions or need assistance in voting your shares, please
call the firm assisting the Fund in the solicitation of proxies:

GEORGESON
SHAREHOLDER COMMUNICATIONS, INC.

17 STATE STREET
NEW YORK, NEW YORK 10004
BANKS AND BROKERS CALL COLLECT: (212) 440-9800
ALL OTHERS CALL TOLL FREE: 1-800-223-2064

3
<PAGE> 7

PROPOSAL 1: ELECTION OF FOUR DIRECTORS

A. BACKGROUND INFORMATION

The Fund's Board is divided into three classes of directors, each class
serving for three years. The term of one class expires each year and no term
shall continue for more than three years after the applicable election. This
type of classification may prevent replacement of a majority of the Directors
for up to a two-year period. The foregoing is subject to the provisions of the
Investment Company Act of 1940, as amended (the "1940 Act"), Maryland law, and
the Bylaws of the Fund.

It is the intention of the persons named in the accompanying form of proxy
to nominate and to vote such proxy for the election of the persons named below,
or if any such persons shall be unable to serve, to vote for the election of
such other person or persons as shall be determined by the Board in accordance
with its judgment. The Fund however, has no reason to believe that it will be
necessary to designate a substitute nominee.

The following tables set forth certain information regarding each nominee
and those directors whose current terms will not expire in 1999.

B. NOMINEE INFORMATION

<TABLE>
<CAPTION>
EXPIRATION
OF TERM IF
POSITIONS WITH BUSINESS EXPERIENCE ELECTED AS A
NAME AND BIRTH DATE FUND AND TERM DURING THE LAST FIVE YEARS DIRECTOR
- ------------------- -------------- -------------------------- ------------
<S> <C> <C> <C>
Judge Gustavo E. Gonzales, Director since 1998 Municipal Court Judge, Dallas, Texas 2002
Jr. (1995-Present); Director, Downtown
07/27/40 Dallas YMCA Board (1996-Present);
Director, Dallas Easter Seals
Society (1997-Present). Formerly,
private attorney (litigation)
(1980-1995).(1)
Dr. F. Robert Paulsen Director since 1997 Dean and Professor Emeritus, 2002
07/05/22 University of Arizona, Tucson,
Arizona. Formerly, Dean and
Professor, University of
Connecticut, Storrs, Connecticut and
Carnegie Fellow, University of
Michigan, Ann Arbor, Michigan.(1)
Alice T. Kane* President and Director President of American General Fund 2002
01/16/48 since 1999 Group (1999-Present). Formerly,
Executive Vice President, American
General Investment Management, L.P.,
("AGIM") (1998-1999). Formerly,
Executive Vice President, New York
Life Insurance Company (1994-1998).
President of other investment
companies advised by VALIC.(1)
</TABLE>

4
<PAGE> 8

C. OTHER DIRECTORS

<TABLE>
<CAPTION>
POSITIONS WITH BUSINESS EXPERIENCE EXPIRATION
NAME AND BIRTH DATE FUND AND TERM DURING THE LAST FIVE YEARS OF TERM
- ------------------- -------------- -------------------------- ------------
<S> <C> <C> <C>
Dr. Timothy J. Ebner Director since 1998 Professor and Head, Department of 2000
07/15/49 Neuroscience (1998-Present),
Professor, Departments of
Neurosurgery and Physiology,
University of Minnesota (1991-1999).
Formerly, Consultant to EMPI Inc.,
(manufacturing of medical products)
(1994-1995) and Medtronic Inc.
(manufacturer of medical products)
(1997-1998).(1)
Dr. John Wm. Lancaster Director since 1997 Pastor Emeritus and Director of 2000
12/15/23 Planned Giving, First Presbyterian
Church, Houston, Texas (1996-
Present). Formerly, Pastor, First
Presbyterian Church, Houston, Texas
(1961-1990).(1)
Dr. John E. Maupin, Jr. Director since 1998 President, Meharry Medical College, 2000
10/28/46 Nashville, Tennessee (1994-Present),
Nashville Advisory Board Member,
First American National Bank (1996-
Present), Director, Monarch Dental
Corporation (1997-Present),
LifePoint Hospitals, Inc.
(1998-Present). Formerly, Executive
Vice President, Morehouse School of
Medicine, Atlanta, Georgia
(1989-1994).(1)
</TABLE>

5
<PAGE> 9

<TABLE>
<CAPTION>
POSITIONS WITH BUSINESS EXPERIENCE EXPIRATION
NAME AND BIRTH DATE FUND AND TERM DURING THE LAST FIVE YEARS OF TERM
- ------------------- -------------- -------------------------- ------------
<S> <C> <C> <C>
Dr. Judith L. Craven Director since 1998 Retired Administrator. Formerly, 2001
10/06/45 President, United Way of Texas Gulf
Coast (1992-1998). Director, Houston
Branch, Federal Reserve Bank of
Dallas (1992-Present), Compaq
Computer Corporation (1998-Present),
Luby's Inc. (1998-Present), A.H.
Belo Corporation (journalism, TV and
radio), (1993-Present), and Sysco
Corporation, (marketing and
distribution of food),
(1996-Present). Formerly, Director,
Sisters of Charity of Incarnate Word
(1996-1999).(1)
Dr. Norman Hackerman Director since 1997 Chairman -- Scientific Advisory 2001
03/02/12 Board for The Robert A. Welch
Foundation (1983-Present), Director,
Electro-source, Inc., (develops,
manufactures and markets energy
storage products), President
Emeritus, Rice University, Houston,
Texas. Formerly, President, Rice
University, Houston, Texas (1970-
1985), Professor Emeritus,
University of Texas, Austin, Texas
(1970-1985).(1)
Ben H. Love Director since 1997 Retired. Formerly, Director, 2001
09/26/30 Mid-American (waste products)
(1993-1997) and Chief Executive, Boy
Scouts of America. (1985-1993).(1)
</TABLE>

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

* Considered an "interested person" as defined in Section 2(a)(19) of the 1940
Act, specifically because of his or her capacity as an officer or director
of VALIC, or one of VALIC's affiliates. Any director who is not an
interested person of the Fund may be referred to hereafter as an
"Independent Director."

(1) A Director or Trustee of American General Series Portfolio Company
("AGSPC"), American General Series Portfolio Company 2 ("AGSPC 2") and
American General Series Portfolio Company 3 ("AGSPC 3"), each an open-end
investment company for which VALIC serves as the investment adviser.

D. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Fund is required to identify any director or officer who failed to
timely file forms with the SEC and The New York Stock Exchange reporting their
affiliation with the Fund, and ownership and changes in ownership of the Fund's
shares.

Each person is required by SEC regulations to furnish the Fund with copies
of all such forms they file. Based on a review of these forms furnished to the
Fund, the Fund believes that during its last fiscal year, each person complied
with the reporting requirements. None of the current officers are shareholders
of the Fund.

6
<PAGE> 10

E. BOARD OF DIRECTORS' COMMITTEES AND MEETINGS

The Board has appointed an Audit Committee and a Nominating Committee, but
has not appointed a Compensation Committee. The functions of the Nominating
Committee have been performed by four of the current Board members. Shareholders
may submit written recommendations to the Board regarding nominees for director,
although the Board expects to be able to identify an ample number of qualified
candidates. The Nominating Committee currently consists of Dr. Craven, Judge
Gonzales, Dr. Hackerman and Mr. Love.

The Audit Committee selects, and recommends for approval by the Board and
the shareholders, the audit firm to be retained as independent auditor by the
Fund. The Audit Committee consults with the Fund's independent auditor regarding
the plan and scope of the audit, the adequacy of the Fund's internal accounting
procedures and controls and all matters relevant to the audit services provided
to the Fund. The Audit Committee also reviews the fees charged by the auditor
and the results of the audit.

The Audit Committee currently consists of Dr. Hackerman, Dr. Lancaster, Dr.
Maupin, Dr. Paulsen and Mr. Love. The Board will elect the members of the Audit
Committee following the election of new Directors at the Meeting.

During the fiscal year ended June 30, 1999, the Board met five times at
special and regularly scheduled meetings. During the fiscal year ended June 30,
1999, the Audit Committee met three times, and the Nominating Committee met one
time. There are no incumbent members of the Board who, during the last fiscal
year of the Fund, attended fewer than 75% of the aggregate meetings of the Board
or its committees on which they serve.

F. EXECUTIVE COMPENSATION

Members of the Board receive an annual retainer of $2,000, $500 for each
Board meeting attended in person and $250 for each Board meeting conducted by
telephone. Audit and Nominating Committee members receive an additional $250 for
each committee meeting attended on a date other than the date the Board meets.
Committee chairs receive an additional $250 for each committee meeting chaired.
Directors who are officers of the Fund are not compensated for their service on
the Board.

During the fiscal year ended June 30, 1999, the Fund paid $50,000 to VALIC,
the investment adviser, in reimbursement of compensation and other expenses
attributable to the offices of the Fund's Secretary and Treasurer as provided
under the investment advisory agreement between the Fund and VALIC. In the
fiscal year ended June 30, 1999, the aggregate cash compensation earned by all
Directors and the three highest-paid officers of the Fund, exclusive of fees
paid for the services of the Secretary and Treasurer, was $29,500.

7
<PAGE> 11

COMPENSATION TABLE

<TABLE>
<CAPTION>
PENSION OR
RETIREMENT TOTAL COMPENSATION
AGGREGATE BENEFITS ACCRUED FROM FUND AND
COMPENSATION AS PART OF FUND FUND COMPLEX PAID
NAME OF PERSON, POSITION(1) FROM FUND EXPENSES TO DIRECTORS(4)
- --------------------------- ------------ ---------------- ------------------
<S> <C> <C> <C>
Kent E. Barrett, Director(2)..................... $ 0 0 $ 0
Dr. Judith L. Craven, Director................... 1,500 0 32,975
Dr. Timothy J. Ebner, Director................... 1,500 0 32,975
Judge Gustavo E. Gonzales, Jr., Director......... 1,500 0 33,225
John A. Graf, Former Director(3)................. 0 0 0
Alice T. Kane, Director(2)....................... 0 0 0
Dr. Norman Hackerman, Director................... 4,500 0 49,682
Dr. John Wm. Lancaster, Director................. 4,750 0 50,682
Ben H. Love, Director............................ 4,750 0 50,432
Dr. John E. Maupin, Jr., Director................ 1,500 0 33,225
Dr. F. Robert Paulsen, Director.................. 4,750 0 50,682
Craig R. Rodby, Former Director(3)............... 0 0 0
Dr. R. Miller Upton, Director(5)................. 4,750 0 50,682
Thomas L. West, Jr., Chairman(5)................. 0 0 0
</TABLE>

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

(1) Messrs. Barrett, Graf, Rodby and West and Ms. Kane are affiliated persons of
VALIC and are not eligible for compensation or retirement benefits from the
Fund.

(2) Ms. Kane and Mr. Barrett were elected by the Board on July 27, 1999 to serve
as directors of the Fund.

(3) Messrs. Rodby and Graf resigned as Directors of the Fund on April 19, 1999
and July 26, 1999, respectively.

(4) The Fund is part of a fund complex which also includes AGSPC, AGSPC 2 and
AGSPC 3.

(5) Dr. Upton and Mr. West are retiring as Directors of the Fund and are not
standing for election at the Meeting.

8
<PAGE> 12

G. EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

The following table sets forth certain information concerning the executive
officers of the Fund other than those officers previously named as nominees or
directors above.

<TABLE>
<CAPTION>
POSITION(S) WITH BUSINESS EXPERIENCE DURING
NAME AND DATE OF BIRTH FUND AND TERM THE LAST 5 YEARS
- ---------------------- ---------------- --------------------------
<S> <C> <C>
Peter V. Tuters Senior Investment Officer Executive Vice President, Trading and
04/18/52 since 1999 Portfolio Management, American General
Investment Management, L.P. (1998-
Present); Vice President and Investment
Officer (1998-Present), Vice President
and Chief Investment Officer
(1993-1998), VALIC and AGAIC
(1998-Present). Formerly, Director of
the Fund (1993-1998), VALIC, Senior
Vice President and Chief Investment
Officer, American General Corporation
(1993-1998).
Leon A. Olver Vice President and Investment Director, Asset Backed and Derivatives
06/27/51 Officer since 1999 and Vice Trading, AGIM (1999-Present) and Vice
President since 1997 President and Investment Officer, AGSPC
(1995-Present). Formerly, Portfolio
Manager, VALIC (1995-1999), Vice
President and Treasurer, First Heights
Bank (1994-1995), Vice President and
Assistant Treasurer, First Heights Bank
(1991-1995).
Cynthia A. Toles Vice President since 1998 and Senior Vice President, General Counsel
03/28/51 Secretary since 1997 and Secretary, VALIC and AGAIC (1998-
Present), Vice President and Secretary,
AGSPC (1985-Present), Vice President
and Secretary, AGSPC 2, AGSPC 3 and
A.G. Series Trust (1998-Present),
Senior Associate General Counsel and
Secretary, VALIC (1990-1998).
Pauletta P. Cohn Vice President since 1999 Associate General Counsel and Assistant
06/06/48 Secretary, American General Life
Companies (1998-Present), Senior
Attorney, American General (1993-1998).
Nori L. Gabert Vice President since 1998 and Associate General Counsel, VALIC (1997-
08/15/53 Assistant Secretary since 1997 Present), Vice President and Assistant
Secretary of AGSPC (1997-Present), Vice
President and Assistant Secretary of
AGSPC 2, AGSPC 3 and A.G. Series Trust
(1998-Present). Formerly, Of Counsel,
Winstead Sechrest & Minick P.C. (1997),
Vice President and Associate General
Counsel of Van Kampen, Inc.
(1981-1996).
</TABLE>

9
<PAGE> 13

<TABLE>
<CAPTION>
POSITION(S) WITH BUSINESS EXPERIENCE DURING
NAME AND DATE OF BIRTH FUND AND TERM THE LAST 5 YEARS
- ---------------------- ---------------- --------------------------
<S> <C> <C>
Cynthia A. Gibbons Assistant Vice President since Senior Compliance Analyst, VALIC (1996-
12/06/67 1998 Present), Assistant Vice President,
AGSPC, AGSPC 2, AGSPC 3 and A.G. Series
Trust (1998-Present).
Gregory R. Seward Treasurer since 1997 Vice President -- Variable Product
06/27/56 Accounting, AGIM, (1998-Present),
Assistant Controller, VALIC
(1991-1998), Treasurer, AGSPC
(1991-Present), AGSPC 2 and AGSPC 3
(1998-Present).
Kathryn A. Pearce Assistant Treasurer since 1997 Director -- Mutual Fund Administration,
02/05/47 AGIM (1999), Associate Director -- Fund
Accounting, VALIC (1996-1999),
Controller, AGSPC (1996-Present), and
AGSPC 2 and AGSPC 3 (1998-Present).
Formerly, Supervisor -- Mutual Fund
Accounting, Van Kampen, Inc.
(1977-1996).
Jaime M. Sepulveda Assistant Treasurer since 1998 Director -- Variable Product Accounting
01/09/52 and Financial Reporting, AGIM
(1998-Present), Assistant Treasurer,
AGSPC, AGSPC 2 and AGSPC 3
(1998-Present). Formerly, Accounting
Manager, Metro Networks, Inc.
(1997-1998); Controller and Investment
Officer, Port of Houston Authority
(1994-1997).
Heriberto Valdez Assistant Treasurer since 1999 Associate Director -- Mutual Fund
04/25/57 Accounting, AGIM (1999-Present),
Manager, Mutual Fund Accounting (1998-
1999), Manager -- Variable Product
Accounting (1997-1998), Staff
Accountant -- Variable Product
Division, VALIC (1989-1997).
Gregory R. Kingston Assistant Treasurer since 1999 Vice President, Fund Accounting, AGIM
06/27/56 (October 1999). Formerly, Assistant
Treasurer, First Investor Management
Company (1994-1999).
</TABLE>

The business address of each officer, other than Ms. Kane, is 2929 Allen
Parkway, Houston, Texas 77019. Ms. Kane's business address is 125 Maiden Lane,
New York, New York 10038.

REQUIRED VOTE

The election of Directors requires the affirmative vote of a majority of
the votes cast at the Meeting, provided a quorum is present.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE FUND'S SHAREHOLDERS
VOTE "FOR" THE ELECTION OF ALL OF THE FUND'S NOMINEES TO THE BOARD.

10
<PAGE> 14

PROPOSAL 2: RATIFICATION OF KPMG LLP AS
INDEPENDENT AUDITOR

The Board, including all of the Independent Directors, has selected KPMG
LLP to continue to serve as independent auditor of the Fund for the fiscal year
ending June 30, 2000, subject to ratification by the Fund's shareholders.

KPMG LLP has served as the Fund's independent auditor since 1972 and has no
direct financial interest or material indirect financial interest in the Fund.
Representatives of KPMG LLP will be present at the Meeting and will have the
opportunity, at their discretion, to make a statement and to respond to
appropriate shareholder questions.

KPMG LLP's audit services for the fiscal year ended June 30, 1999 included:
auditing the Fund's annual financial statements; preparing the Fund's federal
and state income tax return; preparing the Fund's federal excise tax return;
consulting with the Fund's Audit Committee; and engaging in routine
consultations on financial accounting and reporting matters.

The Audit Committee authorized all services performed by KPMG LLP on behalf
of the Fund. In addition, the Audit Committee reviews the scope of services to
be provided by KPMG LLP annually and considers the effect, if any, that
performance of any non-audit services might have on audit independence.

REQUIRED VOTE

The ratification of the selection of independent auditors requires the
affirmative vote of a majority of the votes cast at the Meeting, provided a
quorum is present.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE FUND'S SHAREHOLDERS
VOTE "FOR" KPMG LLP AS INDEPENDENT AUDITOR.

DISSIDENT SHAREHOLDER SOLICITATION

On October 14, 1999, the Horejsi Trust and Stewart R. Horejsi (the "Horejsi
Group") filed with the SEC an amendment to their Schedule 13D (the "Amended
Schedule 13D") in which they stated their intention to solicit proxies from the
Fund's shareholders in connection with the Meeting (i) in an effort to elect
four of their own nominees to the Fund's Board of Directors and (ii) in support
of their proposal to request the Fund's directors to consider changing the
Fund's investment policy so as to invest in equity securities in addition to
fixed income securities. According to the Amended Schedule 13D, the Horejsi
Group beneficially owned 348,000 shares of the Fund's common stock
(approximately 6.17%) as of the Record Date and 376,800 shares of the Fund's
common stock (approximately 6.68%) as of October 13, 1999.

On July 22, 1999, the Horejsi Trust transmitted to the Fund a letter
requesting, pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), that the Fund include in its proxy statement for
the Meeting a proposal which, as subsequently revised by the Horejsi Trust,
recommends that the Fund's Board consider changing the Fund's investment policy
so as to invest the Fund's assets in equity securities as well as fixed income
securities. On July 26, 1999, the Horejsi Group filed with the SEC its original
Schedule 13D, in which the Horejsi Group stated that it may seek control of the
Fund and that, in the event its proposal was not enacted, the Horejsi Group
intended to increase its ownership of common shares of the Fund until it was
able to influence the Fund to implement its proposal.
11
<PAGE> 15

In the Amended Schedule 13D, the Horejsi Group states that it believes that
(i) implementation of the Horejsi Trust's recommended change in investment
policy is likely to significantly reduce the Fund's dividends, (ii)
implementation of the Horejsi Trust's recommended change in investment policy
would likely increase the volatility of the price of the Fund's shares and (iii)
during the period in which the Horejsi Trust's recommended change in investment
policy was being implemented, the discount to net asset value of the Fund's
share price may increase significantly. The Horejsi Group also states in the
Amended Schedule 13D that it believes that total after tax returns of a fund
that invests in equity securities in addition to fixed income securities is
likely to be greater than that of a fund, like the Fund, that invests only in
fixed income securities.

The Horejsi Trust's proposal has been omitted from this Proxy Statement in
accordance with the provisions of Rule 14a-8 under the Exchange Act. If such
proposal is properly presented at the Meeting, the proxy holders will exercise
their discretionary authority to vote against such proposal.

THE FUND'S BOARD UNANIMOUSLY OPPOSES THE HOREJSI GROUP'S PROPOSAL WITH
RESPECT TO THE FUND'S INVESTMENT POLICY AND URGES THE FUND'S SHAREHOLDERS TO
REJECT THE DISSIDENT HOREJSI GROUP'S NOMINEES AND NOT TO RETURN OR SIGN ANY
WHITE PROXY CARD WHICH MAY BE FURNISHED BY THE DISSIDENT HOREJSI GROUP.

INFORMATION ABOUT THE FUND

A. STRUCTURE AND INVESTMENT OBJECTIVES

USLIFE Income Fund, Inc. is a closed-end, diversified management investment
company organized as a Maryland corporation on October 17, 1972. The Fund's
shares are listed for trading on The New York Stock Exchange.

The Fund's fundamental investment objective is to provide a high level of
current income for its shareholders. In pursuing its objective, the Fund invests
at least 50% of its total assets in straight debt securities which are rated at
the time of purchase within the four highest grades by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Service, a division of the
McGraw-Hill Companies, Inc., or which are unrated but considered by the Fund's
management to be of comparable quality. The balance of the Fund's assets are
invested in other fixed income securities, including straight and convertible
debt securities, preferred stock and other securities with equity features. Of
the Fund's total assets, up to 30% may be invested in privately placed
securities which are not readily marketable. The Fund may not invest more than
20% of its net assets in foreign securities. The Fund may also borrow money to
obtain investment leverage. The relative size of the Fund's investments in any
grade or type of securities will vary from time to time depending upon a number
of factors, including yields, market supplies and economic outlook. As of
October 15, 1999, approximately 51.46% the Fund's assets were invested in fixed
income securities rated investment grade or considered by VALIC to be of
comparable quality, and 48.54% in below investment grade securities.

12
<PAGE> 16

B. THE FUND'S INVESTMENT ADVISER

VALIC is a stock life insurance company and became the Fund's Adviser on
September 24, 1997 pursuant to a new investment advisory agreement. VALIC is
wholly-owned by American General Life Insurance Company, which is itself a
wholly-owned subsidiary of AGC Life Insurance Company, a wholly-owned subsidiary
of American General Corporation. VALIC, American General Corporation, AGC Life
Insurance Company and American General Life Insurance Company are located at
2929 Allen Parkway, Houston, Texas 77019.

VALIC receives from the Fund a monthly fee equal to the sum of: (i)
0.04167% of the Fund's adjusted net assets (month end net assets, less net
investment income for the month) and (ii) 2 1/2% of the Fund's net investment
income, minus interest on borrowed funds during the month. During the fiscal
year ended June 30, 1999, the Fund paid VALIC $404,470 for providing advisory
services.

C. CUSTODIAN AND TRANSFER AGENT

State Street Bank and Trust Company ("State Street") serves as custodian
for the Fund's portfolio, and ChaseMellon Shareholder Services ("ChaseMellon")
acts as transfer agent, dividend paying agent and registrar for the Fund's
shares. The principal business address of State Street is 225 Franklin Street,
Boston, Massachusetts 02110, and the principal business address of ChaseMellon
is 450 West 33rd Street, New York, NY 10001.

D. OTHER

The Fund currently does not employ a principal underwriter or
administrator.

SOLICITATION OF PROXIES

Proxies may be solicited, without additional compensation, by directors,
officers or employees of the Fund and by certain other persons listed on
Schedule I hereto, by mail, telephone, facsimile, telegram, in person or
otherwise. The Fund will bear the cost of the solicitation of proxies, including
the preparation, printing and mailing of the proxy materials. In addition, the
Fund will request banks, brokers and other custodians, nominees and fiduciaries
to forward proxy material to the beneficial owners of the Fund's shares and
obtain their voting instructions. The Fund will reimburse those firms for their
expenses in accordance with the rules of the SEC and The New York Stock
Exchange. In addition, the Fund has retained Georgeson Shareholder
Communications, Inc. ("Georgeson") to assist in the solicitation of proxies for
a fee of $25,000 plus out of pocket expenses. Georgeson will employ
approximately 50 people to solicit the Fund's shareholders.

Expenses related to the solicitation of shareholders, in excess of those
normally spent for an annual meeting, are expected to aggregate approximately
$375,000, of which approximately $10,000 has been spent to date. Schedule I
hereto sets forth certain information relating to the Fund's directors,
nominees, officers and other participants who will be soliciting proxies on the
Fund's behalf.

13
<PAGE> 17

GENERAL INFORMATION

OTHER MATTERS

The only business to come before the Meeting of which the management is
aware is set forth in this Proxy Statement, except that management has been
informed that the Horejsi Group intends to submit a proposal that the Fund's
Board consider changing the Fund's investment policy so as to invest in equity
securities as well as fixed income securities. Such proposal previously was
submitted by the Horejsi Trust for inclusion in this Proxy Statement and was
omitted from this Proxy Statement in accordance with the provisions of Rule
14a-8 under the Exchange Act. If such proposal is properly brought before the
Meeting by the Horejsi Group, the proxy holders intend to use their
discretionary authority to vote against such proposal. If any other business is
presented for action, it is intended that discretionary authority to vote the
proxies shall be exercised in respect thereof in accordance with the best
judgment of the proxy holders.

SHAREHOLDER PROPOSALS

Shareholder proposals intended for inclusion in the Fund's proxy statement
in connection with the Fund's 2000 annual meeting of shareholders pursuant to
Rule 14a-8 under the Exchange Act must be received by the Fund at the Fund's
principal executive offices by July 5, 2000. In order for proposals made outside
of Rule 14a-8 under the Exchange Act to be considered "timely" within the
meaning of Rule 14a-4(c) under the Exchange Act, such proposals must be received
by the Fund at the Fund's principal executive offices not later than September
17, 2000. Any shareholder who wishes to submit a proposal for consideration at a
meeting of shareholders should send such proposal to the Fund at 2929 Allen
Parkway, Houston, Texas 77019.

IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED,
PLEASE SIGN, DATE AND RETURN THE ENCLOSED BLUE PROXY. A SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.

By Order of the Board of Directors,

/s/ ALICE T. KANE

Alice T. Kane
President

November 1, 1999

14
<PAGE> 18

IMPORTANT

If your shares are held in your own name, please sign, date and return the
enclosed BLUE proxy card today. If your shares are held in "Street-Name," only
your broker or bank can vote your shares and only upon receipt of your specific
instructions. Please return the enclosed BLUE proxy card to your broker or bank
and contact the person responsible for your account to ensure that a BLUE proxy
card is voted on your behalf.

Do not sign any white proxy card you may receive from the Horejsi Group,
even as a protest vote against them. If you believe you may previously have
voted on a white proxy card furnished by the Horejsi Group, you can revoke that
proxy by signing, dating and mailing the enclosed BLUE proxy card in the
enclosed postage-paid envelope.

If you have any questions or need assistance in voting your shares, please
call the firm assisting the Fund in the solicitation of proxies:

GEORGESON
SHAREHOLDER COMMUNICATIONS, INC.

17 STATE STREET
NEW YORK, NEW YORK 10004
BANKS AND BROKERS CALL COLLECT: (212) 440-9800
ALL OTHERS CALL TOLL FREE: 1-800-223-2064
<PAGE> 19

SCHEDULE I

INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS
OF THE FUND AND OTHER PERSONS WHO MAY SOLICIT PROXIES

The following tables set forth the name and title of persons who may be
deemed to be participants on behalf of the Fund in the solicitation of proxies
from Fund shareholders. Unless otherwise indicated, the principal business
address of each of the following persons is 2929 Allen Parkway, Houston, Texas
77019.

DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS OF THE FUND

<TABLE>
<CAPTION>
NAME POSITION AND ADDRESS
- ---- --------------------
<S> <C>
Dr. Judith L. Craven.............. Director
3212 Ewing Street
Houston, Texas 77004
Dr. Timothy J. Ebner.............. Director
17994 N.W. Union Blvd.
Elk River, Minnesota 55330
Dr. Norman Hackerman.............. Director
2001 Pecos Street
Austin, Texas 78703
Dr. John W. Lancaster............. Director
4624 Braeburn
Bellaire, Texas 77401
Ben H. Love....................... Director
4407 Eaton Circle
Colleyville, Texas 76034
Dr. John E. Maupin, Jr. .......... Director
2 Morningside Ct.
Nashville, Tennessee 37215
Kent E. Barrett................... Director, Nominee and Executive Vice President
2003 South Blvd.
Houston, Texas 77098
Judge Gustavo E. Gonzales, Jr. ... Director and Nominee
3731 Gilbert Ave. A
Dallas Texas 75219
Alice T. Kane..................... Director, Nominee and President
125 Maiden Lane
New York, New York 10038
Dr. F. Robert Paulsen............. Director and Nominee
2801 N. Indian Ruins
Tucson, Arizona 85715
</TABLE>

I-1
<PAGE> 20

<TABLE>
<CAPTION>
NAME POSITION AND ADDRESS
- ---- ------------------------------------
<S> <C>
Thomas L. West, Jr. .............. Chairman
2120 Brentwood Dr.
Houston, Texas 77019
Peter V. Tuters................... Senior Investment Officer
Leon A. Olver..................... Vice President and Investment Officer
Pauletta P. Cohn.................. Vice President
Cynthia A. Toles.................. Vice President and Secretary
Nori L. Gabert.................... Vice President and Assistant Secretary
Gregory R. Seward................. Treasurer
Cynthia A. Gibbons................ Assistant Vice President
Kathryn A. Pearce................. Assistant Treasurer
Jamie M. Sepulveda................ Assistant Treasurer
Heriberto Valdez.................. Assistant Treasurer
Gregory R. Kingston............... Assistant Treasurer

EXECUTIVE OFFICERS OF VALIC OR AFFILIATE
NAME POSITION
- ---- ------------------------------------
Alice T. Kane..................... President, American General Fund Group
Kent E. Barrett................... Executive Vice President, Chief Financial Officer,
American General Retirement Services
Peter V. Tuters................... Executive Vice President, Trading and Portfolio Management,
American General Investment Management, L.P.
Leon A. Olver..................... Director, Asset Backed and Derivatives Trading,
American General Investment Management, L.P.
Pauletta P. Cohn.................. Associate General Counsel and Assistant Secretary,
American General Life Companies
Cynthia A. Toles.................. Senior Vice President, General Counsel and Secretary,
The Variable Annuity Life Insurance Company
Nori L. Gabert.................... Associate General Counsel,
The Variable Annuity Life Insurance Company
Gregory R. Seward................. Vice President, Variable Product Accounting,
American General Investment Management, L.P.
Cynthia A. Gibbons................ Senior Compliance Analyst,
The Variable Annuity Life Insurance Company
Kathryn A. Pearce................. Director, Mutual Fund Administration,
American General Investment Management, L.P.
</TABLE>

I-2
<PAGE> 21

<TABLE>
<CAPTION>
NAME POSITION AND ADDRESS
- ---- --------------------
<S> <C>
Jamie M. Sepulveda................ Director, Financial Reporting, Variable Product Accounting,
American General Investment Management, L.P.
Heriberto Valdez.................. Associate Director, Mutual Fund Accounting, American General
Investment Management, L.P.
Gregory R. Kingston............... Vice President, Fund Accounting,
American General Investment Management, L.P.
</TABLE>

SHARES HELD BY PARTICIPANTS

None of the participants listed in this Schedule I own any shares of Fund
common stock.

MISCELLANEOUS INFORMATION CONCERNING PARTICIPANTS

Except as described in this Schedule I or in the Proxy Statement, none of
the participants nor any of their respective affiliates or associates (together,
the "Participant Affiliates"), (i) directly or indirectly beneficially owns any
shares of common stock of the Fund or (ii) has had any relationship with the
Fund in any capacity other than as an employee, officer or director.
Furthermore, except as described in this Schedule I or in the Proxy Statement,
no Participant Affiliate is either a party to any transaction or series of
transactions since July 1, 1998, or has knowledge of any currently proposed
transaction or series of transactions, (i) to which the Fund or any of its
subsidiaries was or is to be a party, (ii) in which the amount involved exceeds
$60,000, and (iii) in which any Participant Affiliate had, or will have, a
direct or indirect material interest.

Except as described in the Proxy Statement, no Participant Affiliate has
entered into any agreement or understanding with any person respecting any
future employment by the Fund or its affiliates or any future transactions to
which the Fund or any of its affiliates will or may be a party. Except as
described in this Schedule I or in the Proxy Statement, there are no contracts,
arrangements or understandings by any Participant Affiliate within the past year
with any person with respect to the Fund's securities.

I-3
<PAGE> 22

USLIFE INCOME FUND, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Thomas L. West, Jr., Pauletta P. Cohn,
Nori L. Gabert and Gregory R. Seward as proxies, each with the powers to act
alone and to appoint his or her substitute, and hereby authorizes them to
represent and vote, as designated herein, all the shares of Common Stock of
USLIFE Income Fund, Inc. (the "Fund") which the undersigned is entitled to vote
as of September 7, 1999, the Record Date, at the Annual Meeting of Shareholders
to be held December 3, 1999, or any adjournment or postponement thereof.

THIS PROXY IS CONTINUED ON THE REVERSE.
PLEASE SIGN ON THE REVERSE AND RETURN PROMPTLY

USLIFE INCOME FUND, INC.
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 3, 1999
2:00 P.M.
2919 ALLEN PARKWAY
HOUSTON, TEXAS 77019

<PAGE> 23

Please mark your
votes as indicated [X]
in this example

<TABLE>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT THE FUND'S SHAREHOLDERS VOTE "FOR" PROPOSALS 1 AND 2.
- -----------------------------------------------------------------------------------------------
FOR WITHHOLD

Proposal 1-Election of the following four nominees as Directors:

Judge Gustavo E. Gonzales, Jr., Dr. F. Robert Paulsen, [ ] [ ]
Alice T. Kane, Kent E. Barrett

YOU MAY WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE OR
NOMINEES BY MARKING THE FOR BOX AND STRIKING OUT THE NAME OF ANY
SUCH NOMINEE.

FOR AGAINST ABSTAIN
In addition, in their discretion,
Proposal 2-Proposal to ratify the appointment of KPMG LLP as the the Proxies are authorized to vote
independent auditor of the Fund. [ ] [ ] [ ] upon such other business as may
properly come before the meeting.
- -----------------------------------------------------------------------------------------------
</TABLE>

This proxy when properly executed will be
voted in the manner directed herein by the
undersigned shareholder. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR THE
NOMINEES NAMED IN PROPOSAL 1 AND FOR THE
SELECTION OF THE AUDITOR NAMED IN PROPOSAL 2.

Signature(s) Dated: 1999
------------------------------------------ --------------

NOTE: Please sign as name appears herein. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.