File No. 2-42352
File No. 811-2239
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 (AMENDMENT NO. )
Filed by the registrant [X]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for
Use of the
Commission Only (as
permitted by Rule
14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Pioneer Interest Shares
(Name of Registrant as Specified in Its Charter
Pioneer Interest Shares
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2).
<PAGE>
PIONEER INTEREST SHARES, INC.
60 State Street
Boston, Massachusetts 02109
1-800-225-6292
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 20, 1996
The Annual Meeting of Shareholders (the "Meeting") of Pioneer Interest
Shares, Inc. (the "Fund") will be held at the offices of Hale and Dorr, counsel
to the Fund, at 60 State Street, 26th floor, Boston, Massachusetts 02109 on
Thursday, June 20, 1996 at 2:00 p.m. (Boston time) to consider and act upon the
following proposals:
1. To elect the Directors named in the attached Proxy Statement to serve
on the Fund's Board of Directors until their successors have been duly
elected and qualified;
2. To approve an Agreement and Plan of Reorganization pursuant to which
the Fund will be reorganized as a Delaware business trust;
3. To ratify the selection of Arthur Andersen LLP as the Fund's
independent public accountants for the fiscal year ending December 31,
1996; and
4. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Shareholders of record as of the close of business on May 3, 1996 are
entitled to vote at the Meeting or any adjournment thereof.
By Order of the Board of Directors,
Joseph P. Barri, Secretary
Boston, Massachusetts
May 8, 1996
--------------------
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE AND
RETURN THE ENCLOSED PROXY CARD. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE
MEETING.
<PAGE>
PROXY STATEMENT
For Annual Meeting of Shareholders
of Pioneer Interest Shares, Inc.
to be Held on June 20, 1996
INTRODUCTION
This Proxy Statement is furnished to shareholders of Pioneer Interest
Shares, Inc., a Nebraska corporation (the "Fund"), in connection with the
solicitation of proxies by the Fund's Board of Directors for use at the Annual
Meeting of Shareholders (the "Meeting") to be held at the offices of Hale and
Dorr, counsel to the Fund, at 60 State Street, 26th floor, Boston, Massachusetts
02109 on Thursday, June 20, 1996 at 2:00 p.m. (Boston time) and at any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders.
The attached Notice, this Proxy Statement (the "Proxy Statement") and the
enclosed proxy card are being mailed to shareholders on or after May 8, 1996.
THE FUND'S ANNUAL REPORT FOR ITS FISCAL PERIOD ENDED DECEMBER 31, 1995 MAY BE
OBTAINED FREE OF CHARGE BY WRITING TO THE FUND AT ITS EXECUTIVE OFFICES, 60
STATE STREET, BOSTON, MASSACHUSETTS 02109 OR BY CALLING 1-800-225- 6292.
Shareholders of record as of the close of business on May 3, 1996 (the
"Record Date") are entitled to vote on all business of the Meeting or any
adjournments thereof. As of the Record Date, shares of Common Stock of the Fund
were outstanding. To the knowledge of the management of the Fund, no person
beneficially owned more than 5% of the outstanding shares of the Fund as of
April 30, 1996, except that (1) Cede and Co., Box 20, Bowling Green Station, New
York, NY 10004-0001, held ( %) shares of Common Stock as nominee and (2) Kray
and Co., One Financial Place, 440 South LaSalle Street, Chicago, IL 60605 held [
]([ ]%) shares of Common Stock as nominee.
PROPOSAL 1.
ELECTION OF BOARD OF DIRECTORS
The persons named on the accompanying proxy card intend to vote at the
Meeting (unless otherwise directed) FOR the election of the eight (8) nominees
named below as Directors of the Fund. All of the nominees currently serve as
Directors.
Each Director will be elected to hold office until the next meeting of
shareholders or until his or her successor is elected and qualified. Each
nominee has consented to being named herein
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and indicated his or her willingness to serve if elected. In addition, if
Proposal 2 regarding the reorganization of the Fund as a Delaware business trust
is approved by shareholders, the election of Directors of the Fund shall also be
deemed to constitute election as Trustees of the Successor Fund (as defined in
Proposal 2). If any such nominee should be unable to serve, an event not now
anticipated, the persons named as proxies may vote for such other person as
shall be designated by the Board of Directors.
The following table sets forth each nominee's position(s) with the Fund,
age, address, principal occupation or employment during the past five years and
directorships, and indicates the date on which he or she first became a Director
of the Fund. The table also shows the number of shares of Common Stock of the
Fund beneficially owned by each nominee, directly or indirectly, on April 30,
1996.
<TABLE>
<CAPTION>
Shares of the Common
Stock of the Fund
Name, Age, Beneficially Owned
Position(s) with Principal Occupation First and Percentage of Total
the Fund or Employment Became a Shares Outstanding
and Address and Directorships(1) Director on April 30, 1996(2)
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<S> <C> <C> <C>
John F. Cogan, Jr., 69* President, Chief Executive Officer and 1993 [-__-]
Chairman of the Board, a Director of The Pioneer Group, Inc.,
President and a public company ("PGI"); Chairman and
Director a Director of Pioneering Management
60 State Street Corporation ("PMC"), Pioneer Funds
Boston, MA 02109 Distributor, Inc. ("PFD"), Pioneer
Goldfields Limited ("PGL") and Teberebie
Goldfields Limited; Director of Pioneering
Services Corporation ("PSC") and Pioneer Capital
Corporation ("PCC"); President and Director of
Pioneer Plans Corporation ("PPC"), Pioneer
Investment Corporation ("PIC"), Pioneer Metals
and Technology, Inc. ("PMT") and Pioneer
International Corporation ("P.Intl."); Chairman
of the Supervisory Board of Pioneer Fonds
Marketing GmbH ("Pioneer GmbH"); Member of the
Supervisory Board of Pioneer First Polish Trust
Fund Joint Stock Company ("PFPT"); and Partner,
Hale and Dorr (Counsel to the Fund)
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Richard H. Egdahl, M.D., 69 Professor of Management, Boston 1993 -0-
Director University School of Management;
Boston University Professor of Public Health, Boston
Health Policy University School of Public Health;
Institute Professor of Surgery, Boston
53 Bay State Road University School of Medicine;
Boston, MA 02115 Director, Boston University Health
Policy Institute and University Medical Center;
Executive Vice President and Vice Chairman of the
Board, University Hospital; Academic Vice
President for Health Affairs, Boston University;
Director, Essex Investment Management Company,
Inc., an investment adviser, Health Payment
Review, Inc., a health care containment software
firm, Mediplex Group, Inc., a nursing care
facilities firm, Peer Review Analysis, Inc., a
health care utilization management firm, and
Springer-Verlag New York, Inc., a publisher; and
Honorary Director, Franciscan Children's Hospital
Margaret B.W. Graham, 48 Founding Director, Winthrop Group, 1993 -0-
Director Inc., a consulting firm, since 1982;
The Keep Manager of Research Operations, Xerox
P.O. Box 110 Palo Alto Research Center, between
Little Deer Isle, 1991 and 1994; Professor of Operations
ME 04650 Management and Management of
Technology, Boston University School
of Management, between 1989 and 1993
John W. Kendrick, 78 Professor Emeritus of Economics, 1993 -0-
Director George Washington University; and
6363 Waterway Dr. Economic Consultant and Director,
Falls Church, American Productivity and Quality
Virginia 22044 Center
Marguerite A. Piret, 47 President, Newbury, Piret & Company, 1993 -0-
Director Inc., a merchant banking firm
One Boston Place
Suite 2635
Boston, MA 02108
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David D. Tripple, 52* Director and Executive Vice President 1993 -0-
Executive Vice President of PGI; President, Chief Investment
and Director Officer and a Director of PMC;
60 State Street Director of PFD, PCC, Pioneer SBIC
Boston, MA 02109 Corporation, P. Intl. and PIC; and
Member of the Supervisory Board of PFPT
Stephen K. West, 67 Partner, Sullivan & Cromwell, a law 1993 -0-
Director firm
125 Broad Street
New York, NY 10004
John Winthrop, 59 President, John Winthrop & Co., a 1993 101 (0.0__%)
Director private investment firm; Director of
One North Adgers Wharf NUI Corp.; and Trustee of Alliance
Charleston, SC 29401 Capital Reserve, Alliance Government
Reserve and Alliance Tax Exempt Reserve
</TABLE>
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* Messrs. Cogan and Tripple are "interested persons" of the Fund and PMC
within the meaning of Section 2(a)(19) of the Investment Company Act of
1940, as amended (the "1940 Act").
(1) Each nominee also serves as a trustee for each of the 21 open-end
investment companies (mutual funds) in the Pioneer Family of Mutual Funds
and for each of the eight portfolios of the Pioneer Variable Contracts
Trust. Each Director was elected by the shareholders of the Fund in 1995.
(2) As of April 30, 1996, the Directors and officers of the Fund beneficially
owned, directly or indirectly, in the aggregate less than 1% of the Fund's
outstanding shares.
Ms. Piret, Mr. West and Mr. Winthrop serve on the Audit Committee of the
Board of Directors. The functions of the Audit Committee include recommending
independent auditors to the Directors, monitoring the independent auditors'
performance, reviewing the results of audits and responding to certain other
matters deemed appropriate by the Directors. Ms. Graham, Ms. Piret and Mr.
Winthrop also serve on the Nominating Committee of the Board of Directors. The
primary responsibility of the Nominating Committee is the selection and
nomination of candidates to serve as independent directors. The Nominating
Committee will also consider nominees recommended by shareholders to serve as
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Directors provided that shareholders submitting such recommendations comply with
all relevant provisions of Rule 14a-8 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
During the fiscal year ended December 31, 1995, the Board of Directors held
twelve meetings, the Audit Committee held eight meetings and the Nominating
Committee did not meet. All of the current Directors and Committee Members then
serving attended at least 75% of the meetings of the Board of Directors or
applicable committee, if any, held during the fiscal year ended December 31,
1995.
Other Executive Officers
In addition to Messrs. Cogan and Tripple, who serve as executive officers
of the Fund, the following table provides information with respect to the other
executive officers of the Fund. Each executive officer is elected by the Board
of Directors and serves until his successor is chosen and qualified or until his
resignation or removal by the Board. The business address of all officers of the
Fund is 60 State Street, Boston, Massachusetts 02109.
Name, Age and Position with The Fund Principal Occupation(s)
William H. Keough, 58, Treasurer Senior Vice President, Chief
Financial Officer and
Treasurer of PGI and Treasurer
of PFD, PMC, PSC, PPC, Pioneer
SBIC Corporation, PIC, PMT, P.
Intl. and each fund in the
Pioneer Family of Mutual
Funds.
Joseph P. Barri, 49, Secretary Secretary of PGI, PMC and PCC
and each fund in the Pioneer
Family of Mutual Funds; Clerk
of PFD and PSC and Partner,
Hale and Dorr (counsel to the
Fund).
Remuneration of Directors and Officers
The following table provides information regarding the compensation paid by
the Fund and the other investment companies in the Pioneer Family of Mutual
Funds to the Directors for their services as indicated below. Compensation paid
by the Fund to Messrs. Cogan and Tripple, interested persons of PMC, is
reimbursed to the Fund by PMC. The Fund pays no salary or other compensation to
its officers.
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Total Compensa-
tion from the
Pension or Fund and other
Aggregate Retirement funds in the
Compensation Benefits Pioneer Family
Director From the Fund+ Accrued of Mutual Funds++
John F. Cogan, Jr. $____* $0 $11,000*
Richard H. Egdahl, M.D. _____ 0 63,315
Margaret B.W. Graham _____ 0 62,398
John W. Kendrick _____ 0 62,398
Marguerite A. Piret _____ 0 76,704
David D. Tripple ____* 0 11,000*
Stephen K. West _____ 0 68,180
John Winthrop _____ 0 71,199
- ------------- ----- - ------
Totals $ $0 $426,194
===== == =======
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* PMC fully reimbursed the Fund and the other funds in the Pioneer Family of
Mutual Funds for compensation paid to Messrs. Cogan and Tripple.
+ For the fiscal year ended December 31, 1995.
++ For the calendar year ended December 31, 1995.
Investment Adviser
PMC, whose executive offices are located at 60 State Street, Boston,
Massachusetts 02109, serves as investment adviser to the Fund.
PMC is a wholly owned subsidiary of PGI. As of April 30, 1996, Mr. Cogan
beneficially owned [3,588,741] shares ([14.20]%) of the outstanding Common Stock
of PGI. Mr. Cogan's beneficial holdings included [_______] shares held in trusts
with respect to which Mr. Cogan may be deemed to be a beneficial owner by reason
of his interest as a beneficiary and/or position as a trustee and shares which
Mr. Cogan has the right to acquire under outstanding options within sixty days
of April 30, 1996. At such date, Robert L. Butler and David D. Tripple, PMC's
other directors, each owned beneficially less than 2% of the outstanding Common
Stock of PGI. As of April 30, 1996, officers and directors of PMC and Directors
and officers of the Fund beneficially owned an aggregate of [4,432,581] shares
of Common Stock of PGI, approximately [17.56]% of the outstanding Common Stock
of PGI. During PGI's fiscal year
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ended March 31, 1996, there were no transactions in PGI Common Stock by any
officer, Director or nominee for election as Director of the Fund, PMC and/or
PFD in an amount equal to or exceeding 1% of the outstanding Common Stock of
PGI.
Required Vote
In accordance with the Fund's Articles of Incorporation, the vote of a
plurality of all of the shares of the Fund voted at the Meeting is sufficient to
elect the nominees.
PROPOSAL 2.
APPROVAL OF AN AGREEMENT AND PLAN PROVIDING FOR THE
REORGANIZATION OF THE FUND FROM A NEBRASKA CORPORATION
TO A SERIES OF A DELAWARE BUSINESS TRUST
General
At a meeting held on March 5, 1996, the Board of Directors of the Fund that
were present at the meeting unanimously approved, subject to the approval of
shareholders of the Fund, an Agreement and Plan of Reorganization (the "Plan of
Reorganization") in the form attached to the Proxy Statement as Exhibit A. The
Plan of Reorganization provides for the reorganization (the "Reorganization") of
the Fund from a Nebraska corporation to a series of a Delaware business trust.
The Reorganization will entail creating a Delaware business trust (the
"Delaware Trust" or the "Successor Fund"). Following the Reorganization, the
Successor Fund will carry on the business of the Fund. The Successor Fund will
have an investment objective, policies and restrictions that are identical to
the investment objective, policies and restrictions applicable to the Fund. The
shares of the Successor Fund, like those of the Fund, will be listed on the New
York Stock Exchange (the "Exchange"). The Successor Fund will also enter into an
Investment Management Contract and other service agreements which provide the
same services on the same terms as the agreements and the Plan currently
applicable to the Fund. Shareholders should be aware that there may be deemed to
occur a momentary inconsistency with certain of the Fund's policies and
restrictions (such as restrictions on investments in any one issuer and
investments in other investment companies) during the Reorganization. The
principal differences between a Delaware business trust and a Nebraska
corporation as forms of organization are discussed below under the caption
"Comparison of Nebraska Corporations and Delaware Business Trusts."
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Approval of the Reorganization also constitutes approval of the dissolution
of the Fund in accordance with Nebraska law.
Following the Reorganization, PMC, the Fund's investment adviser, will
serve as investment adviser for the Successor Fund under an Investment
Management Contract substantially identical to the Fund's existing Investment
Management Contract.
Reasons for the Proposed Reorganization
The Fund is organized as a Nebraska corporation. The Board of Directors of
the Fund that were present at their March 5, 1996 meeting unanimously voted to
recommend reorganization of the Fund into a Delaware business trust which will
succeed to the business of the Fund. The Directors have determined that a
Delaware business trust affords advantages to the operations of the Fund greater
than those currently available under Nebraska law. See "Comparison of Nebraska
Corporations and Delaware Business Trusts."
In making their determination in favor of reorganizing the Fund, the
Directors considered the fact that, as discussed under "Comparison of Nebraska
Corporations and Delaware Business Trusts," certain actions by Delaware business
trusts either do not require shareholder approval when such approval would be
required under Nebraska law or require approval by a lower percentage of the
outstanding shares of the Fund than is required by Nebraska law. For example, if
the Successor Fund were to enter into a transaction identical to the
Reorganization, such transaction could, under certain circumstances, be
accomplished by the Board of Directors without the need for shareholder approval
and would, in any event, require the approval of only a majority of the
Successor Fund's shareholders compared to two-thirds of the outstanding shares
of the Fund.
The Directors also considered the fact that a Delaware business trust
offers greater operational flexibility than a Nebraska corporation. See
"Comparison of Nebraska Corporations and Delaware Business Trusts." For example,
the Fund's Articles of Incorporation currently permit the Fund to issue only a
single class of its Common Stock representing interests in a single portfolio of
securities. Under the Declaration of Trust, the Delaware Trust would be
authorized to offer different classes of its shares and series thereof,
including various types of preferred shares. At times, a closed-end investment
company may desire to issue such preferred shares to attempt to increase its
rate of return to common shareholders. This would occur if the proceeds from any
preferred share offering are invested in
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investments that pay a higher return than the sum of the dividend rate of the
preferred shares and the expenses associated with such shares. While the
Delaware Trust has no current plans to offer any class or series of its shares
other than the shares corresponding to those of the Fund, it may do so in the
future.
The Directors believe that the Delaware business trust form of organization
will enable the Successor Fund to adopt new methods of operation and employ new
technologies that are expected to reduce costs of operation when, and if,
implemented. For example, Delaware law authorizes electronic or telephonic
communications between shareholders and the Delaware business trust. The
Directors hope to take advantage of this provision to improve shareholder voting
procedures and reduce associated costs.
Board of Directors' Recommendation
After considering the matters discussed above and other matters deemed to
be relevant, the Directors determined that the Reorganization (i) is in the best
interest of the Fund and (ii) will not result in dilution of the interest of the
shareholders of the Fund. The Directors present at their March 5, 1996 meeting
unanimously voted to recommend to the shareholders of the Fund that they approve
the Reorganization.
Approval of the Agreement and Plan of Reorganization requires the
affirmative vote of two-thirds of the outstanding shares of the Fund's Common
Stock.
THE DIRECTORS RECOMMEND THAT SHAREHOLDERS OF THE FUND APPROVE THE AGREEMENT
AND PLAN OF REORGANIZATION PROVIDING FOR THE REORGANIZATION OF THE FUND FROM A
NEBRASKA CORPORATION TO A SERIES OF A DELAWARE BUSINESS TRUST.
Summary of the Plan of Reorganization
The following discussion summarizes certain terms of the Plan of
Reorganization. The summary of the Plan of Reorganization is qualified in its
entirety by the provisions of the form of Plan of Reorganization, which is
attached to this Proxy Statement as Exhibit A.
In order to accomplish the Reorganization, the Delaware Trust will be
formed pursuant to a Declaration of Trust. On the closing date of the
Reorganization (the "Closing Date"), the Fund will transfer all of its assets to
the Successor Fund in exchange for the assumption by the Successor Fund of all
the liabilities of the Fund and the issuance to the Fund of shares of beneficial
interest of the Successor Fund ("Successor Fund shares") equal to the value (as
determined by using the procedures set forth in the Fund's
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current prospectus) on the date of the exchange of the Fund's net assets. The
Fund, as a sole shareholder of the Successor Fund, will vote on certain matters
discussed below. Immediately thereafter, the Fund will liquidate and distribute
Successor Fund shares to each shareholder pro rata in proportion to such
shareholder's beneficial interest in the Fund in exchange for his or her shares
of the Fund. After this distribution of Successor Fund shares, the Fund will, as
soon as practicable thereafter, be dissolved in accordance with Nebraska law. A
confirmation will be mailed to each shareholder informing him or her of the
number of Successor Fund shares registered to such shareholder's account.
Certificates evidencing full or fractional Successor Fund shares will not be
issued. Upon completion of the Reorganization, each shareholder will be the
owner of full and fractional Successor Fund shares equal in number and aggregate
net asset value to his or her shares of the Fund as of the date of the exchange.
As described above, the Plan of Reorganization authorizes the Fund, as the
then sole shareholder of the Delaware Trust (i) to elect as Trustees of the
Delaware Trust the persons who currently serve as Directors of the Fund; (ii) to
ratify the selection of the independent accountants; and (iii) to approve an
Investment Management Contract for the Successor Fund.
The newly elected Trustees will hold office without limit in time except
that (i) any Trustee may resign; (ii) any Trustee may be removed by written
instrument signed by at least a majority of the number of Trustees prior to
removal; and (iii) a Trustee may be removed at any special meeting of the
shareholders by a vote of two-thirds of the outstanding shares of the Delaware
Trust. In case a vacancy shall for any reason exist, the remaining Trustees will
fill such vacancy by appointing another Trustee so long as, immediately after
such appointment, at least two-thirds of the Trustees have been elected by
shareholders.
Assuming the Plan of Reorganization is approved, it is currently
contemplated that the Reorganization will become effective on [JULY 1], 1996.
If, at any time prior to the closing of the Reorganization, the Directors
determine that it would not be in the best interest of the Fund or the
shareholders to proceed with the Reorganization, the Reorganization will not go
forward, notwithstanding the approval of the Reorganization by the shareholders
at the Meeting. The obligations of the Delaware Trust and the Fund under the
Plan of Reorganization are subject to various conditions as stated therein. In
order to provide against unforeseen events, the Plan of Reorganization may be
terminated or amended at any time prior to Reorganization by action of the
Directors of the Fund or the Trustees of the Delaware Trust, if
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(i) there is a material breach by the other party of any representation,
warranty or agreement contained in the Plan of Reorganization or (ii) it
reasonably appears that a party cannot meet a condition of the Plan of
Reorganization. The Fund and the Delaware Trust may at any time waive compliance
with any of the covenants and conditions contained in, or may amend, the Plan of
Reorganization; provided that such waiver or amendment does not materially
adversely affect the interests of shareholders of the Fund.
Continuation of Shareholder Accounts and Services
The Delaware Trust's transfer agent, Pioneering Services Corporation, will
establish accounts for all shareholders of the Fund containing the appropriate
number of Successor Fund shares to be received by that shareholder under the
Plan of Reorganization. Such accounts will be identical in all material respects
to the accounts currently maintained by the Fund for each shareholder.
New York Stock Exchange Listing
Under the Plan of Reorganization, the Delaware Trust will apply for listing
of the Successor Fund's shares on the Exchange. It is a condition to the
consummation of the Reorganization that such application for listing be accepted
by the Exchange. There is no reason to believe that the application for listing
will not be accepted. However, the timing of approval of listing could
nevertheless delay the closing of the Reorganization beyond the currently
expected date. In the unlikely event that the reorganization is not consummated
because the listing of Successor Fund shares is not approved, the Fund will
continue its current operations uninterrupted.
Appraisal Rights
Under Nebraska law, shareholders of a corporation engaging in a transaction
such as the Reorganization are entitled to appraisal rights pursuant to which a
dissenting shareholder can receive the court determined fair value for his
shares rather than the consideration to be given in the Reorganization. The Fund
determines its net asset value daily, which it believes reflects the fair value
of its assets, and is not permitted under the 1940 Act to enter into
transactions for its shares except at a price based upon its net asset value.
The staff of the Securities and Exchange Commission (the "SEC") has taken the
position that in a transaction such as the Reorganization state appraisal rights
are inconsistent with Rule 22e-1 under the 1940 Act and, therefore,
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are preempted and invalidated by federal law and not available to the Fund's
shareholders. Consequently, dissenting Fund shareholders will not have appraisal
rights in connection with the Reorganization.
Expenses of the Reorganization
The Fund will bear its expenses associated with the transactions
contemplated by the Plan of Reorganization. In the event that the Reorganization
is successfully completed, such expenses will be assumed by the Successor Fund.
It is presently estimated that the expenses of the Reorganization will be
approximately $10,000.
Tax Consequences of the Reorganization
It is a condition to the consummation of the Reorganization that the Fund
and the Trust receive on or before the Closing Date an opinion from counsel,
Hale and Dorr, substantially to the effect that, among other things, for federal
income tax purposes the transactions contemplated by the Plan of Reorganization
will constitute a reorganization and that no gain or loss will be recognized for
federal income tax purposes by the Fund or the shareholders of the Fund upon (1)
the transfer of all of the Fund's assets to the Successor Fund in exchange
solely for Successor Fund shares and the assumption by the Successor Fund of the
Fund's liabilities or (2) the distribution by the Fund of the Successor Fund
shares, in liquidation of the Fund, to the shareholders in exchange for their
shares of the Fund. The opinion will further state, among other things, that (i)
the federal tax basis of the Successor Fund shares to be received by
shareholders of the Fund will be the same as the federal tax basis of the shares
of the Fund surrendered in exchange therefor and (ii) each shareholder's federal
tax holding period for his or her Successor Fund shares will include such
shareholder's holding period for the shares of the Fund surrendered in exchange
therefor, provided that such shares of the Fund were held as capital assets on
the date of the exchange.
Description of Certain Provisions of the Declaration of Trust
The following is a summary of certain provisions of the Delaware Trust's
Declaration of Trust.
Classes and Series. As discussed above, the Declaration of Trust would
permit the Delaware Trust to issue additional classes of its shares and series
thereof with different dividend, liquidation and certain other rights. As also
discussed above, preferred shares are at times issued by closed-end investment
companies for the purpose of attempting to increase the return on
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common shares. This may be accomplished if the proceeds from a preferred shares
offering are invested in instruments which pay a higher return than the
dividends that must be paid to preferred shareholders plus the expenses
associated with preferred shares. The use of preferred shares in this manner
constitutes investment "leverage" and involves certain risks, including the risk
that preferred share dividend requirements and expenses will exceed the return
of the invested proceeds from a preferred shares offering thereby lowering the
return on common shares. In addition, preferred shares typically have
liquidation rights that would entitle preferred shareholders to have their
investment paid back in full before any payments are made to common shareholders
in the event of bankruptcy, insolvency or similar occurrence. Preferred
shareholders typically also have certain preferential voting rights, including
the ability to elect a certain percentage of Trustees apart from common
shareholders. The Successor Fund has no current intention in the current fiscal
year to issue any class or series of shares other than the shares corresponding
to those of the Fund.
Limitations on Derivative Actions. In addition to the requirements under
Delaware law, the Declaration of Trust provides that a shareholder of the
Delaware Trust may bring a derivative action on behalf of the Delaware Trust
only if the following conditions are met: (a) shareholders eligible to bring
such derivative action under Delaware law who hold at least 10% of the
outstanding shares of the Delaware Trust, or 10% of the outstanding shares of
the class or series of which such action relates, shall join in the request for
the Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and to
investigate the basis of such claim. The Trustees shall be entitled to retain
counsel or other advisers in considering the merits of the request and shall
require an undertaking by the shareholders making such request to reimburse the
Delaware Trust for the expense of any such advisers in the event that the
Trustees determine not to bring such action.
Shareholder Meetings and Voting Rights. The Delaware Trust is not required
by the Declaration of Trust to hold annual meetings of shareholders but intends
to continue to do so as a condition to the listing of the Successor Fund's
shares on the Exchange. In the event that a meeting of shareholders is held,
each share of the Delaware Trust shall be entitled to one vote on all matters
presented to shareholders including the election of Trustees. Unlike the Fund,
shareholders of the Delaware Trust do not have cumulative voting rights in
connection with the election of Trustees. Meetings of shareholders of the
Delaware Trust, or any class or series thereof, may be called by the Trustees,
certain officers or upon the written request of holders of 10% or
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more of the shares entitled to vote at such meeting. The Shareholders of the
Delaware Trust shall only have the right to vote with respect to the limited
number of matters specified in the Declaration of Trust and such other matters
as the Trustees shall determine or shall be required by law.
Indemnification. The Declaration of Trust provides for indemnification of
Trustees, officers and agents of the Delaware Trust provided that no such
indemnification shall be provided to any person who is adjudicated (i) to be
liable by reason of willful misfeasance, bad faith, gross negligence and
reckless disregard of the duties involved in the conduct of such person's office
or (ii) not to have acted in good faith in the reasonable belief that such
person's actions were in the best interest of the Delaware Trust.
The Declaration of Trust provides that if any shareholder or former
shareholder shall be held personally liable solely by reason of his being or
having been a shareholder and not because of his acts or omissions or for some
other reason, the shareholder or former shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of any entity, its
general successor) shall be entitled out of the assets belonging to the Delaware
Trust to be held harmless from and indemnified against all loss and expense
arising from such liability. The Delaware Trust shall, upon request by such
shareholder, assume the defense of any claim made against such shareholder for
any act or obligation of the Delaware Trust and satisfy any judgment thereon
from the assets of the Delaware Trust.
Termination. The Declaration of Trust would permit termination of the
Delaware Trust or of any class or series of the Delaware Trust (i) by a majority
of the shareholders at a meeting of shareholders of the Delaware Trust, class or
series; (ii) by a majority of the Trustees if the Trustees determine that such
action is in the best interest of the Trust or its shareholders. The factors and
events that the Trustees may take into account in making such determination
include (i) the inability of the Delaware Trust, class or series to maintain its
assets at an appropriate size; (ii) changes in laws or regulations governing it
or affecting assets of the type in which it invests; or (iii) economic
developments or trends having a significant adverse impact on its business or
operations. Dissolution of the Fund requires the approval of two-thirds of the
outstanding shares of Common Stock of the Fund.
Merger, Consolidation, Sale of Assets, Etc. The Declaration of Trust would
specifically permit the Delaware Trust to merge or consolidate with any other
entity so long as the surviving entity is either the Delaware Trust or another
closed-end investment
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company. The Delaware Trust may also sell, lease or exchange all or
substantially all of the property belonging to the Delaware Trust upon the
approval of a majority of the outstanding shares, either at a meeting of
shareholders or by written consent. A merger, consolidation or sale of assets of
the Fund requires the approval of two-thirds of the outstanding shares of Common
Stock of the Fund.
Conversion. The Declaration of Trust would permit the Trustees, subject to
approval by holders of a majority of the Delaware Trust's outstanding shares, to
convert the Delaware Trust into an open-end investment company and to adopt
corresponding amendments to the Declaration of Trust. Open-end investment
companies, unlike closed-end companies, make a continuous offering of their
shares. The shares of open-end companies do not trade on an exchange and rarely
have an active secondary market. Instead, shares are purchased directly from the
company and often through a distribution network at a price based on their net
asset value (often including a sales charge). Shares are sold by redemption with
the company at net asset value (less any deferred sales charge if applicable).
The Delaware Trust has no current intention in the current fiscal year of
proposing to shareholders that they approve the conversion of the Delaware Trust
into an open-end fund. Conversion of the Fund from a closed-end investment
company to an open-end investment company requires the approval of two-thirds of
the outstanding shares of Common Stock of the Fund.
Amendments. The Declaration of Trust would permit the Trustees to amend the
Declaration of Trust without a shareholder vote; provided that shareholders of
the Delaware Trust shall have the right to vote on any amendment (i) that would
affect the voting rights of shareholders, (ii) with respect to which shareholder
approval is required by law; (iii) that would amend this provision of the
Declaration of Trust; (iv) to be made in connection with the conversion of the
Delaware Trust from a closed-end investment company to an open-end investment
company and (v) with respect to any other matter that the Trustees determine to
submit to shareholders.
Comparison of Nebraska Corporations and Delaware Business Trusts
There are numerous differences between a corporation organized under the
laws of the State of Nebraska and a business trust organized under the laws of
the State of Delaware. In general, a Delaware business trust provides the board
of trustees with greater flexibility in managing the affairs of a fund than is
possessed by the board of directors of a Nebraska corporation. Delaware law
permits a Delaware business trust's governing instrument to give trustees broad
power to adapt the trust entity
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to changed circumstances without shareholder approval. The governing instrument
may grant trustees the power to (i) amend the business trust's governing
instrument to create a class, group or series of beneficial interests that was
not previously outstanding (or for any other purpose), (ii) appoint trustees,
(iii) merge or consolidate the business trust with another entity, (iv) dissolve
the business trust or (v) sell, lease, exchange, transfer, pledge or otherwise
dispose of all or any part of the business trust's assets. While such actions
may also be approved by the directors of a Nebraska corporation, the trustees'
actions are either not subject to shareholder approval or are subject to
approval by a lower percentage of the outstanding shares of the fund. In
addition, the governing instrument may (i) provide for classes, groups or series
of trustees or shareholders, or classes, groups or series of beneficial
interests, having such relative rights, powers and duties as the governing
instrument may provide, (ii) provide for the establishment of designated series
of trustees, shareholders or beneficial interests having separate rights, powers
or duties with respect to specified property or obligations, (iii) grant or
withhold voting rights to or from all or certain trustees or shareholders on any
matter, (iv) establish requirements relating to shareholder meetings or any
other meetings, including notice, quorum and other requirements and (v) provide
for the creation of one or more business trusts and the conversion of beneficial
interests in an existing business trust or series thereof into beneficial
interests in a separate business trust or series thereof.
The Fund's structure as an investment company with only a single class of
securities is illustrative of the operational differences between the Fund and a
Delaware business trust. The Fund's Articles of Incorporation currently permit
the Fund to issue only a single class of its Common Stock representing interest
in a single portfolio of securities. Under its Declaration of Trust, the
Delaware Trust would be authorized to offer different classes or series of its
shares.
A Delaware business trust is not required to, although the Delaware Trust
still intends to as a condition to the listing of its shares on the New York
Stock Exchange, hold annual meetings of shareholders and the Trustees serve for
indefinite terms and appoint new trustees to fill any vacancies, subject to the
requirements of the 1940 Act that a majority of the trustees be elected by
shareholders. Nebraska corporations are required to hold meetings and to elect
directors annually, although an investment company may amend its articles of
incorporation to elect not to be subject to such requirement. Shareholders of
the Fund have not approved such an amendment.
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Delaware business trusts also generally require the approval of a majority
of outstanding shares to approve liquidations, reorganizations, conversions of
closed-end investment companies to open-end investment companies or similar
transactions or to amend the declaration of trust. In some circumstances,
certain of these transactions can be consummated and the declaration of trust
can be amended without shareholder action. Such corporate transactions and
amendments to the articles of incorporation of a Nebraska corporation require
the approval of two-thirds of the outstanding shares. While the lower voting
requirement reduces the ability of shareholders of Delaware business trusts to
prevent certain transactions, the higher voting requirement of Nebraska law also
makes solicitations of proxies for beneficial corporate changes more difficult
and expensive. As required by the 1940 Act, shareholders of an investment
company organized as a Delaware business trust retain their right to vote on
certain matters, including (i) changes in fundamental investment policies and
limitations, (ii) ratification of the board's selection of independent public
accountants, (iii) election of trustees in the event that less than a majority
of the current trustees has been elected by shareholders and (iv) approval of
investment advisory contracts. Shareholders of an investment company organized
as a Delaware business trust also retain their right to require a shareholder
meeting upon application to the board of trustees by holders of 10% or more of
the shares affected by the matter to be considered at such meeting.
A shareholder of a Nebraska corporation may bring a derivative action on
behalf of such corporation provided that statutory requirements are met.
Delaware law grants shareholders of a Delaware business trust the right to bring
derivative actions in the Delaware Court of Chancery. However, Delaware law
provides that the business trust's governing instrument may subject this right
to standards and restrictions (in addition to those contained in Delaware law),
including the requirement that holders of a specified percentage interest in the
trust join in such an action. Therefore, it appears that a Delaware business
trust may significantly curtail, or perhaps even eliminate, the power of its
shareholders to bring derivative actions. See "Description of Certain Terms of
the Declaration of Trust -- Limitations on Derivative Actions."
Delaware law provides that a Delaware business trust's governing instrument
may set forth provisions related to voting in any manner. This provision appears
to permit trustee and shareholder voting through computer or electronic media.
For an investment company with a significant number of institutional
shareholders, all with access to computer or electronic networks, the use of
such voting methods could significantly reduce the costs of shareholder voting.
However, the advantage of such
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methods may not be realizable unless the SEC modifies its proxy rules. Also, as
required by the 1940 Act, votes on certain matters by trustees would still need
to be taken at actual in-person meetings.
Delaware law provides that, except to the extent otherwise provided in the
business trust's governing instrument, trustees will not be personally liable to
any person (other than the business trust or a shareholder thereof) for any act,
omission or obligation of the business trust or any trustee thereof. Delaware
law also provides that a trustee's actions under a Delaware business trust's
governing instrument will not subject him to liability to the business trust or
its shareholders if the trustee takes such action in good faith reliance on the
provisions of the business trust's governing instrument. The articles of
incorporation of a Nebraska corporation may limit the liability of a director,
who is not also an officer of the corporation, for breach of fiduciary duty
except for, among other things, any act or omission not in good faith which
involves intentional misconduct or a knowing violation of law or any transaction
from which such director derives an improper direct or indirect financial
benefit.
PROPOSAL 3.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP has served as the Fund's independent public
accountant since 1994. Audit services during the fiscal year ending December 31,
1996 will consist of examinations of the Fund's financial statements and reviews
of the Fund's filings with the Securities and Exchange Commission.
The Board of Directors, including a majority of the non-interested
Directors (as defined in the 1940 Act), has selected Arthur Andersen LLP
(formerly known as Arthur Andersen & Co.) as the Fund's independent public
accountants for the fiscal year ending December 31, 1996, subject to shareholder
ratification at the Meeting. A representative of Arthur Andersen LLP is expected
to be available at the Meeting to make a statement if he or she desires to do so
and to respond to appropriate questions. Arthur Anderson LLP has advised the
Fund that it has no direct or indirect financial interest in the Fund.
Required Vote
The ratification of the selection of Arthur Andersen LLP as the Fund's
independent public accountants for the fiscal year ending December 31, 1996
requires the affirmative vote of a
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majority of the shares of Common Stock of the Fund, present in person or by
proxy at the Meeting.
THE DIRECTORS RECOMMEND THAT THE SHAREHOLDERS VOTE IN FAVOR OF THE RATIFICATION
OF ARTHUR ANDERSEN LLP AS THE FUND'S INDEPENDENT PUBLIC ACCOUNTANTS.
---------------------------------
OTHER MATTERS
Shareholder Proposals
Shareholder proposals to be presented at the next meeting of shareholders,
whenever held, must be received at the Fund's offices, 60 State Street, Boston,
Massachusetts 02109, at a reasonable time prior to the Directors' solicitation
of proxies for such meeting and must comply with the requirements of Rule 14a-8
under the Exchange Act.
Proxies, Quorum and Voting at the Meeting
Any person giving a proxy has the power to revoke it at any time prior to
its exercise by executing a superseding proxy or by submitting a notice of
revocation to the Secretary of the Fund. In addition, although mere attendance
at the Meeting will not revoke a proxy, a shareholder present at the Meeting may
withdraw his or her proxy and vote in person. All properly executed and
unrevoked proxies received in time for the Meeting will be voted in accordance
with the instructions contained in the proxies. If no instruction is given, the
persons named as proxies will vote the shares represented thereby in favor of
the Proposals described above and will use their best judgment in connection
with the transaction of such other business as may properly come before the
Meeting or any adjournment thereof.
With respect to Proposal 1 (election of directors), every shareholder
voting at the election of directors may cumulate such shareholder's votes and
give one candidate a number of votes equal to the number of directors (eight) to
be elected multiplied by the number of votes to which the shareholder's shares
are entitled, or distribute the shareholder's votes on the same principle among
as many candidates as the shareholder thinks fit. On all other matters, each
share has one vote.
A majority of the shares entitled to vote -- present in person or
represented by proxy -- constitutes a quorum for the transaction of business
with respect to any Proposal (unless otherwise noted in the Proxy Statement). In
the event that at the time any session of the Meeting is called to order and a
quorum is
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not present in person or by proxy, the persons named as proxies may vote those
proxies which have been received to adjourn such Meeting to a later date. In the
event that a quorum is present at the Meeting but sufficient votes in favor of
any Proposal, including the electing of the nominees to the Board of Directors,
have not been received, the persons named as proxies may propose one or more
adjournments of such Meeting to permit further solicitation of proxies with
respect to such Proposal. Any such adjournment will require the affirmative vote
of a majority of the shares present in person or by proxy at the session of the
Meeting to be adjourned. The persons named as proxies will vote those proxies
which they are entitled to vote in favor of any such Proposal in favor of such
adjournment and will vote those proxies required to be voted against any such
Proposal against such adjournment. A shareholder vote may be taken on one or all
of the Proposals prior to such adjournment if sufficient votes for the
Proposal's approval have been received and it is otherwise appropriate. Such
vote will be considered final regardless of whether the Meeting is adjourned to
permit additional solicitation with respect to any other Proposal.
Shares of the Fund represented at the Meeting (including shares which
abstain or do not vote with respect to one or more of the Proposals) will be
counted for purposes of determining whether a quorum is present at the Meeting.
Abstentions will be treated as shares that are present and entitled to vote for
purposes of determining the number of shares that are present and entitled to
vote with respect to any particular Proposal, but will not be counted as a vote
in favor of such Proposal. Accordingly, an abstention from voting on a Proposal
has the same legal effects as a vote against the Proposals.
Adoption by the shareholders of Proposal 2 requires the affirmative vote of
at least two-thirds of the outstanding shares of the Fund. If a broker or
nominee holding shares in "street name" indicates on the proxy that it does not
have discretionary authority to vote as to Proposal 2, those shares will not be
considered as present and entitled to vote as to that Proposal. Accordingly,
because shares represented by a "broker non-vote" are considered outstanding
shares, a "broker non-vote" has the same legal effect as a vote against Proposal
2.
Other Business
While the Meeting has been called to transact any business that may
properly come before it, the only matters that the Directors intend to present
are those matters stated in the attached Notice of Annual Meeting of
Shareholders. However, if any additional matters properly come before the
Meeting, and on all matters incidental to the conduct of the Meeting, it is the
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intention of the persons named in the enclosed proxy to vote the proxy in
accordance with their judgment on such matters unless instructed to the
contrary.
Methods of Solicitation and Expenses
The cost of preparing, assembling and mailing this proxy statement and the
attached Notice of Special Meeting of Shareholders and the accompanying proxy
card will be borne by the Fund. In addition to soliciting proxies by mail, the
Fund may, at its expense, have one or more of its officers, representatives or
compensated third-party agents, including PMC, PSC and PFD, aid in the
solicitation of proxies by personal interview or telephone and telegraph and may
request brokerage houses and other custodians, nominees and fiduciaries to
forward proxy soliciting materials to the beneficial owners as of the shares
held of record by such persons.
Persons holding shares as nominees will be reimbursed by the Fund, upon
request, for the reasonable expense of mailing soliciting materials to the
principals of the accounts.
PIONEER INTEREST SHARES, INC.
May 8, 1996
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made as of the day of July,
1996, by and between Pioneer Interest Shares, Inc., a Nebraska corporation (the
"Current Fund"), and Pioneer Interest Shares, a business trust duly formed under
the laws of the State of Delaware (the "Successor Fund").
This Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368 (a)(1) of the U.S. Internal Revenue Code of
1986, as amended (the "Code"), and is intended to effect the reorganization (a
"reorganization") of the Current Fund as the Successor Fund. The reorganization
will involve the transfer of all of the assets of the Current Fund to the
Successor Fund solely in exchange for (1) assumption by the Successor Fund of
all liabilities of the Current Fund and (2) the issuance of shares of beneficial
interest (the "Successor Shares") by the Successor Fund to the Current Fund,
followed by the pro rata distribution on the Closing Date (as defined below) of
the Successor Shares to the holders of the Common Stock of the Current Fund (the
"Current Fund Shareholders") in exchange for their shares of Common Stock of the
Current Fund in liquidation and dissolution of the Current Fund, all upon the
terms and conditions hereinafter set forth in this Agreement.
In consideration of the premises and of the covenants and agreements
hereinafter set forth the parties hereto covenant and agree as follows.
1. TRANSFER OF ASSETS OF THE CURRENT FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ISSUANCE OF SUCCESSOR SHARES OF THE SUCCESSOR FUND;
DISSOLUTION OF THE CURRENT FUND
1.1 Subject to the terms and conditions set forth herein and on the basis
of the representations and warranties contained herein, the Current Fund agrees
to transfer all of the assets of the Current Fund as set forth in paragraph 1.2
and assign and transfer all of its liabilities to the Successor Fund which has
been organized solely for the purpose of acquiring all of the assets and
assuming all of the liabilities of the Current Fund. The Successor Fund has not
issued any Shares or commenced operations. The Successor Fund agrees that in
exchange for all of the assets of the Current Fund (1) the Successor Fund shall
assume all of the liabilities of the Current Fund, whether contingent or
otherwise, then existing, and further (2) the Successor Fund shall deliver to
the Current Fund the number of full and fractional Successor Shares equal to the
value of the assets of the Current Fund transferred to the Successor Fund, minus
the liabilities of the Current Fund assumed by the Successor Fund (the "Net
Assets"), as described in paragraph 3.1 on the Closing Date provided for in
<PAGE>
paragraph 3.1. Such transactions shall take place at the Closing provided for in
paragraph 3.1.
1.2 The assets of the Current Fund to be acquired by the Successor Fund
shall include, without limitation, all cash, cash equivalents, securities,
receivables (including interest and dividends receivable), any claims or rights
of action or rights to register shares under applicable securities laws, any
books or records of the Current Fund and other property owned by the Current
Fund and any deferred or prepaid expenses shown as assets on the books of the
Current Fund on the Closing Date provided for in paragraph 3.1.
1.3 Immediately upon delivery to the Current Fund of Successor Shares, any
duly authorized officer of the Current Fund shall cause the Current Fund, as the
then sole shareholder of the Successor Fund, to (i) elect as Trustees of the
Successor Fund the persons who currently serve as Directors of the Current Fund;
(ii) ratify the selection of the independent accountants; (iii) approve an
investment advisory agreement for the Successor Fund in the form currently
approved by the shareholders of the Current Fund; and (v) adopt, on behalf of
the Successor Fund, the investment objectives, investment policies and
investment restrictions of the Current Fund.
1.4 As provided in paragraph 3.4, on the Closing Date the Current Fund will
distribute in liquidation the Successor Shares pro rata in proportion to the
Current Fund's shares of Common Stock ("Current Fund Shares") to Current Fund
Shareholders of record determined as of the close of business on the Closing
Date, in exchange for the Current Fund Shares. Such distribution will be
accomplished by the transfer of the Successor Shares then credited to the
account of the Current Fund on the share records of the Successor Fund to open
accounts on those records in the names of the Current Fund Shareholders and
representing the respective pro rata number of the Successor Shares received
from the Successor Fund due the Current Fund Shareholders. The Successor Fund
shall not issue certificates representing Successor Shares in connection with
such distribution. Fractional Successor Shares shall be rounded to the third
place after the decimal point.
1.5 As soon as practicable after the distribution of the Successor Shares
as set forth in Section 1.4, the Current Fund shall be dissolved and any such
further actions shall be taken in connection therewith as are required by
applicable law.
1.6 Ownership of the Successor Shares of each Successor Fund Shareholder
shall be maintained separately on the books of Pioneering Services Corporation
as the Successor Fund's shareholder services and transfer agent.
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1.7 Any transfer taxes payable upon issuance of Successor Shares in a name
other than the registered holder of the Current Fund Shares on the books of the
Current Fund as of that time shall be paid by the person to whom such Successor
Shares are to be distributed as a condition of such transfer.
2. VALUATION
2.1 The value of the Current Fund's Net Assets to be acquired by the
Successor Fund hereunder shall be the net asset value computed as of the
valuation time provided in the Current Fund's prospectus on the Closing Date
using the valuation procedures set forth in the Current Fund's current
prospectus or statement of additional information.
2.2 The value of full and fractional Successor Shares to be issued in
exchange for the Current Fund's Net Assets shall be equal to the value of the
Net Assets of the Current Fund on the Closing Date, and the number of such
Successor Shares shall equal the number of full and fractional Current Fund
Shares.
2.3 All computations of value shall be made by Pioneering Services
Corporation as the Current Fund's and the Successor Fund's shareholder services
and transfer agent.
3. CLOSING AND CLOSING DATE
3.1 The transfer of the Current Fund's assets in exchange for the
assumption by the Successor Fund of the Current Fund's liabilities and the
issuance of Successor Shares to the Current Fund, as described above, together
with related acts necessary to consummate such acts (the "Closing"), shall occur
at the offices of Hale and Dorr at 60 State Street, Boston, Massachusetts 02109
on July 1, 1996 ("Closing Date"), or at such other place or date on or prior to
August 1, 1996 as the parties may agree in writing. All acts taking place at the
Closing shall be deemed to take place simultaneously as of the last daily
determination of the net asset value of any Current Fund or at such other time
and/or place as the parties may agree.
3.2 In the event that on the Closing Date (a) the New York Stock Exchange
is closed to trading or trading thereon is restricted or (b) trading or
reporting of trading on said Exchange or in any market in which portfolio
securities of the Current Fund are traded is disrupted so that accurate
appraisal of the value of the total net assets of the Current Fund is
impracticable, the Closing shall be postponed until the first business day upon
which trading shall have been fully resumed and reporting shall have been
restored.
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3.3 The Current Fund shall deliver at the Closing a certificate or separate
certificates of an authorized officer stating that it has notified the
Custodian, as custodian for the Current Fund, of the Current Fund's
reorganization as the Successor Fund.
3.4 Pioneering Services Corporation as shareholder services and transfer
agent for the Current Fund, shall deliver at the Closing a certificate as to the
conversion on its books and records of the Current Fund Shareholder account to
an account as a holder of Successor Shares. The Successor Fund shall issue and
deliver to the Current Fund a confirmation evidencing the Successor Shares to be
credited on the Closing Date or provide evidence satisfactory to the Current
Fund that such Successor Shares have been credited to the Current Fund's account
on the books of the Successor Fund. At the Closing, each party shall deliver to
the other such bills of sale, checks, assignments, stock certificates, receipts
or other documents as such other party or its counsel may reasonably request.
3.5 Portfolio securities that are not held in book-entry form in the name
of the Custodian as record holder for the Current Fund shall be presented by the
Current Fund to the Custodian for examination no later than five business days
preceding the Closing Date. Portfolio securities which are not held in
book-entry form shall be delivered by the Current Fund to the Custodian for the
account of the Successor Fund on the Closing Date, duly endorsed in proper form
for transfer, in such condition as to constitute good delivery thereof in
accordance with the custom of brokers, and shall be accompanied by all necessary
federal and state stock transfer stamps or a check for the appropriate purchase
price thereof. Portfolio securities held of record by the Custodian in
book-entry form on behalf of the Current Fund shall be delivered to the
Successor Fund by the Custodian by recording the transfer of beneficial
ownership thereof on its records. The cash delivered shall be in the form of
currency or by the Custodian crediting the Successor Fund's account maintained
with the Custodian with immediately available funds.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Current Fund represents and warrants as follows:
4.1.A. The Current Fund is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nebraska and has
the power to own all of its properties and assets and, subject to approval by
the shareholders of the Current Fund, to perform its obligations under this
Agreement. The Current Fund is not required to qualify to do business in any
jurisdiction in which it is not so qualified or where failure to qualify would
not subject it to any material liability or disability. The Current Fund has all
necessary
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federal, state and local authorizations to own all of its properties and assets
and to carry on its business as now being conducted;
4.1.B. The Current Fund is a registered investment company
classified as a management company of the closed-end type and its registration
with the Securities and Exchange Commission (the "Commission") as an investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
is in full force and effect;
4.1.C. The Current Fund is not, and the execution, delivery and
performance of this Agreement will not result, in violation of any provision of
its Declaration of Trust or By-laws, or any agreement, indenture, instrument,
contract, lease or other undertaking to which the Current Fund is a party or by
which the Current Fund is bound;
4.1.D. The Current Fund has no material contracts or other
commitments (other than this Agreement or agreements for the purchase of
securities entered into in the ordinary course of business and consistent with
its obligations under this Agreement) that will not be terminated without
liability to the Current Fund on or prior to the Closing Date;
4.1.E. No material litigation or administrative proceeding or
investigation of or before any court or governmental body presently is pending
or threatened against the Current Fund or any of its properties or assets. The
Current Fund knows of no facts that might form the basis for the institution of
such proceedings and the Current Fund is not a party to, or subject to, the
provisions of any order, decree or judgment of any court or governmental body
that materially and adversely affects its business or its ability to consummate
the transactions herein contemplated;
4.1.F. At the date hereof and at the Closing Date, all federal,
state and other tax returns and reports, including information returns and payee
statements, of the Current Fund required by law to have been filed or furnished
by such dates shall have been filed or furnished and all federal, state and
other taxes, interest and penalties shall have been paid so far as due or
provision shall have been made for the payment thereof and no such return is
currently under audit and no assessment has been asserted with respect to any of
such returns or reports;
4.1.G. The Current Fund has elected to be treated as a regulated
investment company under Subchapter M of the Code, has qualified as such for
each taxable year since its inception, and will qualify as such as of the
Closing Date;
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4.1.H. The authorized capital of the Current Fund consists of
Fifty Million ($50,000,000) shares of common stock. All issued and outstanding
shares of common stock of the Current Fund are, and at the Closing Date will be,
duly and validly issued and outstanding, fully paid and nonassessable. The
Current Fund does not have outstanding any options, warrants or other rights to
subscribe for or purchase any of its shares of common stock, nor is there
outstanding any security convertible into any of its shares of common stock;
4.1.I. The information to be furnished by the Current Fund for use
in applications for orders, registration statements, proxy materials and other
documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall comply in all
material respects with federal securities and other laws and regulations
thereunder applicable thereto;
4.1.J. All of the issued and outstanding Current Fund Shares will
at the time of the Closing be held by the persons and in the amounts as
certified in accordance with the provisions of paragraph 3.4;
4.1.K. At the Closing Date, the Current Fund will have good and
marketable title to the assets to be transferred to the Successor Fund pursuant
to paragraph 1.1, and full right, power and authority to sell, assign, transfer
and deliver such assets hereunder, and upon delivery and in payment for such
assets, the Successor Fund will acquire good and marketable title thereto
subject to no restrictions on the full transfer thereof, including such
restrictions as might arise under the Securities Act of 1933, as amended;
4.1.L. The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all necessary action
on the part of the Current Fund and this Agreement constitutes a valid and
binding obligation of the Current Fund enforceable in accordance with its terms,
subject to the approval of the Current Fund's Shareholders; and
4.1.M. No consent, approval, authorization or order of any court
or governmental authority is required for the consummation by the Current Fund
of the transactions contemplated herein, except such as shall have been obtained
prior to the Closing Date.
4.2 The Successor Fund represents and warrants as follows:
4.2.A. The Successor Fund is a business trust duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the power to own all of its properties and assets and to perform its
obligations under this Agreement; the Successor Fund is not required to qualify
to do
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business in any jurisdiction in which it is not so qualified or where failure to
qualify would not subject it to any material liability or disability; and the
Successor Fund has all necessary federal, state and local authorizations to own
all of its properties and assets and to carry on its business as now being
conducted.
4.2.B. The Successor Fund is not, and the execution, delivery and
performance of this Agreement will not result, in violation of any provision of
the Declaration of Trust or By-laws of the Successor Fund or any agreement,
indenture, instrument, contract, lease or other undertaking to which the
Successor Fund is a party or by which the Successor Fund is bound;
4.2.C. No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or threatened against the Successor Fund or any of its properties or assets. The
Successor Fund knows of no facts that might form the basis for the institution
of such proceedings, and the Successor Fund is not a party to, or subject to,
the provisions of any order, decree or judgment of any court or governmental
body that materially and adversely affects its business or its ability to
consummate the transactions herein contemplated;
4.2.D. The Successor Fund will qualify as a regulated investment
company under subchapter M of the Code for the taxable year in which the Closing
occurs and intends to continue to qualify as such for each taxable year;
4.2.E. Prior to the Closing Date, there shall be no issued and
outstanding Successor Shares or any other securities of the Successor Fund;
Successor Shares issued in connection with the transactions contemplated herein
will be duly and validly issued and outstanding and fully paid and
nonassessable;
4.2.F. The execution, delivery and performance of this Agreement
has been duly authorized by all necessary action on the part of the Successor
Fund, and this Agreement constitutes a valid and binding obligation of the
Successor Fund enforceable against the Successor Fund in accordance with its
terms;
4.2.G. On the Closing Date, the Successor Fund shall have obtained
approval of the listing on the Successor Shares on the New York Stock Exchange
(the "Exchange") on substantially the same terms and conditions as the listing
of the Current Fund Shares, as well as well as approval for the Successor Shares
to commence trading on the Exchange immediately following the Closing;
4.2.H. The information to be furnished by the Successor Fund for
use in applications for orders, registration statements,
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proxy materials and other documents which may be necessary in connection with
the transactions contemplated hereby shall be accurate and complete and shall
comply in all material respects with Federal securities and other laws and
regulations applicable thereto; and
4.2.I. No consent, approval, authorization or order of any court
or governmental authority is required for the consummation by the Successor Fund
of the transactions contemplated herein, except such as shall have been obtained
prior to the Closing Date.
5. COVENANTS OF THE CURRENT FUND AND THE SUCCESSOR FUND
5.1 The Current Fund covenants that the Successor Shares are not being
acquired for the purpose of making any distribution thereof, other than in
accordance with the terms of this Agreement.
5.2 The Current Fund covenants that it will assist the Successor Fund in
obtaining such information as the Successor Fund reasonably requests concerning
the beneficial ownership of Current Fund Shares.
5.3 The Current Fund will, from time to time, as and when requested by the
Successor Fund execute and deliver, or cause to be executed and delivered, all
such assignments and other instruments, and will take or cause to be taken such
further action, as the Successor Fund may deem necessary or desirable in order
to vest in, and confirm to, the Successor Fund, title to, and possession of, all
the assets of the Current Fund to be sold, assigned, transferred and delivered
hereunder and otherwise to carry out the intent and purpose of this Agreement.
5.4 The Successor Fund will, from time to time, as and when requested by
the Current Fund, execute and deliver or cause to be executed and delivered all
such assignments and other instruments, and will take or cause to be taken such
further action, as the Current Fund may deem necessary or desirable in order to
vest in, and confirm to, the Current Fund title to, and possession of, the
Successor Shares issued, sold, assigned, transferred and delivered hereunder and
otherwise to carry out the intent and purpose of this Agreement.
5.5 The Successor Fund shall apply for listing of the Successor Shares on
the Exchange on substantially the same terms and conditions as the listing of
the Current Fund Shares and shall use all reasonable efforts to obtain such
listing by the Closing Date.
5.6 The Successor Fund shall use all reasonable efforts to obtain the
approvals and authorizations required by the Securities
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Act of 1933, the Securities Exchange Act of 1934, the 1940 Act, the rules and
regulations of the Exchange (or any successor securities exchange on which the
Successor Shares may in the future be listed) and such state securities laws as
it may deem appropriate in order to operate after the Closing Date.
5.7 Subject to the provisions of this Agreement, the Successor Fund and the
Current Fund each will take, or cause to be taken, all action and will do or
cause to be done all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.8 As promptly as practicable, but in any event within 60 days after the
Closing Date, the Current Fund shall furnish to the Successor Fund, in such form
as is reasonably satisfactory to the Successor Fund, a statement of the earnings
and profits of the Current Fund for federal income tax purposes, and of any
capital loss carryovers and other items that will be carried over to the
Successor Fund as a result of Section 381 of the Code, and which statement will
be certified by the President or Treasurer of the Current Fund.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CURRENT FUND
The obligations of the Current Fund to consummate the transactions provided
for herein shall be subject to the performance by the Successor Fund of all the
obligations to be performed by the Successor Fund hereunder on or before the
Closing Date and, in addition thereto, to the following further conditions:
6.1 All representations and warranties of the Successor Fund contained in
this Agreement shall be true and correct in all material respects as of the date
hereof except as they may be affected by the transactions contemplated by this
Agreement, as of the Closing Date, with the same force and effect as if made on
and as of the Closing Date; and
6.2 The Successor Fund shall have delivered on the Closing Date to the
Current Fund a certificate executed in the Successor Fund's name by its
President or Vice President, in form and substance satisfactory to the Current
Fund, dated as of the Closing Date, to the effect that the representations and
warranties of the Successor Fund made in this Agreement are true and correct at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as the Current Fund
shall reasonably request.
6.3 The Successor Fund shall have delivered on the Closing Date to the
Current Fund such evidence as the Current Fund deems necessary that the
Successor Shares have been approved for listing on the Exchange on substantially
the same terms and conditions as the listing of the Current Fund Shares.
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Each of the foregoing conditions precedent may be waived by the Current Fund.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SUCCESSOR FUND
The obligations of the Successor Fund to consummate the transactions
provided for herein shall be subject to the performance by the Current Fund of
all the obligations to be performed by the Current Fund hereunder on or before
the Closing Date and, in addition thereto, to the following further conditions:
7.1 All representations and warranties of the Current Fund contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date, with the same force and effect as if
made on and as of the Closing Date;
7.2 The Current Fund shall have delivered to the Successor Fund on the
Closing Date a statement of the Current Fund's assets and liabilities, prepared
in accordance with generally accepted accounting principles consistently
applied, together with a certificate of the Treasurer or Assistant Treasurer of
the Current Fund as to its portfolio securities and the Current Fund's federal
income tax basis and holding period for each such portfolio security as of the
Closing Date; and
7.3 The Current Fund shall have delivered to the Successor Fund on the
Closing Date a certificate executed in the Current Fund's name by its President
or Vice President, in form and substance satisfactory to the Successor Fund,
dated as of the Closing Date, to the effect that the representations and
warranties of the Current Fund made in this Agreement are true and correct at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as the Successor
Fund shall reasonably request.
Each of the foregoing conditions precedent may be waived by the Successor
Fund.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CURRENT FUND AND THE
SUCCESSOR FUND
The obligations of the Current Fund and the Successor Fund are each subject
to the further conditions that on or before the Closing Date:
8.1 This Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the Current Fund's Shareholders in accordance
with applicable law;
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8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with,
the transactions contemplated hereby;
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state securities authorities) deemed necessary by the
Successor Fund or the Current Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Successor Fund or the Current Fund, provided that either party hereto may for
itself waive any of such conditions;
8.4 The President or a Vice President of the Successor Fund shall have
delivered a certificate to the Current Fund on the Closing Date certifying that
the Successor Fund has taken all necessary action so that it shall be a
registered open-end investment company under the 1940 Act; and
8.5 The Current Fund and the Successor Fund shall have received on or
before the Closing Date an opinion of Hale and Dorr satisfactory to the Current
Fund and the Successor Fund, substantially to the effect that for federal income
tax purposes:
8.5.A. The acquisition of all of the assets of the Current Fund by
the Successor Fund solely in exchange for the issuance of Successor Shares
to the Current Fund and the assumption by the Successor Fund of all of the
liabilities of the Current Fund, followed by the distribution in
liquidation by the Current Fund of such Successor Shares to the Current
Fund Shareholders in exchange for their Current Fund Shares and the
dissolution of the Current Fund, will constitute a reorganization within
the meaning of Section 368(a)(1) of the Code, and the Current Fund and the
Successor Fund will each be "a party to a reorganization" within the
meaning of Section 368(b) of the Code;
8.5.B. No gain or loss will be recognized by the Current Fund upon
(i) the transfer of all of its assets to the Successor Fund solely in
exchange for the issuance of Successor Shares to the Current Fund and the
assumption by the Successor Fund of the Current Fund's liabilities and (ii)
the distribution by the Current Fund of the Successor Shares to the Current
Fund Shareholders;
8.5.C. No gain or loss will be recognized by the Successor Fund
upon its receipt of all of the Current Fund's assets solely in exchange for
the issuance of the Successor
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Shares to the Current Fund and the assumption by the Successor Fund of all
of the liabilities of the Current Fund;
8.5.D. The tax basis of the assets acquired by the Successor Fund
from the Current Fund will be, in each instance, the same as the tax basis
of those assets in the Current Fund's hands immediately before the
transfer;
8.5.E. The tax holding period of the assets of the Current Fund in
the hands of the Successor Fund will include the Current Fund's tax holding
period for those assets;
8.5.F. The Current Fund's Shareholders will not recognize gain or
loss upon the exchange of all of their Current Fund Shares solely for
Successor Shares as part of the transaction;
8.5.G. The tax basis of the Successor Shares received by Current
Fund Shareholders in the transaction will be, for each shareholder, the
same as the tax basis of the Current Fund Shares surrendered in exchange
therefor; and
8.5.H. The tax holding period of the Successor Shares received by
Current Fund Shareholders will include, for each such Shareholder, the tax
holding period for the Current Fund Shares surrendered in exchange
therefor, provided that such Current Fund Shares were held as capital
assets on the date of the exchange.
The Current Fund and Successor Fund each agree to make and provide
representations with respect to the Current Fund and the Successor Fund which
are reasonably necessary to enable Hale and Dorr to deliver an opinion
substantially as set forth in this paragraph 8.5, which opinion may address such
other federal income tax consequences, if any, as Hale and Dorr believes to be
material to the transaction.
Each of the foregoing conditions precedent to the obligations of a party,
except for the receipt of the opinion of Hale and Dorr set forth in paragraph
8.5, may be waived by that party.
9. BROKERAGE FEES AND EXPENSES
9.1 The Successor Fund and the Current Fund each represent and warrant to
the other that there are no broker's or finder's fees payable in connection with
the transactions contemplated hereby.
9.2 The Current Fund and the Successor Fund shall each be liable for its
own expenses incurred in connection with entering into and carrying out the
provisions of this Agreement whether or not the transactions contemplated hereby
are consummated; if the
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transactions are consummated, such expenses of the Current Fund will be assumed
by the Successor Fund as part of the transactions.
10. ENTIRE AGREEMENT
The Successor Fund and the Current Fund agree that neither party has made
any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties. The
representations, warranties and covenants contained herein or in any document
delivered pursuant hereto or in connection herewith shall survive the
consummation of the transactions contemplated hereunder.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Successor Fund and the Current Fund. In addition, either the Successor Fund or
the Current Fund may at its option terminate this Agreement at or prior to the
Closing Date because:
11.1.A. There exists a material breach by the other party of any
representations, warranties or agreements contained herein to be performed
at or prior to the Closing Date; or
11.1.B. A condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it reasonably
appears that it will not or cannot be met.
11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Successor Fund or the Current Fund, or their
respective trustees, directors or officers, to the other party or its trustees,
directors or officers.
12. AMENDMENT
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the parties; provided, however, that
following the approval of this Agreement by the Current Funds' Shareholders, no
such amendment may have the effect of changing the provisions for determining
the number of Successor Shares to be paid to the Current Fund Shareholders under
this Agreement to the detriment of the Current Fund Shareholders without their
further approval.
13. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
13.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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13.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts.
13.4 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation other than the parties hereto and their respective
successors and assigns any rights or remedies under or by reason of this
Agreement.
13.5 All persons dealing with the Successor Fund must look solely to the
property of the Successor Fund for the enforcement of any claims against the
Successor Fund as neither the Trustees, officers, agents nor shareholders of the
Successor Fund assume any personal liability for obligations entered into on
behalf of the Successor Fund. No other series of the Successor Fund hereafter
established shall be responsible for any obligations assumed by the Successor
Fund on behalf of the Successor Fund under this Agreement.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Current Fund or the
Successor Fund, each at 60 State Street, Boston, Massachusetts 02109, Attention:
Secretary.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized officer.
PIONEER INTEREST SHARES, INC.
By:_____________________________
John F. Cogan, Jr.
President
PIONEER INTEREST SHARES
By:_____________________________
David D. Tripple
Executive Vice President
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PRELIMINARY COPY
PROXY PROXY
PIONEER INTEREST SHARES, INC.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
To be held June 20, 1996
The undersigned, having received notice of the meeting and management's
proxy statement therefor, and revoking all prior proxies, hereby appoint(s) John
F. Cogan, Jr., David D. Tripple, Robert P. Nault and Joseph P. Barri, and each
of them, attorneys or attorney of the undersigned (with full power of
substitution in them and each of them) for and in the name(s) of the undersigned
to attend the Annual Meeting of Shareholders of Pioneer Interest Shares, Inc.
(the "Fund") to be held on Thursday, June 20, 1996 at 2:00 p.m. (Boston time) at
the offices of Hale and Dorr, counsel to the Fund, 60 State Street, 26th Floor,
Boston, Massachusetts 02109 (the "Meeting"), and any adjourned session or
sessions thereof, and there to vote and act upon the following matters (as more
fully described in the accompanying Proxy Statement) in respect of all shares of
the Fund which the undersigned will be entitled to vote or act upon, with all
the powers the undersigned would possess if personally present:
(1) To elect Directors:
The nominees for Directors are: J.F. Cogan, Jr., Dr. R.H. Egdahl,
M.B.W. Graham, J.W. Kendrick, M.A. Piret, D.D. Tripple, S.K. West
and J. Winthrop.
/ / FOR electing all the nominees
(EXCEPT AS MARKED TO THE CONTRARY ABOVE)
TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE OF THE NOMINEES,
CIRCLE THOSE NOMINEES' NAMES ABOVE.
/ / WITHHOLD authority to vote for all nominees
(2) To approve an Agreement and Plan of Reorganization pursuant to
which the Fund will be reorganized as a Delaware business trust:
FOR |_| AGAINST |_| ABSTAIN |_|
(3) To ratify the selection of Arthur Andersen LLP as the Fund's
independent public accountants for the fiscal year ending
December 31, 1996:
FOR |_| AGAINST |_| ABSTAIN |_|
<PAGE>
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
PROPOSALS.
DATED: ......................, 1996
...................................
...................................
Signature(s)
In signing, please write name(s)
exactly as appearing hereon. When
signing as attorney, executor,
administrator or other fiduciary,
please give your full title as
such. Joint owners should each sign
personally.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE FUND AND
SHOULD BE RETURNED AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED
