SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
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 (Section)240.14a-11(c) or
(Section)240.14a-12
THE HIGH YIELD INCOME FUND, INC.
(Name of Registrant as Specified In Its Charter)
_____________________________________________________________________
(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)(1) 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>
PRELIMINARY PROXY MATERIALS
THE HIGH YIELD INCOME FUND, INC.
GATEWAY CENTER THREE
NEWARK, NEW JERSEY 07102
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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To Our Shareholders:
Notice is hereby given that the 1998 Annual Meeting of Shareholders (the
Meeting) of The High Yield Income Fund, Inc. (the Fund) will be held on
December 8, 1998, at 9:00 a.m., at 751 Broad Street, Newark, New Jersey 07102,
for the following purposes:
1. To elect three directors.
2. To approve or disapprove the elimination of the Fund's fundamental
investment restriction regarding restricted and illiquid securities.
3. To approve or disapprove the elimination of the Fund's fundamental
investment restriction regarding the purchase of securities of other
investment companies.
4. To ratify or reject the selection of PricewaterhouseCoopers LLP as
independent accountants of the Fund for the fiscal year ending August 31,
1999.
5. To consider and act upon any other business as may properly come
before the Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on October 16, 1998
as the record date for the determination of shareholders entitled to vote at
the Meeting or any adjournment thereof.
S. Jane Rose
SECRETARY
Dated: October , 1998
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WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. IN ORDER
TO AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK
YOUR COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
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<PAGE>
PRELIMINARY PROXY MATERIALS
THE HIGH YIELD INCOME FUND, INC.
GATEWAY CENTER THREE
NEWARK, NEW JERSEY 07102
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PROXY STATEMENT
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This Proxy Statement is furnished by the Board of Directors of The High
Yield Income Fund, Inc. (the Fund) in connection with the solicitation of
proxies for use at the Annual Meeting of Shareholders to be held on December 8,
1998 at 9:00 a.m., at 751 Broad Street, Newark, New Jersey 07102, the Fund's
principal executive office. The purpose of the Meeting and the matters to be
acted upon are set forth in the accompanying Notice of Annual Meeting.
If the accompanying form of proxy is executed properly and returned,
shares represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. However, if no instructions are specified, shares
will be voted FOR the proposals. A proxy may be revoked at any time prior to
the time it is voted by written notice to the Secretary of the Fund or by
attendance at the Meeting. If sufficient votes to approve one or more of the
proposed items are not received, the persons named as proxies may propose one
or more adjournments of the Meeting to permit further solicitation of proxies.
Any such adjournment will require the affirmative vote of a majority of those
shares present at the Meeting or represented by proxy. When voting on a
proposed adjournment, the persons named as proxies will vote for the proposed
adjournment all shares that they are entitled to vote with respect to each
item, unless directed to disapprove the item, in which case such shares will be
voted against the proposed adjournment. In the event that a meeting is
adjourned, the same procedures will apply at a later meeting date.
With respect to matters to be determined by a majority of the votes cast,
each "broker non-vote" (that is, a proxy from a broker or nominee indicating
that such person has not received instructions from the beneficial owner or
other person entitled to vote shares on a particular matter with respect to
which the broker or nominee does not have discretionary power) and abstention
will be considered present for purposes of determining the existence of a
quorum for the transaction of business but, not being cast, will have no effect
on the outcome of such matters. With respect to matters requiring the approval
by a majority of the outstanding voting securities, each broker non-vote or
abstention will be considered present for purposes of determining the existence
of a quorum, but will have the effect of a vote against such matters.
The close of business on October 16, 1998 has been fixed as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the Meeting. On that date, the Fund had shares of Common Stock
outstanding and entitled to vote. Each share will be entitled to one vote at
the Meeting. It is expected that the Notice of Annual Meeting, Proxy Statement
and accompanying form of proxy will first be mailed to shareholders of record
on or about October , 1998. The most recent annual report for the Fund is
being mailed to shareholders together with this Proxy Statement.
As of October 16, 1998 [Cede & Co., P.O. Box 20, Bowling Green Station,
New York, NY 10274,] held, solely of record on behalf of other persons,
shares of the Fund and which represented approximately % of the
shares of the Fund then outstanding. Management does not know of any person or
group who owned beneficially 5% or more of the Fund's outstanding shares on the
record date.
The expenses of solicitation will be borne by the Fund and will include
reimbursement of brokerage firms and others for expenses in forwarding proxy
solicitation material to beneficial owners. The solicitation of proxies
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<PAGE>
will be largely by mail but may include, without cost to the Fund, telephonic,
telegraphic or oral communications by regular employees of Prudential
Securities Incorporated (Prudential Securities). In addition, the Board of
Directors of the Fund has authorized management to retain, at their discretion,
Shareholder Communications Corporation, a proxy solicitation firm, to assist in
the solicitation of proxies for this Meeting. The cost of solicitation,
including specified expenses, is not expected to exceed $15,000 and will be
borne by the Fund.
Prudential Investments Fund Management LLC (PIFM or the Manager), Gateway
Center Three Newark, New Jersey 07102, serves as the Fund's Manager under a
management agreement dated as of December 15, 1988 (the Management Agreement).
Investment advisory services are provided to the Fund by PIFM through its
affiliate, The Prudential Investment Corporation (PIC), doing business as
Prudential Investments (PI, the Subadviser or the investment adviser),
Prudential Plaza, Newark, New Jersey 07102, under a Subadvisory Agreement dated
December 15, 1988. Both PIFM and PI are indirect, wholly owned subsidiaries of
The Prudential Insurance Company of America (Prudential). As of September 30,
1998, PIFM served as the manager to 67 open-end investment companies, and as
manager or administrator to 22 closed-end investment companies with aggregate
assets of more than $66 billion. The Fund has a Board of Directors which, in
addition to overseeing the actions of the Fund's Manager and Subadviser,
decides upon matters of general policy.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The Fund's Articles of Incorporation provide that the Board of Directors
will be divided into three classes of Directors, as nearly equal in number as
possible. Each Director, after a transition period, serves for three years with
one class being elected each year. Each year the term of office of one class
will expire. The Board of Directors is currently comprised of 11
Directors-Messrs. Beach, Dorsey, Gunia, Jacobs, Melzer, Mooney, O'Brien,
Redeker and Weil and Mses. Gold and Teeters. Mr. Dorsey has served as a
Director since September 30, 1987. Mr. Redeker was elected to serve as a
Director on October 19, 1993. Messrs. Beach, Gunia, Jacobs, Melzer, Mooney,
O'Brien and Weil and Mses. Gold and Teeters were elected to serve as Directors
on October 30, 1996. All of the current members of the Board of Directors have
previously been elected by the shareholders.
At the Annual Meeting, Directors will be elected to hold office until the
earlier to occur of (i) the next meeting of shareholders at which Directors are
elected and their successors are elected and qualified or (ii) the expiration
of their terms in accordance with the Fund's retirement policy. The Fund's
retirement policy, which was recently adopted, calls for the retirement of
Directors on December 31 of the year in which they reach the age of 72 except
that retirement is being phased in for Directors who were age 68 or older as of
December 31, 1993. Under this phasing provision, Messrs. Beach, Dorsey, Jacobs
and O'Brien are scheduled to retire on December 31, 1999, 1999, 1998 and 1999,
respectively.
As prescribed in the Fund's Articles of Incorporation, the Directors have
been divided into three classes and their terms of office fixed as follows:
Class I: Messrs. Melzer and Weil and Ms. Teeters-whose term expires in 2000;
Class II: Messrs. Gunia, Jacobs and Mooney and Ms. Gold-whose term expires in
1998; and Class III: Messrs. Beach, Dorsey, O'Brien and Redeker-whose term
expires in 1999.
Only three of the Directors, Messrs. Gunia and Mooney and Ms. Gold, are
standing for re-election to serve as Class II Directors until the Fund's 2001
Annual Meeting of Shareholders and until their successors have been elected and
qualified. Mr. Jacobs is not standing for re-election as a Class II Director
because he is scheduled to retire on December 31, 1998 under the Fund's
retirement policy. It is the intention of the persons named in the enclosed
proxy to vote in favor of the election of Messrs. Gunia and Mooney and Ms.
Gold. Messrs. Gunia and Mooney and Ms. Gold have consented to be named in this
Proxy Statement and to serve as Directors if elected. The Directors have no
reason to believe that any of the nominees named above will become unavailable
for election as a Director, but if that should occur before the Meeting,
proxies will be voted for such persons as the Directors may recommend.
2
<PAGE>
The following table sets forth certain information concerning each of the
Directors of the Fund. Each of the nominees is currently a Director of the
Fund.
INFORMATION REGARDING DIRECTORS STANDING FOR RE-ELECTION
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
OWNED AT
NAME, AGE, BUSINESS EXPERIENCE DURING THE POSITION WITH OCTOBER 16,
PAST FIVE YEARS AND OTHER DIRECTORSHIPS FUND 1998
- ------------------------------------------------------------------------------- ---------------- -------------
<S> <C> <C>
CLASS II (TERM EXPIRING IN 1998)
*ROBERT F. GUNIA (51), Vice President (since January 1996), Prudential Insur- Vice President 0
ance Company of America (Prudential); Executive Vice President and and Director
Treasurer (since December 1996), Prudential Investments Fund Manage-
ment LLC (PIFM); Senior Vice President of Prudential Securities; for-
merly Chief Administrative Officer (July 1990-September 1996), Director
(January 1989-September 1996) and Executive Vice President, Treasurer
and Chief Financial Officer (June 1987-December 1996) of Prudential
Mutual Fund Management, Inc.; Director/Trustee of 44 investment compa-
nies in the Prudential Fund Complex (Prudential Funds) and Vice Presi-
dent and Director of The Asia Pacific Fund, Inc. and Nicholas-Applegate
Fund, Inc.
DELAYNE DEDRICK GOLD (60), Marketing and Management Consultant; Director 0
Director/Trustee of 44 Prudential Funds.
THOMAS T. MOONEY (56), President of the Greater Rochester Metro Chamber Director 0
of Commerce; former Rochester City Manager; Trustee of Center for Gov-
ernmental Research, Inc.; Director of Blue Cross of Rochester, The Busi-
ness Council of New York State, Monroe County Water Authority, Roch-
ester Jobs, Inc., Executive Service Corps of Rochester, Monroe County
Industrial Development Corporation, Northeast Midwest Institute;
Director/Trustee of 33 Prudential Funds and First Financial Fund, Inc.
</TABLE>
3
<PAGE>
INFORMATION REGARDING OTHER DIRECTORS
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
OWNED AT
NAME, AGE, BUSINESS EXPERIENCE DURING THE POSITION WITH OCTOBER 16,
PAST FIVE YEARS AND OTHER DIRECTORSHIPS FUND 1998
- ----------------------------------------------------------------------------- --------------- -------------
<S> <C> <C>
CLASS III (TERM EXPIRING IN 1999)
EDWARD D. BEACH (73), President and Director of BMC Fund, Inc., a closed- Director 0
end investment company; prior thereto, Vice Chairman of Broyhill Furni-
ture Industries, Inc.; Certified Public Accountant; Secretary and Treasurer
of Broyhill Family Foundation, Inc.; Member of the Board of Trustees of
Mars Hill College; Director/Trustee of 44 Prudential Funds.
EUGENE C. DORSEY (71), retired President, Chief Executive Officer and Director 0
Trustee of the Gannett Foundation (now Freedom Forum); former Pub-
lisher of four Gannett newspapers and Vice President of Gannett Com-
pany; past chairman, Independent Sector, Washington, D.C. (national coa-
lition of philanthropic organizations); formerly Chairman of the American
Council for the Arts; Director of the Advisory Board of Chase Manhattan
Bank of Rochester; Director/Trustee of 13 Prudential Funds.
THOMAS H. O'BRIEN (73), President O'Brien Associates; formerly President Director 0
of Jamaica Water Securities Corp. (February 1989-August 1990); Chair-
man and Chief Executive Officer (September 1987-February 1989) and
Director (September 1987-August 1990) of Jamaica Water Supply Com-
pany; Director and President of Winthrop Regional Health System and
United Presbyterian Home at Syoset Inc.; Director of Ridgewood Savings
Bank; Director/Trustee of 12 Prudential Funds.
*RICHARD A. REDEKER (55), Employee of Prudential Investments; formerly President 0
President, Chief Executive and Officer and Director (October 1993- and
September Director 1996), Prudential Mutual Fund Management, Inc.; Director
Executive Vice President, Director and Member of the Operating Commit-
tee (October 1993-September 1996), Prudential Securities; Director (Octo-
ber 1993-September 1996) of Prudential Securities Group, Inc; formerly
Senior Executive Vice President and Director of Kemper Financial Ser-
vices, Inc. (September 1978-September 1993); Director/Trustee of 45 Pru-
dential Funds.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
OWNED AT
NAME, AGE, BUSINESS EXPERIENCE DURING THE POSITION WITH OCTOBER 16,
PAST FIVE YEARS AND OTHER DIRECTORSHIPS FUND 1998
- ------------------------------------------------------------------------------ --------------- -------------
<S> <C> <C>
CLASS I (TERM EXPIRING IN 2000)
*MENDEL A. MELZER (37), Chief Investment Officer (since October 1996) of Director 0
Prudential Mutual Funds; formerly Chief Financial Officer (November
1995-September 1996) of Prudential Investments, Senior Vice President
and Chief Financial Officer of Prudential Preferred Financial Services
(April 1993-November 1995); Managing Director of Prudential Investment
Advisors (April 1991-April 1993); Senior Vice President of Prudential
Capital Corporation (July 1989-April 1991); Chairman and Director of
Prudential Series Fund, Inc.; Director/Trustee of 44 Prudential Funds.
LOUIS A. WEIL III (57), President and Chief Executive Officer (since January Director 0
1996) and Director (since September 1991) of Central Newspapers, Inc.;
Chairman of the Board (since January 1996), Publisher and Chief Execu-
tive Officer (August 1991-December 1995) of Phoenix Newspapers, Inc.;
formerly Publisher of Time Magazine (May 1989-March 1991); formerly
President, Publisher & CEO of The Detroit News (February 1986-August
1989); formerly member of the Advisory Board, Chase Manhattan Bank-
Westchester; Director/Trustee of 30 Prudential Funds.
NANCY H. TEETERS (68), Economist; formerly Vice President and Chief Econo- Director 0
mist (March 1986-June 1990) of International Business Machines Cor-
poration; Director of Inland Steel Corporation (since July 1991); Director/
Trustee of 26 Prudential Funds.
</TABLE>
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* Is or will be an "interested" Director, as defined in the Investment Company
Act of 1940, as amended (Investment Company Act), by reason of his
affiliation with PIFM, Prudential Securities or Prudential.
5
<PAGE>
The Directors and officers as a group owned beneficially less than 1% of
the outstanding shares of the Fund at October 16, 1998.
Each Director who is not an "interested person" as defined in the
Investment Company Act of PIFM or PI currently receives $3,000 as an annual
Director's fee, plus expenses. For the fiscal year ending August 31, 1998,
Directors' fees and expenses amounted to [$25,333] and [$154], respectively.
Board Members may elect to receive their Directors' fees pursuant to a deferred
fee agreement with the Fund. Under the terms of the agreement, the Fund accrues
daily the amount of such Board Member's fee in installments which accrue
interest at a rate equivalent to the prevailing rate applicable to 90-day U.S.
Treasury Bills at the beginning of each calendar quarter. Payment of the
interest so accrued is also deferred and accruals become payable at the option
of the Board Member. The Fund's obligation to make payments of deferred
Directors' fees, together with interest thereon, is a general obligation of the
Fund.
The following table shows (i) the compensation paid by the Fund to each
Board Member and nominee for the most recent fiscal year and (ii) the
compensation paid by the Prudential Mutual Fund Complex to each Board Member
and nominee for the calendar year ended December 31, 1997. "Interested" Board
Members do not receive any compensation from the Fund.
COMPENSATION TABLE
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT
AGGREGATE BENEFITS ACCRUED
COMPENSATION AS PART OF FUND
NAME AND POSITION FROM FUND EXPENSES
- ------------------------------------------------ -------------- ------------------
<S> <C> <C>
Edward D. Beach, Director $1,500 None
Eugene C. Dorsey, Director** $1,500 None
Delayne Dedrick Gold, Director $1,500 None
Robert F. Gunia, Director and Vice President++ $ - -
Harry A. Jacobs, Jr., Director*++ $ - -
Donald D. Lennox, Retired Director $1,500 None
Mendel A, Melzer, CFA, Director++ $ - -
Thomas T. Mooney, Director** $1,500 None
Thomas H. O'Brien, Director $1,500 None
Richard A. Redeker, Director and President++ $ - -
Nancy H. Teeters, Director $1,500 None
Louis A. Weil, III, Director $1,500 None
<CAPTION>
TOTAL COMPENSATION
ESTIMATED ANNUAL FROM FUND AND FUND
BENEFITS UPON COMPLEX PAID TO
NAME AND POSITION RETIREMENT DIRECTORS(1)
- ------------------------------------------------ ------------------ ----------------------------
<S> <C> <C>
Edward D. Beach, Director N/A $ 135,000(38/63)+
Eugene C. Dorsey, Director** N/A $ 70,000(16/43)+
Delayne Dedrick Gold, Director N/A $ 135,000(38/63)+
Robert F. Gunia, Director and Vice President++ - -
Harry A. Jacobs, Jr., Director*++ - -
Donald D. Lennox, Retired Director N/A $ 90,000(26/50)+
Mendel A, Melzer, CFA, Director++ - -
Thomas T. Mooney, Director** N/A $ 115,000(31/64)+
Thomas H. O'Brien, Director N/A $ 45,000(11/29)+
Richard A. Redeker, Director and President++ - -
Nancy H. Teeters, Director N/A $ 90,000(23/42)+
Louis A. Weil, III, Director N/A $ 90,000(26/50)+
</TABLE>
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* Indicates Current Board Member who is not standing for reelection.
** Total aggregate compensation from all of the funds in the Fund Complex for
the calendar year ended December 31, 1997, includes amounts deferred at the
election of Directors. Including accrued interest, total compensation
amounted to $87,401, and $143,909 for Eugene C. Dorsey and Thomas T.
Mooney, respectively.
+ Indicates number of funds/portfolios in Fund Complex (including the Fund) to
which aggregate compensation relates.
++ Robert F. Gunia, Harry A. Jacobs, Jr., Mendel A. Melzer and Richard A.
Redeker, who are each interested Directors do not receive compensation from
the Fund or any other fund in the Fund Complex.
(1)No fund within the Fund Complex has a bonus, pension profit sharing or
retirement plan.
There were four meetings of the Fund's Board of Directors during the
fiscal year ended August 31, 1998, all of which were regularly scheduled
meetings. The Board of Directors has an Audit Committee. The Audit Committee
makes recommendations to the full Board with respect to the engagement of
independent public accountants
6
<PAGE>
and reviews with the independent public accountants the plan and results of the
audit engagement and matters having a material effect upon the Fund's financial
operations. The Audit Committee consists of Messrs. Beach, Dorsey, Mooney,
O'Brien and Weil and Mses. Gold and Teeters, the Directors of the Fund who are
not "interested persons," as defined in the Investment Company Act, of the
Fund. The Audit Committee met twice during the fiscal year ended August 31,
1998. For the fiscal year ended August 31, 1998, each of the Directors attended
75% or more of the total number of meetings of the Board of Directors and all
committees of which he or she was a member.
The executive officers of the Fund, other than as shown above, are: S.
Jane Rose, Secretary, having held such office since October 1, 1987, Grace
Torres, Treasurer and Principal Financial and Accounting Officer, having held
such office since February 20, 1997, Stephen M. Ungerman, Assistant Treasurer,
having held such office since April 11, 1995 and Deborah A. Docs, Assistant
Secretary, having held such office since February 20, 1997. Ms. Rose is 52
years old and is a Senior Vice President and Senior Counsel of PIFM and a
Senior Vice President and Senior Counsel of Prudential Securities (since July
1992). Prior thereto, she was a Vice President and Associate General Counsel of
Prudential Securities. Ms. Torres is 39 years old and is a First Vice President
(since December 1996) of PIFM and a First Vice President (since March 1994) of
Prudential Securities. Prior thereto, she was a First Vice President of Bankers
Trust. Mr. Ungerman is 45 years old and is First Vice President (since February
1993) of PIFM. Prior thereto he was a Senior Tax Manager at
PricewaterhouseCoopers LLP. Ms. Docs is 40 years old and is a Vice President
and Associate General Counsel of PIFM and Prudential Securities. The executive
officers of the Fund are elected annually by the Board of Directors at their
meeting following the Annual Meeting of Shareholders.
REQUIRED VOTE
Directors must be elected by a vote of a majority of the votes cast at the
meeting in person or by proxy and entitled to vote thereupon.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" THE
NOMINEES INDICATED IN PROPOSAL NO. 1.
APPROVAL OF THE ELIMINATION OF THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING RESTRICTED AND ILLIQUID SECURITIES
(PROPOSAL NO. 2)
The Fund currently may not purchase a security if the Fund would then hold
more than 20% of its total assets in "securities which are not readily
marketable, including those that are restricted as to disposition under the
federal securities laws or otherwise." Securities eligible for resale pursuant
to Rule 144A under the Securities Act of 1933, as amended (Securities Act), are
currently subject to this investment restriction, since they are technically
"restricted" securities. A large percentage of new issues in the high yield
market are restricted securities that are eligible for resale pursuant to Rule
144A and the investment adviser believes that eliminating the current
fundamental investment restriction will allow the Fund to take advantage of
these additional investment opportunities.
Historically, illiquid securities have been defined to include securities
subject to contractual or legal restrictions on resale, including
privately-placed commercial paper, securities for which there is no readily
available market and repurchase agreements having a maturity of longer than
seven days. In recent years, however, the securities
7
<PAGE>
markets have evolved significantly, with the result that new types of
instruments have developed which makes the Fund's present restriction overly
broad and unnecessarily restrictive in the view of the investment adviser. In
particular, the Securities and Exchange Commission (SEC) adopted Rule 144A in
April 1990, which allows for a broader institutional trading market for
securities otherwise subject to restrictions on resale to the general public.
SEC interpretations give directors of registered investment companies the
discretion to designate restricted securities as liquid if the presence of a
readily available market can be demonstrated and if a current market value can
be ascertained.
The proposed change would expand the Fund's ability to invest in
securities for which there is a readily available market but which
traditionally were considered illiquid, in part because of restrictions on
resale to the public. In the opinion of the Fund's investment adviser, the fact
that there are restrictions on resale to the public is not necessarily
indicative of the liquidity of such investments. If designated as liquid under
the supervision of the Board of Directors, these securities would be exempt
from the Fund's percentage limitation with respect to investment in illiquid
securities.
In order to take advantage of the institutional trading markets, the
investment adviser recommends that upon the approval of this Proposal No. 2,
the Fund's fundamental restriction No. 1 regarding the purchase of illiquid
securities would be eliminated and replaced with the following non-fundamental
policy:
"The Fund may invest up to 20% of its total assets in illiquid
securities, including repurchase agreements which have a maturity of
longer than seven days, securities with legal or contractual
restrictions on resale (restricted securities) and securities that are
not readily marketable. Restricted securities, including securities
eligible for resale pursuant to Rule 144A under the Securities Act of
1933, (as amended), privately placed commercial paper and other
securities that have a readily available market are not considered
illiquid for purposes of this limitation. Repurchase agreements subject
to demand are deemed to have a maturity equal to the applicable notice
period."
By making the Fund's policy on illiquid securities non-fundamental, the
Fund will be able to respond more quickly to regulatory and market developments
because a shareholder vote will not be required to define what types of
securities should be deemed illiquid or to change the applicable permissible
percentage limitation. If this proposal is approved by shareholders, the
investment adviser, under the supervision of the Board of Directors, will
monitor the liquidity of specific types of securities and, based on its
recommendations, the Board of Directors will from time to time determine
whether such securities should be deemed to be liquid with reference to legal,
regulatory and market developments. The Fund's investment in Rule 144A
securities could have the effect of increasing illiquidity to the extent that
qualified institutional buyers become, for a limited time, uninterested in
purchasing such securities.
The Board of Directors believes that the adoption of Proposal No. 2 is in
the best interests of the Fund and its shareholders.
REQUIRED VOTE
Adoption of Proposal No. 2 requires the approval of a majority of the
outstanding voting securities of the Fund. Under the Investment Company Act, a
majority of the Fund's outstanding voting securities is defined as the lesser
of (i) 67% of the Fund's outstanding voting shares represented at a meeting at
which more than 50% of the Fund's outstanding voting shares are represented in
person or represented by proxy, or (ii) more than 50% of the Fund's outstanding
voting shares. If the proposed change in investment policy is not approved, the
current limitation would
8
<PAGE>
remain a fundamental policy which could not be changed without the approval of
a majority of the outstanding voting securities of the Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2.
APPROVAL OF THE ELIMINATION OF THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING INVESTMENT IN SECURITIES
OF OTHER INVESTMENT COMPANIES
(PROPOSAL NO. 3)
The Fund currently may not purchase securities of other investment
companies, "except in connection with a merger, consolidation, reorganization
or acquisition of assets." The investment adviser proposes the elimination of
this investment restriction so that the Fund will be able to purchase such
securities up to the amounts permitted by law. Under the Investment Company
Act, a fund generally may invest up to 10% of its total assets in the shares of
other investment companies in the aggregate, provided (i) a fund may invest no
more than 5% of its total assets in any one investment company and (ii) a fund
may not own more than 3% of the total outstanding voting stock of any one
investment company.
The Board of Directors believes the proposed amendment would provide the
investment adviser with additional flexibility to take advantage of investment
opportunities. However, because any shares that the Fund may hold in another
investment company will be subject to the management fees and expenses of such
investment company, investment by the Fund in other investment companies may
result, in effect, in payment by shareholders of duplicate fees and expenses.
REQUIRED VOTE
Adoption of Proposal No. 3 requires the approval of a majority of the
outstanding voting securities of the Fund. Under the Investment Company Act, a
majority of the Fund's outstanding voting securities is defined as the lesser
of (i) 67% of the Fund's outstanding voting shares represented at a meeting at
which more than 50% of the Fund's outstanding voting shares are represented in
person or represented by proxy, or (ii) more than 50% of the Fund's outstanding
voting shares. If the proposed change in investment policy is not approved, the
current limitation would remain a fundamental policy which could not be changed
without the approval of a majority of the outstanding voting securities of the
Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 3.
RATIFICATION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 4)
The Board of Directors of the Fund, including a majority of the members of
the Board of Directors who are not interested persons of the Fund, have
selected PricewaterhouseCoopers LLP as independent accountants for the Fund for
the Fund's fiscal year ending August 31, 1999. PricewaterhouseCoopers LLP has
served as independent accountants for the Fund for the Fund's fiscal year ended
August 31, 1998 and for each year since the Fund's inception. The ratification
of the selection of independent accountants is to be voted on at the Meeting
and it is intended that the persons named in the accompanying proxy vote for
PricewaterhouseCoopers LLP. No representative of PricewaterhouseCoopers LLP is
expected to be present at the Meeting.
9
<PAGE>
The Board of Directors' policy regarding engaging independent accountants'
services is that management may engage the Fund's principal independent
accountants to perform any service(s) normally provided by independent
accounting firms, provided that such service(s) meets any and all of the
independence requirements of the American Institute of Certified Public
Accountants and the SEC. The Audit Committee will review and approve services
provided by the independent accountants prior to their being rendered. The
Board of Directors also receives a report from its Audit Committee relating to
all services after they have been performed by the Fund's independent
accountants.
REQUIRED VOTE
The affirmative vote of at least a majority of the votes cast, in person
or by proxy, at the meeting is required for ratification.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL
NO. 4.
OTHER MATTERS
No business other than as set forth herein is expected to come before the
Meeting, but should any other matter requiring a vote of shareholders arise,
including any question as to an adjournment of the Meeting, the persons named
in the enclosed proxy will vote thereon according to their best judgment in the
interests of the Fund.
SHAREHOLDER PROPOSALS
A shareholder proposal intended to be presented at the Annual Meeting of
Shareholders of the Fund in 1999 hereinafter called must be received by the
Fund on or before June 30, 1999 in order to be included in the Fund's proxy
statement and form of proxy relating to that meeting and presented at the
meeting. The mere submission of a proposal by a shareholder does not guarantee
that such proposal will be included in the proxy statement because certain
rules under the federal securities laws must be complied with before inclusion
of the proposal is required.
S. Jane Rose
SECRETARY
Dated: October 1998
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH
TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
10
<PAGE>
PRELIMINARY PROXY MATERIALS
Appendix to Proxy Statement
(left column)
[X] PLEASE MARK VOTES AS IN
THIS EXAMPLE
THE HIGH YIELD INCOME FUND, INC.
P R O X Y
The Board of Directors recommends
a vote "FOR" each of the Proposals.
____________________________
Please be sure to mark, sign, date and return the Date
Proxy card promptly using the enclosed envelope.
________________________________________________________________________________
___Shareholder sign here____________________________Co-owner sign here__________
(right column)
For With- For All
hold Except
1.) ELECTIONS OF DIRECTORS [ ] [ ] [ ]
Nominees: Class I
Robert F. Gunia, Delayne Dedrick Gold, Thomas T. Mooney
If you do not wish your shares voted "For" a particular nominee, mark the "For
All Except" box and strike a line through the nominee's name. Your shares will
be voted for the remaining nominee(s).
For Against Abstain
2.) To approve the elimination of the Fund's [ ] [ ] [ ]
fundamental investment restriction regarding
restricted and illiquid securities.
For Against Abstain
3.) To approve the elimination of the Fund's [ ] [ ] [ ]
fundamental investment restriction regarding
the purchase of securities of other
investment companies.
For Against Abstain
4.) To ratify the selection of Price [ ] [ ] [ ]
Waterhouse LLP as independent
accountants for the fiscal year
ending August 31, 1999.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the Meeting.
NOTE:
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Mark box at right if address change is noted
on the reverse side of this card. [ ]
RECORD DATE SHARES:
<PAGE>
THE HIGH YIELD INCOME FUND, INC.
Gateway Center Three
Newark, New Jersey 07102
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The
undersigned hereby appoints S. Jane Rose, Grace C. Torres and Deborah A. Docs as
Proxies, each with the power of substitution, and hereby authorizes each of them
to represent and to vote, as designated on the reverse side of this card, all
the shares of Common Stock of The High Yield Income Fund, Inc. held of record by
the undersigned on October 16, 1998 at the Annual Meeting of Shareholders to be
held on December 8, 1998, or any adjournment thereof.
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 PROPOSALS 1, 2, 3 and 4.
ADDRESS CHANGES:
__________________________________________
__________________________________________
__________________________________________
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD USING THE ENCLOSED ENVELOPE
