<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
Filed by the Registrant / /
Filed by a Party other than 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
Mentor Income Fund, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Karpus Investment Management, Inc.
------------------------------------------------------------------------
(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:
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MENTOR INCOME FUND, INC.
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116
PROXY OF KARPUS MANAGEMENT, INC. d/b/a KARPUS INVESTMENT
MANAGEMENT INC. ("KIM")
FOR THE SPECIAL MEETING OF SHAREHOLDERS
At the Special Meeting of shareholders of Mentor Income Fund. Inc,. ("the Fund")
to be held at 200 Berkeley Street, Boston, Massachusetts 02116 on September 27,
2000 @ 10:00 a.m., Eastern time Karpus Management Inc. will present the
following proposals to the shareholders of the Fund.
1. TO APPROVE OR DISAPPROVE A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN THE FUND
AND KARPUS MANAGEMENT, INC. D/B/A KARPUS INVESTMENT MANAGEMENT, INC.
2. TO REMOVE MENTOR AS THE INVESTMENT ADVISOR OF THE FUND.
3. TO ELECT MEMBERS OF THE FUND'S BOARD OF DIRECTORS TO HOLD OFFICE UNTIL THEIR
SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
4. TO REJECT AN AMENDMENT TO ARTICLE I OF THE FUND'S RESTATED AND AMENDED
ARTICLES OF INCORPORATION CHANGING THE NAME OF THE FUND TO AMERICAN INCOME FUND
INC.
5. TO REJECT AN AMENDMENT TO ARTICLE II OF THE FUND'S RESTATED AND AMENDED
ARTICLES OF INCORPORATION DELETING SECTION 2 THEREOF WHICH CURRENTLY RESTRICTS
CERTAIN TRANSFERS OF FUND SHARES.
6. TO REJECT THE SELECTION OF KPMG LLP AS INDEPENDENT ACCOUNTANTS OF THE FUND
FOR THE FISCAL YEAR ENDED OCTOBER 31, 2000.
7. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENTS THEREOF.
The close of business on July 28, 2000 has been fixed by the Fund as
the record date for the determination of shareholders of the Fund entitled to
notice of and to vote at the Meeting and any adjournments thereof.
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KARPUS URGES SHAREHOLDERS: SUPPORT THE EFFORTS OF KIM TO RECOGNIZE THE NET ASSET
VALUE OF YOUR INVESTMENT BY SUPPORTING KIM'S PROPOSALS.
SHAREHOLDERS OF THE FUND ARE ENTITLED TO SHARE IN THE ECONOMIC BENEFITS THAT ARE
REALIZED IN THIS TRANSACTION, IN THE OPINION OF KIM.
MENTOR REALIZES AN ECONOMIC BENEFIT BY SELLING THE FUND. U.S. BANK WILL REALIZE
AN ECONOMIC BENEFIT BY RECEIVING ADDITIONAL MANAGEMENT FEES IN BECOMING THE NEW
INVESTMENT ADVISOR TO THE FUND.
THE SHAREHOLDER IS NOT EVEN RECEIVING THE NET ASSET VALUE OF THEIR INVESTMENT,
WHAT IT IS TRULY WORTH, IF THEY HELD THE INDIVIDUAL SECURITIES, INSTEAD OF FUND
SHARES.
<PAGE>
PROXY STATEMENT OF
KARPUS MANAGEMENT, INC. d/b/a KARPUS INVESTMENT MANAGEMENT INC. ("KIM")
FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON SEPTEMBER 27, 2000 OF
MENTOR INCOME FUND, INC.
The accompanying Proxy is solicited by KIM to be used at a Special
Meeting of shareholders of the Fund, which will be held on September 27, 2000 at
10:00 a.m., Eastern time, at 200 Berkeley Street, Boston, Massachusetts 02116
and at any adjournment or adjournments thereof (the "Meeting").
The Fund has called this meeting to consider and act upon proposals to:
1. Approve or disapprove a new investment advisory agreement between the Fund
and U.S. Bank National Association.
2. To elect members of the Fund's Board of Directors to hold office until
their successors are duly elected and qualified.
3. To approve or disapprove an amendment to Article I of the Fund's restated
and amended Articles of Incorporation changing the name of the Fund to
American Income Fund Inc.
4. To approve or disapprove an amendment to Article II of the Fund's restated
and amended Articles of Incorporation deleting section 2 thereof, which
currently restricts certain transfers of Fund shares.
5. To ratify or reject the selection of KPMG LLP as independent accountants of
the Fund for the fiscal year ended October 31, 2000. 6. To transact such
other business as may properly come before the meeting or any adjournments
thereof.
KIM wishes to enlist the support of fellow shareholders to stop Fund's
Management from assigning new investment advisory agreements between the Fund
and a new Investment Advisor WITHOUT GIVING ANY BENEFITS TO THE SHAREHOLDERS OF
THE FUND.
Shareholders of record at the close of business on July 28, 2000 (the
"Record Date") are entitled to notice of and to vote at the Meeting. Each share
is entitled to a proportionate share of one vote on such matters. The most
recent annual report to shareholders of the Fund and most recent semi-annual
report to shareholders are available upon request, without charge, by writing
the Fund at 200 Berkeley Street, Boston, Massachusetts, or by calling the Fund
at 877-504-5025. The principal executive offices of the Fund are located at 200
Berkeley Street, Boston, Massachusetts 02116.
KIM has retained _________________________ ( the "Proxy Solicitor") to
assist it in the solicitation of proxies. It is expected that the cost of
soliciting the proxies will be approximate $25,000. Should KIM be successful in
presenting KIM's Proposals to the shareholders, KIM will seek reimbursement from
the Fund of the costs of soliciting
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proxies. The Proxy Solicitor may supplement its solicitation of proxies by mail,
telephone or other means. The costs of soliciting proxies, including the cost of
preparing and mailing the Proxy Statement will be paid by KIM and various
accounts that are clients of KIM.
All properly executed proxies received prior to the Meeting and not
revoked will be voted at the Meeting in accordance with the instructions marked
thereon. Executed proxies that are unmarked will be voted for each of the
Proposals 1 through 5. Stockholders are entitled to one vote for each Fund share
held and fractional votes for each fractional Fund share held. Stockholders of
the Fund will vote as a single class and will vote separately on each proposal.
Shares represented by executed and unrevoked proxies will be voted in accordance
with the specifications made thereon. If no instructions are given on KIM's blue
proxy card, such shares will be voted FOR KIM's Proposal, authority will be
WITHHELD from Management's proposed nominee for Director, authority will be
WITHHELD from Management's Proposal to amend Article I of the Fund's restated
and amended Articles of Incorporation, authority will be WITHHELD from
Management's Proposal to amend Article II oft the Fund's restated and amended
Articles of Incorporation, such shares will be voted AGAINST the proposed
ratification of auditors, and such shares will be voted on any other matter that
may properly come before the Meeting. If the enclosed form of proxy is executed
and returned, it nevertheless may be revoked by a subsequently dated proxy or by
attending the Meeting and voting in person. As of the Record Date, the Fund had
11,817,776 shares of common stock issued and outstanding.
KIM's clients hold 544,247 shares of the Fund, representing
approximately 4.61% of its outstanding shares. Karpus Investment Management
Profit Sharing presently owns 100 shares as of July 31, 2000. Sophie Karpus, (a
Principal of KIM) presently owns 800 shares as of July 31, 2000.
It is estimated that definitive proxy materials will be mailed to
stockholders of record on or about __________________. The Fund's principal
executive offices are located at 200 Berkley Street, 21st floor, Boston
Massachusetts 12116-5034. Copies of the Fund's most recent Annual and
Semi-Annual Reports are available without charge upon written request to the
Fund at its principal office. KIM is located at 14A Tobey Village Office Park,
Pittsford NY 14534 and any correspondence to KIM should be directed to this
address.
After reviewing the proxy statement, PLEASE SIGN AND RETURN THE BLUE
PROXY CARD TO___________________________________________________________________
YOUR VOTE IS CRITICAL.
KIM RECOMMENDS THAT YOU VOTE FOR KIM'S PROPOSAL TO APPROVE A NEW INVESTMENT
ADVISORY AGRREMENT BETWEEN THE FUND AND KARPUS MANAGEMENT INC, D/B/A KARPUS
INVESTMENT MANAGEMENT.
<PAGE>
VOTE TO REMOVE MENTOR AS THE INVESTMENT ADVISOR OF THE FUND
VOTE TO ELECT THE KIM SUPPORTED BOARD OF DIRECTORS TO HOLD OFFICE UNTIL THEIR
SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
VOTE TO REJECT AN AMENDMENT TO ARTICLE I OF THE FUND'S RESTATED AND AMENDED
ARTICLES OF INCORPORATION CHANGING THE NAME OF THE FUND TO AMERICAN INCOME FUND,
INC.
VOTE TO REJECT AN AMENDMENT TO ARTICLE II OF THE FUND'S RESTATED AND AMENDED
ARTICLES OF INCORPORATION DELETING SECTION 2 THEREOF WHICH CURENTLY RESTRICTS
CERTAIN TRANSFERS OF FUND SHARES.
VOTE TO REJECT THE SELECTION OF KPMG LLP AS INDEPENDENT ACCOUNTANTS OF THE FUND
FOR THE FISCAL YEAR ENDED OCTOBER 31,2000.
INTRODUCTION
On July 7, 2000, U.S. Bank, First Union Corporation ("FUC") and Mentor
Investment Advisors, LLC ("Mentor") entered into an Asset Purchase Agreement
("Acquisition Agreement"), pursuant to which U.S. Bank will purchase certain
assets of Mentor, the Fund's present investment advisor, that relate to the
management and operations of the Fund (the "Acquisition").
The Acquisition is subject to various conditions being satisfied prior
to closing, including, among other things, the requisite approvals of a new
investment advisory agreement (the "New Advisory Agreement") by Fund
shareholders and the election of a new Board of Directors, the composition of
which is reconstituted in a manner acceptable to both U.S. Bank and Mentor. U.S.
Bank and Mentor have agreed in the Acquisition Agreement that Mentor will use
its reasonable best efforts to cause the Fund to call a shareholders meeting for
the purpose of causing the Board to be reconstituted and approving the New
Advisory Agreement. The Acquisition is not expected to result in any material
change in the investment policies or restrictions of the Fund.
It is the belief of KIM that SHAREHOLDERS OF THE FUND SHOULD SHARE THE
ECONOMIC BENEFITS OF SUCH AN ACQUISTION.
Mentor Income Fund has traded at a significant discount to net asset
value over the past five years (8/3/95 through 8/3/00). This discount has
averaged -11.92% whereas a low discount was reached on December 30, 1999 at
-22.3% and a high of .72% was
<PAGE>
reached on March 12,1998. As of August 3, 2000 the closing market price of the
Fund was $7.813 and the net asset value of the Fund was $8.97 (this represents a
discount of -12.90% of market price compared to net asset value). Net asset
value is the value of the assets of the Fund and is determined by subtracting
the liabilities from the portfolio value of a fund's securities, and dividing
that figure by the number of outstanding shares. Should the Fund be liquidated
or open-ended, shareholders would realize a price of close to net asset value in
the opinion of KIM. (Some transaction charges may be applied).
For a new investment advisory agreement to be put in place, shareholders must be
allowed to vote on this item. SHAREHOLDERS, THIS IS YOUR CHANCE IN KIM'S OPINION
TO ELECT A NEW INVESTMENT MANAGER THAT WILL WORK FOR THE BEST ECONOMIC INTERESTS
OF THE SHAREHOLDERS OF THE FUND.
1940 Act requirements
Section 15(a) of the Investment Company Act of 1940 (the "1940 Act")
prohibits any person from serving as an investment advisor to a registered
investment company except pursuant to a written contract that has been approved
by shareholders. Therefore, any new investment manager or for anyone to provide
investment advisory services to the Fund, shareholders must approve the New
Investment Agreement.
Karpus Management, Inc. d/b/a Karpus Investment Management, Inc.
("KIM") believes that it is a suitable candidate to manage the Fund in acting as
an investment advisor to the Fund. KIM would recommend to the Board of Directors
continuous plans to assist in closing the discount to net asset value at which
the Fund currently trades.
Explanation of KIM's Proposals
Proposal 1.
To approve or disapprove a new investment advisory agreement between
the Fund and Karpus Management, Inc. d/b/a Karpus Investment Management ("KIM")
KIM is enlisting the support of fellow shareholders to establish a new
investment advisory agreement with itself and the Fund. KIM is committed to
enhancing the value of the Fund's shares. KIM would recommend to the Board of
Directors either, any or all of the following: an aggressive share buy back
program in the open market, a share repurchase offer at net asset value, or
conversion of the Fund from the current closed-end to an open-ended format.
It is the opinion of KIM that the shareholders of the Fund are entitled
to substantially better performance in terms of net asset value performance and
market price performance than the Fund has previously experienced. From August
1, 1996 to July 27, 2000 the net asset value has experienced a simple price
depreciation of -9.3212% for the holding period. On an annual equivalent the
simple price depreciation of the net asset value equaled -2.423%. During this
same time period (8/1/96 to 7/27/00) the market
<PAGE>
price experienced a simple price depreciation of -12.1429% for the holding
period or -----3.2084% annual equivalent.
The discount to net asset value of the Fund (from 8/1/96 through
7/27/00) has averaged -11.96%. The high was on 3/12/98 at +.72% and the low was
on December 30, 1999 at -22.3%.
The shareholders of Mentor Income Fund have suffered in the opinion of
KIM because of this dismal performance and deserve to be compensated in the sale
of the assets of the Fund from Mentor Investment Advisors, LLC ("Mentor") to
U.S. Bank National Association ("U.S. Bank"). Mentor will benefit from the sale
of assets and U.S. Bank will benefit from increased investment advisory fees.
The shareholder will not receive any compensation in terms of this transaction.
Karpus has gained national recognition in being ranked "A Worlds Best
Money Manager" according to Nelson Information. For U.S. Intermediate Duration
Fixed Income, Karpus was ranked for the 40 quarters ending 3/31/00 8th out of 94
managers. For the 20 quarters ending 3/31/00 Karpus was ranked 3rd out of 148
managers and the 12 quarters ending 3/31/00, Karpus was ranked 8th out of 165
managers.
KIM has vowed to work for the financial betterment of the Fund's
shareholders. VOTE TO ELECT KARPUS THE NEW INVESTMENT ADVISOR OF THE FUND.
Proposal 2
To remove Mentor as the Investment Advisor for the Fund.
THE PRESENT BOARD OF DIRECTORS OF MENTOR INCOME FUND, INC. AGREE THAT THE FUND
SHOULD BE MANAGED BY ANOTHER ADVISOR.
Mentor and the advisory subsidiaries of FUC manage only open-end funds.
(Other than one other closed-end fund, which is unknown). This is one of the
reasons supported by the Board of Directors and Management of the Fund to seek a
new investment advisor for the Fund, which would have an expertise in closed-end
funds.
It is the belief of KIM that should the Fund be managed by a new
Investment Advisor, one that is qualified in the closed-end fund arena,
performance may be able to be improved within the Fund. This Advisor will look
to close the discount at which the Fund has historically traded by methods of
tender offers, share buy-back programs, and possibly seeking a similar open-end
fund with which to merge.
Karpus Management, Inc. d/b/a Karpus Investment Management ("KIM") is
well known for its investment expertise in the area of closed-end funds. Karpus
has gained national recognition in being ranked by "A Worlds Best Money
Managers" according to Nelson Information. For U.S. Intermediate Duration Fixed
Income, Karpus was ranked for the 40 quarters ending 3/31/00 8th out of 94
managers. For the 20 quarters ending 3/31/00 Karpus was ranked 3rd out of 148
managers and for the 12 quarters ending 3/31/00, Karpus was ranked 8th out of
165 managers.
Whereas currently, KIM does not manage any closed-end funds, only
"individual investment accounts", however KIM believes that it's experience in
the closed-end fund
<PAGE>
arena make it a very qualified candidate to become the Fund's Advisor. KIM will
work for the best interest of the shareholders of the Fund in helping them
receive an economic benefit from being a shareholder of the Fund.
Proposal 3
To elect members of the Fund's Board of Directors to hold office until
their successors are duly elected and qualified.
The proposed KIM slate of directors are not the typical house directors
as normally found in families of funds. In fund families you find many times the
Board of Directors may be comprised of the identical individuals that serve for
many different fund. Consequently, a large percentage of the director's income
may be derived from serving on Boards.
KIM has strived to present to the shareholders a Board of Directors
that will work tirelessly for the shareholders. They are composed of many
leading authorities in the closed-end fund industry; none of the proposed
directors are employees of KIM although 2 of the proposed directors may receive
some compensation from KIM.
At the Meeting, shareholders of the Fund will vote for the election to
serve as Directors of the Fund, each to hold office until his successor is
elected and qualifies or until his death, retirement, resignation or removal
from office. The Fund's Restated and Amended Articles of Incorporation
("Articles of Incorporation") provide that the Fund's Board of Directors shall
be divided into three classes, each having a term of three years. Since the term
of office of one class will expire each year, certain nominees will serve less
than three years during their initial terms as Directors of the Fund.
The persons named on the accompanying proxy card intend, in the absence
of contrary instructions, to vote all proxies in favor of the election of the
nominees named below as Directors of the Fund to serve until their successors
are duly elected and qualified. If any of the nominees should be unable to
serve, and event not now anticipated, the proxies will be voted for such other
person or person, if any, as shall be designated by KIM.
The following sets forth certain information concerning the persons
nominated for election as Directors.
<TABLE>
<CAPTION>
Name / Age Principal Occupation During the Last Five Years
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CLASS I NOMINEES TO SERVE UNTIL 2001 ANNUAL MEETING OF SHAREHOLDERS
<S> <C>
Andrew Dakos Age 34 Private Investor, Vice-President Sales
14 Mill Street UVitec Printing Inc. since 1997, Sales
Lodi, New Jersey 07644 Manager from 1992-1997
Kenneth Saks Age 57 President Harsax, Inc. (building developer)
2575 Fairwood Rd. 1965-2000.
PepperPike, Ohio 44124
Gerald Hellerman Age 62 Managing Director of Hellerman Assoc.
10965 Eight Bells Lane Financial Consulting Firm, Trustee of 3RD
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Columbia, Maryland 21044 Avenue Trust since 1993, Director of
Clemente Strategic Value Fund 1998-2000
CLASS II NOMINEES TO SERVE UNTIL 2002 ANNUAL MEETING OF SHAREHOLDERS
Glenn Goodstein Age 37 Since 1992 has managed investments for
16830 Adlon Rd. a limited number of clients. 1988-1996
Encino, California 91436 held several executive positions with ADP
Brad Orvietto Age 43* Certified Financial Planner with Strategic
10824 Northwest Second Street Asset Value Management from 1996 to
Plantation, Florida 33324 2000. Previously founder and principal of
of Horizon Financial Group.
Kenneth P. Liesegang Age 47* Founder and President of RSVP
5 Fox Hollow Drive Business Systems, Inc, a Rochester, NY
Fairport, New York 14450 based computer consulting firm founded
in 1986
CLASS III NOMINEES TO SERVE UNTIL 2003 ANNUAL MEETING OF SHAREHOLDERS
Thomas J. Herzfeld Age 55 Principal Occupation for the past five
The Herzfeld Building years: Chairman and President of Thomas
P.O. Box 161465 J. Herzfeld & Co. and Thomas J. Herzfeld
Miami, Florida 33116 Advisors, Inc. and President and Chairman
of the Herzfeld Caribbean Basin Fund, Inc.
Represents beneficial ownership of 6,100
shares of MRF.
Phillip Goldstein Age 55 1992 to present managed investments for
60 Heritage Dr. limited number of clients, Portfolio Manager
Pleasantville, NY 10570 and Pres. of the general partner of
Opportunities Partners, (private inv.
prtnrshp) 1998-2000 director of
Clemente Strategic Value
Fund and was elected a
director of Mexico Equity &
Income Fund in 2/00 and The
Italy Fund in 5/00.
</TABLE>
*Mr. Orvietto has business relationships with Karpus Investment Management in
the form personal accounts managed by KIM. As a certified financial
planner, he has also placed accounts under management by KIM for which he
receives compensation. This relationship is a minor financial relationship.
Mr. Liesegang's company RSVP Business Systems, Inc. may occasionally perform
computer services for KIM upon which the company receives compensation.
This relationship is a minor financial relationship.
<PAGE>
Karpus Directors are truly independent. None are employees or officers of Karpus
Investment Management. Any relationship is professional and constitutes only in
two cases a minor portion of their compensation.
VOTE FOR THE KARPUS SLATE OF DIRECTORS
--------------------------------------
Proposal 4
To reject an amendment to Article I of the Fund's restated and amended
Articles of Incorporation changing the name of the Fund to American Income Fund,
Inc.
Why change the name of the Fund AGAIN after the name was changed in
1993 from RAC Income Shares to Mentor Income Fund. Each time a name is changed
it COSTS THE SHAREHOLDERS OF THE FUND MONEY. These expenses should not be borne
by the shareholders to benefit the management of the Fund.
It is the belief of KIM that the shareholders are entitled to some type
of compensation for the sale of the Fund's assets from "Mentor" to " U.S. Bank".
This name change is only coming about because the Fund is being sold. In the
opinion of KIM the buyer and the seller both will benefit and the shareholder is
left with the bill in their hand.
Should KIM become the new investment advisor for the Fund, KIM will
strive to close the discount and help shareholders realize the true value of
their investment.
VOTE TO REJECT THIS CHANGE AND SEND A CLEAR MESSAGE TO THE FUND THAT
SHAREHOLDERS SHOULD RECEIVE AN ECONOMIC BENEFIT WITH THE SALE OF THE FUND.
Proposal 5
To reject an amendment to Article II of the Fund's restated and amended
Articles of Incorporation deleting Section 2 thereof, which currently restricts
certain transfer of Fund shares.
The Fund's Directors and Management believes that it is necessary to
delete section 2 of Article II in the Fund's Articles of Incorporation. The
section refers to certain restrictions on the transfer of shares of the Fund to
"Disqualified Organizations". These restrictions were originally designed to
avoid tax liabilities that may be imposed on the Fund when certain shareholders
invest in the Fund. The Fund's prospectus states that it may invest in interests
issued by real estate mortgage investment conduits ("REMICs") When the Fund
began, certain aspects of the tax treatment of investment in REMIC's were not
completely clear. Specifically, certain tax rules applied to certain
shareholders who owned stock in regulated investment companies, such as the
Fund, that acquired residual interests in REMICs. These certain shareholders
("Disqualified Organizations") were not allowed, without serious tax
repercussions, to own shares of a fund that held residual interests of REMIC's.
Furthermore, if a Disqualified Organization owned shares of the Fund, an annual
tax could be imposed on the Fund equal to that portion of the "excess inclusion
income" of the Fund for the taxable year that is allocable to the
<PAGE>
Disqualified Organization, multiplied by the highest tax rate applicable to
corporations. Since this tax would be detrimental to the other shareholders of
the Fund, Article II, Section 2 was inserted into the Articles of Incorporation.
This provision provided a method for the removal of certain shareholders found
to be Disqualifies Organizations.
This proposal may result in added legal costs that may have to be paid
by us, the shareholders!
KIM believes that shareholders should not support the proposal as a
means of expressing to the Fund that it is not satisfied with the performance of
the Fund along with the fact that the shareholders are NOT RECEIVING AN ECONOMIC
BENEFIT FROM THE SALE OF THE FUND'S ASSETS. It is the opinion of KIM that all
parties of the transaction are benefiting however, the shareholders are getting
nothing in return.
VOTE TO REJECT THIS CHANGE AND SEND A CLEAR MESSAGE TO THE FUND THAT
SHAREHOLDERS SHOULD RECEIVE AN ECONOMIC BENEFIT WITH THE SALE OF THE FUND.
Proposal 6
To reject the selection of KPMG LLP as independent accountants of the
Fund for the fiscal year ended October 31, 2000.
KIM believes that the shareholders of the Fund should reject the Fund's
auditor in protest of the sale of the Fund and assets of the Fund without
economic benefit being received by the shareholders.
VOTE TO REJECT THIS CHANGE AND SEND A CLEAR MESSAGE TO THE FUND THAT
SHAREHOLDERS SHOULD RECEIVE AN ECONOMIC BENEFIT WITH THE SALE OF THE FUND.
VOTE "FOR" KIM'S PROPOSAL TO BECOME THE NEW INVESTMENT ADVISOR FOR THE FUND.
VOTE TO "REMOVE" MENTOR AS THE INVESTMENT ADVISOR OF THE FUND
VOTE "FOR" KIM'S SLATE OF DIRECTORS.
"REJECT" ALL OF MANAGEMENTS PROPOSALS !!!
VOTE AGAINST
------------
AN AMENDMENT TO ARTICLE I OF THE FUND'S
RESTATED AND AMENDED ARTICLES OF INC.
<PAGE>
MENTOR INCOME FUND, INC.
PROXY OF KARPUS MANAGEMENT, INC. d/b/a KARPUS INVESTMENT
MANAGEMENT, INC. ("KIM")
FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
SEPTEMBER 27, 2000.
The undersigned, revoking all Proxies heretofore given, hereby appoints George
W. Karpus, and Sherry Flax or any of them as Proxies of the undersigned, with
full power of substitution, to vote on behalf of the undersigned all shares of
Mentor Income Fund, Inc. (the "Fund") that the undersigned is entitled to vote
at the special meeting of shareholders of the Fund to be held at 10:00 a.m. on
September 27, 2000 at the offices of the Evergreen Funds, 200 Berkeley Street,
26th floor, Boston, Massachusetts 02116 and at any adjournments thereof, as
fully as the undersigned would be entitled to vote if personally present.
[ ] FOR [ ] AGAINST [ ]ABSTAIN A New Investment Advisory agreement between the
Fund and Karpus Management, Inc. d/b/a Karpus Investment Management (KIM).
[ ] FOR [ ] AGAINST [ ]ABSTAIN To remove Mentor as the Investment Advisor of the
Fund.
[ ] FOR [ ] AGAINST [ ]ABSTAIN Karpus Proposal to reject the Fund's name change.
[ ] FOR [ ] AGAINST [ ]ABSTAIN Karpus Proposal to reject amendment to Article II
[ ] FOR [ ] AGAINST [ ]ABSTAIN The selection KPMG as independent accountant for
the fiscal year ending 10/31/00.
[ ] FOR [ ] AGAINST [ ]ABSTAIN To give KIM the authority to transact such other
business as may properly come before the meeting or any adjournments thereof.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME (S) APPEAR ON THIS PROXY. If
joint owners, EITHER may sign this Proxy. When signing as attorney, executor,
administrator, trustee, guardian, or custodian of a minor or as partner for a
partnership, please give the full corporate or partnership name and your title.
Date 2000
---------------------
---------------------
Signature
VOTE FOR KARPUS PROPOSALS
<PAGE>
AN AMENDMENT TO ARTICLE II OF THE FUND'S
RESTATED AND AMENDED ARTICLES OF INC.
THE SELECTION OF KPMG AS INDEPENDENT
ACCOUNTANTS OF THE FUND (fiscal yr. ending 10/31/00
VOTE "FOR" GIVING KIM THE AUTHORITY TO VOTE IN ANY OTHER MATTERS THAT MAY COME
BEFORE THE MEETING.
The following general rules for signing proxy cards may be of assistance to you
and will help insure that your vote is counted.
INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears in the
Registration on the proxy card.
JOINT ACCOUNTS: Either party may sign, but the name of the
party signing should conform exactly to a name shown in the Registration on
the proxy card.
ALL OTHER ACCOUNTS: The capacity of the individual signing the
proxy card should be indicated unless it is reflected in the form of
Registration. For example:
Corporation Name
John Smith, (Corporate Title)
Trust Account Name Custodial or Estate Account Name
John Smith, Trustee John Smith, Title (Custodian or Executor)
