<PAGE>
PROXY OF KARPUS MANAGEMENT, INC.
d/b/a KARPUS INVESTMENT MANAGEMENT
14 A Tobey Village Office Park
Pittsford, New York 14534
(716) 586-4680
FOR THE SPECIAL MEETING OF SHAREHOLDERS OF
MENTOR INCOME FUND, INC.
Dear Fellow Shareholders,
You are receiving this proxy statement because the Board of Directors
of the Mentor Income Fund, Inc. ("the Fund") has called for a Special Meeting of
shareholders to be held at 200 Berkeley Street, Boston, Massachusetts 02116 on
September 27, 2000 at 10:00 a.m., Eastern Time (the "Meeting").
You, as a fellow shareholder, are being presented the opportunity by
Karpus Management, Inc. d/b/a Karpus Investment Management, ("KIM") to make
important choices regarding the Fund which KIM believes will potentially provide
greater economic benefits to "us" the shareholders of the Fund.
As of July 28, 2000 (the record date of the Meeting), Karpus Management
Inc. d/b/a Karpus Investment Management ("KIM") beneficially owns 547,847 shares
of the common stock of the Fund or 4.64% of the outstanding shares of common
stock of the Fund. According to the proxy materials sent to you by the Fund, it
appears that there is no ownership of Fund shares by the current or proposed
Directors, Officers or Management of the Fund.
WHY IS KIM SOLICITING A PROXY TO VOTE YOUR SHARES?
o MENTOR INVESTMENT ADVISORS, LLC ("MENTOR") IS PROPOSING TO SELL THE
MANAGEMENT CONTRACT OF THE FUND AND CERTAIN MENTOR ASSETS TO U.S. BANK NATIONAL
ASSOCIATION ("U.S. BANK") FOR AN UNDISCLOSED AMOUNT.
o IF THIS PROPOSED TRANSACTION WERE TO OCCUR, MENTOR WOULD REALIZE AN
ECONOMIC BENEFIT BY RECEIVING THE PROCEEDS OF THE SALE OF THE MANAGEMENT
CONTRACT, WHILE U.S. BANK WOULD REALIZE AN ECONOMIC BENEFIT BY RECEIVING
ADDITIONAL COMPENSATION AS THE INVESTMENT ADVISOR TO THE FUND.
o THE SHAREHOLDERS, WHOSE SHARES ARE TRADING AT -11.41% DISCOUNT TO NET
ASSET VALUE (as of 8/24/00), HOWEVER, ARE BEING ASKED TO PAY FOR MUCH OF THE
COSTS OF THIS TRANSACTION INCLUDING:
- Some of the costs of the Meeting;
- The cost of changing the name of the Fund;
- The cost of changing the state of incorporation of
the Fund; and
- The cost of changes to the Articles of Incorporation
of the Fund.
<PAGE>
We are soliciting your proxy so we can install a management team and
Board of Directors that will work toward enhancing shareholder value through
some or all of the following:
- Tender Offers;
- Open-Ending the Fund;
- Share Buy Back Programs;
- Possibly Reduced Management Fees; and
- Improved Performance.
Additionally, we are asking our fellow shareholders to reject the costs
associated with the Meeting that has been called for the benefit of Mentor and
U.S. Bank. This is a direct cost to us, the shareholders, without a meaningful
benefit.
YOUR VOTE IS IMPORTANT. PLEASE REVIEW THE ENCLOSED PROXY MATERIAL AND RETURN
YOUR PROXY CARD AS SOON AS POSSIBLE. KIM URGES SHAREHOLDERS TO SUPPORT ITS
EFFORTS TO RECOGNIZE THE NET ASSET VALUE OF OUR INVESTMENT BY SUPPORTING KIM'S
PROPOSALS.
PLEASE REMEMBER: THE LAST PROXY WHICH YOU VALIDLY EXECUTE AND DELIVER IS THE
ONLY ONE THAT COUNTS. IF YOU HAVE EXECUTED MANAGEMENTS PROXY YOU MAY
NEVERTHELESS REVOKE THAT PROXY BY FILLING OUT OUR PROXY AND DATING IT WITH A
LATER DATE.
Sincerely,
/s/ George W. Karpus
-------------------------------------------
George W. Karpus
President and C.E.O.
-2-
<PAGE>
In connection with the Meeting, KIM, is soliciting your proxy for the
following purposes:
1. To vote FOR a new investment advisory agreement between the Fund and
KIM;
2. To vote FOR the election of a slate of directors nominated by KIM, to
hold office until their successors are duly elected and qualified as
such;
3. To vote AGAINST the proposal to amend Article I of the Fund's Restated
and Amended Articles of Incorporation to change the name of the Fund to
"American Income Fund, Inc."
4. To vote AGAINST the proposal to amend Article II of the Fund's Restated
and Amended Articles of Incorporation to delete Section 2 thereof which
currently restricts certain transfers of Fund shares.
5. To vote AGAINST the selection of KPMG LLP as independent accountants of
the Fund for the fiscal year ended October 31, 2000.
6. To grant KIM the AUTHORITY to consider and vote upon such other matters
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 the shareholders of the Fund entitled
to notice of and to vote at the Meeting and any adjournments thereof.
-3-
<PAGE>
PROXY STATEMENT OF
KARPUS MANAGEMENT, INC.
d/b/a KARPUS INVESTMENT MANAGEMENT
FOR THE SPECIAL MEETING OF SHAREHOLDERS OF THE MENTOR INCOME FUND, INC.
TO BE HELD ON SEPTEMBER 27, 2000.
The accompanying Proxy is solicited by Karpus Management, Inc. d/b/a
Karpus Investment Management ("KIM") to be used at a Special Meeting of the
shareholders of the Mentor Income Fund, Inc. ("the Fund"), which is scheduled to
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").
It is estimated that definitive proxy material will be mailed to
shareholders of record on or about September 6, 2000.
The Fund has called the Meeting of the shareholders of the Fund to
consider and act upon the following proposals:
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.
By way of this proxy solicitation, KIM is hereby notifying its fellow
shareholders that KIM will present additional proposals at the Meeting.
Specifically, KIM will make the following proposals:
o To approve or disapprove a new investment advisory agreement between
the Fund and KIM.
o To elect members of the Fund's Board of Directors to hold office until
their successors are duly elected and qualified.
-4-
<PAGE>
KIM wishes to enlist the support of its fellow shareholders to stop the
management of the Fund from transferring its investment advisory agreement to a
new Investment Advisor without giving any benefits to the shareholders of the
Fund.
If KIM is selected as the new investment advisor to the Fund, it will
recommend that the Board of Directors of the Fund immediately consider acts such
as the following to closed the current discount to net asset value:
o AN AGGRESSIVE SHARE BUY BACK PROGRAM IN THE OPEN
MARKET THAT WILL CAUSE FUND SHARES TO TRADE CLOSER TO
THEIR NET ASSET VALUE
o SHARE REPURCHASE (TENDER) OFFER
o CONVERSION OF THE FUND TO AN OPEN-ENDED FORMAT
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. 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 the principal executive offices of the Fund: 200 Berkeley Street,
21st floor, Boston, Massachusetts 02116-5034, or by calling the Fund at
877-504-5025.
KIM has retained Garland Associates, Inc. (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. 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. Should any of KIM's Proposals to the
shareholders receive more votes than the Fund's proposals, KIM will seek
reimbursement from the Fund for the costs associated with preparing and
soliciting proxies.
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. Shareholders are entitled to one vote for each Fund share held and
fractional votes for each fractional Fund share held. Shareholders 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 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.
-5-
<PAGE>
If no instruction are given on KIM's blue proxy card such shares will
be voted: (1) FOR the approval of a new investment advisory agreement between
the Fund and KIM; (2) FOR the election of a slate of directors nominated by KIM,
to hold office until their successors are duly elected and qualified; (3)
AGAINST the proposal to amend Article I of the Fund's Restated and Amended
Articles of Incorporation to change the name of the Fund to "American Income
Fund, Inc."; (4) AGAINST the proposal to amend Article II of the Fund's Restated
and Amended Articles of Incorporation to delete Section 2 thereof which
currently restricts certain transfers of Fund shares; (5) AGAINST the
ratification of the selection of KPMG LLP as independent accountants of the Fund
for the fiscal year ended October 31, 2000; and (6) at the discretion of KIM on
all other business as may properly come before the Meeting or any adjournments
thereof.
As of the Record Date, July 28, 2000, the Fund has 11,817,776 shares of
common stock issued and outstanding. As of July 31, 2000: KIM's clients hold
544,247 shares of common stock of the Fund (representing approximately 4.61% of
the outstanding shares of the Fund); Karpus Investment Management Profit Sharing
owns 100 shares of the common stock of the Fund; Sophie Karpus (a Principal of
KIM) owns 800 shares of common stock of the Fund; and Kathy Popham Karpus (wife
of George W. Karpus) as Custodian of UGMA Karin Popham owns 175 shares.
The principal office of KIM is located at 14A Tobey Village Office
Park, Pittsford NY 14534 and any correspondence to KIM should be directed to
this address. If you have any questions and wish to speak with a representative
of KIM call 1-877-550-6928 (toll free call).
After reviewing the proxy statement, PLEASE SIGN AND RETURN THE BLUE
CARD IN THE ENCLOSED ENVELOPE. If you have any questions please contact our
proxy solicitor:
GARLAND ASSOCIATES
P.O. Box 3355
Grand Central Station
New York, New York 10163
Phone: (212) 866-0095
Facsimile: (212) 866-1599
-6-
<PAGE>
YOUR VOTE IS CRITICAL
KIM STRONGLY RECOMMENDS THAT YOU:
o vote FOR the approval of a new investment advisory agreement
between the Fund and KIM;
o vote FOR the election of a slate of directors nominated by KIM, to
hold office until their successors are duly elected and qualified;
o vote AGAINST the proposal to amend Article I of the Fund's
Restated and Amended Articles of Incorporation to change the name
of the Fund to "American Income Fund, Inc.";
o vote AGAINST the proposal to amend Article II of the Fund's
Restated and Amended Articles of Incorporation to delete Section 2
thereof which currently restricts certain transfers of Fund
shares;
o vote AGAINST the selection of KPMG LLP as independent accountants
of the Fund for the fiscal year ended October 31, 2000; and
o grant KIM the AUTHORITY to consider and vote upon such other
matters as may properly come before the Meeting or any
adjournments thereof.
Introduction
On July 7, 2000, U.S. Bank National Association ("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 present investment advisor
of the Mentor Income Fund, Inc. ("the Fund") 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 the 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 of Directors to be reconstituted and approving
the New Advisory Agreement. KIM believes that:
SHAREHOLDERS OF THE FUND SHOULD SHARE THE ECONOMIC BENEFITS OF SUCH AN
ACQUISITION.
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%. A low discount was reached on December 30, 1999 at -22.3%
while a high of +0.72% was reached on March 12, 1998. As of August 3, 2000, the
closing market price of the Fund was $7.813 while 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.
In the opinion of KIM, if the Fund were liquidated or made
-7-
<PAGE>
open-ended, the shareholders would realize a price of close to net asset value
(some transaction charges may be applied).
A new investment advisory agreement requires shareholder approval.
Accordingly, this is your chance 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, in order to retain a new investment manager the
shareholders will need to approve a new investment advisory agreement.
KIM believes that it is a suitable candidate to manage the Fund in
acting as an investment advisor to the Fund. KIM has a history of successful
investing in closed-end mutual funds for its private accounts, 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.
Security Ownership Of Participants And Associates Of Participants
<TABLE>
<CAPTION>
Amount and Nature of Amount and Nature of
Beneficial Owner Beneficial Ownership Record Ownership
---------------- -------------------- --------------------
<S> <C> <C>
Andrew Dakos - -
Phillip Goldstein 100 -
Glenn Goodstein - -
Gerald Hellerman - -
Thomas J. Herzfeld 6,100 -
Kenneth P. Liesegang - -
Brad Orvieto - -
Kenneth Saks -
Sophie Karpus (Director "KIM") 800 -
Kathy Popham Karpus as Cust. UGMA
Karin Popham 175 -
Karpus Management Inc. d/b/a Karpus Investment 100 -
Management ("KIM") Profit Sharing Plan B
Karpus Management Inc. d/b/a Karpus Investment 544,247 -
Management
</TABLE>
Other Participant and Associate Information
-8-
<PAGE>
The KIM nominees to stand for election to the Board of Directors are
truly independent. None of these nominees are employees or officers of KIM.
Moreover, the relationship between the nominees of KIM and KIM are professional
in nature. In one case a minor portion of the nominees income is derived from
KIM. Specifically, Mr. Orvieto has business relationships with KIM in which KIM
manages certain personal and referred accounts of Mr. Orvietto.
A schedule of all securities of the Fund purchased and sold by the
Participants ( KIM and KIM nominees) can be found in appendix 1 of this proxy
statement.
EXPLANATION OF KIM'S PROPOSALS
PROPOSAL 1
-------------------------------------------------------------------------------
KIM is proposing that the shareholders vote to approve a new investment
advisory agreement between the Mentor Income Fund, Inc. and Karpus
Management, Inc., d/b/a Karpus Investment Management.
Summary
KIM is enlisting the support of its fellow shareholders to establish a
new investment advisory agreement between itself and the Fund. KIM is committed
to enhancing the value of the Fund's shares. KIM would recommend to the Board of
Directors any or all of the following: an aggressive share buy back program in
the open market; a share repurchase offer; 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. For example,
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 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 March 12, 1998 at +0.72% while
the low was on December 30, 1999 at -22.3%.
The shareholders of the Fund have suffered because of this dismal
performance and deserve to be compensated in the sale of Mentor's assets to U.S.
Bank. KIM believes that it is patently unfair that:
o Mentor will benefit from the sale of its assets;
o U.S. Bank will benefit from the receipt of investment advisory
fees;
o The shareholders, however will not receive any compensation in
terms of this transaction, and it is unknown whether the
shareholders will receive any benefit whatsoever from the
change in investment advisor;
o The shareholders are being asked to pay costs that will
provide primary benefits to Mentor and U.S. Bank.
KIM has gained national recognition in being ranked "A Worlds Best
Money Manager" according to Nelson Information's latest published information.
In particular, for U.S.
-9-
<PAGE>
Intermediate Duration Fixed Income, Nelson Information ranked KIM 8th
out of 94 managers for 40 quarters ending 3/31/00 (the latest publication of
ranking by Nelson Information). For the 20 quarters ending 3/31/00, Nelson
Information ranked KIM 3rd out of 148 managers and for the 12 quarters ending
3/31/00, Nelson Information ranked KIM 8th out of 165 managers.
There are no material differences between the present investment
advisory agreement and the investment advisor agreement proposed between KIM and
the Fund. KIM will charge the same investment management fee rate as currently
charged by Mentor. KIM will, however, base its fees on the lesser of the net
asset value or market value. There is no financial condition of KIM that is
reasonably likely to impair the financial ability of KIM to fulfill its
commitment to the Fund under the proposed investment advisory agreement.
Who Is Karpus Management, Inc. ("KIM")?
In 1986, George W. Karpus established KIM as an SEC-registered
independent investment management firm to specialize in generating superior
returns from conservative, low risk investment portfolios for individuals,
corporations, endowments/foundations, retirement plans, not-for-profit
organizations and labor unions.
The general philosophy of KIM is the understanding of the needs and
goals of each client to develop an investment strategy that will lead to
successful results. The highly experienced professional staff integrates the
objectives of each client with the conservative approach to value-added results.
Specifically, KIM looks for inefficient or "under valued" areas in the market to
produce additional return. The mission of KIM is to achieve investment results
in the top quartile of professionally managed monies over a three to five-year
period based on the risk and return objectives.
As of July 31, 2000, KIM has approximately $450,000,000 under
management for various clients. KIM does not currently manage any closed-end or
open-end mutual funds.
KIM is a privately held corporation located at 14 A Tobey Village
Office Park, Pittsford, N.Y. 14534 (Pittsford is a suburb of Rochester, New
York).
Principal Executive Officer and Directors of KIM
The following table lists the name, address and principal occupation of
the executive officers and each director of KIM.
<TABLE>
<CAPTION>
---------------------------------- ----------------------------------------- ------------------------------------------
Name Principal Occupation Business Address
---------------------------------- ----------------------------------------- ------------------------------------------
<S> <C> <C>
George W. Karpus Director, President and Chief Executive 14A Tobey Village Office Park, Pittsford
Officer of KIM NY 14534
---------------------------------- ----------------------------------------- ------------------------------------------
JoAnn Van Degriff Director and Senior Vice President of 14A Tobey Village Office Park, Pittsford
KIM NY 14534
---------------------------------- ----------------------------------------- ------------------------------------------
Sophie P. Karpus Director of KIM 14A Tobey Village Office Park, Pittsford
NY 14534
---------------------------------- ----------------------------------------- ------------------------------------------
Scott D. Nasca Corporate Vice President of KIM 14A Tobey Village Office Park, Pittsford
NY 14534
---------------------------------- ----------------------------------------- ------------------------------------------
Dana R. Consler Vice President of KIM 14A Tobey Village Office Park, Pittsford
NY 14534
---------------------------------- ----------------------------------------- ------------------------------------------
Kathy F. Crane Chief Financial Officer of KIM 14A Tobey Village Office Park, Pittsford
NY 14534
---------------------------------- ----------------------------------------- ------------------------------------------
</TABLE>
-10-
<PAGE>
Ownership of KIM Voting Securities.
The following persons own ten percent or more of the voting securities
of KIM: (1) George W. Karpus, President / Chief Executive Officer, 14A Tobey
Village Office Park, Pittsford NY 14534; and (2) JoAnn Degriff, Senior Vice
President, 14A Tobey Village Office Park, Pittsford NY 14534.
Required Vote and Recommendation of KIM
The 1940 Act provides that approval of a new Advisory Agreement
requires the affirmative vote of "a majority of the outstanding voting
securities" of the Fund which, for this purpose, means the affirmative vote of
the lesser of: (i) more than 50% of the outstanding shares of the Fund; or (ii)
67% or more of the shares of the Fund present at the Meeting if more than 50% of
the outstanding shares are present at the Meeting in person or by proxy. KIM
recommends that you:
VOTE TO ELECT KIM THE NEW INVESTMENT ADVISOR OF THE FUND.
KIM has vowed to work for the financial betterment of the Fund's shareholders
PROPOSAL 2
-------------------------------------------------------------------------------
To elect certain persons to the Board of Directors of the Fund to hold
office until their successors are duly elected and qualified.
Summary
The slate of directors nominated by KIM are not the typical house
directors as normally found in families of funds. In many instances, the Boards
of Directors of fund families may be comprised of the same individuals.
Consequently, a large percentage of each director's income may be derived from
serving on such Boards of Directors.
KIM has endeavored to present to the shareholders a Board of Directors
that will work tirelessly for the shareholders. Some of these nominees are
recognized authorities in the closed-end fund industry; none of these nominees
are employees of KIM.
At the Meeting, shareholders of the Fund will vote for the election of
persons to serve as members of the Board of Directors of the Fund, each to hold
office until his/her successor is elected and qualifies or until his/her death,
retirement, resignation or removal from office. The Fund's Restated and Amended
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, an event not now anticipated, the proxies will be voted for such other
person or persons, if any, as shall be designated by KIM.
The following sets forth certain information concerning the persons
nominated for election as Directors by KIM.
-11-
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------- -------- ---------------------------------------------------------------
Name Age Principal Occupation During
Business Address the Last Five Years
--------------------------------------------- -------- ---------------------------------------------------------------
<S> <C> <C>
CLASS I NOMINEES TO SERVE UNTIL 2001 ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------------------------------------------------------------------------------------
Andrew Dakos 34 Private Investor, Vice-President Sales UVitec Printing Inc.
14 Mill Street (commercial printing) since 1997, Sales Manager from
Lodi, New Jersey 07644 1992-1997.
--------------------------------------------- -------- ---------------------------------------------------------------
Kenneth Saks 57 President Harsax, Inc. (building developer) 1965-2000.
6908 Engle Rd. Suite D
Middleburg Heights, Ohio 44130
--------------------------------------------- -------- ---------------------------------------------------------------
Gerald Hellerman 62 Managing Director of Hellerman Assoc. Financial Consulting
10965 Eight Bells Lane Firm, Trustee of 3rd Avenue Trust since 1993, Director of
Columbia, Maryland 21044 Clemente Strategic Value Fund 1998-2000.
--------------------------------------------- -------- ---------------------------------------------------------------
<CAPTION>
CLASS II NOMINEES TO SERVE UNTIL 2002 ANNUAL MEETING OF SHAREHOLDERS
--------------------------------------------- -------- ---------------------------------------------------------------
<S> <C> <C>
Glenn Goodstein 37 Self-employed. Since 1992 has managed investments for a
16830 Adlon Rd. limited number of clients. 1988-1996 held several executive
Encino, California 91436 positions with ADP.
--------------------------------------------- -------- ---------------------------------------------------------------
Brad Orvietto 43 Certified Financial Planner with Strategic Asset Value
2 South University Dr. Suite 222 Management from 1996 to 2000. Previously founder and
Plantation, Florida 33324 principal of Horizon Financial Group.
--------------------------------------------- -------- ---------------------------------------------------------------
Kenneth P. Liesegang 47 Founder and President of RSVP Business Systems, Inc., a
349 W. Commercial St. Rochester, NY based computer consulting firm founded in 1986.
E. Rochester, New York 14445
--------------------------------------------- -------- ---------------------------------------------------------------
<CAPTION>
CLASS III NOMINEES TO SERVE UNTIL 2003 ANNUAL MEETING OF SHAREHOLDERS
--------------------------------------------- -------- ---------------------------------------------------------------
<S> <C> <C>
Thomas J. Herzfeld 55 Principal Occupation for the past five years: Chairman and
The Herzfeld Building President of Thomas J. Herzfeld & Co. and Thomas J. Herzfeld
P.O. Box 161465 Advisors, Inc. and President and Chairman of the Herzfeld
Miami, Florida 33116 Caribbean Basin Fund, Inc.
--------------------------------------------- -------- ---------------------------------------------------------------
Phillip Goldstein 55 From 1992 to present managed investments for limited number
60 Heritage Drive of clients, Portfolio Manager and Pres. of the general
Pleasantville, NY 10570 partner of Opportunities Partners, (private investment
partnership). From 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>
Section 16(a) Beneficial Ownership Reporting Compliance
None of the foregoing nominees of KIM were subject to Section 16 of the
Securities Exchange Act of 1934, as amended, with respect to the securities of
the Fund.
Required Vote and Recommendation of KIM
The members of the Board of Directors of the Fund will be elected by a
plurality of the votes cast by shareholders present, in person or by proxy, and
entitled to vote for the election of directors as the Meeting. KIM recommends
that you:
VOTE FOR THE KIM SLATE OF DIRECTORS
-12-
<PAGE>
KIM has vowed to work for the financial betterment of the Fund's shareholders.
PROPOSAL 3
-------------------------------------------------------------------------------
Management has proposed that the shareholders vote to amend Article I
of the Fund's restated and amended Articles of Incorporation to change
the name of the Fund to "American Income Fund, Inc."
Join with KIM and REJECT this proposal.
Summary
Why change the name of the Fund AGAIN after the name was changed in
1993 from the "RAC Income Shares" to the "Mentor Income Fund"? Each time the
Fund's 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."
The impetus for the name change is that the Fund is being sold. This is just one
more expense being borne by the shareholders. In the opinion of KIM the buyer
and the seller both will benefit while the shareholder will be left with the
bill.
If the shareholders determine to engage KIM as the new investment
advisor for the Fund, KIM will strive to close the discount and help
shareholders realize the true value of their investment.
Required Vote and Recommendation of KIM
Approval of this proposal requires the affirmative vote of a majority
of the Fund's shares outstanding and entitled to vote at the Meeting. KIM
recommends that you:
Vote to Reject Management's Proposal
Send a Clear Message to the Fund that Shareholders Should
Receive an Economic Benefit with the Sale of the Fund
PROPOSAL 4
-------------------------------------------------------------------------------
Management has proposed that the shareholders vote to amend Article II
of the Fund's restated and amended Articles of Incorporation deleting
Section 2 thereof, which currently restricts certain transfer of Fund
shares.
Join with KIM and REJECT this proposal.
Summary
The Fund's Board of Directors and Management believe that it is
necessary to delete Section 2 of Article II in the Fund's Articles of
Incorporation. This 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
-13-
<PAGE>
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 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.
Required Vote and Recommendation of KIM
Approval of this proposal requires the affirmative vote of a majority
of the Fund's shares outstanding and entitled to vote at the Meeting. KIM
recommends that you:
Vote to Reject Management's Proposal
Send a Clear Message to the Fund that Shareholders Should
Receive an Economic Benefit with the Sale of the Fund
PROPOSAL 5
-------------------------------------------------------------------------------
Management has proposed that the shareholders vote to ratify the
selection of KPMG LLP as independent accountants of the Fund for the
fiscal year ended October 31, 2000.
Join with KIM and REJECT this proposal.
Summary
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.
Required Vote and Recommendation Of KIM
Approval of this proposal requires the affirmative vote of a majority
of the Fund's shares outstanding and entitled to vote at the Meeting. KIM
recommends that you:
Vote to Reject Management's Proposal
-14-
<PAGE>
Send a Clear Message to the Fund that Shareholders Should
Receive an Economic Benefit with the Sale of the Fund
REMEMBER
YOUR VOTE COUNTS!
Please Join KIM and:
o vote FOR the approval of a new investment advisory agreement between
the Fund and KIM;
o vote FOR the election of the slate of directors nominated by KIM, to
hold office until their successors are duly elected and qualified;
o vote AGAINST the proposal to amend Article I of the Fund's Restated and
Amended Articles of Incorporation to change the name of the Fund to
"American Income Fund, Inc.";
o vote AGAINST the proposal to amend Article II of the Fund's Restated
and Amended Articles of Incorporation to delete Section 2 thereof which
currently restricts certain transfers of Fund shares;
o vote AGAINST the selection of KPMG LLP as independent accountants of
the Fund for the fiscal year ended October 31, 2000; and
o grant KIM the AUTHORITY to vote on any other matters that may come
before the meeting and any adjournments thereof.
Karpus Management, Inc.
d/b/a Karpus Investment Management
Pittsford, New York
September 6, 2000
-15-
<PAGE>
APPENDIX 1
Schedule of all securities of the Fund purchased and sold by the Participants
(KIM and KIM nominees). (Defination of terms: b=buy, s=sell, to=transfer out,
ti= transfer in, lo= ledger out, li= ledger in)
DATE SHARES DATE SHARES DATE SHARES
B 8/6/98 10,000 B 11/24/98 400 S 4/7/99 200
B 8/14/98 10,000 B 11/24/98 500 TO 4/23/99 4000
B 8/14/98 1,500 B 11/24/98 100 TO 5/6/99 5000
B 8/18/98 7,500 B 11/24/98 200 TO 5/6/99 5000
B 8/18/98 5,000 B 11/24/98 500 TO 5/6/99 500
B 8/18/98 3,000 B 11/24/98 1,000 TI 5/6/99 5000
B 8/26/98 1,250 B 11/24/98 1,000 TI 5/6/99 5000
B 8/26/98 1,250 B 11/24/98 1,000 TI 5/6/99 500
B 9/21/98 3,000 B 11/24/98 900 B 5/11/99 4000
B 9/25/98 1,250 B 11/24/98 15,000 TO 5/13/99 500
B 10/20/98 800 B 11/24/98 600 B 5/18/99 2000
B 10/21/98 200 B 11/24/98 400 B 5/20/99 2600
B 10/26/98 1,000 B 11/24/98 200 B 5/20/99 1575
B 10/27/98 2,000 B 11/24/98 500 B 5/20/99 1700
B 10/28/98 4,000 B 11/24/98 500 B 5/20/99 1400
B 10/28/98 4,000 B 11/25/98 1,250 B 5/20/99 800
B 10/28/98 2,500 B 11/27/98 1,500 B 5/28/99 525
B 10/28/98 750 B 12/8/98 200 B 6/14/99 1600
B 10/28/98 5,000 B 12/8/98 200 S 6/14/99 2600
B 10/28/98 3,500 B 12/9/98 1,000 S 6/15/99 400
B 10/29/98 1,800 B 12/14/98 2,000 B 6/23/99 2800
B 10/30/98 100 B 12/14/98 4,000 B 6/24/99 200
B 10/30/98 4,900 TO 12/22/98 1,000 B 6/24/99 600
B 10/30/98 2,200 B 12/22/98 4,000 B 6/24/99 775
B 10/30/98 2,000 TI 12/22/98 1,000 B 6/25/99 1350
B 11/2/98 2,000 TO 12/24/98 10,000 B 6/25/99 5000
B 11/5/98 1,500 TO 12/24/98 10,000 B 6/25/99 1550
B 11/6/98 1,500 TO 12/24/98 1,200 B 6/29/99 1500
B 11/16/98 2,000 B 12/30/98 4,000 S 6/30/99 2000
B 11/16/98 2,000 B 12/30/98 3,000 S 6/30/99 3200
B 11/23/98 8,000 B 12/30/98 3,000 B 7/9/99 6000
B 11/23/98 242 B 12/30/98 1,000 B 7/22/99 1000
B 11/23/98 1,800 B 12/31/98 4,000 B 8/2/99 450
B 11/23/98 200 B 8/10/99 2000
B 11/23/98 1,200 S 2/11/99 1,250 S 8/10/99 2000
B 11/23/98 4,000 S 2/11/99 250 B 8/11/99 400
B 11/23/98 600 S 3/15/99 200 B 8/12/99 600
B 11/23/98 2,300 S 3/15/99 1,000 B 8/13/99 750
B 11/23/98 1,000 B 3/19/99 4,600 B 8/18/99 750
B 11/23/98 200 B 3/22/99 12,000 B 8/20/99 500
B 11/24/98 600 B 3/22/99 5,000 B 8/20/99 600
B 11/24/98 800 B 3/24/99 13,200 B 8/23/99 900
B 11/24/98 500 B 3/25/99 1,800 B 8/23/99 2500
B 11/24/98 400 B 3/25/99 1,900 B 8/23/99 1600
B 11/24/98 400 B 3/26/99 3,200 B 8/24/99 500
B 11/24/98 300 B 3/29/99 5,500 B 8/26/99 1250
B 11/24/98 700 S 3/30/99 1,500 B 8/26/99 600
B 11/24/98 900 B 3/30/99 200 B 8/27/99 1250
B 11/24/98 500 B 4/5/99 4,200 B 9/1/99 300
B 11/24/98 400 S 4/6/99 400 B 9/1/99 500
B 11/24/98 300 S 4/6/99 400 B 9/2/99 200
B 11/24/98 600 S 4/6/99 300 B 9/2/99 1200
B 11/24/98 1,000 S 4/6/99 200 B 9/2/99 1000
B 11/24/98 3,200 S 4/6/99 600 B 9/13/99 1300
B 11/24/98 200 S 4/6/99 100 S 9/17/99 700
-16-
<PAGE>
B 9/21/99 525 B 10/18/99 50 B 10/22/99 100
S 9/22/99 3,000 B 10/18/99 200 B 10/22/99 75
S 9/22/99 2,000 B 10/18/99 50 B 10/22/99 25
S 9/24/99 2,000 B 10/18/99 200 B 10/25/99 50
S 9/27/99 300 B 10/18/99 350 B 10/25/99 50
S 9/27/99 5,000 B 10/18/99 150 B 10/25/99 50
S 9/27/99 3,500 B 10/18/99 100 B 10/25/99 100
S 9/27/99 1,700 B 10/18/99 100 B 10/25/99 100
S 9/28/99 3,300 B 10/18/99 100 B 10/25/99 100
S 9/28/99 500 B 10/19/99 675 B 10/25/99 50
S 9/28/99 500 B 10/19/99 175 S 10/25/99 800
B 10/6/99 5,200 B 10/19/99 750 B 10/25/99 50
B 10/13/99 1,300 B 10/21/99 50 B 10/25/99 50
B 10/13/99 9,800 B 10/21/99 50 B 10/25/99 800
B 10/13/99 350 B 10/21/99 25 B 10/26/99 100
B 10/13/99 1,250 B 10/21/99 25 B 10/27/99 200
B 10/18/99 50 B 10/21/99 150 B 10/27/99 250
B 10/18/99 100 B 10/21/99 75 B 10/27/99 150
B 10/18/99 50 B 10/21/99 250 B 10/27/99 550
B 10/18/99 100 B 10/21/99 50 B 10/27/99 200
B 10/18/99 50 B 10/21/99 25 B 10/27/99 400
B 10/18/99 50 B 10/21/99 300 B 10/27/99 50
B 10/18/99 50 B 10/21/99 150 B 10/27/99 150
B 10/18/99 150 B 10/21/99 25 B 10/27/99 700
B 10/18/99 100 B 10/21/99 50 B 10/27/99 100
B 10/18/99 100 B 10/21/99 50 B 10/27/99 50
B 10/18/99 150 B 10/21/99 50 B 10/27/99 250
B 10/18/99 300 B 10/21/99 25 B 10/27/99 50
B 10/18/99 50 B 10/21/99 300 B 10/27/99 150
B 10/18/99 50 B 10/21/99 100 B 10/27/99 400
B 10/18/99 200 B 10/21/99 50 B 10/27/99 450
B 10/18/99 450 B 10/21/99 50 B 10/27/99 800
B 10/18/99 50 B 10/21/99 50 B 11/5/99 1000
B 10/18/99 150 B 10/21/99 150 B 11/10/99 550
B 10/18/99 50 B 10/21/99 300 B 11/10/99 2700
B 10/18/99 100 B 10/21/99 200 B 11/12/99 200
B 10/18/99 100 B 10/21/99 100 B 11/18/99 100
B 10/18/99 150 B 10/21/99 100 B 11/18/99 50
B 10/18/99 100 B 10/21/99 50 B 11/18/99 50
B 10/18/99 250 B 10/21/99 150 B 11/18/99 150
B 10/18/99 500 B 10/21/99 50 B 11/18/99 50
B 10/18/99 50 B 10/21/99 250 B 11/18/99 150
B 10/18/99 100 B 10/21/99 75 B 11/18/99 50
B 10/18/99 100 B 10/21/99 75 B 11/18/99 150
B 10/18/99 50 B 10/22/99 2,000 B 11/18/99 50
B 10/18/99 200 B 10/22/99 400 B 11/19/99 250
B 10/18/99 200 B 10/22/99 300 B 11/19/99 150
B 10/18/99 50 B 10/22/99 150 B 11/15/99 100
B 10/18/99 50 B 10/22/99 200 B 11/19/99 450
B 10/18/99 100 B 10/22/99 350 B 11/19/99 50
B 10/18/99 100 B 10/22/99 200 B 11/19/99 150
B 10/18/99 100 B 10/22/99 300 B 11/19/99 450
B 10/18/99 250 B 10/22/99 50 B 11/19/99 100
B 10/18/99 450 B 10/22/99 25 B 11/19/99 50
B 10/18/99 150 B 10/22/99 75 B 11/19/99 50
B 10/18/99 200 B 10/22/99 200 B 11/19/99 150
B 10/18/99 50 B 10/22/99 600 B 11/19/99 500
B 10/18/99 50 B 10/22/99 250 B 11/19/99 50
-17-
<PAGE>
B 11/19/99 50 B 12/13/99 2,500 B 12/28/99 1800
B 11/19/99 50 B 12/13/99 5,100 B 12/28/99 2200
B 11/19/99 100 B 12/13/99 2,000 B 12/28/99 600
B 11/19/99 100 B 12/14/99 1,800 B 12/28/99 1500
B 11/22/99 125 B 12/14/99 4,600 B 12/28/99 1300
B 11/22/99 350 B 12/14/99 7,500 B 12/28/99 1500
B 11/22/99 50 B 12/14/99 1,000 B 12/28/99 1550
B 11/22/99 3,750 B 12/16/99 700 B 12/28/99 825
B 11/22/99 50 B 12/17/99 750 B 12/28/99 900
B 11/22/99 450 B 12/17/99 500 B 12/29/99 600
B 11/22/99 750 S 12/17/99 1,600 B 12/29/99 2400
B 11/22/99 200 S 12/17/99 1,575 B 12/29/99 2000
B 11/22/99 60 S 12/17/99 525 B 12/29/99 2000
B 11/22/99 50 S 12/17/99 1,000 B 12/29/99 700
B 11/22/99 375 B 12/17/99 5,000 B 12/29/99 1450
B 11/22/99 240 B 12/17/99 500 B 12/29/99 10000
B 11/22/99 50 B 12/17/99 850 B 12/29/99 850
B 11/22/99 2,850 B 12/17/99 850 B 12/30/99 4300
B 11/22/99 50 B 12/17/99 850 B 12/30/99 9300
B 11/22/99 375 B 12/17/99 3,000 S 12/30/99 4000
B 11/22/99 50 B 12/17/99 2,000 B 12/31/99 2000
B 11/22/99 200 S 12/20/99 1,000 B 12/31/99 5700
B 11/22/99 350 S 12/22/99 1,000 B 12/31/99 5000
B 11/22/99 50 B 12/22/99 1,100
B 11/22/99 50 B 12/22/99 1,400 B 1/3/00 1700
B 11/22/99 50 B 12/22/99 7,500 TO 1/12/00 545
B 11/22/99 2,100 B 12/23/99 850 TO 1/12/00 545
B 11/22/99 50 B 12/23/99 2,600 TI 1/12/00 545
B 11/22/99 3,900 B 12/23/99 3,700 TI 1/12/00 545
B 11/22/99 75 B 12/23/99 700 B 1/13/00 2700
B 11/24/99 2,150 B 12/23/99 800 B 1/14/00 3600
B 11/24/99 1,000 B 12/23/99 1,700 B 1/14/00 10000
B 11/29/99 6,000 B 12/23/99 900 B 1/14/00 1150
B 11/30/99 300 B 12/23/99 1,400 B 1/18/00 10000
B 11/30/99 5,000 B 12/23/99 600 S 1/19/00 800
B 11/30/99 1,250 B 12/23/99 2,900 S 1/19/00 200
B 12/1/99 1,200 B 12/23/99 2,200 S 1/19/00 600
B 12/2/99 1,800 B 12/27/99 400 S 1/25/00 1500
B 12/6/99 2,000 B 12/27/99 300 B 2/15/00 1400
B 12/7/99 10,000 B 12/27/99 2,000 B 2/22/00 5000
B 12/8/99 15,000 B 12/27/99 1,150 S 2/22/00 4000
B 12/8/99 10,000 B 12/27/99 2,000 S 2/22/00 1000
B 12/8/99 4,400 B 12/27/99 1,800 S 2/25/00 500
B 12/8/99 2,350 B 12/27/99 825 B 2/29/00 5000
B 12/8/99 4,000 B 12/27/99 450 B 3/1/00 22
B 12/8/99 9,150 B 12/27/99 800 S 3/9/00 500
B 12/8/99 4,000 B 12/27/99 350 S 3/9/00 900
B 12/8/99 2,925 B 12/27/99 600 S 3/9/00 850
B 12/9/99 3,300 B 12/27/99 2,000 S 3/13/00 1
B 12/9/99 1,000 B 12/27/99 300 B 3/16/00 5000
B 12/9/99 700 B 12/27/99 1,000 B 3/16/00 5000
B 12/9/99 6,700 B 12/27/99 1,050 S 3/17/00 525
B 12/9/99 5,000 B 12/28/99 250 B 3/20/00 1100
B 12/9/99 3,900 B 12/28/99 300 LO 3/21/00 1800
B 12/10/99 4,900 B 12/28/99 2,650 LO 3/21/00 100
B 12/10/99 1,250 B 12/28/99 2,600 LO 3/21/00 75
B 12/10/99 2,500 B 12/28/99 2,250 LO 3/21/00 200
B 12/10/99 1,100 B 12/28/99 1,700 LO 3/21/00 825
-18-
<PAGE>
B 3/21/00 900 S 6/30/00 1,400 B 7/31/00 300
B 3/22/00 900 S 7/7/00 8,000 B 7/31/00 200
B 3/24/00 400 S 7/7/00 1,400 B 7/31/00 100
B 3/24/00 800 S 7/7/00 1,300 B 7/31/00 100
B 3/24/00 200 S 7/7/00 8,000 B 7/31/00 100
B 3/24/00 300 S 7/7/00 50 B 7/31/00 300
B 3/24/00 275 S 7/7/00 4,000 B 7/31/00 100
B 3/24/00 400 S 7/7/00 1,000 B 7/31/00 400
B 3/27/00 600 S 7/7/00 4,600 B 7/31/00 500
B 3/27/00 300 S 7/7/00 400 B 7/31/00 100
B 3/27/00 400 S 7/7/00 3,000 B 7/31/00 100
B 3/27/00 9,000 S 7/7/00 1,000 B 7/31/00 100
B 3/28/00 850 S 7/7/00 5,000 B 7/31/00 100
B 3/29/00 400 S 7/7/00 1,000 B 7/31/00 100
B 3/29/00 3,000 S 7/17/00 200 B 7/31/00 200
B 4/3/00 5,000 B 7/19/00 10,000 B 7/31/00 200
B 4/4/00 1,000 B 7/20/00 1,000 B 7/31/00 1500
B 4/6/00 3,700 B 7/20/00 200 B 7/31/00 500
B 4/7/00 1,300 B 7/21/00 1,200 B 7/31/00 100
B 4/12/00 450 B 7/21/00 500 B 7/31/00 500
B 4/14/00 550 B 7/21/00 250 B 7/31/00 100
B 4/14/00 800 B 7/21/00 2,800 B 7/31/00 500
B 4/14/00 400 B 7/21/00 250 B 7/31/00 100
B 4/19/00 400 B 7/21/00 100
B 4/19/00 2,900 B 7/26/00 100
B 4/19/00 375 B 7/26/00 100
B 4/19/00 455 B 7/26/00 100
B 4/20/00 200 B 7/26/00 200
B 4/20/00 300 B 7/26/00 100
B 5/1/00 550 B 7/26/00 100
B 5/3/00 600 B 7/26/00 100
B 5/3/00 700 B 7/26/00 100
S 5/10/00 20 B 7/26/00 200
S 5/12/00 1 B 7/26/00 200
S 5/15/00 4,000 B 7/26/00 100
S 5/15/00 250 B 7/26/00 100
S 5/15/00 500 B 7/26/00 100
S 5/15/00 300 B 7/26/00 700
S 5/15/00 100 B 7/26/00 200
S 5/15/00 350 B 7/26/00 200
S 5/15/00 100 B 7/26/00 100
S 5/15/00 4,400 B 7/26/00 200
S 5/26/00 1,500 B 7/27/00 100
S 5/30/00 8,500 B 7/27/00 100
S 5/30/00 10,000 B 7/27/00 100
TI 6/12/00 600 B 7/27/00 100
TO 6/12/00 600 B 7/28/00 100
S 6/12/00 500 B 7/28/00 100
TO 6/15/00 10,000 B 7/31/00 5,000
TI 6/15/00 10,000 B 7/31/00 100
S 6/26/00 350 B 7/31/00 400
S 6/26/00 2,600 B 7/31/00 5,000
S 6/26/00 1,150 B 7/31/00 100
B 6/28/00 5,025 B 7/31/00 100
S 6/28/00 150 B 7/31/00 100
S 6/28/00 75 B 7/31/00 200
S 6/28/00 800 B 7/31/00 100
S 6/28/00 4,000 B 7/31/00 400
-19-
<PAGE>
PROXY MENTOR INCOME FUND, INC. PROXY
This Proxy is Solicited by
Karpus Management, Inc. d/b/a Karpus Investment Management ("KIM")
in Connection with the Special Meeting of Shareholders
September 27, 2000
10:00 A.M. (E.T.)
Place: 200 Berkeley Street
Boston, Massachusetts 02116
REVOCATION/PROXY: The undersigned, revoking all Proxies heretofore given, hereby
appoints George W. Karpus, and Sherry Flax, and each of them jointly and
severally, with full power of substitution, as Proxies of the undersigned, to
vote on behalf of the undersigned all shares of the common stock 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. (E.T.) 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.
INSTRUCTIONS: 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:
<TABLE>
<S> <C> <C>
Corporation Name Trust Account Name Custodial or Estate Account Name
John Smith, (Corporate Title) John Smith, Trustee John Smith, Title (Custodian or Executor)
</TABLE>
RECOMMENDATIONS: KIM Recommends that you:
o vote FOR the approval of a new investment advisory agreement between
the Fund and KIM;
o vote FOR the election of the slate of directors nominated by KIM, to
hold office until their successors are duly elected and qualified;
o vote AGAINST the proposal to amend Article I of the Fund's Restated and
Amended Articles of Incorporation to change the name of the Fund to
"American Income Fund, Inc.";
o vote AGAINST the proposal to amend Article II of the Fund's Restated
and Amended Articles of Incorporation to delete Section 2 thereof which
currently restricts certain transfers of Fund shares;
o vote AGAINST the selection of KPMG LLP as independent accountants of
the Fund for the fiscal year ended October 31, 2000; and
o grant KIM the AUTHORITY to consider and vote upon such other matters as
may properly come before the meeting or any adjournments thereof.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
-20-
<PAGE>
MENTOR INCOME FUND, INC. (the "Fund")
Proxy is Solicited by
Karpus Management, Inc. d/b/a Karpus Investment Management, ("KIM")
For the Special Meeting of Shareholders To Be Held On September 27, 2000.
<TABLE>
<S> <C> <C> <C>
[ ] FOR [ ]ABSTAIN [ ] AGAINST KIM's Proposal for the Fund to enter into a new Investment
Advisory agreement between the Fund and KIM.
[ ] FOR ALL [ ] WITHHOLD KIM's Proposal to elect the following person to the Board of
LISTED TO THE AUTHORITY to Directors of the Fund:
NOMINEES vote for all
RIGHT (except as nominees listed to Andrew Dakos, Phillip Goldstein, Glenn Goodstein, Gerald
marked to the the right Hellerman, Thomas J. Herzfeld, Kenneth P. Liesegang, Brad
contrary at right) Orvietto and Kenneth Saks.
Instruction: To Withhold Authority To Vote For Any Individual
Nominee, Strike A Line Through The Nominee's Name In The List
Above
[ ] FOR [ ]ABSTAIN [ ] AGAINST Management's proposal to amend Article I of the Restated and
Amended Articles of Incorporation of the Fund to change the
name of the Fund.
[ ] FOR [ ]ABSTAIN [ ] AGAINST Management's proposal to amend Article II of the Restated and
Amended Articles of Incorporation of the Fund to delete
Section 2 thereof.
[ ] FOR [ ]ABSTAIN [ ] AGAINST Management's proposal to ratify the selection KPMG LLP as
independent accountant for the fiscal year ending 10/31/00.
[ ] FOR [ ]ABSTAIN [ ] AGAINST Grant of Authority to KIM to consider and vote upon such other
matters as may properly come before the meeting or any
adjournments thereof.
</TABLE>
Please sign exactly as your name(s) appears on this Proxy. If joint
owners, EITHER may sign thsis 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:
------------------------------------------------
Signature:
------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
-21-
