SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ] Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
PREFERRED INCOME FUND INCORPORATED
PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
(Name of Registrant as Specified In Its Charter)
TERESA M. R. HAMLIN
ASSISTANT SECRETARY
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transactions 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 identity 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>
February 24, 1999
Dear Shareholder:
Enclosed is a proxy statement for the Annual Meeting of Preferred
Income Fund to be held on April 30, 1999. In addition to the usual votes for the
Fund's directors and auditors, shareholders are also being asked to approve
"Proposal 3" in the proxy materials, which involves an important amendment to
the Fund's Articles of Incorporation.
The Fund's Board of Directors recommends voting FOR all three items
shown on the enclosed proxy card. Please vote and sign the card now and return
it in the envelope provided. This will spare the Fund the expense of further
mailings.
We believe that the most basic characteristics of investment funds,
such as their investment objectives, should be changed only with widespread
shareholder approval. With that in mind, Proposal 3 would tighten the
shareholder protection measures adopted by the Fund's shareholders at last
year's Annual Meeting.
Preferred Income [Opportunity] Fund is an income fund that is
diversified and does not seek to take control of the companies in which it
invests. As a result of the action taken last year, those characteristics can be
changed only by the vote of a "supermajority" of at least 80% of the Fund's
shares. Approval of Proposal 3 would make sure that this 80% supermajority
protection could not be taken away from the shareholders in the future by any
act of the Fund's directors.
It might seem a little "far out" to imagine that a fund's investment
objective could be changed, even to a goal that might not be suitable for the
needs of a significant number of shareholders. However, it can happen. Such a
proposal has been made concerning the Fund's sister fund, Preferred Income
Management Fund. It is up to the shareholders to determine the rules under which
such changes can be made.
We appreciate your support of the Board's efforts to protect the basic
nature of your investment.
Sincerely yours,
/s/ ROBERT T. FLAHERTY
Robert T. Flaherty
Chairman of the Board
<PAGE>
February 24, 1999
Dear Shareholder:
Enclosed is a proxy statement for the Annual Meeting of Preferred
Income Opportunity Fund to be held on April 30, 1999. In addition to the usual
votes for the Fund's directors and auditors, shareholders are also being asked
to approve "Proposal 3" in the proxy materials, which involves an important
amendment to the Fund's Articles of Incorporation.
The Fund's Board of Directors recommends voting FOR all three items
shown on the enclosed proxy card. Please vote and sign the card now and return
it in the envelope provided. This will spare the Fund the expense of further
mailings.
We believe that the most basic characteristics of investment funds,
such as their investment objectives, should be changed only with widespread
shareholder approval. With that in mind, Proposal 3 would tighten the
shareholder protection measures adopted by the Fund's shareholders at last
year's Annual Meeting.
Preferred Income [Opportunity] Fund is an income fund that is
diversified and does not seek to take control of the companies in which it
invests. As a result of the action taken last year, those characteristics can be
changed only by the vote of a "supermajority" of at least 80% of the Fund's
shares. Approval of Proposal 3 would make sure that this 80% supermajority
protection could not be taken away from the shareholders in the future by any
act of the Fund's directors.
It might seem a little "far out" to imagine that a fund's investment
objective could be changed, even to a goal that might not be suitable for the
needs of a significant number of shareholders. However, it can happen. Such a
proposal has been made concerning the Fund's sister fund, Preferred Income
Management Fund. It is up to the shareholders to determine the rules under which
such changes can be made.
We appreciate your support of the Board's efforts to protect the basic
nature of your investment.
Sincerely yours,
/s/ ROBERT T. FLAHERTY
Robert T. Flaherty
Chairman of the Board
<PAGE>
PREFERRED INCOME FUND INCORPORATED
PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
301 E. Colorado Boulevard, Suite 720
Pasadena, California 91101
NOTICE OF ANNUAL MEETINGS OF SHAREHOLDERS
To Be Held on April 30, 1999
To the Shareholders:
Notice is hereby given that the Annual Meetings of Shareholders of
Preferred Income Fund Incorporated and Preferred Income Opportunity Fund
Incorporated (each a "Fund" and collectively, the "Funds"), each a Maryland
corporation, will be held at the offices of Willkie Farr & Gallagher, 787
Seventh Avenue, 42nd Floor, New York, New York 10019 at 8:30 a.m., on April 30,
1999, for the following purposes:
1. To elect Directors of each Fund (Proposal 1).
2. To ratify the selection of PricewaterhouseCoopers LLP as
independent accountants for each Fund for the fiscal year
ending November 30, 1999 (Proposal 2).
3. To approve an amendment to each Fund's Articles of
Incorporation (as more fully set forth in the Proxy Statement)
(Proposal 3).
4. To transact such other business as may properly come before
the Meetings or any adjournments thereof.
The Board of Directors of each Fund has fixed the close of business on
February 19, 1999 as the record date for the determination of shareholders of
the Funds entitled to notice of and to vote at the Annual Meetings.
By Order of the Board of Directors,
DONALD F. CRUMRINE
Secretary
February 24, 1999
- --------------------------------------------------------------------------------
SEPARATE PROXY CARDS ARE ENCLOSED FOR EACH FUND IN WHICH YOU OWN
SHARES. SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETINGS ARE
REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD(S). THE PROXY
CARD(S) SHOULD BE RETURNED IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF
MAILED IN THE CONTINENTAL UNITED STATES. INSTRUCTIONS FOR THE PROPER EXECUTION
OF PROXIES ARE SET FORTH ON THE INSIDE COVER.
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and may avoid the time and expense to the Fund(s) involved in
validating your vote if you fail to sign your proxy card(s) properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card(s).
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to a name shown in the registration.
3. 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:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp., c/o John Doe Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
Trust Accounts
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee, u/t/d 12/28/78 Jane B. Doe
Custodian or Estate Accounts
(1) John B. Smith, Cust., John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith, Executor, John B. Smith, Jr., Executor
estate of Jane Smith
<PAGE>
PREFERRED INCOME FUND INCORPORATED
PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
301 E. Colorado Boulevard, Suite 720
Pasadena, California 91101
ANNUAL MEETINGS OF SHAREHOLDERS
April 30, 1999
JOINT PROXY STATEMENT
This document is a joint proxy statement ("Joint Proxy Statement") for
Preferred Income Fund Incorporated ("Preferred Income Fund" or "PFD") and
Preferred Income Opportunity Fund Incorporated ("Preferred Income Opportunity
Fund" or "PFO") (each a "Fund" and collectively, the "Funds"). This Joint Proxy
Statement is furnished in connection with the solicitation of proxies by each
Fund's Board of Directors (each a "Board" and collectively, the "Boards") for
use at the Annual Meeting of Shareholders of each Fund to be held on April 30,
1999, at 8:30 a.m., at the offices of Willkie Farr & Gallagher, 787 Seventh
Avenue, 42nd Floor, New York, New York 10019 and at any adjournments thereof
(each a "Meeting" and collectively, the "Meetings"). A Notice of Annual Meetings
of Shareholders and proxy card for each Fund of which you are a shareholder
accompany this Joint Proxy Statement. Proxy solicitations will be made,
beginning on or about February 24, 1999, primarily by mail, but proxy
solicitations may also be made by telephone, telegraph or personal interviews
conducted by officers of the Funds; Flaherty & Crumrine Incorporated ("Flaherty
& Crumrine"), the investment adviser of each Fund; and First Data Investor
Services Group, Inc. ("Investor Services Group"), the transfer agent and
administrator of each Fund and a wholly-owned subsidiary of First Data
Corporation. In addition, the Funds have retained MacKenzie Partners, Inc. to
assist in solicitation of proxies for a fee estimated at $4,000 per Fund plus
reimbursement of expenses. Except for this fee, the costs of proxy solicitation
and expenses incurred in connection with the preparation of this Joint Proxy
Statement and its enclosures will be paid by the Funds in proportion to each
Fund's net assets. Each Fund also will reimburse brokerage firms and others for
their expenses in forwarding solicitation material to the beneficial owners of
its shares.
The Annual Report of each Fund, including audited financial statements
for the fiscal year ended November 30, 1998, is available upon request, without
charge, by writing First Data Investor Services Group, Inc., P.O. Box 1376,
Boston, Massachusetts 02104, or calling 1-800-331-1710.
If the enclosed proxy is properly executed and returned in time to be
voted at the relevant Meeting, the Shares (as defined below) represented thereby
will be voted in accordance with the instructions marked thereon. Unless
instructions to the contrary are marked thereon, a proxy will be voted FOR the
election of the nominees for Directors and FOR the other matters listed in the
accompanying Notice of Annual Meetings of Shareholders. Any shareholder who has
given a proxy has the right to revoke it at any time prior to its exercise
either by attending the relevant Meeting and voting his or her Shares in person
or by submitting a letter of revocation or a later-dated proxy to the
appropriate Fund at the above address prior to the date of the Meeting.
In the event that a quorum is not present at a Meeting, or in the event
that a quorum is present but sufficient votes to approve any of the proposals
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
represented at the Meeting in person or by proxy. If a quorum is present, the
persons named as proxies will vote those proxies which they are entitled to vote
FOR any proposal in favor of such an adjournment and will vote those proxies
required to be voted AGAINST any proposal against any such adjournment. A
shareholder vote may be taken on one or more of the proposals in the Joint Proxy
Statement prior to any such adjournment if sufficient votes have been received
for approval. Under the By-Laws of each Fund, a quorum is constituted by the
presence in person or by proxy of the holders of a majority of the outstanding
shares of the Fund entitled to vote at the Meeting. If a proposal is to be voted
upon by only one class of a Fund's shares, a quorum of that class of shares must
be present at the Meeting in order for the proposal to be considered.
Each Fund has two classes of capital stock: common stock, par value
$0.01 per share (the "Common Stock"); and Money Market Cumulative Preferred(TM)
Stock, par value $0.01 per share ("MMP(R)"; together with the Common Stock, the
"Shares"). On the record date, February 19, 1999, the following number of Shares
of each Fund were issued and outstanding:
Common Stock MMP(R)
Name of Fund Outstanding Outstanding
Preferred Income Fund 9,838,571 575
Preferred Income Opportunity Fund 11,151,288 700
As of February 19, 1999, to the knowledge of each Fund and its Board,
the following shareholder or "group", as that term is used in Section 13(d) of
the Securities Exchange Act of 1934 (the "1934 Act"), beneficially owned more
than 5% of the relevant Fund's outstanding shares:
Preferred Income Fund
As of December 31, 1998, The Commerce Group, Inc. located at 211 Main
Street, Webster, Massachusetts 01570, beneficially owned 20.7% of Preferred
Income Fund's outstanding shares of Common Stock.
Preferred Income Opportunity Fund
As of December 31, 1998, The Commerce Group, Inc. located at 211 Main
Street, Webster, Massachusetts 01570, beneficially owned 25.7% of Preferred
Income Opportunity Fund's outstanding shares of Common Stock and is considered
to be a control person of the Fund, as such term is defined in Section 2(a)(9)
of the Investment Company Act of 1940, as amended (the "1940 Act").
Information as to beneficial ownership is based on reports filed with
the Securities and Exchange Commission (the "SEC") by such holders. As of
February 19, 1999, Cede & Co., a nominee partnership of Depository Trust
Company, held 9,164,195 shares or 93.15% of Common Stock outstanding and 575
shares or 100% of MMP(R) outstanding of Preferred Income Fund and 10,335,240
shares or 92.68% of Common Stock outstanding and 700 shares or 100% of MMP(R)
outstanding of Preferred Income Opportunity Fund.
This Joint Proxy Statement is being used in order to reduce the
preparation, printing, handling and postage expenses that would result from the
use of a separate proxy statement for each Fund. Other than as described below
under Proposals 1 and 3, shareholders of each Fund will vote as a single class
and will vote separately on each proposal on which shareholders of that Fund are
entitled to vote. Separate proxy cards are enclosed for each Fund in which a
shareholder is a record owner of Shares. Thus, if a proposal is approved by
shareholders of one Fund and disapproved by shareholders of the other Fund, the
proposal will be implemented for the Fund that approved the proposal and will
not be implemented for the Fund that did not approve the proposal. It is
therefore essential that shareholders complete, date and sign each enclosed
proxy card. Shareholders of each Fund are entitled to vote on all proposals
pertaining to that Fund.
In order that your Shares may be represented at the Meetings, you are
requested to vote on the following matters:
PROPOSAL 1: ELECTION OF DIRECTORS
The first proposal to be considered at the Meetings is the election of
Directors of the Funds.
Each nominee named below has consented to serve as a Director if
elected at the relevant Meeting. If a designated nominee declines or otherwise
becomes unavailable for election, however, the proxy confers discretionary power
on the persons named therein to vote in favor of a substitute nominee or
nominees.
<PAGE>
Nominees for the Board of Directors
The Board of each Fund is divided into three classes, each class having
a term of three years. Each year the term of office of one class expires and the
successor or successors elected to such class serve for a three-year term. The
classes of Directors are the same for each Fund and are indicated below:
Class I Directors Class II Directors
Martin Brody Donald F. Crumrine
David Gale Robert F. Wulf
Class III Directors
Robert T. Flaherty
Morgan Gust
Class I Directors of Preferred Income Fund and Class III Directors of
Preferred Income Opportunity Fund all have been nominated for a three-year term
to expire at each Fund's 2002 Annual Meeting of Shareholders and until their
successors are duly elected and qualified. Class II Directors of Preferred
Income Fund and Class I Directors of Preferred Income Opportunity Fund serve
until each Fund's Annual Meeting of Shareholders in 2000, and Class III
Directors of Preferred Income Fund and Class II Directors of Preferred Income
Opportunity Fund serve until each Fund's Annual Meeting of Shareholders in 2001.
Except for Mr. Gale (who has served as a Director of each Fund since January 24,
1997), each Director has served in such capacity since each Fund's commencement
of operations.
Under each Fund's Articles of Incorporation, Articles Supplementary and
the 1940 Act, holders of shares of MMP(R), voting as a single class,
will be entitled to elect two Directors, and holders of the Common Stock will be
entitled to elect the remaining Directors, subject to the provisions of the 1940
Act and the Fund's Articles of Incorporation, which permit the holders of shares
of MMP(R), when dividends are in arrears for two full years, to elect the
minimum number of additional Directors that when combined with the two Directors
elected by the holders of shares of MMP(R) would give the holders of shares of
MMP(R) a majority of the Directors. Donald F. Crumrine and Morgan Gust currently
represent holders of shares of MMP(R) of each Fund. A quorum of the MMP(R)
shareholders must be present at the Meeting of Preferred Income Opportunity Fund
in order for the proposal to elect Mr. Gust to be considered.
Information About Directors and Officers
Set forth in the following table are the existing Directors and
nominees for election to the Board of Directors of the Funds, together with
certain other information. Each Director serves in the same capacity for each
Fund. No Director or officer owned any shares of MMP(R) on February 19, 1999.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Business Experience Common Stock
During the Beneficially Owned
Name, Address and Age Past Five Years on February 19, 1999** Percent
- --------------------- --------------- ---------------------- -------
Class I Directors
Martin Brody Director of the Funds; Director of 1,160 Shares of PFD ***
c/o HMK Associates Preferred Income Management Fund 877 Shares of PFO ***
30 Columbia Turnpike Incorporated until April 28, 1998;
Florham Park, NJ 07932 Director of Jaclyn, Inc.; Director
Age: 77 of several other investment
companies.
- -------------------------------------------------
** This information has been furnished by each Director. "Beneficial
Ownership" is defined under Section 13(d) of the 1934 Act.
*** Less than 1%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Business Experience Common Stock
During the Beneficially Owned
Name, Address and Age Past Five Years on February 19, 1999** Percent
- --------------------- --------------- ---------------------- -------
Class I Directors (continued)
David Gale Director of the Funds; Director of 1,500 Shares of PFD ***
Delta Dividend Group, Inc. Preferred Income Management Fund 1,500 Shares of PFO ***
301 Pine Street Incorporated until April 28, 1998;
San Francisco, CA 94104 President & CEO of
Age: 49 Delta Dividend Group, Inc.
(Investments).
Class II Directors
Donald F. Crumrine* Director, Chief Financial Officer, 11,026 Shares of PFD+ ***
301 E. Colorado Boulevard Chief Accounting Officer, Vice 13,283 Shares of PFO+ ***
Suite 720 President and Secretary of the
Pasadena, CA 91101 Funds; Director, Chief Financial
Age: 51 Officer, Chief Accounting Officer,
Vice President and Secretary of
Preferred Income Management Fund
Incorporated until January 15, 1999;
Chairman of the Board, since
December 1996, and previously held
other officerships of Flaherty &
Crumrine; Director of Flaherty &
Crumrine.
Robert F. Wulf Director of the Funds; Director of 1,224 Shares of PFD ***
3560 Deerfield Drive South Preferred Income Management Fund 1,000 Shares of PFO ***
Salem, OR 97302 Incorporated until January 15, 1999;
Age: 61 since March 1984, Financial
Consultant.
- -------------------------------------------------
* "Interested person" of the Fund as defined in the 1940 Act. Messrs.
Crumrine and Flaherty are each considered an "interested person"
because of their affiliation with Flaherty & Crumrine which acts as
the Funds' investment adviser.
** This information has been furnished by each Director. "Beneficial
Ownership" is defined under Section 13(d) of the 1934 Act.
*** Less than 1%.
+ 7,169 Shares of PFD and 8,603 Shares of PFO are held by Flaherty &
Crumrine of which the reporting person is a shareholder and director.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Business Experience Common Stock
During the Beneficially Owned
Name, Address and Age Past Five Years on February 19, 1999** Percent
- --------------------- --------------- ---------------------- -------
Class III Directors
Robert T. Flaherty* Director, Chairman of the Board, 8,269 Shares of PFD+ ***
301 E. Colorado Boulevard President and Chief Executive 9,603 Shares of PFO+ ***
Suite 720 Officer of the Funds; Director,
Pasadena, CA 91101 Chairman of the Board, President and
Age: 61 Chief Executive Officer of Preferred
Income Management Fund Incorporated until
January 15, 1999; prior to December 1996,
President of Flaherty & Crumrine; Director of
Flaherty &
Crumrine.
Morgan Gust Director of the Funds; Director of 1,678 Shares of PFD ***
Giant Industries, Inc. Preferred Income Management Fund 1,805 Shares of PFO ***
23733 N. Scottsdale Road Incorporated until January 15, 1999;
Scottsdale, AZ 85255 from January 1, 1999, Executive Vice
Age: 51 President, Giant Industries, Inc.;
and, for more than five years prior thereto,
Vice President, General Counsel and Vice
President-Administration, Giant Industries,
Inc.
Directors and Officers 18,488 Shares of PFD ***
as a Group 24,743 Shares of PFO ***
- -------------------------------------------------
* "Interested person" of the Fund as defined in the 1940 Act. Messrs.
Crumrine and Flaherty are each considered an "interested person"
because of their affiliation with Flaherty & Crumrine which acts as
the Funds' investment adviser.
** This information has been furnished by each Director. "Beneficial
Ownership" is defined under Section 13(d) of the 1934 Act.
*** Less than 1%.
+ 7,169 Shares of PFD and 8,603 Shares of PFO are held by Flaherty &
Crumrine of which the reporting person is a shareholder and director.
</TABLE>
Each Director of each Fund who is not a director, officer or employee
of Flaherty & Crumrine or any of their affiliates receives a fee of $9,000 per
annum plus $500 for each in-person meeting, and $100 for each telephone meeting.
Each Director of each Fund is reimbursed for travel and out-of-pocket expenses
associated with attending Board and committee meetings. The Board of Directors
of each Fund held six meetings (two of which were held by telephone conference
call) during the fiscal year ended November 30, 1998. Each Director then serving
in such capacity attended in-person at least 75% of the meetings of Directors
and any Committee of which he is a member. The aggregate remuneration paid to
the Directors of each Fund for the fiscal year ended November 30, 1998 amounted
to $75,239.03, respectively (including reimbursement for travel and
out-of-pocket expenses for both "interested" and non-interested Directors).
<PAGE>
Each Board of Directors has an Audit Committee consisting of Messrs.
Gust, Brody and Wulf. The Audit Committee reviews the scope and results of each
Fund's annual audit with the Funds' independent accountants and recommends the
engagement of such accountants. Each Audit Committee met twice during the fiscal
year ended November 30, 1998.
Each Board of Directors has a Nominating Committee consisting of
Messrs. Gust, Brody and Wulf, which is responsible for considering candidates
for election to the Board of Directors of each Fund in the event a position is
vacated or created. The Nominating Committee would consider recommendations by
shareholders if a vacancy were to exist. Such recommendations should be
forwarded to the Secretary of the Fund. The Nominating Committee of each Fund
did not meet during the fiscal year ended November 30, 1998.
The names of the officers of each Fund (other than Messrs. Flaherty and
Crumrine who are described above) are listed in the table below. Each officer
was first elected to office at the organization of each Fund. This table also
shows certain additional information. Each officer will hold such office until a
successor has been elected by the Board of Directors of a Fund.
<TABLE>
<CAPTION>
<S> <C> <C>
Positions Held Principal Occupations and Other Affiliations
Name and Age With each Fund During The Past Five Years
Robert M. Ettinger Vice President and Assistant President, since December 1996, and previously held
Age: 40 Treasurer of the Funds. other officerships with Flaherty & Crumrine; Vice
President and
Assistant
Treasurer of
Preferred Income
Management Fund
Incorporated until
January 15, 1999.
Peter C. Stimes Vice President, Treasurer and Vice President, Flaherty & Crumrine;
Age: 43 Assistant Secretary of the Vice President, Treasurer and Assistant Secretary of
Funds. Preferred Income Management Fund Incorporated until
January 15, 1999.
</TABLE>
The following table sets forth certain information regarding the
compensation of each Fund's Directors for the fiscal year ended November 30,
1998. No executive officer or person affiliated with the Fund received
compensation from the Fund during the fiscal year ended November 30, 1998 in
excess of $60,000. Directors and executive officers of the Funds do not receive
pension or retirement benefits from the Funds.
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C>
Name of Person Aggregate Compensation Total Compensation From the Funds and
and Position from each Fund Fund Complex Paid to Directors*
Robert T. Flaherty $0 $0 (3)
Director, Chairman of the Board,
President and Chief Executive Officer
Donald F. Crumrine $0 $0 (3)
Director, Chief Financial Officer,
Chief Accounting Officer, Vice
President and Secretary
Martin Brody** $15,450 PFD $39,200 (2)
Director $15,450 PFO
Morgan Gust $12,200 PFD $37,200 (3)
Director $12,200 PFO
Robert F. Wulf $12,200 PFD $37,200 (3)
Director $12,200 PFO
David Gale** $13,950 PFD $35,500 (2)
Director $13,950 PFO
- -------------------------------------------------
* Represents the total compensation paid to such persons by the Funds and
Preferred Income Management Fund Incorporated for the fiscal year ended
November 30, 1998, which are considered part of the same "fund complex"
because they have a common adviser. The parenthetical number represents
the total number of investment company directorships held by the
director or nominee in such fund complex.
** Director of Preferred Income Management Fund Incorporated until April
28, 1998.
</TABLE>
Required Vote
Election of each of the listed nominees for Director of each Fund will
require the affirmative vote of a plurality of the votes cast at the Meeting in
person or by proxy.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE NON-INTERESTED DIRECTORS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 1.
PROPOSAL 2: RATIFICATION OF THE SELECTION OF
INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP ("PricewaterhouseCoopers"), One
Post Office Square, Boston, Massachusetts 02109, has served as independent
accountants for each Fund since the Fund's commencement of operations, and has
been selected to serve in such capacity for the Fund's fiscal year ending
November 30, 1999 by the Directors of the Fund, including those Directors who
are not "interested persons" (as defined in the 1940 Act) of the Fund or
Flaherty & Crumrine. PricewaterhouseCoopers has informed the Funds that it has
no direct or indirect financial interest in the Funds. A representative of
PricewaterhouseCoopers will not be present at the Meetings but will be available
by telephone and will have an opportunity to make a statement if the
representative so desires and will be available to respond to appropriate
questions. Required Vote
Ratification of the selection of PricewaterhouseCoopers as
independent accountants for a Fund requires the affirmative vote of the holders
of a majority of the shares of Common Stock and MMP(R), voting as a single
class, cast at the Meeting in person or by proxy.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE NON-INTERESTED DIRECTORS,
RECOMMENDS THAT THE SHAREHOLDERS VOTH "FOR" PROPOSAL NO. 2.
PROPOSAL 3: APPROVAL OF AN AMENDMENT
TO EACH FUND'S ARTICLES OF INCORPORATION
The third proposal to be considered at the Meeting is amending the
Articles of Incorporation of each Fund as set forth in the proposed Articles of
Amendment described below (the "Articles of Amendment").
The Articles of Incorporation currently create a "supermajority" voting
requirement to effect any of the following changes: (1) change in the Fund's
existing investment objective, (2) conversion of the Fund from being a
diversified investment company under the 1940 Act to a non-diversified
investment company or (3) removal of the prohibition on the Fund's making
investments for the purpose of exercising control or management of any company.
Each Fund is a diversified investment company with an investment
objective of high current income for holders of its Common Stock consistent with
preservation of capital and with a prohibition on investing in companies for the
purpose of exercising control. Changing the Fund's investment objective, its
diversified status and its passive approach regarding exercising control of
companies currently requires a vote in each case of at least 80% of the Fund's
Common Stock and MMP(R), voting as a single class, and approval of the holders
of at least 80% of the Fund's MMP(R), voting as a separate class, and in the
case of PFD, at least 80% of the entire Board of Directors. However, if at least
80% of the Continuing Directors of the Fund (as defined below) approve one of
these changes (a "Continuing Director Vote"), then the shareholder vote required
to amend the Fund's Articles to effect the change is reduced to an affirmative
vote of a majority of the votes entitled to be cast by the holders of the Fund's
Common Stock and MMP(R) to be voted on the matter, voting as a single class,
unless otherwise required by the Articles of Incorporation or unless otherwise
required by law (this provision is referred to as the "Lower Voting
Requirement").
The proposed Articles of Amendment would eliminate the ability of the
Continuing Directors to cause a Lower Voting Requirement. As a result, a
Continuing Director Vote could not reduce the shareholder vote required to
effectuate the changes referred to above.
The effect of the proposed amendments to the Articles of Incorporation
is to assure that any proposal to modify certain key aspects of either
Fund has widespread support of shareholders before it could be implemented and
to protect shareholders from having their reasonable expectations about the
nature of the Fund and its operations nullified by the actions of a single
shareholder or group of shareholders or even by the Fund's Board of Directors.
The amendments would also help prevent a simple majority of
shareholders from taking control of the Fund's Board and then reducing the vote
required to implement these changes.
Once adopted, the proposed amendments to the Articles of Incorporation
may be further amended only by the affirmative vote of at least 80% of the votes
of the Fund's Common Stock and MMP(R), voting as a single class, and at least
80% of the votes of the MMP(R), voting as a separate class, and in the case of
PFD, at least 80% of the entire Board of Directors.
<PAGE>
Articles of Amendment: PFD
The proposed amendments to the Articles of Incorporation for PFD
necessary to implement the change described above are as follows:
A. Article VIII ("Amendments") is hereby amended to replace paragraph
(3) with the following (with language to be deleted shown with a line through
it):
(3) Notwithstanding any other provision of these Articles of
Incorporation, no amendment to these Articles of Incorporation of the
Corporation shall amend, alter, change or repeal paragraph (4) of Article II or
the proviso at the end of the last paragraph of Article II unless the amendment
effecting such amendment, alteration, change or repeal shall receive the
affirmative vote of at least eighty percent (80%) of the votes of the
Corporation's Common Stock and Preferred Stock entitled to be cast by
stockholders, voting as a single class, and of at least eighty percent (80%) of
the votes of the Corporation's Preferred Stock entitled to be cast by
stockholders, voting as a separate class, and of at least 80% of the entire
Board of Directors, unless such action previously has been approved, adopted or
authorized by the affirmative vote of eighty percent (80%) of the total number
of Continuing Directors, in which case the affirmative vote of a majority of the
votes entitled to be cast by the holders of the Corporation's Common Stock and
Preferred Stock to be voted on the matter, voting as a single class, unless
otherwise provided in the charter or unless otherwise required by law, shall be
required to approve, adopt, or authorize such an amendment.
B. Article VIII ("Amendments") is hereby amended to add the italicized
language to paragraph (2):
(2) Notwithstanding Paragraph (1) of this Article or any other
provision of these Articles of Incorporation, no amendment to these Articles of
Incorporation of the Corporation shall amend, alter, change or repeal any of the
provisions of Articles V, VI or VIII unless the amendment effecting such
amendment, alteration, change or repeal shall receive the affirmative vote of at
least eighty percent (80%) of the votes of the Corporation's Common Stock and
Preferred Stock entitled to be cast by stockholders, each voting as a separate
class unless, in the case of Articles V, VI or paragraphs (1) and (2) (but not
paragraph (3)) of Article VIII, such action previously has been approved,
adopted or authorized by the affirmative vote of eighty percent (80%) of the
total number of Continuing Directors, in which case the affirmative vote of a
majority of the holders of the Corporation's Common Stock and Preferred Stock to
be voted on the matter, each voting as a separate class, shall be required to
approve, adopt or authorize such an amendment. Notwithstanding the previous
sentence, any proposal to amend, alter, change or repeal Article VIII in a
manner that would permit paragraph (4) of Article II or the proviso at the end
of the last paragraph of Article II to be amended, altered, changed or repealed
by an affirmative vote of less than at least eighty percent (80%) of the votes
of the Corporation's Common Stock and Preferred Stock entitled to be cast by
stockholders, voting as a single class, and of at least eighty percent (80%) of
the votes of the Corporation's Preferred Stock entitled to be cast by
stockholders, voting as a separate class, shall require the affirmative vote of
at least eighty percent (80%) of the votes of the Corporation's Common Stock and
Preferred Stock entitled to be cast by stockholders, voting as a single class,
and of at least eighty percent (80%) of the votes of the Corporation's Preferred
Stock entitled to be cast by stockholders, voting as a separate class, and of at
least eighty percent (80%) of the entire Board of Directors.
Articles of Amendment: PFO
The proposed amendment to the Articles of Incorporation for PFO
necessary to implement the change described above is as follows:
Article VIII ("Amendments") is hereby amended to add the italicized
language to paragraph (2):
(2) With the exception of Articles II, V, VI and VIII, any of the
provisions of the Articles of Incorporation may be amended, altered or repealed
upon the vote of a majority of the votes entitled to be cast by stockholders.
The provisions of Articles II, V, VI and VIII may be amended, altered or
repealed only upon the vote of at least eighty percent (80%) of the votes of the
Corporation's Common Stock and Preferred Stock entitled to be cast by
stockholders, voting as a single class, and of at least eighty percent (80%) of
the votes of the Corporation's Preferred Stock entitled to be cast by
stockholders, voting as a separate class, unless, except in the case of proposed
amendments to paragraph (4) of Article II or the proviso at the end of the last
paragraph of Article II, such action previously has been approved, adopted or
authorized by the affirmative vote of eighty percent (80%) of the total number
of Continuing Directors, in which case the affirmative vote of a majority of the
votes entitled to be cast by the holders of the Corporation's Common Stock and
Preferred Stock to be voted on the matter, voting as a single class, unless
otherwise required by law shall be required to approve, adopt, or authorize such
an amendment. Notwithstanding the previous sentence, any proposal to amend,
alter, change or repeal Article VIII in a manner that would permit paragraph (4)
of Article II or the proviso at the end of the last paragraph of Article II to
be amended, altered, changed or repealed by an affirmative vote of less than at
least eighty percent (80%) of the votes of the Corporation's Common Stock and
Preferred Stock entitled to be cast by stockholders, voting as a single class,
and of at least eighty percent (80%) of the votes of the Corporation's Preferred
Stock entitled to be cast by stockholders, voting as a separate class, shall
require the affirmative vote of at least eighty percent (80%) of the votes of
the Corporation's Common Stock and Preferred Stock entitled to be cast by
stockholders, voting as a single class, and of at least eighty percent (80%) of
the votes of the Corporation's Preferred Stock entitled to be cast by
stockholders, voting as a separate class.
"Continuing Director" means any member of the Board of Directors of the
Fund who (A) is not an Interested Party or an Affiliate or an Associate (as
these terms are defined below) of an Interested Party and has been a member of
the Board of Directors for a period of at least 12 months, or (B) is a successor
of a Continuing Director who is not an Interested Party or an Affiliate or
Associate of an Interested Party and is recommended to succeed a Continuing
Director by a majority of the Continuing Directors then on the Board of
Directors, or (C) is elected to the Board to be a Continuing Director by a
majority of the Continuing Directors then on the Board of Directors and who is
not an Interested Party or an Affiliate or Associate of an Interested Party.
"Interested Party" shall mean any person, other than an investment
company advised by the Fund's initial investment manager or any of its
Affiliates, which enters, or proposes to enter, into a Business Combination with
the Fund or which individually or together with any other persons beneficially
owns or is deemed to own, directly or indirectly, more than 5 percent of any
class of the Fund's securities (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934 and the rules and regulations thereunder (the
"Exchange Act").
"Affiliate" and "Associate" shall have the respective meaning ascribed
to such terms in Rule 12b-2 of the Exchange Act; provided that the term
"Affiliate" shall also include any person who, at or prior to the time of
election to the Board of Directors, had expressed support in writing of any
proposals of an Interested Party for which shareholder approval would be
required (for purposes of consideration of those proposals only).
Required Vote
Approval of the Articles of Amendment will require the affirmative vote
of a majority of the votes entitled to be cast by the holders of the Fund's
Common Stock and MMP(R) to be voted on the matter, voting as a single class in
the case of PFO and each voting as a separate class in the case of PFD.
THE BOARD OF DIRECTORS OF EACH FUND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" PROPOSAL NO. 3.
SUBMISSION OF SHAREHOLDER PROPOSALS
All proposals by shareholders of each Fund that are intended to be
presented at each Fund's next Annual Meeting of Shareholders to be held in 2000
must be received by the Fund for consideration for inclusion in the Fund's proxy
statement relating to the meeting no later than October 27, 1999.
<PAGE>
ADDITIONAL INFORMATION
Investment Adviser and Administrator
Flaherty & Crumrine serves as the Investment Adviser to the Funds and
its business address is 301 E. Colorado Boulevard, Suite 720, Pasadena,
California 91101. Investor Services Group acts as the administrator to the Funds
and is located at One Exchange Place, Boston, Massachusetts 02109.
Compliance with the Securities Exchange Act of 1934
Section 16(a) of the 1934 Act requires the Funds' directors and
officers, certain persons affiliated with Flaherty & Crumrine and persons who
own more than 10% of a registered class of each Fund's securities, to file
reports of ownership and changes of ownership with the SEC and, in some
cases, the New York Stock Exchange. Directors, officers and
greater-than-10% shareholders are required by SEC regulations to furnish the
Fund with copies of all Section 16(a) forms they file. Based solely upon the
SEC's review of the copies of such forms it receives and written representations
from certain of such persons, each Fund believes that through the date hereof
all such filing requirements applicable to such persons were complied with.
Broker Non-Votes and Abstentions
A proxy which is properly executed and returned accompanied by
instructions to withhold authority to vote represents a broker "non-vote" (i.e.,
shares held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or the persons entitled to vote and (ii) the
broker or nominee does not have discretionary voting power on a particular
matter). Proxies that reflect abstentions or broker non-votes (collectively
"abstentions") will be counted as shares that are present and entitled to vote
on the matter for purposes of determining the presence of a quorum. Under
Maryland law, abstentions will be disregarded in determining the "votes cast" on
all proposals. Abstentions will, however, have the effect of a vote "against"
for purposes of obtaining the requisite approval of the Amendment of each Fund's
Articles of Incorporation covered by Proposal 3.
OTHER MATTERS TO COME BEFORE THE MEETING
The Funds do not intend to present any other business at the Meetings,
nor are they aware that any shareholder intends to do so. If, however, any other
matters are properly brought before the Meetings, the persons named in the
accompanying form of proxy will vote thereon in accordance with their judgment.
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETINGS ARE THEREFORE URGED TO COMPLETE, SIGN, DATE AND
RETURN ALL PROXY CARDS AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE>
PREFERRED INCOME FUND INCORPORATED
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Money Market Cumulative Preferred(TM) Stock
("MMP(R)") of Preferred Income Fund Incorporated, a Maryland corporation (the
"Fund"), hereby appoints Robert T. Flaherty, Donald F. Crumrine, Teresa M.R.
Hamlin and Christine P. Ritch, attorneys and proxies for the undersigned, with
full powers of substitution and revocation, to represent the undersigned and to
vote on behalf of the undersigned all shares of MMP(R), which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of the Fund to be held at
the offices of Willkie Farr & Gallagher, 787 Seventh Avenue, 42nd Floor, New
York, New York 10019 at 8:30 a.m., on April 30, 1999, and any adjournments
thereof. The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement and hereby instructs said attorneys and proxies to
vote said shares as indicated hereon. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
Meeting. A majority of the proxies present and acting at the Meeting in person
or by substitute (or, if only one shall be so present, then that one) shall have
and may exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
Please mark votes as in this example.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 2 AND 3.
Please refer to the Proxy Statement for a discussion of the Proposals.
1. Election of Director
Nominee: Not Applicable
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for the Fund.
FOR ____ AGAINST ____ ABSTAIN ____
3. To approve an amendment to the Fund's Articles of Incorporation.
FOR ____ AGAINST ____ ABSTAIN ____
The Board of Directors recommends that the shareholders vote "FOR" ratification
of the selection of PricewaterhouseCoopers LLP as independent accountants for
the Fund and "FOR" approval of an amendment to the Fund's Articles of
Incorporation.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
NOTE: Please sign exactly as your name appears on this Proxy. If joint owners,
EITHER may sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.
Signature: _______________________
Signature: _______________________
Date: _______________________
Date: _______________________
<PAGE>
PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Money Market Cumulative Preferred(TM) Stock
("MMP(R)") of Preferred Income Opportunity Fund Incorporated, a Maryland
corporation (the "Fund"), hereby appoints Robert T. Flaherty, Donald F.
Crumrine, Teresa M.R. Hamlin and Christine P. Ritch, attorneys and proxies for
the undersigned, with full powers of substitution and revocation, to represent
the undersigned and to vote on behalf of the undersigned all shares of MMP(R),
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
of the Fund to be held at the offices of Willkie Farr & Gallagher, 787 Seventh
Avenue, 42nd Floor, New York, New York 10019 at 8:30 a.m., on April 30, 1999,
and any adjournments thereof. The undersigned hereby acknowledges receipt of the
Notice of Annual Meeting and Proxy Statement and hereby instructs said attorneys
and proxies to vote said shares as indicated hereon. In their discretion, the
proxies are authorized to vote upon such other business as may properly come
before the Meeting. A majority of the proxies present and acting at the Meeting
in person or by substitute (or, if only one shall be so present, then that one)
shall have and may exercise all of the power and authority of said proxies
hereunder. The undersigned hereby revokes any proxy previously given.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
Please mark votes as in this example.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
ELECTION OF NOMINEE AS DIRECTOR AND FOR PROPOSALS 2 AND 3.
Please refer to the Proxy Statement for a discussion of the Proposals.
1. Election of Director
Nominee: Morgan Gust
FOR ____ WITHHELD ____
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for the Fund.
FOR ____ AGAINST ____ ABSTAIN ____
3. To approve an amendment to the Fund's Articles of Incorporation.
FOR ____ AGAINST ____ ABSTAIN ____
The Board of Directors recommends that the shareholders vote "FOR" the election
of the nominee, "FOR" ratification of the selection of PricewaterhouseCoopers
LLP as independent accountants for the Fund, and "FOR" approval of an amendment
to the Fund's Articles of Incorporation.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
NOTE: Please sign exactly as your name appears on this Proxy. If joint owners,
EITHER may sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.
Signature: _______________________
Signature: _______________________
Date: _______________________
Date: _______________________
<PAGE>
PREFERRED INCOME FUND INCORPORATED
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Common Stock of Preferred Income Fund
Incorporated, a Maryland corporation (the "Fund"), hereby appoints Robert T.
Flaherty, Donald F. Crumrine, Teresa M.R. Hamlin and Christine P. Ritch,
attorneys and proxies for the undersigned, with full powers of substitution and
revocation, to represent the undersigned and to vote on behalf of the
undersigned all shares of Common Stock, which the undersigned is entitled to
vote at the Annual Meeting of Shareholders of the Fund to be held at the offices
of Willkie Farr & Gallagher, 787 Seventh Avenue, 42nd Floor, New York, New York
10019 at 8:30 a.m., on April 30, 1999, and any adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement and hereby instructs said attorneys and proxies to vote said
shares as indicated hereon. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the Meeting. A
majority of the proxies present and acting at the Meeting in person or by
substitute (or, if only one shall be so present, then that one) shall have and
may exercise all of the power and authority of said proxies hereunder.
The undersigned hereby revokes any proxy previously given.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
Please mark votes as in this example.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
ELECTION OF NOMINEES AS DIRECTOR AND FOR PROPOSALS 2 AND 3.
Please refer to the Proxy Statement for a discussion of the Proposals.
1. Election of Directors
Nominees: Martin Brody and David Gale
FOR ____ WITHHELD ____
____ For all nominees except as noted above.
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for the Fund.
FOR ____ AGAINST ____ ABSTAIN ____
3. To approve an amendment to the Fund's Articles of Incorporation.
FOR ____ AGAINST ____ ABSTAIN ____
The Board of Directors recommends that the shareholders vote "FOR" the election
of the nominees, "FOR" ratification of the selection of PricewaterhouseCoopers
LLP as independent accountants for the Fund, and "FOR" approval of an amendment
to the Fund's Articles of Incorporation.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
NOTE: Please sign exactly as your name appears on this Proxy. If joint owners,
EITHER may sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.
Signature: _______________________
Signature: _______________________
Date: _______________________
Date: _______________________
<PAGE>
PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Common Stock of Preferred Income Opportunity
Fund Incorporated, a Maryland corporation (the "Fund"), hereby appoints Robert
T. Flaherty, Donald F. Crumrine, Teresa M.R. Hamlin and Christine P. Ritch,
attorneys and proxies for the undersigned, with full powers of substitution and
revocation, to represent the undersigned and to vote on behalf of the
undersigned all shares of Common Stock, which the undersigned is entitled to
vote at the Annual Meeting of Shareholders of the Fund to be held at the offices
of Willkie Farr & Gallagher, 787 Seventh Avenue, 42nd Floor, New York, New York
10019 at 8:30 a.m., on April 30, 1999, and any adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement and hereby instructs said attorneys and proxies to vote said
shares as indicated hereon. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the Meeting. A
majority of the proxies present and acting at the Meeting in person or by
substitute (or, if only one shall be so present, then that one) shall have and
may exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
Please mark votes as in this example.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
ELECTION OF NOMINEE AS DIRECTOR AND FOR PROPOSALS 2 AND 3.
Please refer to the Proxy Statement for a discussion of the Proposal.
1. Election of Directors
Nominee: Robert T. Flaherty
FOR ____ WITHHELD ____
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for the Fund.
FOR ____ AGAINST ____ ABSTAIN ____
3. To approve an amendment to the Fund's Articles of Incorporation.
FOR ____ AGAINST ____ ABSTAIN ____
The Board of Directors recommends that the shareholders vote "FOR" the election
of the nominee, "FOR" ratification of the selection of PricewaterhouseCoopers
LLP as independent accountants for the Fund, and "FOR" approval of an amendment
to the Fund's Articles of Incorporation.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
NOTE: Please sign exactly as your name appears on this Proxy. If joint owners,
EITHER may sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.
Signature: _______________________
Signature: _______________________
Date: _______________________
Date: _______________________
<PAGE>
