<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / 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 Rule 14a-11(c) or Rule 14a-12
HYPERION 1999 TERM TRUST, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / 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 transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
HYPERION 1999 TERM TRUST, INC.
520 Madison Avenue o New York, New York 10022
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
January 29, 1996
To the Stockholders:
The Annual Meeting of Stockholders of Hyperion 1999 Term Trust, Inc. (the
'Trust') will be held at The Drake Hotel, 440 Park Avenue at 56th Street, New
York, New York 10022, on Tuesday, April 16, 1996, at 9:45 a.m., for the
following purposes:
1. To elect directors (Proposal 1).
2. To ratify or reject the selection of Deloitte & Touche LLP as the
independent auditors of the Trust for the fiscal year ending November 30,
1996 (Proposal 2).
3. To transact any other business that may properly come before the
meeting.
The close of business on January 19, 1996 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
meeting.
By Order of the Board of Directors,
Patricia A. Sloan
Secretary
WE NEED YOUR PROXY VOTE IMMEDIATELY.
YOU MAY THINK YOUR VOTE IS NOT IMPORTANT, BUT IT IS VITAL. THE MEETING OF
STOCKHOLDERS OF THE TRUST WILL BE UNABLE TO CONDUCT ANY BUSINESS IF LESS THAN A
MAJORITY OF THE SHARES ELIGIBLE TO VOTE IS REPRESENTED. IN THAT EVENT, THE
TRUST, AT STOCKHOLDERS' EXPENSE, WOULD CONTINUE TO SOLICIT VOTES IN AN ATTEMPT
TO ACHIEVE A QUORUM. CLEARLY, YOUR VOTE COULD BE CRITICAL TO ENABLE THE TRUST TO
HOLD THE MEETING AS SCHEDULED, SO PLEASE RETURN YOUR PROXY CARD IMMEDIATELY. YOU
AND ALL OTHER STOCKHOLDERS WILL BENEFIT FROM YOUR COOPERATION.
<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Trust involved in validating your vote
if you fail to sign your proxy card properly.
1. Individual Accounts. Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts. Either party may sign, but the name of the party
signing should conform exactly to the 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:
<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
- -------------------------------------------------- ----------------------------
<S> <C>
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................................ John B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78...... Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr.
UGMA..................................... John B. Smith
(2) John B. Smith............................ John B. Smith, Jr., Executor
</TABLE>
<PAGE>
HYPERION 1999 TERM TRUST, INC.
520 Madison Avenue o New York, New York 10022
------------------------
PROXY STATEMENT
------------------------
This proxy statement is furnished in connection with a solicitation by the
Board of Directors of Hyperion 1999 Term Trust, Inc. (the 'Trust') of proxies to
be used at the Annual Meeting of Stockholders of the Trust to be held at The
Drake Hotel, 440 Park Avenue at 56th Street, New York, New York 10022, at 9:45
a.m. on Tuesday, April 16, 1996 (and at any adjournment or adjournments thereof)
for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. This proxy statement and the accompanying form of proxy are first
being mailed to stockholders on or about January 29, 1996. Stockholders who
execute proxies retain the right to revoke them by written notice received by
the Secretary of the Trust at any time before they are voted. Unrevoked proxies
will be voted in accordance with the specifications thereon and, unless
specified to the contrary, will be voted FOR the election of the three nominees
for director, and FOR the ratification of the selection of Deloitte & Touche LLP
as the independent auditors of the Trust for the fiscal year ending November 30,
1996. The close of business on January 19, 1996 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the meeting. Each stockholder is entitled to one vote for each share held.
Abstentions will be treated as shares that are present and entitled to vote for
purposes of determining the presence of a quorum but as unvoted for purposes of
determining the approval of any matters submitted to stockholders for a vote.
Broker non-votes will not be counted for purposes of determining the presence of
a quorum or determining whether a proposal has been approved. On the record date
there were 63,112,639 shares outstanding.
PROPOSAL 1: ELECTION OF DIRECTORS
The Trust's Articles of Incorporation provide that the Trust's Board of
Directors shall be divided into three classes: Class I, Class II and Class III.
The terms of office of the present directors in each class expire at the Annual
Meeting in the year indicated or thereafter in each case when their respective
successors are elected and qualified: Class I, 1997; Class II, 1998; and Class
III, 1996. At each subsequent annual election, Directors chosen to succeed those
whose terms are expiring will be identified as being of that same class and will
be elected for a three-year term. The effect of these staggered terms is to
limit the ability of other entities or persons to acquire control of the Trust
by delaying the replacement of a majority of the Board of Directors.
The terms of Kenneth C. Weiss, Lewis S. Ranieri, and Patricia A. Sloan, the
members of Class III, currently serving on the Board of Directors, expire at
this year's Annual Meeting. The persons named in the accompanying form of proxy
intend to vote at the Annual Meeting (unless directed not to so vote) for the
re-election of Mr. Weiss, Mr. Ranieri, and Ms. Sloan. Each nominee has indicated
that he or she will serve if elected, but if any nominee should be unable to
serve, the proxy or proxies will be voted for any other person or persons, as
the case may be, determined by the persons named in the proxy in accordance with
their judgment.
As described above, there are three nominees for election to the Board of
Directors at this time. Proxies cannot be voted for a greater number of persons
than the three nominees currently proposed to serve on the Board of Directors.
1
<PAGE>
The following table provides information concerning each of the seven
members and nominees of the Board of Directors of the Trust:
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
PRINCIPAL OCCUPATION OR INDIRECTLY, ON
NAME AND OFFICE DURING PAST FIVE YEARS, DIRECTOR NOVEMBER 30,
WITH THE TRUST OTHER DIRECTORSHIPS AND AGE SINCE 1995(**)
- --------------------------------- ------------------------------------------------ --------- -----------------
CLASS III NOMINEES TO SERVE UNTIL 1999 ANNUAL MEETING OF STOCKHOLDERS:
<S> <C> <C> <C>
Kenneth C. Weiss* ............... President, Chief Executive Officer and/or Di- June 1992 15,427
Chairman of the Board rector of Hyperion Capital Management, Inc.
(February 1992-Present). Chairman of the
Board, Director/Trustee and/or officer of
several investment companies advised by
Hyperion Capital Management, Inc. or by its
affiliates (February 1992-Present). Director
and President of Equitable Real Estate
Hyperion Mortgage Opportunity Fund, Inc. and
Equitable Real Estate Hyperion High Yield
Commercial Mortgage Fund, Inc. and their
Investment Advisers (1995-Present). Formerly
Director of First Boston Asset Management
(1988-February 1992). Director of The First
Boston Corporation (until 1988). Age 44.
Lewis S. Ranieri* ............... Chairman and Chief Executive Officer of Ranieri June 1992 11,500
Director & Co., Inc. (since 1988); in addition,
President of LSR Hyperion Corp., a general
partner of the limited partnership that is the
general partner of Hyperion Partners L.P.
('Hyperion Partners') (since 1988). Director
and Chairman of the Board of Hyperion Capital
Management, Inc. (since 1989); Chairman of the
Board and/or Director of several investment
companies advised by Hyperion Capital
Management, Inc. (since 1989); Chairman of
Bank United of Texas FSB (since 1988) and
Hyperion Credit Services Corp. (since 1992);
Director and President of Hyperion Funding
1993 Corp., the general partner of the limited
partnership that is the general partnership
that is the general partner of Hyperion 1993
Fund L.P.; and also Chairman and President of
various other direct and indirect subsidiaries
of Hyperion Partners (since 1988); Director of
Equitable Real Estate Hyperion Mortgage
Opportunity Fund, Inc. and Equitable Real
Estate Hyperion High Yield Commercial Mort-
gage Fund, Inc. (since 1995). Formerly Vice
Chairman of Salomon Brothers Inc (until 1987).
Age 49.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
PRINCIPAL OCCUPATION OR INDIRECTLY, ON
NAME AND OFFICE DURING PAST FIVE YEARS, DIRECTOR NOVEMBER 30,
WITH THE TRUST OTHER DIRECTORSHIPS AND AGE SINCE 1995(**)
- --------------------------------- ------------------------------------------------ --------- -----------------
<S> <C> <C> <C>
Patricia A. Sloan* .............. Managing Director of Ranieri & Co., Inc. June 1992 388
Director, Secretary (1988-Present). Secretary, Director and/or
Trustee of several investment companies
advised by Hyperion Capital Management, Inc.
or by its affiliates (1989-Present). Director
of Bank United of Texas FSB (1988-Present).
Formerly Director of the Financial
Institutions Group of Salomon Brothers Inc
(1972-1988). Age 52.
<CAPTION>
CLASS I DIRECTORS TO SERVE UNTIL 1997 ANNUAL MEETING OF STOCKHOLDERS:
<S> <C> <C> <C>
Garth Marston ................... Managing Director of M.E. Associates, a fi- June 1992 0
Director, Member of the nancial consulting group (1986-Present).
Audit Committee Director and/or Trustee of several investment
companies advised by Hyperion Capital
Management, Inc. (1989-Present). Currently a
member of the Board of Managers of the Sun
Life Assurance Company of Canada (U.S.).
Formerly Director and interim Chief Executive
Officer of Florida Federal Savings
(1986-1988); Chairman of the Board and Chief
Executive Officer of The Provident Institution
for Savings (1979-1986); Special Assignment
regarding partially call protected Mortgage-
Backed Securities for Salomon Brothers Inc
(1987). Age 69.
Rodman L. Drake ................. President, R.L. Drake & Co. Inc. (1993-Pres- June 1992 710
Director, Member of the ent). Director and/or Trustee of several in-
Audit Committee vestment companies advised by Hyperion Capital
Management, Inc. (1989-Present). Consultant to
Rockefeller & Co. Inc. (1990-Present).
Co-Chairman of KMR Power Corporation
(1993-Present). Chairman, Car Rental Systems
do Brasil S.A. (Hertz-Brazil)(1994-Present).
Formerly Managing Director and Chief Executive
Officer of Cresap (1980-1990). Trustee of
Excelsior Funds. Member, Investment Advisory
Board, Argentina Private Equity Fund Inc. and
Garantia L.P. (Brazil). Director, Parsons
Brinkerhoff, Inc. and Latin American Growth
Fund Inc. Age 53.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
PRINCIPAL OCCUPATION OR INDIRECTLY, ON
NAME AND OFFICE DURING PAST FIVE YEARS, DIRECTOR NOVEMBER 30,
WITH THE TRUST OTHER DIRECTORSHIPS AND AGE SINCE 1995(**)
- --------------------------------- ------------------------------------------------ --------- -----------------
CLASS II DIRECTORS TO SERVE UNTIL 1998 ANNUAL MEETING OF STOCKHOLDERS:
<S> <C> <C> <C>
Harry E. Petersen, Jr. .......... Director and/or Trustee of several investment June 1992 200
Director, Member of the companies advised by Hyperion Capital
Audit Committee Management, Inc. or by its affiliates
(1992-Present). Director of Equitable Real
Estate Hyperion Mortgage Opportunity Fund,
Inc. and Equitable Real Estate Hyperion High
Yield Commercial Mortgage Fund, Inc.
(1995-Present). Director of Lexington
Corporate Properties, Inc. (1993-Present).
Consultant to Advisers Capital Management,
Inc. (1992-Present). Consultant to Ewing
Capital, Inc. (1993-Present). Formerly
Consultant on public and private pension funds
(1991-1993). Formerly President of Lepercq
Realty Advisers (1988-1990). Age 71.
Leo M. Walsh, Jr. ............... Director and/or Trustee of several investment June 1992 5,000
Director, Chairman of the companies advised by Hyperion Capital
Audit Committee Management, Inc. or by its affiliates
(1989-Present). Director of Equitable Real
Estate Hyperion Mortgage Opportunity Fund,
Inc. and Equitable Real Estate Hyperion High
Yield Commercial Mortgage Fund, Inc.
(1995-Present). Financial Consultant for Medco
Containment Services Inc. (1994-Present).
Financial Consultant for Synetic Inc., a
manufacturer of porous plastic materials for
health care uses (1989-1994). Formerly
President, WW Acquisition Corp. (1989-1990);
Senior Executive Vice President and Chief
Operating Officer of The Equitable Life
Assurance Society of the United States ('The
Equitable') (1986-1988); Director of The
Equitable and Chairman of Equitable Investment
Corporation, a holding company for The
Equitable's investment oriented subsidiaries
(1983-1988); Chairman and Chief Executive
Officer of EQUICOR-Equitable HCA Corporation
(1987-1988). Age 63.
</TABLE>
- ------------------
* Interested persons as defined in the Investment Company Act of 1940, as
amended (the '1940 Act'), because of affiliations with Hyperion Capital
Management, Inc., the Trust's Investment Adviser.
** The holdings of no director or nominee represented more than 1% of the
outstanding shares of the Trust.
4
<PAGE>
OFFICERS OF THE TRUST. The officers of the Trust are chosen each year at
the first meeting of the Board of Directors of the Trust following the Annual
Meeting of Stockholders, to hold office at the discretion of the Board of
Directors until the meeting of the Board following the next Annual Meeting of
Stockholders and until their successors are chosen and qualified. The Board of
Directors has elected five officers of the Trust. Except where dates of service
are noted, all officers listed below served as such throughout the 1995 fiscal
year. The following sets forth information concerning each officer of the Trust
who served during all or part of the last fiscal year of the Trust:
<TABLE>
<CAPTION>
NAME AND
PRINCIPAL OCCUPATION OFFICE AGE OFFICER SINCE
- ------------------------------------------- ------------ --- --------------
<S> <C> <C> <C>
Kenneth C. Weiss Chairman 44 June 1992
President and Chief Executive Officer of
Hyperion Capital Management, Inc.; See
information under 'ELECTION OF
DIRECTORS.'
Louis C. Lucido President 47 June 1992
Managing Director and Chief Operating
Officer of Hyperion Capital
Management, Inc. (February
1992-Present). President and/or
Director of several investment
companies advised by Hyperion Capital
Management, Inc. or by its affiliates
(1992-Present). Senior Vice President
and Director, Progressive Capital
Management Inc. (1991-February 1992).
Senior Vice President and Manager,
Donaldson Lufkin & Jenrette
(1988-1991). Vice President, Smith
Barney, Harris Upham & Co. Inc.
(1987-1988). Vice-President, Merrill
Lynch, Pierce, Fenner & Smith
(1981-1987).
Clifford E. Lai Senior Vice 42 April 1993
Managing Director and Chief Investment President
Officer, Hyperion Capital Management,
Inc. (March 1993-Present). President
and/or Director and Senior Vice
President of several investment
companies advised by Hyperion Capital
Management, Inc. or by its affiliates.
(1993-Present) Managing Director and
Chief Investment Strategist for Fixed
Income, First Boston Asset Management
(1989-1993). Vice President, Morgan
Stanley & Co. (1987-1989).
Patricia A. Sloan Secretary 52 June 1992
Managing Director of Ranieri & Co., Inc.
(1988-Present); See information under
'ELECTION OF DIRECTORS.'
Alan M. Mandel Treasurer 33 February 1993
Vice President of Hyperion Capital (Resigned
Management, Inc. (1991-1994). Vice December 1994)
President of Mitchell Hutchins Asset
Management Inc. (1987-1991). Deloitte
Haskins & Sells (1985-1987).
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NAME AND
PRINCIPAL OCCUPATION OFFICE AGE OFFICER SINCE
- ------------------------------------------- ------------ --- --------------
<S> <C> <C> <C>
Paul Zavattoni Treasurer 33 March 1995
Vice President of Hyperion Capital (Resigned
Management, Inc. in 1992; Treasurer July 1995)
(March 1995-July 1995). Formerly
Assistant Vice President of
PaineWebber/Mitchell Hutchins Asset
Management (1988-1992). Fund
Supervisor with Smith Barney Harris
Upham & Co. (1985-1988).
Joseph W. Sullivan Treasurer 38 September 1995
Vice President of Hyperion Capital
Management, Inc. (August
1995-Present). Treasurer of several
investment companies advised by
Hyperion Capital Management, Inc. or
by its affiliates (September
1995-Present) Formerly, Vice President
in Merrill Lynch & Co.'s Investment
Banking Division; Treasurer and Chief
Financial Officer of several Merrill
Lynch subsidiaries. Responsible for
all financial reporting, accounting,
ministerial and administrative
services (1990-1995); Assistant Vice
President of Standard & Poor's Debt
Rating Group (1988-1990); Assistant
Vice President and Operations
Controller of Shearson Lehman Hutton,
Inc., engaged in the identification,
analysis and financial administration
of public and private real estate
investment programs (1983-1987). A
Licensed Certified Public Accountant
since 1981.
</TABLE>
At November 30, 1995, directors and officers of the Trust as a group owned
beneficially less than 1% of the outstanding shares of the Trust. No person, to
the knowledge of management, owned beneficially more than 5% of the Trust's
outstanding shares at that date. The business address of the Trust and its
officers and directors is 520 Madison Avenue, New York, New York 10022.
INTERESTED PERSONS. Mr. Ranieri serves as a Director and Chairman of the
Board of the Adviser and Mr. Weiss serves as a Director, President and Chief
Executive Officer of Hyperion Capital Management, Inc. (the 'Adviser'). Ms.
Sloan is a special limited partner of Hyperion Ventures, the sole general
partner of Hyperion Partners L.P., of which the Adviser is a wholly-owned
subsidiary. As a result of their service with the Adviser and certain
affiliations with the Adviser as described below, the Trust considers Messrs.
Ranieri and Weiss and Ms. Sloan to be 'interested persons' of the Trust within
the meaning of Section 2(a)(19) of the 1940 Act.
COMMITTEES AND BOARD OF DIRECTORS' MEETINGS. The Trust has a standing
Audit Committee presently consisting of Messrs. Walsh, Drake, Petersen and
Marston, all of whom are members of the Board of Directors and are currently
non-interested persons of the Trust. The principal functions of the Trust's
Audit Committee are to recommend to the Board the appointment of the Trust's
auditors, to review with the auditors the scope and anticipated costs of their
audit and to receive and consider a report from the auditors concerning their
conduct of the audit, including any comments or recommendations they might want
to make in that connection. During the last fiscal year of the Trust, the full
Board of Directors met six times, and the Audit Committee met one time. All of
the directors attended the Audit Committee meeting and all of the directors,
except Mr. Marston, attended at least 75% of the aggregate of the Board meetings
and the Audit Committee meeting. Mr. Marston attended five of the seven
meetings. The Trust has no nominating, compensation or similar committees.
6
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS. No remuneration was paid
by the Trust to persons who were directors, officers or employees of Hyperion
Capital Management, Inc. or any affiliate thereof for their services as
directors or officers of the Trust. Each director of the Trust, other than those
who are officers or employees of Hyperion Capital Management, Inc. or any
affiliate thereof, is entitled to receive a fee of $7,500 per year plus $1,000
for each Board of Directors' meeting attended. Members of the Audit Committee
receive $750 for each Audit Committee meeting attended, other than meetings held
on days when there is also a directors' meeting.
DIRECTORS' COMPENSATION TABLE
FOR THE TWELVE MONTH PERIOD ENDED 11/30/95
<TABLE>
<CAPTION>
TOTAL DIRECTORS'
DIRECTORS' COMPENSATION
COMPENSATION FROM THE TRUST
FROM THE AND THE FUND
TRUST COMPLEX
------------ ----------------
<S> <C> <C>
Rodman Drake.................. $ 12,500 $ 61,500
Garth Marston................. 12,500 61,500
Harry E. Petersen, Jr......... 13,500 66,500
Leo M. Walsh, Jr.............. 13,500 66,500
------------ ----------------
$ 52,000 $256,000
------------ ----------------
------------ ----------------
</TABLE>
REQUIRED VOTE
Election of the listed nominees for director requires the affirmative vote
of the holders of a majority of the outstanding shares of Common Stock of the
Trust present or represented by proxy at the Annual Meeting.
7
<PAGE>
PROPOSAL 2: RATIFICATION OR REJECTION OF
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of the Trust will consider, and it is expected that
they will recommend the selection of Deloitte & Touche LLP as independent
auditors of the Trust for the fiscal year ending November 30, 1996 at a meeting
to be held on March 12, 1996. The appointment of accountants is approved
annually by the Audit Committee of the Board of Directors and is subsequently
submitted to the stockholders for ratification or rejection. The Trust has been
advised by Deloitte & Touche LLP that at November 30, 1995 neither that firm nor
any of its partners had any direct or material indirect financial interest in
the Trust. A representative of Deloitte & Touche LLP will be at the meeting to
answer questions concerning the Trust's financial statements and will have an
opportunity to make a statement if he or she chooses to do so.
REQUIRED VOTE
Ratification of the selection of Deloitte & Touche LLP as independent
auditors of the Trust requires the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock of the Trust present or represented by
proxy at the Annual Meeting.
ADDITIONAL INFORMATION
INVESTMENT ADVISER
The Trust has engaged Hyperion Capital Management, Inc., to provide
professional investment management for the Trust pursuant to an Advisory
Agreement dated May 23, 1995. The Adviser is a Delaware corporation which was
organized in February 1989. The Adviser is a registered investment advisor under
the Investment Advisers Act of 1940, as amended. The business address of the
Adviser and its officers and directors is 520 Madison Avenue, New York, New York
10022. The Trust has also engaged Hyperion Capital Management, Inc. as the
Trust's administrator. The administrator's address is the same as that of the
Adviser.
The Adviser is an indirect, wholly-owned subsidiary of Hyperion Partners
L.P., a Delaware limited partnership ('Hyperion Partners'). Hyperion Partners
acquired all of the shares of the Adviser held by Hyperion Holdings, Inc. in
exchange for a $20,000,000 note on January 15, 1993. The sole general partner of
Hyperion Partners is Hyperion Ventures L.P., a Delaware limited partnership
('Hyperion Ventures'). Corporations owned principally by Lewis S. Ranieri,
Salvatore A. Ranieri and Scott A. Shay are the general partners of Hyperion
Ventures. Lewis S. Ranieri, a former Vice Chairman of Salomon Brothers Inc
('Salomon Brothers'), is the Chairman of the Board of the Adviser and a Director
of the Trust. Messrs. Salvatore Ranieri and Shay are directors of the Adviser,
but have no other positions with either the Adviser or the Trust. Messrs.
Salvatore Ranieri and Shay are principally engaged in the management of the
affairs of Hyperion Ventures and its affiliated entities. Since January 1, 1990,
Patricia A. Sloan, Secretary of the Trust, has been a special limited partner of
Hyperion Ventures and since July 1993 she has been a limited partner of Hyperion
Partners. Mr. Weiss, Chairman of the Board, Mr. Lucido, President of the Trust,
and Mr. Lai, Senior Vice President of the Trust, are employees of the Adviser,
and each may be entitled, in addition to receiving a salary from the Adviser, to
receive a bonus based upon a portion of the Adviser's profits, including any
profit from a sale of the Adviser. Mr. Sullivan, Treasurer of the Trust, is also
an employee of the Adviser. The business address of Hyperion Partners and
Hyperion Ventures is 50 Charles Lindbergh Boulevard, Suite 500, Uniondale, New
York 11553.
8
<PAGE>
The Adviser provides advisory services to several other registered
investment companies and one offshore fund, all of which invest in
mortgage-backed securities. Its management includes several individuals with
extensive experience in creating, evaluating and investing in Mortgage-Backed
Securities, Derivative Mortgage-Backed Securities and Asset-Backed Securities,
and in using hedging techniques. Lewis S. Ranieri, Chairman of the Advisor and a
Director of the Trust, was instrumental in the development of the secondary
mortgage-backed securities market and the creation and development of secondary
markets for conventional mortgage loans, Commercial Mortgage Obligations and
other mortgage-related securities. While at Salomon Brothers, Mr. Ranieri
directed that firm's activities in the mortgage, real estate and government
guaranteed areas. Kenneth C. Weiss, President and Chief Executive Officer of the
Adviser and Chairman of the Board, was a Director of First Boston Asset
Management Corporation and was a Director of The First Boston Corporation. Louis
C. Lucido, Managing Director and Chief Operating Officer of the Adviser and
President of the Trust, was Senior Vice President and Director of Progressive
Capital Management. Clifford E. Lai, Chief Investment Manager of the Adviser and
Senior Vice President of the Trust, was Managing Director and Chief Investment
Strategist for Fixed Income for First Boston Asset Management Corporation.
INVESTMENT ADVISORY AGREEMENT
On March 7, 1995, the Board of Directors of the Trust, including those
persons identified as interested persons and a majority of the directors who are
not parties to the Advisory Agreement or interested persons (as such term is
defined in the 1940 Act) of any such party (the 'Disinterested Directors'),
approved extension of the revised Advisory Agreement through March 31, 1996. At
the time of the Board's approval of the latest extension of the Advisory
Agreement, Messrs. Lewis Ranieri, Weiss and Ms. Sloan were interested persons of
the Trust. The Advisory Agreement was last submitted to a vote of the
Stockholders of the Trust at the Annual Meeting of the Stockholders of the Trust
held on May 23, 1995. At that meeting, the Stockholders approved the continuance
of the revised Advisory Agreement. The Advisory Agreement provides that it will
continue from year to year, but only so long as such continuation is
specifically approved at least annually by both (1) the vote of a majority of
the Board of Directors or the vote of a majority of the outstanding voting
securities of the Trust (as provided in the 1940 Act) and (2) by the vote of a
majority of the Disinterested Directors cast in person at a meeting called for
the purpose of voting on such approval. The Advisory Agreement may be terminated
at any time without the payment of any penalty, upon the vote of a majority of
the Board of Directors or a majority of the outstanding voting securities of the
Trust or by the Adviser,on 60 days' written notice by either party to the other.
The Advisory Agreement will terminate automatically in the event of its
assignment (as such term is defined in the 1940 Act and the rules thereunder).
The Board of Directors will consider continuance of the Advisory Agreement until
March 31, 1997 at a meeting scheduled for March 12, 1996.
Pursuant to the Advisory Agreement, the Trust has retained the Adviser to
manage the investment of the Trust's assets and to provide such investment
research, advice and supervision, in conformity with the Trust's investment
objective and policies, as may be necessary for the operations of the Trust.
The Advisory Agreement provides, among other things, that the Adviser will
bear all expenses of its employees and overhead incurred in connection with its
duties under the Advisory Agreement, and will pay all salaries of the Trust's
directors and officers who are affiliated persons (as such term is defined in
the 1940 Act) of the Adviser. The Advisory Agreement provides that the Trust
shall pay to the Adviser a monthly fee for its services which is equal to .50%
per annum of the Trust's average weekly net assets, which, for purposes of
determining the Adviser's fee, shall be the average weekly value of the total
assets of the Trust, minus the sum of accrued liabilities (including accrued
expenses) of the Trust and any
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declared but unpaid dividends on the Common Shares and any Preferred Shares (if
such shares are issued in the future) and any accumulated dividends on any
Preferred Shares (but without deducting the aggregate liquidation value of any
Preferred Shares). Investment advisory fees paid by the Trust to the Adviser
during the last fiscal year of the Trust amounted to $2,470,311. Additionally,
Administration fees paid by the Trust to the Adviser during the last fiscal year
of the Trust amounted to $680,374.
ADMINISTRATION AGREEMENT
The Trust has entered into an Administration Agreement with Hyperion
Capital Management, Inc. (the 'Administrator'). The Administrator performs
administrative services necessary for the operation of the Trust, including
maintaining certain books and records of the Trust, and preparing reports and
other documents required by federal, state, and other applicable laws and
regulations, and provides the Trust with administrative office facilities. For
these services, the Trust pays a monthly fee at an annual rate of 0.17% of the
first $100 million of the Trust's average weekly net assets, 0.145% of the next
$150 million and 0.12% of any amounts above $250 million. For the twelve month
period ended November 30, 1995, the Administrator earned $680,374 in
Administration fees. The Administrator has entered into a Sub-Administrator
Agreement with Prudential Mutual Fund Management, Inc. ('PMF')(the 'Sub-
Administrator'), an indirect, wholly-owned subsidiary of The Prudential
Insurance Company of America, to whom the Administrator will pay out of its own
assets the fee to be paid to the Sub-Administrator computed at the rate of 0.12%
per annum of the first $100 million of the Trust's average weekly net assets,
0.10% of the next $150 million and 0.08% of any amounts above $250 million. The
Administrator paid $465,250 to PMF during the year ended November 30, 1995. On
September 22, 1995, the Administrator notified PMF that it was terminating its
Sub-Administration agreement with them effective November 30, 1995. The
Administrator has assumed all responsibilities previously performed by PMF.
INVESTMENT COMPANIES MANAGED BY HYPERION CAPITAL MANAGEMENT, INC.
In addition to acting as adviser to the Trust, Hyperion Capital Management,
Inc. acts as investment adviser to the following other investment companies at
the indicated annual compensation.
<TABLE>
<CAPTION>
APPROXIMATE NET
ASSETS AT
NOVEMBER 30,
NAME OF FUND INVESTMENT ADVISORY FEE 1995
- ------------------------------------- ---------------------------------------------- ---------------
(IN MILLIONS)
<S> <C> <C>
The Hyperion Total Return Fund, Inc.* 0.65% of the Fund's average weekly net assets $ 263.0
Hyperion 1997 Term Trust, Inc. 0.50% of the Trust's average weekly net assets 479.7
Hyperion 2002 Term Trust, Inc. 0.50% of the Trust's average weekly net assets 311.0
Hyperion 2005 Investment Grade
Opportunity Term Trust, Inc. 0.65% of the Trust's average weekly net assets 197.1
</TABLE>
- ------------------
* The Adviser and The Hyperion Total Return Fund, Inc. (the 'Fund') have entered
into a sub-advisery agreement with Pacholder Associates, Inc., an Ohio
corporation organized in 1983, to serve as an investment adviser with respect
to a portion of this Fund's assets.
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BROKERAGE COMMISSIONS
Because it buys most of its portfolio securities in dealer markets, the
Trust did not pay any brokerage commissions on most of its securities purchases
during its last fiscal year. The Trust paid an aggregate of $657,816, $176,385
and $94,765 in futures, options and swap commissions respectively during the
last fiscal year, all of which were paid to entities that are not affiliated
with the Trust or the Adviser.
The Adviser has discretion to select brokers and dealers to execute
portfolio transactions initiated by the Adviser and to select the markets in
which such transactions are to be executed. The Advisory Agreement provides, in
substance, that in executing portfolio transactions and selecting brokers or
dealers, the primary responsibility of the Adviser is to seek the best
combination of net price and execution for the Trust. It is expected that
securities will ordinarily be purchased in primary markets, and that in
assessing the best net price and execution available to the Trust, the Adviser
will consider all factors they deem relevant, including the price, dealer
spread, the size, type and difficulty of the transaction involved, the firm's
general execution and operation facilities and the firm's risk in positioning
the securities involved. Transactions in foreign securities markets may involve
the payment of fixed brokerage commissions, which are generally higher than
those in the United States.
In selecting brokers or dealers to execute particular transactions and in
evaluating the best net price and execution available, the Adviser is authorized
to consider 'brokerage and research services' (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934). The Adviser is also
authorized to cause the Trust to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction. The Adviser must
determine in good faith, however, that such commission was reasonable in
relation to the value of the brokerage and research services provided, viewed in
terms of that particular transaction or in terms of all the accounts over which
the Adviser exercises investment discretion. Research services furnished by
brokers through whom the Trust effects securities transactions may be used by
the Adviser in servicing all of the accounts for which investment discretion is
exercised by the Adviser, and not all such services may be used by the Adviser
in connection with the Trust.
COMPLIANCE WITH SECTION 16 REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 requires the Trust's
officers and directors and persons who own more than ten percent of a registered
class of the Trust's equity securities to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and the New York Stock
Exchange. Officers, directors and greater than ten-percent shareholders are
required by SEC regulations to furnish the Trust with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by the
Trust and written representations from certain reporting persons that all
applicable filing requirements for such persons had been complied with, the
Trust believes that, during the fiscal year ending November 30, 1995, all filing
requirements applicable to the Trust's officers, directors, and greater than
ten-percent beneficial owners were complied with.
LITIGATION
During the months of October and November of 1993, purported class action
lawsuits were instituted against the Trust and its directors, officers and
underwriters by certain shareholders of the Trust in the United States District
Court, Southern District of New York. The plaintiffs in those actions generally
alleged
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<PAGE>
that the defendants made inadequate and misleading disclosure in the
registration statement and prospectus for the Trust, in particular, as such
disclosure relates to the nature and risks of 'interest-only mortgage strip
securities' and the Trust's investments in those instruments. A Pre-Trial Order
of Consolidation dated December 27, 1993 consolidated these and other actions
under the caption In re: Hyperion Securities Litigation Master File No.
93-CIV-7179 (MBM). Pursuant to the terms of the Order of Consolidation, one
consolidated amended complaint was served upon the Trust and the other
defendants which superseded all other complaints previously filed. The Adviser
was added as a defendant in that complaint. On April 8, 1994, the defendants
moved to dismiss the consolidated complaint. Pursuant to an order dated October
3, 1994, the Court stayed all discovery in the Action except for certain limited
document discovery. In November 1994, while the motion to dismiss was still
pending, plaintiffs filed a second consolidated amended complaint which
superseded the first amended complaint. The allegations in the second
consolidated complaint relate to the accuracy of the defendants' representations
to investors about the Trust's investment objectives and the level and adequacy
of the disclosure in the Prospectus for the Trust used in connection with its
initial public offering. The defendants moved to dismiss the second consolidated
amended complaint in December 1994.
Judge Michael B. Mukasey issued an opinion and order dated July 12, 1995
dismissing the second consolidated amended complaint without leave to replead
(granted-93 CIV-7179; July 18, 1995). The plaintiffs filed a motion to reargue
on July 27, 1995 and Judge Mukasey denied the motion to reargue on September 6,
1995. Plaintiffs filed a notice of appeal to the Second Circuit Court of Appeals
on August 17, 1995. The appeal has been fully briefed and oral argument of the
appeal will likely occur in early 1996. Pursuant to the Underwriting Agreement
between the Trust and its underwriters, the Trust and the Adviser have jointly
and severally agreed to indemnify the underwriters for their liabilities, losses
and costs directly related to certain contents of the prospectus and
registration statement of the Trust. The underwriters have provided notification
to the Trust and the Adviser that they intend to exercise their rights of
indemnification in the event that they are subject to liabilities, costs or
losses that are covered by the indemnity. In addition, pursuant to the Advisory
Agreement between the Trust and the Adviser, the Adviser is indemnified for all
of its liabilities, losses and costs in connection with any matter involving the
Trust, except for actions relating to the gross negligence, willful malfeasance
or fraud of the Adviser. In addition, the Trust's Articles of Incorporation
provide for the indemnification of its Directors. The Trust's Directors and
Adviser have also notified the Trust of their intention to seek indemnification.
The Trust has incurred litigation expenses for the year ended November 30, 1995
to the indemnified parties noted above, based upon amounts which are deemed
reimbursable in accordance with the indemnification provisions. The Trust has
included these amounts in legal fees. The ultimate outcome of this litigation is
not presently determinable.
OTHER BUSINESS
The Board of Directors of the Trust does not know of any other matter which
may come before the meeting. If any other matter properly comes before the
meeting, it is the intention of the persons named in the proxy to vote the
proxies in accordance with their judgment on that matter.
PROPOSALS TO BE SUBMITTED BY STOCKHOLDERS
All proposals by stockholders of the Trust that are intended to be
presented at the Trust's next Annual Meeting of Stockholders to be held in 1997
must be received by the Trust for inclusion in the Trust's proxy statement and
proxy relating to that meeting no later than October 4, 1996.
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<PAGE>
EXPENSES OF PROXY SOLICITATION
The cost of preparing, assembling and mailing material in connection with
this solicitation of proxies will be borne by the Trust. In addition to the use
of the mails, proxies may be solicited personally by regular employees of the
Trust, Hyperion Capital Management, Inc., or Shareholder Communications Corp.,
paid solicitors for the Trust, or by telephone or telegraph. The anticipated
cost of solicitation by the paid solicitors will be nominal. The Trust's
agreement with Shareholder Communications Corp. provides that such paid
solicitors will perform a broker search and deliver proxies in return for the
payment of their fee plus the expenses associated with this proxy solicitation.
Brokerage houses, banks and other fiduciaries will be requested to forward proxy
solicitation material to their principals to obtain authorization for the
execution of proxies, and they will be reimbursed by the Trust for out-of-pocket
expenses incurred in this connection.
January 29, 1996
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<PAGE>
HYPERION 1999 TERM TRUST, INC.
Proxy Solicited on Behalf of the Directors.
The undersigned hereby appoints LEWIS S. RANIERI, KENNETH C. WEISS, LOUIS C.
LUCIDO, JOSEPH W. SULLIVAN and PATRICIA A. SLOAN, and each of them, attorneys
and proxies for the undersigned, with full power of substitution and revocation
to represent the undersigned and to vote on behalf of the undersigned all shares
of Hyperion 1999 Term Trust, Inc. (the "Trust") which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Trust to be held
at The Drake Hotel, 440 Park Avenue at 56th Street, New York, New York 10022, on
Tuesday, April 16, 1996 at 9:45 a.m., and at any adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Meeting and
accompanying 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 of authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
This Proxy, if properly executed, will be voted in the manner directed by the
stockholder. If no direction is made, this Proxy will be voted FOR election of
the nominees as Directors in Proposal 1 and FOR Proposal 2. Please refer to the
Proxy Statement for a discussion of the Proposals.
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name appears on the Proxy. If joint owners,
EITHER may sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian, or corporate officer, please give full title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
______________________________________ ______________________________________
______________________________________ ______________________________________
______________________________________ ______________________________________
<PAGE>
/x/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
1) Election of Directors: With- For All
For hold Except
Class III / / / / / /
Kenneth C. Weiss, Lewis S. Ranieri, Patricia A. Sloan
If you do not wish your shares voted "For" a particular nominee, mark the
"For All Except" box and strike a line through the nominee(s) name. Your
shares will be voted for the remaining nominee.
2) Ratification or rejection of the selection of For Against Abstain
independent auditors (a vote "FOR" is a vote for / / / / / /
ratification).
I plan to attend the Annual Meeting of Stockholders on Yes No
April 16, 1996. / / / /
Mark box at right if comments or address change have been
noted on the reverse side of this card. / /
RECORD DATE SHARES:
Please be sure to sign and date this Proxy.
Date ________________________
________________________________________________________________________________
Signature(s), (Title(s), if applicable)
