HYPERION 1999 TERM TRUST, INC.
One Liberty Plaza o New York, New York 10006-1404
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
January 27, 1999 To the Stockholders:
The Annual Meeting of Stockholders of Hyperion 1999 Term Trust, Inc.
(the "Trust") will be held at The Millenium Hilton, 55 Church Street (next to
the World Trade Center), New York, New York 10007, on Tuesday, April 20, 1999,
at 10:30 a.m., for the following purposes:
1. To elect directors (Proposal 1).
2. To ratify or reject the
selection of PricewaterhouseCoopers LLP
as the independent accountants of the Trust
for the fiscal year ending November 30, 1999
(Proposal 2).
3. To transact any other business
that may properly come
before the meeting.
The close of business on January 22, 1999, 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.
Instructions for Signing Proxy Cards
The following general rules for signing proxy cards may be of
assistance to you and eliminate 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:
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 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
HYPERION 1999 TERM TRUST, INC.
One Liberty Plaza o New York, New York 10006-1404
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 Millenium Hilton, 55 Church Street (next to the World Trade Center), New
York, New York 10007, at 10:30 a.m. on Tuesday, April 20, 1999, 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 27, 1999. 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 re-election of the two nominees and the election of Robert F. Birch for
Class II director and for the election of Mr. Andrew M. Carter as Class I
director, and FOR the ratification of the selection of PricewaterhouseCoopers
LLP as the independent accountants of the Trust for the fiscal year ending
November 30, 1999. The close of business on January 22, 1999, 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 61,358,339 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, 2000; Class II, 2001; and Class
III, 1999. At each subsequent annual election, Directors chosen to succeed those
directors 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.
Please note that no directors will serve beyond the date of the termination of
the Trust.
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. Ranieri and Ms. Sloan. The persons named in the accompanying
form of proxy also intend to vote (unless directed not to so vote) for the
election of Robert F. Birch as a Class II Director and Mr. Andrew M. Carter as a
Class I director. On July 31, 1998, the Board of Directors elected Mr. Carter to
fill the vacancy created by the resignation of Garth Marston, who resigned on
June 10, 1998. On December 8, 1998, the Board elected Mr. Robert F. Birch as a
Class II Director to fill a newly created director position. The elections of
Messrs. Carter and Birch are subject to shareholder approval. Each nominee has
indicated that he or she will serve if elected, but if either 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 two nominees for re-election and two
nominees for election to the Board of Directors at this time. Proxies cannot be
voted for a greater number of persons than the nominees currently proposed to
serve on the Board of Directors.
The following table provides information concerning each of the four
nominees for and the three continuing members of the Board of Directors of the
Trust:
<TABLE>
<S> <C> <C> <C>
Shares of
Common Stock
Beneficially
Owned Directly
or Indirectly,
on November 30,
Name and Office Principal Occupation During Past Five Years, Director 1998(**)
with the Trust Other Directorships and Age Since
Class III Nominees to serve until 2002 Annual Meeting of Stockholders or
termination of the Trust:
Lewis S. Ranieri*
Director Chairman and Chief Executive Officer of Ranieri & 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 Vice Chairman of the Board of Hyperion Capital Management, Inc.
(December 1998-present); Director and Chairman of the Board of
Hyperion Capital Management, Inc. (1989-November 1998); Chairman of
the Board (1989-December 1998) and/or Director (since 1989) of
several investment companies advised by Hyperion Capital Management,
Inc. or by its affiliates; Director of Lend Lease Hyperion Mortgage
Opportunity Fund, Inc. (formerly Equitable Real Estate Hyperion
Mortgage Opportunity Fund, Inc.) and Lend Lease Hyperion High Yield
Commercial Mortgage Fund, Inc. (formerly Equitable Real Estate
Hyperion High Yield Commercial Mortgage Fund, Inc.) (since 1995);
Chairman of Bank United Corp., the parent of Bank United (formerly
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. Formerly Vice Chairman of
Salomon Brothers Inc (until 1987).
Age 52 June 1989 11,500
Patricia A. Sloan*
Director, Secretary Managing Director of Ranieri & Co., Inc. (1988-Present). Secretary,
Director and/or Trustee of several investment companies advised by
Hyperion Capital Management, Inc. (1989-Present). Director of Bank
United Corp., the parent Bank United (formerly Bank United of Texas
FSB) (1988-Present). Formerly Director of the Financial Institutions
Group of Salomon Brothers Inc (1972-1988).
Age 55 June 1992 388
</TABLE>
<TABLE>
<S> <C> <C> <C>
Shares of
Common Stock
Beneficially
Owned Directly
or Indirectly,
on November 30,
Name and Office Principal Occupation During Past Five Years, Director 1998(**)
with the Trust Other Directorships and Age Since
Class I Nominee to serve until 2000 Annual Meeting of Stockholders or
termination of the Trust:
Andrew M. Carter*
Director, Chairman of Chairman and Chief Executive Officer of Hyperion Capital Management,
the Board Inc. (November 1998-Present). Vice Chairman of The China Business
Group (1996-Present), and presently officer of four charitable
boards: The New England Conservatory, The Loomis Chaffee School, The
William E. Simon Graduate School of Business Administration at the
University of Rochester, and The Big Brother Association of Boston.
Director of several investment companies advised by Hyperion Capital
Management, Inc. (July 1998-Present). Formerly President and Founding
Principal, Andrew M. Carter & Company (1994-1998); Director and
Senior Vice President, Jennison Associates Capital Corp.
(1975-1993); Founder, Standard & Poor's/Carter, Doyle (1972-1975);
Vice President, Head of Fixed Income Group, Wellington Management Co.
(1968-1972); and Manager of the Harvard Endowment bond portfolio,
Harvard Treasurer's Office (1964-1968).
Age 58 July 1998 # -
Class I Director to serve until 2000 Annual Meeting of Stockholders or
termination of the Trust:
Rodman L. Drake
Director, Member of the Chief Operating Officer, Continuation Investments N.V.
Audit Committee (1997-Present). Director and/or Trustee of several investment
companies advised by Hyperion Capital Management, Inc.
(1989-Present). Formerly, Co-Chairman of KMR Power Corporation (1993-1997);
President, Mandrake Group (1993-1997); Managing Director and
Chief Executive Officer of Cresap (1980-1990). Trustee of Excelsior Funds (1994-Present).
Director, Parsons Brinckerhoff, Inc. (1995-Present) and Parsons Brinckerhoff Energy
Systems, Inc. (1995-Present), and Latin American Growth Fund Inc.
(1994-Present).
Age 56 June 1992 711
Class II Nominee to serve until 2001 Annual Meeting of Stockholders or
termination of the Trust:
Robert F. Birch
Director, Member of the Chairman and President, New America High Income Fund (1992-Present).
Audit Committee Director and Strategic Planning Consultant, Dewe Rogerson, Inc. Ltd.
(1994-1998); Chairman of the Board and Co-Founder, The
China Business Group, Inc. (1996-Present). Formerly,
Chairman and Chief Executive Officer, Memtek
Corporation (1990-1991); Associated with Finn
Wishengrad Warnke & Gayton, a consulting firm
specializing in work-outs of financially distressed
companies (1988-1989); President and Chief Executive
Officer, Gardner and Preston Moss, Inc.
(1969-1987).
Age 62 December 1998 -
</TABLE>
<TABLE>
<S> <C> <C> <C>
Shares of
Common Stock
Beneficially
Owned Directly
or Indirectly,
on November 30,
Name and Office Principal Occupation During Past Five Years, Director 1998(**)
with the Trust Other Directorships and Age Since
Class II Directors to serve until 2001 Annual Meeting of Stockholders or
termination of the Trust:
Harry E. Petersen, Jr.
Director, Member of the Director and/or Trustee of several investment companies advised by
Audit Committee Hyperion Capital Management, Inc. or by its affiliates
(1992-Present). Senior Advisor to Cornerstone Equity Advisors, Inc.
(1998-Present). Formerly, Senior Advisor to Potomac Babson Inc.
(1995-1998). Formerly, Director of Equitable Real Estate Hyperion
Mortgage Opportunity Fund, Inc. and Equitable Real Estate Hyperion
High Yield Commercial Mortgage Fund, Inc. (1995-1997); Director of
Lexington Corporate Properties, Inc. (1993-1997); Consultant to
Advisers Capital Management, Inc. (1992-1995); Consultant on public
and private pension funds (1991-1993); President of Lepercq Realty
Advisors (1988-1990). Member of Advisory Council of Polytechnic
University.
Age 74 Oct. 1993 200
Leo M. Walsh, Jr.
Director, Chairman of Director and/or Trustee of several investment companies advised by
the Audit Committee Hyperion Capital Management, Inc. or by its affiliates (1989-Present).
Financial Consultant for Merck-Medco Managed Care L.L.C. (formerly
Medco Containment Services Inc.) (1994-Present). Formerly, Director
of Equitable Real Estate Hyperion Mortgage Opportunity Fund, Inc. and
Equitable Real Estate Hyperion High Yield Commercial Mortgage Fund,
Inc. (1995-1997); 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 66 June 1989 5,000
* 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 Advisor. ** The holdings of no director
or nominee represented more than 1% of the outstanding shares of the Trust. # On
July 21, 1998, the Board of Directors elected Mr. Carter to fill the vacancy
created by the resignation of Garth Marston, who resigned on June 10, 1998.
<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 1998 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:
Name and
Principal Occupation Office Age Officer Since
Andrew M. Carter Chairman 58 December 1998
See information under "ELECTION OF DIRECTORS."
June 1992 - December
Kenneth C. Weiss Chairman 46 1998
Director and/or Trustee of several investment companies advised by Hyperion
Capital Management, Inc. or by its affiliate (1992-Present) and former
President and Chief Executive Officer of Hyperion Capital Management, Inc.
(February 1992-December 1998). Former 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-December 1998). Director
and President of Lend Lease Hyperion Mortgage Opportunity Fund, Inc. and Lend
Lease Hyperion High Yield Commercial Mortgage Fund, Inc. and their Investment
Advisor (1995-December 1998); Formerly Director of First Boston Asset
Management (1988-February 1992). Director of The First Boston Corporation
(until 1988).
President/Senior June 1997/
Clifford E. Lai Vice President 44 (April 1993-June 1997)
President (since November 1998) and Chief Investment Officer, Hyperion Capital
Management, Inc. (March 1993-Present). President of several investment
companies advised by Hyperion Capital Management, Inc. or by its affiliates
(1993-Present). Formerly Managing Director and Chief Investment Strategist for
Fixed Income, First Boston Asset Management (1989-1993); Vice President, Morgan
Stanley & Co. (1987-1989).
Patricia A. Botta Vice President 41 March 1997
Director of Hyperion Capital Management, Inc. (1989-Present). Formerly with the
Davco Group (1988-1989)and with Salomon Brothers Inc (1986-1988).
Patricia A. Sloan Secretary 55 June 1992
See information under "ELECTION OF DIRECTORS."
Thomas F. Doodian Treasurer 40 February 1998
Chief Operating Officer, Hyperion Capital Management, Inc. (July 1995-Present).
Treasurer of several investment companies advised by Hyperion Capital
Management, Inc. (February 1998-Present). Formerly, Vice President in Mortgage
Backed Trading at Mabon Securities Corporation (1994-1995); fixed income
analyst, trader, and Vice President and Controller at Credit Suisse First Boston
(1984-1994).
</TABLE>
Security Ownership of Certain Beneficial Owners at November 30, 1998
<TABLE>
<S> <C> <C> <C> <C>
- ------------------ --------------------------------------------------- -------------------------- ------------------ --------------
Name and Amount and
Address of Nature of Percent
Title of Beneficial Beneficial of
Class Owner Ownership Class Source
- ------------------ --------------------------------------------------- -------------------------- ------------------ --------------
Common Tattersall Advisory Group 14,901,000 shares 27.09% 13F
Stock 6802 Paragon Place
Suite 200
Richmond, Virginia 23230
- ------------------ --------------------------------------------------- -------------------------- ------------------ --------------
- ------------------ --------------------------------------------------- -------------------------- ------------------ --------------
Common Credit Suisse First Boston Corporation 7,202,000 shares 13.09% 13F
Stock Eleven Madison Avenue
New York, NY 10010
- ------------------ --------------------------------------------------- -------------------------- ------------------ --------------
</TABLE>
At November 30, 1998, directors and officers of the Trust as a group
owned beneficially less than 1% of the outstanding shares of the Trust. No
person, other than those listed above, 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 One Liberty
Plaza, New York, New York 10006-1404.
Interested Persons. Mr. Ranieri serves as a Director of the Advisor.
Mr. Carter serves as the Chairman and Chief Executive Officer of the Advisor.
Mr. Weiss formerly served as a Director, President and Chief Executive Officer
of the Advisor. Ms. Sloan is a special limited partner of Hyperion Ventures, the
sole general partner of Hyperion Partners L.P., of which the Advisor is a
wholly-owned subsidiary. As a result of their service with the Advisor and
certain affiliations with the Advisor as described below, the Trust considers
Messrs. Ranieri, Carter, 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, Birch and
Petersen, all of whom are members of the Board of Directors and are currently
non-interested persons of the Trust. Mr. Carter resigned from the Audit
Committee on November 20, 1998. The principal functions of the Trust's Audit
Committee are to recommend to the Board the appointment of the Trust's
accountants, to review with the accountants the scope and anticipated costs of
their audit and to receive and consider a report from the accountants 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 five times, and the Audit Committee met one time.
All of the members of the Audit Committee attended the Audit Committee meeting
and all of the directors attended at least 75% of the Board meetings. The Trust
has no nominating, compensation or similar committees.
Compensation of Directors and Executive Officers. No remuneration was
paid by the Trust to persons who, at the time, 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 11/30/98
<TABLE>
<S> <C> <C>
Directors' Total Directors' Compensation
Compensation from the Trust and the Fund
From the Trust Complex
Andrew M. Carter**................................................... $2,875 $11,500
Rodman L. Drake...................................................... $11,500 $46,000
Garth Marston*....................................................... $8,625 $34,500
Harry E. Petersen, Jr................................................ $11,500 $46,000
Leo M. Walsh, Jr. ................................................... $11,500 $46,000
------- -------
$46,000 $184,000
======= ========
</TABLE>
*Mr. Marston resigned as Director of the Trust on June 10, 1998, and currently
serves as a Director Emeritus. Pursuant to the Director Emeritus Plan adopted by
the Board of Directors, a Director Emeritus receives compensation from the Trust
at a rate equal to one-half of the compensation paid to directors.
** Compensation represents that paid to Mr. Carter as a disinterested director
prior to his change in status as an interested director on November 20, 1998. No
compensation was paid by the Trust or Fund complex subsequent to the change in
status.
Required Vote
Election of the listed nominees for director requires the affirmative
vote of the holders of a majority of the shares of Common Stock of the Trust
present or represented by proxy at the Annual Meeting.
PROPOSAL 2: RATIFICATION OR REJECTION OF
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Trust will consider, and it is expected
that they will recommend, the selection of PricewaterhouseCoopers LLP as
independent accountants of the Trust for the fiscal year ending November 30,
1999, at a meeting to be held on March 9, 1999. 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 PricewaterhouseCoopers LLP that at November 30, 1998,
neither that firm nor any of its partners had any direct or material indirect
financial interest in the Trust. A representative of PricewaterhouseCoopers 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.
The Board of Directors of the Trust has determined that it would be in
the best interests of the Trust and its shareholders to appoint
PricewaterhouseCoopers LLP to replace Deloitte & Touche as the accountants of
the Trust. The Board's decision was based upon the breadth and scope of the
accounting and auditing services that PricewaterhouseCoopers LLP would provide
to the Trust.
Required Vote
Ratification of the selection of PricewaterhouseCoopers LLP as
independent accountants 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 Advisor
The Trust has engaged Hyperion Capital Management, Inc., the Advisor,
to provide professional investment management for the Trust pursuant to an
Advisory Agreement dated June 17, 1992. The Advisor is a Delaware corporation
which was organized in February 1989. The Advisor is a registered investment
advisor under the Investment Advisers Act of 1940, as amended. The business
address of the Advisor and its officers and directors is One Liberty Plaza, New
York, New York 10006-1404. 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 Advisor.
The Advisor is a subsidiary of Hyperion Partners L.P., a Delaware
limited partnership ("Hyperion Partners"). 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 Vice Chairman of the Board of the Advisor and a Director of the Trust.
Messrs. Salvatore Ranieri and Shay are directors of the Advisor, but have no
other positions with either the Advisor or the Trust. Messrs. Salvatore Ranieri
and Shay are principally engaged in the management of the affairs of Hyperion
Ventures and its affiliated entities. Mr. Carter is the Chairman and Chief
Executive Officer of the Advisor. 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.
Lai, President of the Trust, is President of the Advisor, and may be entitled,
in addition to receiving a salary from the Advisor, to receive a bonus based
upon a portion of the Advisor's profits, including any profit from a sale of the
Advisor. Ms. Botta, Vice President of the Trust, and Mr. Doodian, Treasurer of
the Trust, are also employees of the Advisor. The business address of Hyperion
Partners and Hyperion Ventures is 50 Charles Lindbergh Boulevard, Suite 500,
Uniondale, New York 11553.
The Advisor 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, Vice 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, CMOs 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. Clifford E. Lai, President and Chief Investment Officer of the Advisor
and 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 10, 1998, 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 Advisory Agreement through March 31, 1999. At the time
of the Board's approval of the latest extension of the Advisory Agreement,
Messrs. Lewis Ranieri and 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 Advisor, on 60 days' written notice by either party to the
other. The 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,
2000, at a meeting scheduled for March 9, 1999.
Pursuant to the Advisory Agreement, the Trust has retained the Advisor
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 Advisor
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 Advisor. The Advisory Agreement provides that
the Trust shall pay to the Advisor 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 Advisor'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 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 Advisor during the last fiscal year of the Trust
amounted to $2,260,120.
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. The Advisor, in its
capacity as Administrator, has entered into a Sub-Administration Agreement with
Investors Capital Services, Inc., to which the Advisor delegates certain of its
administrative responsibilities. For these services, the Advisor pays out of its
own assets the fee to be paid to the Sub-Administrator, computed at the rate of
0.075% per annum of the first $650 million of the Trust's average weekly net
assets and 0.005% of any amounts above $650 million. For the twelve month period
ended November 30, 1998, the Administrator earned $629,929 in Administration
fees. In addition, the Administrator has entered into Administration Agreements
with the other investment companies listed on the following page, generally
under the same fee structure as noted above. The only exception is the fee
structure for services rendered to The Hyperion Total Return Fund, Inc., which
stipulates a fee paid monthly at an annual rate of 0.20% of its average weekly
assets.
Investment Companies Managed by Hyperion Capital
Management, Inc.
In addition to acting as advisor to the Trust, Hyperion Capital Management, Inc.
acts as investment advisor to the following other investment companies at the
indicated annual compensation.
<TABLE>
<S> <C> <C>
Investment Advisory Fee Approximate Net Assets at
November 30, 1998
(in Millions)
The Hyperion Total Return Fund, Inc.* 0.65% of the Fund's average weekly $238,803
net assets
Hyperion 2002 Term Trust, Inc. 0.50% of the Trust's average weekly $279,886
net assets
Hyperion 2005 Investment Grade Opportunity Term 0.65% of the Trust's average weekly $167,340
Trust, Inc. net assets
</TABLE>
*The Advisor and The Hyperion Total Return Fund,
Inc. (the "Fund") have entered into a sub-advisory
agreement with Pacholder Associates, Inc., an Ohio
corporation organized in 1983, to serve as an
investment advisor with respect to a portion of
this Fund's assets.
Brokerage Commissions
Because it buys its portfolio securities in dealer markets, the Trust
did not pay any brokerage commissions on its securities purchases during its
last fiscal year. The Trust paid an aggregate of $1,517 in futures commissions
during the last fiscal year, all of which were paid to entities that are not
affiliated with the Trust or the Advisor.
The Advisor has discretion to select brokers and dealers to execute
portfolio transactions initiated by the Advisor 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 Advisor 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 Advisor
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 Advisor 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 Advisor 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 Advisor 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 Advisor exercises investment discretion. Research services furnished by
brokers through whom the Trust effects securities transactions may be used by
the Advisor in servicing all of the accounts for which investment discretion is
exercised by the Advisor, and not all such services may be used by the Advisor
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 ended November 30, 1998, all filing
requirements applicable to the Trust's officers, directors, and greater than
ten-percent beneficial owners were complied with.
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 2000
must be received by the Trust for inclusion in the Trust's proxy statement and
proxy relating to that meeting no later than September 27, 1999.
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 Corporate Investors
Communications, Inc., 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 Corporate Investors Communications, Inc.
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 27, 1999
HYPERION 1999 TERM TRUST, INC.
PROXY SOLICITED ON BEHALF OF THE
DIRECTORS
The undersigned hereby
appoints Lewis S.Ranieri,
Clifford E. Lai, 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 Millenium Hilton, 55
Church Street (next to the World
Trade Center), New York, New York
10007, on Tuesday, April 20, 1999
at 10:30 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.
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.
Date , 1999
Signature(s), (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE
I PLAN DO NOT PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS ON April 20,
1999
Please indicate your
vote by an "X" in the appropriate
box below. 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.
1. ELECTION OF DIRECTORS: FOR all nominees listed (except
as marked to the contrary
below) WITHHOLD authority to
vote for all nominees
Class III:
Lewis S. Ranieri
Patricia A. Sloan
Class II:
Robert F. Birch
Class I:
Andrew M. Carter
(Instruction: To withhold
authority to vote for any
individual nominee(s), write the
name(s) of the nominee(s) on the
line below.)
2. Ratification or rejection of the
selection of independent accountants
(a vote "FOR" is a vote for ratification) FOR AGAINST ABSTAIN
PLEASE SIGN AND DATE THIS PROXY ON
THE REVERSE SIDE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
