<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant / /
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))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Hyperion 2005 Investment Grade Opportunity Term Trust, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
/ / $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 2005 INVESTMENT GRADE
OPPORTUNITY TERM TRUST, INC.
520 Madison Avenue o New York, New York 10022
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
February 29, 1996
To the Stockholders:
The Annual Meeting of Stockholders of Hyperion 2005 Investment Grade
Opportunity 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 10:30 a.m., for the following purposes:
1. To elect directors (Proposal 1).
2. To ratify or reject the selection of Price Waterhouse LLP as the
independent accountants of the Trust for the fiscal year ending December
31, 1996 (Proposal 2).
3. To transact any other business that may properly come before the
meeting.
The close of business on February 16, 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 2005 INVESTMENT GRADE
OPPORTUNITY 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 2005 Investment Grade Opportunity 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 10:30 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 February 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 two nominees for director, and FOR the ratification of the
selection of Price Waterhouse LLP as the independent accountants of the Trust
for the fiscal year ending December 31, 1996. The close of business on February
16, 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 21,316,673 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, 1998; Class II, 1996; and Class
III, 1997. 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 Garth Marston and Leo M. Walsh, Jr., the members of Class II,
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
Messrs. Marston and Walsh. Each nominee has indicated that he 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 election to the Board of
Directors at this time. Proxies cannot be voted for a greater number of persons
than the two 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 DECEMBER 31,
WITH THE TRUST OTHER DIRECTORSHIPS AND AGE SINCE 1995(**)
- ---------------------------- ------------------------------------------------------- ------------- -----------------
CLASS II NOMINEES TO SERVE UNTIL 1999 ANNUAL MEETING OF STOCKHOLDERS:
<S> <C> <C> <C>
Garth Marston ............ Managing Director of M.E. Associates, a financial February 1993
Director, Member of the consulting group (1986-Present). Director and/or
Audit Committee 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.
Leo M. Walsh, Jr. ........ Director and/or Trustee of several investment companies February 1993 6,000
Director, Chairman of advised by Hyperion Capital Management, Inc. or by
the Audit Committee its affiliates (1989-Present). Director of Equitable
Real Estate Hyperion Mortgage Opportunity Fund, Inc.
and Equitable Real Estate 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
</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 DECEMBER 31,
WITH THE TRUST OTHER DIRECTORSHIPS AND AGE SINCE 1995(**)
- ---------------------------- ------------------------------------------------------- ------------- -----------------
<S> <C> <C> <C>
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.
<CAPTION>
CLASS I DIRECTORS TO SERVE UNTIL 1998 ANNUAL MEETING OF STOCKHOLDERS:
<S> <C> <C> <C>
Rodman L. Drake .......... President, R.L. Drake & Co. Inc. (1993-Present). February 1993 204
Director, Member of the Director and/or Trustee of several investment
Audit Committee 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.
Patricia A. Sloan* ....... Managing Director of Ranieri & Co., Inc. February 1993 300
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
</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 DECEMBER 31,
WITH THE TRUST OTHER DIRECTORSHIPS AND AGE SINCE 1995(**)
- ---------------------------- ------------------------------------------------------- ------------- -----------------
<S> <C> <C> <C>
Texas FSB (1988-Present). Formerly Director of the
Financial Institutions Group of Salomon Brothers Inc.
(1972-1988). Age 52.
<CAPTION>
CLASS III DIRECTORS TO SERVE UNTIL 1997 ANNUAL MEETING OF STOCKHOLDERS:
<S> <C> <C> <C>
Harry E. Petersen, Jr. ... Director and/or Trustee of several investment companies February 1993 200
Director, Member of the advised by Hyperion Capital Management, Inc. or by
Audit Committee 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). Senior Advisor to Potomac Babson Inc.
(1995-Present). Formerly Consultant to Advisers
Capital Management, Inc. (1992-1995).Consultant to
Ewing Capital, Inc. (1993-Present). Formerly
Consultant on public and private pension funds
(1991-1993). Formerly President of Lepercq Realty
Advisors (1988-1990). Member of Advisory Council of
Polytechnic University. Age 71.
Lewis S. Ranieri* ........ Chairman and Chief Executive Officer of Ranieri & Co., February 1993
Director 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. or by its affiliates (since 1989);
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
PRINCIPAL OCCUPATION OR INDIRECTLY, ON
NAME AND OFFICE DURING PAST FIVE YEARS, DIRECTOR DECEMBER 31,
WITH THE TRUST OTHER DIRECTORSHIPS AND AGE SINCE 1995(**)
- ---------------------------- ------------------------------------------------------- ------------- -----------------
<S> <C> <C> <C>
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 Mortgage Fund, Inc.
(since 1995). Formerly Vice Chairman of Salomon
Brothers Inc. (until 1987). Age 49.
Kenneth C. Weiss* ........ President and Chief Executive Officer of Hyperion February 1993 3,962
Director, Chairman of Capital Management, Inc. (February 1992-Present).
the Board of Directors Chairman of the Board, Director/ Trustee and/or
officer of several investment companies advised by
Hyperion Capital Management, Inc. or 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 Funds, Inc. (1995-Present).
Formerly Director of First Boston Asset Management
(1988-February 1992). Director of The First Boston
Corporation (until 1988). Age 44.
</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.
5
<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 six 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 February 1993
President and Chief Executive Officer of Hyperion
Capital Management, Inc.; See information under
'ELECTION OF DIRECTORS.'
Louis C. Lucido........................................ President 47 February 1993
Managing Director and Chief Operating Officer of
Hyperion Capital Management, Inc. (February
1992-Present). President, Senior Vice 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 President 42 April 1993
Managing Director and Chief Investment Officer,
Hyperion Capital Management, Inc. (March
1993-Present). President and/or 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).
John N. Dunlevy........................................ Vice President 36 April 1993
Director, Hyperion Capital Management, Inc. (July
1992-Present). Director and Portfolio Manager,
Teachers Insurance & Annuity Association (1988-1992).
Assistant Vice President, Sumitomo Bank Ltd.
(1985-1988).
Patricia A. Sloan...................................... Secretary 52 February 1993
Managing Director of Ranieri & Co., Inc.
(1988-Present); See information under 'ELECTION OF
DIRECTORS.'
</TABLE>
6
<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 Management, Inc. (Resigned
in 1992; Treasurer (March 1995-July 1995). Formerly July 1995)
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 39 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>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
NAME AND AMOUNT AND
ADDRESS OF NATURE OF PERCENT
TITLE OF BENEFICIAL BENEFICIAL OF
CLASS OWNER OWNERSHIP CLASS SOURCE
- ------------ -------------------------------------- ---------------- ------- ------
<S> <C> <C> <C> <C>
Common Stock Lowe, Brockenbrough & Tattersall, Inc. 2,173,400 shares 10.20% 13G
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
</TABLE>
At December 31, 1995, directors and officers of the Trust as a group owned
beneficially less than 1% of the outstanding shares of the Trust. 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 Advisor and Mr. Weiss serves 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 and Weiss and Ms. Sloan to be 'interested persons' of
the Trust within the meaning of Section 2(a)(19) of the 1940 Act.
7
<PAGE>
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 five 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 four of the six 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 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 12/31/95
<TABLE>
<CAPTION>
DIRECTORS' COMPENSATION TOTAL DIRECTORS' COMPENSATION FROM
FROM THE TRUST THE TRUST AND THE FUND COMPLEX
----------------------- ----------------------------------
<S> <C> <C>
Rodman L. Drake........... $11,500 $ 57,500
Garth Marston............. 11,500 57,500
Harry E. Petersen, Jr..... 12,500 62,500
Leo M. Walsh, Jr.......... 12,500 62,500
----------- ------------
$48,000 $240,000
----------- ------------
----------- ------------
</TABLE>
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 Price Waterhouse LLP as independent
accountants of the Trust for the fiscal year ending December 31, 1996 at a
meeting scheduled 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 Price Waterhouse LLP that at December 31, 1995 neither
that firm nor any of its partners had any direct or material indirect financial
interest in the Trust. A representative of Price Waterhouse 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 Price Waterhouse 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.
8
<PAGE>
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 May 23, 1995. 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 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
Advisor.
The Advisor 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 Advisor 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 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. 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, the Senior Vice President of the Trust, are employees of the
Advisor, and each 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. Mr. Dunlevy, a Vice President
of the Trust, and Mr. Sullivan, 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 Trust, 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, 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. Kenneth
C. Weiss, President and Chief Executive Officer of the Advisor and Chairman of
the Trust, 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 Advisor and President of the Trust, was Senior
Vice President and Director of Progressive Capital Management. Clifford E. Lai,
Chief Investment Manager of the Advisor and Senior Vice President of the Trust,
was Managing Director and Chief Investment Strategist for Fixed Income for First
Boston Asset Management Corporation.
9
<PAGE>
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 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,
1997 at a meeting scheduled for March 12, 1996.
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 .65%
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 $1,217,170.
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 to the Administrator 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 year ended December 31, 1995, the Administrator earned $296,521
in Administration fees. The Administrator 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
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<PAGE>
whom the Administrator delegated certain of its administrative responsibilities.
For these services, the Administrator paid out of its own assets the fee 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 $188,832 to
PMF during the year ended December 31, 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 advisor to the Trust, Hyperion Capital Management,
Inc. acts as investment advisor to the following other investment companies at
the indicated annual compensation.
<TABLE>
<CAPTION>
APPROXIMATE NET
ASSETS AT
DECEMBER 31,
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 $ 265.3
Hyperion 1997 Term Trust, Inc. 0.50% of the Trust's average weekly net assets 485.3
Hyperion 1999 Term Trust, Inc. 0.50% of the Trust's average weekly net assets 484.9
Hyperion 2002 Term Trust, Inc. 0.50% of the Trust's average weekly net assets 314.7
</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 $33,498 and $4,400 in futures and
options commissions, respectively, 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
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<PAGE>
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 ending December 31, 1995, 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 1997
must be received by the Trust for inclusion in the Trust's proxy statement and
proxy relating to that meeting no later than November 7, 1996.
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.
February 29, 1996
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<PAGE>
HYPERION 2005 INVESTMENT GRADE OPPORTUNITY 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 2005 Investment Grade Opportunity 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, NY 10022, on Tuesday, April 16, 1996 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 , 1996
- ----------------------------------------
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 16, 1996
<PAGE>
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 II:
Garth Marston
Leo M. Walsh, Jr.
(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.
