SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ] Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
PREFERRED INCOME MANAGEMENT FUND INCORPORATED
(Name of Registrant as Specified In Its Charter)
TERESA M.R. HAMLIN
ASSISTANT SECRETARY
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transactions
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identity the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
16
PREFERRED INCOME MANAGEMENT FUND INCORPORATED
301 E. Colorado Boulevard, Suite 720
Pasadena, California 91101
NOTICEOF ANNUAL MEETING OF SHAREHOLDERS To Be
Held on April 17, 1998
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of
Preferred Income Management Fund Incorporated (the "Fund"), a Maryland
corporation, will be held at the offices of Willkie Farr & Gallagher, One
Citicorp Center, 153 East 53rd Street, 47th Floor, New York, New York 10022 at
9:00 a.m., on April 17, 1998, for the following purposes:
1. To elect Directors of the Fund (Proposal 1).
2. To ratify the selection of Coopers & Lybrand L.L.P. as
independent accountants for the Fund for the fiscal year
ending November 30, 1998 (Proposal 2).
3. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
The Board of Directors of the Fund has fixed the close of business on
January 20, 1998 as the record date for the determination of shareholders of the
Fund entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors,
DONALD F. CRUMRINE
Secretary
February 6, 1998
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SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING ARE
REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE CONTINENTAL UNITED STATES.
INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH ON THE INSIDE
COVER.
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<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and may avoid the time and expense to the Fund 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 a name shown in the registration.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp., c/o John Doe Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
Trust Accounts
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee, u/t/d 12/28/78 Jane B. Doe
Custodian or Estate Accounts
(1) John B. Smith, Cust., John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith John B. Smith, Jr., Executor
<PAGE>
PREFERRED INCOME MANAGEMENT FUND INCORPORATED
301 E. Colorado Boulevard, Suite 720
Pasadena, California 91101
ANNUAL MEETING OF SHAREHOLDERS
April 17, 1998
PROXY STATEMENT
This document is a proxy statement ("Proxy Statement") for Preferred
Income Management Fund Incorporated ("Preferred Income Management Fund" or the
"Fund"). This Proxy Statement is furnished in connection with the solicitation
of proxies by the Fund's Board of Directors (the "Board") for use at the Annual
Meeting of Shareholders of the Fund to be held on April 17, 1998, at 9:00 a.m.,
at the offices of Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd
Street, 47th Floor, New York, New York 10022 and at any adjournments thereof
(the "Meeting"). A Notice of Annual Meeting of Shareholders and proxy card for
the Fund accompany this Proxy Statement. Proxy solicitations will be made,
beginning on or about February 6, 1998, primarily by mail, but proxy
solicitations may also be made by telephone, telegraph or personal interviews
conducted by officers of the Fund, Flaherty & Crumrine Incorporated, the
investment adviser of the Fund, and First Data Investor Services Group, Inc.
("Investor Services Group"), the transfer agent and administrator of the Fund
and a wholly-owned subsidiary of First Data Corporation. The costs of proxy
solicitation and expenses incurred in connection with the preparation of this
Proxy Statement and its enclosures will be paid by the Fund. The Fund also will
reimburse brokerage firms and others for their expenses in forwarding
solicitation material to the beneficial owners of its shares.
The Annual Report of the Fund, including audited financial statements
for the fiscal year ended November 30, 1997, is available upon request, without
charge, by writing First Data Investor Services Group, Inc., P.O. Box 1376,
Boston, Massachusetts 02104, or calling 1-800-331-1710.
If the enclosed proxy is properly executed and returned in time to be
voted at the Meeting, the Shares (as defined below) represented thereby will be
voted in accordance with the instructions marked thereon. Unless instructions to
the contrary are marked thereon, a proxy will be voted FOR the election of the
nominees for Director and FOR the other matters listed in the accompanying
Notice of the Annual Meeting of Shareholders. Any shareholder who has given a
proxy has the right to revoke it at any time prior to its exercise either by
attending the Meeting and voting his or her Shares in person or by submitting a
letter of revocation or a later-dated proxy to the Fund at the above address
prior to the date of the Meeting.
In the event that a quorum is not present at the Meeting or in the
event that a quorum is present but sufficient votes to approve any of the
proposals are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment
<PAGE>
will require the affirmative vote of a majority of those shares represented at
the Meeting in person or by proxy. If a quorum is present, the persons named as
proxies will vote those proxies which they are entitled to vote FOR any proposal
in favor of such an adjournment and will vote those proxies required to be voted
AGAINST any proposal against any such adjournment. A shareholder vote may be
taken on one or more of the proposals in the Proxy Statement prior to any such
adjournment if sufficient votes have been received for approval. Under the
By-Laws of the Fund, a quorum is constituted by the presence in person or by
proxy of the holders of a majority of the outstanding shares of the Fund
entitled to vote at the Meeting. If a proposal is to be voted upon by only one
class of the Fund's shares, a quorum of that class of shares must be present at
the Meeting in order for the proposal to be considered.
The Fund has two classes of capital stock: common stock, par value
$0.01 per share (the "Common Stock"); and Money Market Cumulative Preferred(TM)
Stock, par value $0.01 per share ("MMP(R)"; together with the Common Stock, the
"Shares"). On the record date, January 20, 1998, the following number of Shares
of the Fund were issued and outstanding:
Common Stock MMP(R)
Outstanding Outstanding
9,416,743 775
As of January 20, 1998, to the knowledge of the Fund and its Board, the
following shareholder or "group", as that term is used in Section 13(d) of the
Securities Exchange Act of 1934 (the "1934 Act"), beneficially owned more than
5% of the Fund's outstanding shares:
As of January 23, 1998, Horejsi, Inc. located at 122 South Phillips
Avenue, Suite 220, Sioux Falls, South Dakota 57104, the Lola Brown Trust No. 1B
and Badlands Trust Company beneficially owned approximately 22%, 16.8% and 0.13%
respectively, of the Fund's outstanding shares of Common Stock and are, as a
group, considered to be a control person of the Fund, as such term is defined in
Section 2(a)(9) of the Investment Company Act of 1940, as amended (the "1940
Act"). Mr. Stewart R. Horejsi, who may be deemed to share indirect beneficial
ownership of the shares directly beneficially owned by Horejsi, Inc. and the
Lola Brown Trust No. 1B, is a member of the Fund's Board of Directors and is
currently a nominee for election by shareholders as a Director at the Meeting of
the Fund. Mr Horejsi disclaims all such beneficial ownership.
Information as to beneficial ownership is based on reports filed with
the Securities and Exchange Commission (the "SEC") by such holders. As of
January 20, 1998, Cede & Co., a nominee partnership of Depository Trust Company,
held 8,811,653 Shares or 93.57% of the Fund.
In order that your Shares may be represented at the Meeting, you are
requested to vote on the following matters:
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
The first proposal to be considered at the Meeting is the election of
Directors of the Fund.
Each nominee named below has consented to serve as a Director if
elected at the Meeting. If a designated nominee declines or otherwise becomes
unavailable for election, however, the proxy confers discretionary power on the
persons named therein to vote in favor of a substitute nominee or nominees.
Under the Fund's Articles of Incorporation, Articles Supplementary and
the 1940 Act, holders of Shares of MMP(R), voting as a single class, will be
entitled to elect two Directors, and holders of the Common Stock will be
entitled to elect the remaining Directors, subject to the provisions of the 1940
Act and the Fund's Articles of Incorporation, which permit the holders of Shares
of MMP(R), when dividends are in arrears for two full years, to elect the
minimum number of additional Directors that when combined with the two Directors
elected by the holders of Shares of MMP(R) would give the holders of Shares of
MMP(R) a majority of the Directors. Donald F. Crumrine and Morgan Gust currently
represent holders of Shares of MMP(R) of the Fund.
Nominees for the Board of Directors
The Board of the Fund is divided into three classes, each class having
a term of three years. Each year the term of office of one class expires and the
successor or successors elected to such class serve for a three-year term.
Class I Directors Class II Directors
Martin Brody Donald F. Crumrine
David Gale Robert F. Wulf
Stewart R. Horejsi
Class III Directors
Robert T. Flaherty
Morgan Gust
Mr. Martin Brody and Mr. David Gale, two of the Class I Directors of
the Fund, each of whose current term expires on the date of the Meeting, have
been nominated for a three-year term to expire at the Fund's 2001 Annual Meeting
of Shareholders and until their successors are duly elected and qualified. In
addition, Mr. Stewart R. Horejsi, a Class I Director of the Fund, has been
nominated for a three-year term. Mr. Horejsi was elected to the Board of
Directors of the Fund at a meeting of the Board held on July 25, 1997. Class II
Directors of the Fund serve until the Fund's Annual Meeting of Shareholders in
1999, and Class III Directors of the Fund serve until the Fund's Annual Meeting
of Shareholders in 2000. Except for Messrs. Gale (who has served as a Director
of the Fund since January 24, 1997) and Horejsi, each Director has served in
such capacity since the Fund's commencement of operations.
<PAGE>
Actions taken by Stewart R. Horejsi, Director Nominee
On January 23, 1998, the Board of Directors of the Fund received an
informal proposal from Mr. Stewart R. Horejsi, a nominee to the Board of
Directors of the Fund and a member of a group that holds almost 39% of the
Fund's common stock, to substantially change the Fund's objectives and policies.
The main points proposed by Mr. Horejsi at the meeting were: (i)
changing the Fund's objective from current income to capital appreciation in
recognition of the most recent reduction in federal tax rates applicable to
capital gains (capital gains being more advantageous to the Horejsi group from a
tax standpoint than ordinary income or dividends qualifying for the dividends
received deduction); (ii) converting the Fund from diversified to
non-diversified status and gradually accumulating over time large holdings of a
small number of common stocks; (iii) eliminating, to the maximum extent
possible, the investment restrictions contained in the Fund's original
prospectus, including the restriction on investing for the purpose of gaining
control of the management of other companies; (iv) raising investment advisory
fees only on common stocks to one percent (1%) of market value and permitting
the investment adviser, Flaherty & Crumrine Incorporated, to retain sub-advisers
in areas outside its area of expertise in fixed income markets; (v) prohibiting
directors from receiving fees from other funds managed by the adviser to the
Fund; and (vi) changing the Fund's name to reflect its new investment focus.
On January 26, 1998, the Fund received a copy of a Schedule 13D filed
by the group of which Mr. Horejsi is a member. The Schedule 13D also set forth
the following additions to the items raised by Mr. Horejsi at the Board meeting:
(i) Mr. Horejsi's group would consider whether it should take a more active role
in the Fund's management and may consider soliciting proxies in connection with
the Fund's annual meeting of shareholders; (ii) Flaherty & Crumrine Incorporated
should continue to manage the preferred stock and fixed income portion of the
Fund's portfolio, but an unnamed company controlled by Mr. Horejsi would be
better suited to implement a new investment focus for the Fund than Flaherty &
Crumrine Incorporated; (iii) the Fund should appoint a chief executive officer
who is not affiliated with Flaherty & Crumrine Incorporated; (iv) the Fund
should consider investing in other investment companies; (v) the Fund should
dispose of a portion of its preferred stock portfolio in connection with the
change in the Fund's investment focus; and (vi) the Fund should retain and
reinvest the maximum amounts of income and gains that can be retained consistent
with tax requirements.
To consider Mr. Horejsi's proposal properly, the Board of Directors of
the Fund would require more comprehensive information about it. If additional
details are forthcoming from Mr. Horejsi, the Board will consider the proposal
in light of the Board's responsibilities to all holders of the Fund's Common
Stock and MMP(R), including those not affiliated with Mr. Horejsi.
<PAGE>
Information About Directors and Officers
Set forth in the following table are the existing Directors and
nominees for election to the Board of Directors of the Fund, together with
certain other information:
<TABLE>
<CAPTION>
Business Experience Common Stock
During the Beneficially Owned on
Name, Address and Age Past Five Years January 20, 1998** Percent
- --------------------- --------------- ------------------ -------
<S> <C> <C> <C>
Class I Directors
Martin Brody Director of the Fund, Preferred 508 Shares ***
c/o HMK Associates Income Fund Incorporated and
30 Columbia Turnpike Preferred Income Opportunity Fund
Florham Park, NJ 07932 Incorporated; Director of Jaclyn,
Age: 76 Inc., Director of several other
investment companies.
David Gale Director of the Fund, Preferred 1,000 Shares ***
Delta Dividend Group, Inc. Income Fund Incorporated and
301 Pine Street Preferred Income Opportunity Fund
San Francisco, CA 94104 Incorporated; President & CEO of
Age: 48 Delta Dividend Group, Inc.
(Investments).
Stewart R. Horejsi* Director of the Fund, since July 3,667,830 Shares+ 38.93%
253 North Santa Fe 1997, General Manager, Brown
Salina, KS 67401 Welding Supply, LLC; Director,
Age: 60 Sunflower Bank; Trustee, various
Horejsi family trusts.
* "Interested person" of the Fund as defined in the 1940 Act. Mr. Horejsi is an "interested
person" as a result of the amount of his beneficial ownership of Fund shares.
** This information has been furnished by each Director, except that information regarding Mr.
Horejsi was taken from the Schedule 13D referred to above under "Actions Taken by Stewart R.
Horejsi, Director Nominee". "Beneficial Ownership" is defined under Section 13(d) of the 1934 Act.
*** Less than 1%.
+ 2,073,430, 1,581,665 and 12,735 Shares of the Fund are held by Horejsi, Inc., the Lola Brown
Trust No. 1B and Badlands Trust Company, respectively. According to the above-referenced Schedule
13D, Mr. Horejsi may be deemed to have indirect beneficial ownership of the Shares directly
beneficially owned by Horejsi, Inc. and the Lola Brown Trust No. 1B. Mr. Horejsi disclaims all
such beneficial ownership.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Business Experience Common Stock
During the Beneficially Owned on
Name, Address and Age Past Five Years January 20, 1998** Percent
- --------------------- --------------- ------------------ -------
<S> <C> <C> <C>
Class II Directors
Donald F. Crumrine* Director, Chief Financial Officer, 8,169 Shares+ ***
301 E. Colorado Boulevard Chief Accounting Officer, Vice
Suite 720 President and Secretary of the Fund,
Pasadena, CA 91101 Preferred Income Fund Incorporated
Age: 50 and Preferred Income Opportunity
Fund Incorporated; Chairman of the Board,
since December 1996, and previously held
other officerships of Flaherty & Crumrine
Incorporated; Director of Flaherty &
Crumrine Incorporated.
Robert F. Wulf Director of the Fund, Preferred 1,006 Shares ***
3560 Deerfield Drive South Income Fund Incorporated and
Salem, OR 97302 Preferred Income Opportunity Fund
Age: 60 Incorporated; since March 1984,
Financial Consultant.
* "Interested person" of the Fund as defined in the 1940 Act. Messrs. Crumrine and Flaherty are
each considered an "interested person" because of their affiliation with Flaherty & Crumrine
Incorporated which acts as the Fund's investment adviser.
** This information has been furnished by each Director. "Beneficial Ownership" is defined under
Section 13(d) of the 1934 Act.
*** Less than 1%.
+ 7,169 Shares of the Fund are held by Flaherty & Crumrine Incorporated
of which the reporting person is a shareholder and director.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Business Experience Common Stock
During the Beneficially Owned on
Name, Address and Age Past Five Years January 20, 1998** Percent
- --------------------- --------------- ------------------ -------
<S> <C> <C> <C>
Class III Directors
Robert T. Flaherty* Director, Chairman of the Board, 8,169 Shares + ***
301 E. Colorado Boulevard President and Chief Executive
Suite 720 Officer of the Fund, Preferred
Pasadena, CA 91101 Income Fund Incorporated and
Age: 60 Preferred Income Opportunity
Fund Incorporated; prior to December 1996,
President of Flaherty & Crumrine
Incorporated; Director of Flaherty &
Crumrine Incorporated.
Morgan Gust Director of the Fund, Preferred 1,412 Shares ***
Giant Industries, Inc. Income Fund Incorporated and
23733 N. Scottsdale Road Preferred Income Opportunity
Scottsdale, AZ 85255 Fund Incorporated; since August
Age: 50 1990, Vice President, General
Counsel and Corporate Secretary, and since
1992, also Vice President-Administration,
Giant Industries, Inc.
Directors and Officers 3,692,994 Shares 39.21%
as a Group
* "Interested person" of the Fund as defined in the 1940 Act. Messrs. Crumrine and Flaherty are
each considered an "interested person" because of their affiliation with Flaherty & Crumrine
Incorporated which acts as the Fund's investment adviser.
** This information has been furnished by each Director. "Beneficial Ownership" is defined under
Section 13(d) of the 1934 Act.
*** Less than 1%.
+ 7,169 Shares of the Fund are held by Flaherty & Crumrine Incorporated
of which the reporting person is a shareholder and director.
No Director or officer owned any shares of MMP(R) on January 20, 1998.
</TABLE>
<PAGE>
Each Director of the Fund who is not a director, officer or employee of
Flaherty & Crumrine Incorporated or any of their affiliates receives a fee of
$9,000 per annum plus $500 for each in-person meeting, and $100 for each
telephone meeting. Each Director of the Fund is reimbursed for travel and
out-of-pocket expenses associated with attending Board and committee meetings.
The Board of Directors of the Fund held six meetings (two of which were held by
telephone conference call) during the fiscal year ended November 30, 1997. Each
Director then serving in such capacity attended in-person at least 75% of the
meetings of Directors and any Committee of which he is a member. The aggregate
remuneration paid to the Directors of the Fund for the fiscal year ended
November 30, 1997 amounted to $71,053 (including reimbursement for travel and
out-of-pocket expenses for both "interested" and non-interested Directors).
The Board has an Audit Committee consisting of Messrs. Gust, Brody and
Wulf. The Audit Committee reviews the scope and results of the Fund's annual
audit with the Fund's independent accountants and recommends the engagement of
such accountants. The Audit Committee met twice during the fiscal year ended
November 30, 1997.
The Board has a Nominating Committee consisting of Messrs. Gust, Brody
and Wulf, which is responsible for considering candidates for election to the
Board of Directors of the Fund in the event a position is vacated or created.
The Nominating Committee will consider recommendations by shareholders if a
vacancy were to exist. Such recommendations should be forwarded to the Secretary
of the Fund. The Nominating Committee met twice during the fiscal year ended
November 30, 1997.
The names of the officers of the Fund (other than Messrs. Flaherty and
Crumrine who are described above) are listed in the table below. Each officer
was first elected to office at the organization of the Fund. This table also
shows certain additional information. Each officer will hold such office until a
successor has been elected by the Board of Directors of the Fund.
<TABLE>
<CAPTION>
Principal Occupations and
Positions Held Other Affiliations During
Name and Age With the Fund The Past Five Years
<S> <C> <C>
Robert M. Ettinger Vice President and Assistant President, since December 1996, and
Age: 39 Treasurer of the Fund. previously held other officerships with
Flaherty & Crumrine
Incorporated;
Director, Flaherty &
Crumrine
Incorporated; Vice
President and
Assistant Treasurer
of Preferred Income
Fund Incorporated
and Preferred Income
Opportunity Fund
Incorporated.
Peter C. Stimes Vice President, Treasurer and Vice President, Flaherty & Crumrine
Age: 42 Assistant Secretary of the Incorporated; Vice President, Treasurer and
Fund. Assistant Secretary of Preferred Income
Fund Incorporated and Preferred Income
Opportunity Fund Incorporated.
</TABLE>
<PAGE>
The following table sets forth certain information regarding the
compensation of the Fund's Directors for the fiscal year ended November 30,
1997. No executive officer or person affiliated with the Fund received
compensation from the Fund during the fiscal year ended November 30, 1997 in
excess of $60,000. Directors and executive officers of the Fund do not receive
pension or retirement benefits from the Fund.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Name of Aggregate Total Compensation From the Fund and Fund
Person and Compensation Complex
Position from the Fund Paid to Directors*
<S> <C> <C>
Robert T. Flaherty $0 $0 (3)
Director, Chairman of the
Board, President and Chief
Executive Officer
Donald F. Crumrine $0 $0 (3)
Director, Chief Financial
Officer, Chief Accounting
Officer, Vice President and
Secretary
Martin Brody $13,100.00 $37,300.00 (3)
Director
Morgan Gust $13,200.00 $37,400.00 (3)
Director
Robert F. Wulf $13,200.00 $37,400.00 (3)
Director
David Gale $9,787.50 $29,162.50 (3)
Director
Stewart R. Horejsi** $5,500.00 $5,500.00 (1)
Director
* Represents the total compensation paid to such persons by the Fund,
Preferred Income Fund Incorporated and Preferred Income Opportunity
Fund Incorporated for the fiscal year ended November 30, 1997, which
are considered part of the same "fund complex" because they have a
common adviser. The parenthetical number represents the total number of
investment company directorships held by the director or nominee in
such fund complex.
** Elected as a Director of the Fund by the Board at a meeting held on July 25, 1997.
</TABLE>
<PAGE>
Required Vote
Election of each of the listed nominees for Director of the Fund will
require the affirmative vote of a plurality of the votes cast at the Meeting in
person or by proxy.
THE DIRECTORS, INCLUDING THE NON-INTERESTED DIRECTORS, UNANIMOUSLY
RECOMMEND THAT THE SHAREHOLDERS VOTE
"FOR" PROPOSAL NO. 1.
PROPOSAL 2: RATIFICATION OF THE SELECTION
OF INDEPENDENT ACCOUNTANTS
The firm of Coopers & Lybrand L.L.P. ("Coopers & Lybrand"), One Post
Office Square, Boston, Massachusetts 02109, has served as independent
accountants for the Fund since the Fund's commencement of operations, and has
been selected to serve in such capacity for the Fund's fiscal year ending
November 30, 1998 by the Directors of the Fund, including those Directors who
are not "interested persons" (as defined in the 1940 Act) of the Fund or
Flaherty & Crumrine Incorporated. Coopers & Lybrand has informed the Fund that
it has no direct or indirect financial interest in the Fund. A representative of
Coopers & Lybrand will not be present at the Meeting but will be available by
telephone and will have an opportunity to make a statement if the representative
so desires and will be available to respond to appropriate questions.
Required Vote
Ratification of the selection of Coopers & Lybrand as independent
accountants for the Fund requires the affirmative vote of the holders of a
majority of the shares of Common Stock and MMP(R) represented at the Meeting in
person or by proxy voting as a single class.
THE BOARD OF DIRECTORS OF THE FUND, INCLUDING ALL OF THE NON-INTERESTED
DIRECTORS, RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 2.
SUBMISSION OF SHAREHOLDER PROPOSALS
All proposals by shareholders of the Fund that are intended to be
presented at the Fund's next Annual Meeting of Shareholders to be held in 1999
must be received by the Fund for consideration for inclusion in the Fund's proxy
statement relating to the meeting no later than October 9, 1998.
ADDITIONAL INFORMATION
Investment Adviser and Administrator
Flaherty & Crumrine Incorporated serves as the Investment Adviser to
the Fund and its business address is 301 E. Colorado Boulevard, Suite 720,
Pasadena, California 91101. Investor Services Group acts as the administrator to
the Fund and is located at One Exchange Place, Boston, Massachusetts 02109.
<PAGE>
Compliance with the Securities Exchange Act of 1934
Section 16(a) of the 1934 Act requires the Fund's directors and
officers, certain persons affiliated with Flaherty & Crumrine Incorporated and
persons who own more than 10% of a registered class of the Fund's securities, to
file reports of ownership and changes of ownership with the SEC and the New York
Stock Exchange. Directors, officers and greater-than-10% shareholders are
required by SEC regulations to furnish the Fund with copies of all Section 16(a)
forms they file. Based solely upon the SEC's review of the copies of such forms
it receives and written representations from certain of such persons, the Fund
believes that through the date hereof all such filing requirements applicable to
such persons were complied with.
Broker Non-Votes and Abstentions
A proxy which is properly executed and returned accompanied by
instructions to withhold authority to vote represents a broker "non-vote" (i.e.,
shares held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or the persons entitled to vote and (ii) the
broker or nominee does not have discretionary voting power on a particular
matter). Proxies that reflect abstentions or broker non-votes (collectively
"abstentions") will be counted as shares that are present and entitled to vote
on the matter for purposes of determining the presence of a quorum. Under
Maryland law, abstentions do not constitute a vote "for" or "against" a matter
and will be disregarded in determining the "votes cast" on an issue.
OTHER MATTERS TO COME BEFORE THE MEETING
The Fund does not intend to present any other business at the Meeting,
nor is it aware that any shareholder intends to do so. If, however, any other
matters are properly brought before the Meeting, the persons named in the
accompanying form of proxy will vote thereon in accordance with their judgment.
- -----------------------------------------------------------------------
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS
WHO DO NOT EXPECT TO ATTEND THE
MEETING ARE THEREFORE URGED TO COMPLETE, SIGN, DATE AND RETURN ALL PROXY CARDS
AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
- ----------------------------------------------------------------------------
<PAGE>
PREFERRED INCOME MANAGEMENT FUND INCORPORATED
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Common Stock of Preferred Income Management
Fund Incorporated, a Maryland corporation (the "Fund"), hereby appoints Robert
T. Flaherty, Donald F. Crumrine, Teresa M.R. Hamlin and Christine P. Ritch,
attorneys and proxies for the undersigned, with full powers of substitution and
revocation, to represent the undersigned and to vote on behalf of the
undersigned all shares of Common Stock, which the undersigned is entitled to
vote at the Annual Meeting of Shareholders of the Fund to be held at the offices
of Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, 47th
Floor, New York, New York 10022 at 9:00 a.m., on April 17, 1998, and any
adjournments thereof. The undersigned hereby acknowledges receipt of the Notice
of Annual Meeting and Proxy Statement and hereby instructs said attorneys and
proxies to vote said shares as indicated hereon. In their discretion, the
proxies are authorized to vote upon such other business as may properly come
before the Meeting. A majority of the proxies present and acting at the Meeting
in person or by substitute (or, if only one shall be so present, then that one)
shall have and may exercise all of the power and authority of said proxies
hereunder. The undersigned hereby revokes any proxy previously given.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
Please 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
undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
ELECTION OF NOMINEES AS DIRECTORS AND FOR PROPOSAL 2.
Please refer to the Proxy Statement for a discussion of the Proposal.
1. ELECTION OF DIRECTORS FOR ____ WITHHELD____
Nominees: Martin Brody
David Gale
Stewart R. Horejsi
(Instruction: To withhold authority for any individual, write his name on the
line below.)
2. To ratify the selection of Coopers & Lybrand L.L.P. as FOR____ AGAINST____
ABSTAIN ____ independent accountants for the Fund.
The Board of Directors recommends that the shareholders vote "FOR" the election
of the nominees and "FOR" ratification of the selection of Coopers & Lybrand
L.L.P. as independent accountants for the Fund.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE
NOTE: Please sign exactly
as your name appears on
this Proxy. If joint
owners, EITHER may sign
this Proxy. When signing as
attorney, executor,
administrator, trustee,
guardian or corporate
officer, please give your
full title.
Signature: ______________ Date: ______________
Signature: __________________ Date: ________________
<PAGE>
PREFERRED INCOME MANAGEMENT FUND INCORPORATED
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Money Market Cumulative Preferred(TM) Stock
("MMP(R)") of Preferred Income Management Fund Incorporated, a Maryland
corporation (the "Fund"), hereby appoints Robert T. Flaherty, Donald F.
Crumrine, Teresa M.R. Hamlin and Christine P. Ritch, attorneys and proxies for
the undersigned, with full powers of substitution and revocation, to represent
the undersigned and to vote on behalf of the undersigned all shares of MMP(R),
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
of the Fund to be held at the offices of Willkie Farr & Gallagher, One Citicorp
Center, 153 East 53rd Street, 47th Floor, New York, New York 10022 at 9:00 a.m.,
on April 17, 1998, and any adjournments thereof. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting and Proxy Statement and
hereby instructs said attorneys and proxies to vote said shares as indicated
hereon. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting. A majority of the proxies
present and acting at the Meeting in person or by substitute (or, if only one
shall be so present, then that one) shall have and may exercise all of the power
and authority of said proxies hereunder. The undersigned hereby revokes any
proxy previously given.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
Please 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
undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSAL 2.
Please refer to the Proxy Statement for a discussion of the Proposal.
1. ELECTION OF DIRECTOR
Nominees: Not Applicable
2. To ratify the selection of Coopers & Lybrand L.L.P. as FOR____ AGAINST____
ABSTAIN ____ independent accountants for the Fund.
The Board of Directors recommends that the shareholders vote "FOR" ratification
of the selection of Coopers & Lybrand L.L.P. as independent accountants for the
Fund.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE
NOTE: Please sign exactly
as your name appears on
this Proxy. If joint
owners, EITHER may sign
this Proxy. When signing as
attorney, executor,
administrator, trustee,
guardian or corporate
officer, please give your
full title.
Signature: ______________ Date: ________________
Signature: ________________ Date:________________
