SCHEDULE 14A INFORMATION
Revised Preliminary Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |_|
Filed by a Party other than the Registrant |X|
Check the appropriate box:
|X| 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 Under Rule14a-12
USLIFE Income Fund, Inc.
(Name of Registrant as Specified in Its Charter)
Ernest Horejsi Trust No. 1B
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
-
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|_| 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Stewart Horejsi
200 South Santa Fe
Salina, Kansas 67401
Dear Fellow Shareholder:
I am writing this letter on behalf of the Ernest Horejsi Trust No. 1B
(the "Trust"), the largest shareholder of the USLIFE Income Fund, Inc. (the
"Fund"), owning more than 20% of the Fund's stock.
The Fund's management is asking you to approve a new investment
advisory contract between the Fund and The Variable Annuity Life Insurance
Company ("VALIC"), the Fund's existing investment adviser, at the Annual
Shareholder Meeting scheduled for October 30, 2001. Shareholder approval is
required because American International Group, Inc. has acquired VALIC's parent
corporation, American General Corporation. Under federal law, closing of this
transaction resulted in an automatic termination of VALIC's current advisory
contract with the Fund.
The Trust strongly opposes any new contract with VALIC based on what it
believes to be VALIC's poor performance in advising the Fund. We view the
automatic termination of the existing advisory contract as an opportunity for
the Fund to seek a new investment adviser that has a better performance record.
The Trust recommends that the Fund's shareholders vote AGAINST
Proposal 2 to approve the new investment advisory contract between the Fund and
VALIC. Please sign, date and return the enclosed WHITE proxy card in the
envelope provided and vote against this proposal. If you have already returned
the Fund's blue proxy card, and you want to change your vote, you have the right
to revoke your proxy and vote against Proposal 2 by signing, dating and mailing
a later dated WHITE proxy card in the envelope provided.
If you have any questions, please contact MacKenzie Partners, Inc., who is
assisting us in the solicitation, toll-free at (800) 322-2885.
Please vote AGAINST Proposal 2, and sign, date and return the enclosed
WHITE PROXY CARD in the postage-prepaid envelope that is provided.
Sincerely yours,
/s/ Stewart R. Horejsi
REVISED PRELIMINARY Proxy Statement In Opposition To
The Solicitation By The Board Of Directors Of
Uslife Income Fund, Inc.
Annual Meeting Of Shareholders
To be held on October 30, 2001
To Our Fellow Shareholders:
The Ernest Horejsi Trust No. 1B (the "Trust") is sending this proxy
statement and the enclosed WHITE proxy card to holders of record on August 2,
2001 of shares of common stock, par value $1.00 per share, of USLIFE Income
Fund, Inc., a Maryland corporation (the "Fund"). This proxy is not solicited by
the Fund. This proxy statement relates to our solicitation of proxies for use at
the Annual Meeting of shareholders of the Fund scheduled to be held on Tuesday,
October 30, 2001 at 2:00 p.m., local time, and any and all adjournments or
postponements thereof. The Fund's Annual Meeting will be held in Meeting Room 1
of The Variable Annuity Life Insurance Company, Plaza level, The Woodson Tower,
2919 Allen Parkway, Houston, Texas 77019. This proxy statement and the
accompanying WHITE proxy card will first be sent to Fund shareholders on or
about September __, 2001.
The Fund has scheduled two matters for votes at the Annual Meeting:
1. The election of three directors of the Fund; and
2. The approval of a new investment advisory agreement between the Fund
and The Variable Annuity Life Insurance Company ("VALIC"), the Fund's existing
investment adviser. The Trust is soliciting your proxy to vote AGAINST Proposal
2. We are not making any recommendation with respect to Proposal 1.
REASONS FOR THE SOLICITATION
The primary reason for this solicitation is the Fund's poor
performance. Here are a few of the more illuminating specifics:
o The Fund's average annual total return on net assets was only 0.45% for
the three-year period ending June 30, 2001. The Trust has owned the
Fund's common stock since June 29, 1998, and has invested more than
$10.1 million in 1,146,600 shares of the Fund. Because of this
significant share ownership, the Trust has a strong interest in
advocating better Fund performance.
o The Fund's net asset value per share declined from $10.75 to $8.65 for
the same three-year period, a drop of $2.10 per share or 19.5%. During
this same 3-year period, shareholders received dividends totaling $2.22
per share, for a total net positive return of only $0.12 per share over
3 years.
o The Fund lowered its quarterly dividend twice in the last year. These
two cuts amounted to a reduction in annual shareholder income of
approximately 10.5%, from $0.76 to $0.68 per share.
o The Fund's own benchmark produced a 50% greater return than did VALIC's
management for the 12 months ending June 30, 2001. According to the
Fund's own annual report for the year ending June 30, 2001, the Fund's
total return on net asset value (NAV) of 4.41% was soundly beaten by
its own stated benchmark, a blend of Merrill Lynch High Yield US
Corporate and US Government Indices, which returned 6.59%. This means
that matching the benchmark would have yielded 50% more to the Fund's
shareholders than VALIC's performance did. This is the third year in a
row that the Fund has underperformed its own benchmark index since
VALIC took over as the adviser to the Fund in September 1997.
o In 1999, the Fund's total return on net asset value, after expenses of
1.12%, was 0.64%, while the two indices used by the Fund to compare its
performance returned 2.71% and 0.94%. In its letter to shareholders
that year, Fund management reported that returns "compared favorably"
to these benchmark indices. It's difficult to understand how getting
beaten by a chosen benchmark by more than four-fold can be viewed as
"favorable." Although the Fund's total return on "market value" was
7.85% during the same period, the Trust believes that the Fund's return
on net asset value is a better measure of an adviser's performance than
the Fund's return on market value.
o Out of the 138 issuers whose securities are currently held by the Fund,
7 have declared bankruptcy or ceased interest payments on the
underlying bonds. These 7 issuers represent 5.0% of the 138 issuers
whose securities are held by the Fund. The value of the Fund's assets
attributable to these 7 issuers was $201,000 on June 30, 2001, with an
indicated par value of $4,130,000. These facts suggest a couple of
things to us--either these issues were bought prior to the
bankruptcies, indicating poor credit analysis; or they were bought
after the bankruptcies, indicating that VALIC is risking shareholders'
money investing in speculative bankrupt issuers. Neither of these
alternatives represents the kind of management we think is appropriate
for the Fund.
o According to the Fund's most recent Annual Report, during the 2001
fiscal year approximately $1 million of capital loss carryforwards
expired. This represents the permanent loss of a substantial
shareholder asset. It is alarming that over a seven year period VALIC
has been unable to muster enough gains to offset the Fund's losses.
Moreover, additional valuable loss carryforwards will continue to
expire in future years if VALIC manages the Fund as it has in the past.
o None of the Fund's directors have invested in the Fund. We believe that
all directors should have a personal financial investment in the Fund,
just as shareholders do. In our opinion, shareholders of the Fund may
want to take into account in their vote on the VALIC advisory contract
that the Fund's directors do not have a personal financial incentive to
maximize the Fund's returns.
The Trust believes that the Fund's existing investment adviser, VALIC,
is largely to blame for the Fund's recent poor financial performance and
strongly opposes the approval of a new advisory contract with this same adviser.
The Trust views the automatic termination of the existing advisory agreement as
an opportunity for shareholders to replace VALIC with an investment adviser that
has a better performance record. If Proposal 2 is defeated, we do not know what
action the Fund's Board of Directors will take. We hope that they will find
another adviser who will produce better returns for the Fund's shareholders. We
hope that, if Proposal 2 is defeated, the Board would consider appointing
Boulder Investment Advisers, LLC (which is affiliated with the Trust) as adviser
to the Fund. Voting against Proposal 2 will not result in Boulder Investment
Advisers, LLC becoming the adviser to the Fund. That would required the
preparation of a new advisory agreement, Board approval, and a separate vote by
the Fund's shareholders.
For these reasons, the Trust recommends that the Fund's shareholders
vote AGAINST Proposal 2. A summary of Proposal 2 is included in the section
entitled "Summary of Proposals" in this proxy statement.
BACKGROUND TO THE SOLICITATION
The Trust is a substantial owner of the Fund's shares, holding a
20.24% equity position. The Trust has been an active and vocal investor in the
Fund since June 1998. Over the past three years, we have become increasingly
disappointed with the lackluster performance of the Fund and its investment
adviser.
In 1999, the Trust sought unsuccessfully to have four of its nominees
elected to the Fund's Board of Directors. The Trust also proposed changing the
Fund's investment objective to total return and permitting the Fund to invest in
equity, as well as fixed income, securities -- changes similar to those
implemented by the Trust, together with certain other Horejsi family trusts, for
the Boulder Total Return Fund, Inc. (prior to August 27, 1999, Preferred Income
Management Fund, Inc.), an investment company managed by Mr. Horejsi. The
following year, the Trust led a successful shareholder effort to defeat a
proposal by the Fund to permit the Fund to leverage its portfolio by borrowing
money and issuing shares of preferred stock.
On December 21, 2000, in an effort to encourage better performance by
the Fund, Mr. Horejsi, on behalf of the Trust, sent a letter to the Board of
Directors of the Fund urging a termination of the advisory agreement with VALIC.
In the alternative, the letter suggested reducing the Board to five members,
resignation of existing Board members and appointment of the independent
directors of the Boulder Total Return Fund to fill the vacant slots until
elections could be held. On January 9, 2001, legal counsel for the independent
directors of the Fund sent a letter to the Trust responding to Mr. Horejsi's
letter indicating the Board's refusal to reconsider the Fund's advisory
agreement with VALIC prior to its next approval.
On July 11, 2001, legal counsel for the Fund contacted the Trust to
indicate that shareholder approval may be required for a new advisory contract
in connection with the anticipated change of control of VALIC. Fund's counsel
sought the Trust's support in retaining VALIC as the Fund's adviser. In response
to the solicitation, on July 13, 2001, the Trust indicated to the Fund's counsel
that, in light of VALIC's poor performance, the Trust would oppose any proposal
to approve a new advisory contract with VALIC. In addition, the Trust indicated
that it would favor the Fund retaining Boulder Investment Advisers, LLC as the
investment adviser for the Fund, and that Boulder Investment Advisers, LLC would
be willing to consider payment of $250,000 in connection with its obtaining the
advisory contract. This amount would be provided as a $250,000 credit to the
Fund against fees to be earned under an advisory contract between Boulder
Investment Advisers, LLC and the Fund, if Boulder Investment Advisers, LLC were
to become the adviser to the Fund.
The Trust, together with a group of other trusts for the benefit of
certain members of the Horejsi family (collectively, the "Trusts"), has
substantial investments in two other closed-end mutual funds called the Boulder
Total Return Fund and First Financial Fund, Inc. The Trusts successfully took
control of the Boulder Total Return Fund in January, 1999.
Stewart Horejsi, an investment consultant to the Trusts, is also the
portfolio manager for Boulder Investment Advisers, LLC, the adviser to the
Boulder Total Return Fund. The Boulder Total Return Fund has operated under that
name and with the investment objectives of growth and income, with Boulder
Investment Advisers, LLC as its adviser, since August 1999. Under Mr. Horejsi's
guidance, Boulder Total Return Fund achieved the # 1 ranking for year 2000,
based on total return, in Lipper's closed-end fund standard category of "Growth
& Income," out of a total seven funds in that category. The ranking achieved by
the Boulder Total Return Fund does not indicate or provide any assurance that
the Fund could achieve a similar ranking if Boulder Investment Advisers, LLC
were the adviser to the Fund. The Boulder Total Return Fund has different
investment objectives from the Fund. The ranking indicates the relative success
of the Boulder Total Return Fund for the year 2000 in the defined category. Mr.
Horejsi is also a director of the Boulder Total Return Fund.
Finally, we note from the Fund's most recent proxy statement that "as
of the record date, no director or executive officer of the Fund owned, directly
or beneficially, any Fund shares." In contrast, the Trust advocates and believes
that directors who own their fund's shares and thus have a financial stake in
their fund's performance will take a more proactive role in acting as
shareholder "watchdogs" and encouraging performance.
SUMMARY OF PROPOSALS
The following is a summary of the two matters that are scheduled to be
voted upon at the Annual Meeting and is based upon the information provided in
the Fund's preliminary proxy statement filed with the United States Securities
and Exchange Commission on September 5, 2001 (the "Fund's Preliminary Proxy
Statement").
PROPOSAL 1: ELECTION OF DIRECTORS
The Fund's Board of Directors has nominated three nominees as directors for
election at the 2001 Annual Meeting: Judith L. Craven, Norman Hackerman and Ben
H. Love. The Trust is not making any recommendation with respect to Proposal 1.
PROPOSAL 2: APPROVAL OF A NEW ADVISORY CONTRACT
VALIC, the Fund's investment adviser, was a wholly-owned subsidiary of
American General Corporation. On August 29, 2001, American International Group,
Inc. ("AIG") acquired American General Corporation. VALIC became a subsidiary of
AIG. Pursuant to the Investment Company Act of 1940, as amended (the "1940
Act"), the change of control of VALIC results in the assignment and automatic
termination of the investment advisory agreement between the Fund and VALIC.
The Fund's Board has approved and recommended shareholder approval of a
new advisory agreement between the Fund and VALIC, which would take effect
immediately upon approval by the shareholders. According to the Fund's
Preliminary Proxy Statement, the terms of the new investment advisory agreement
with VALIC would be the same in all material respects to those of the previous
advisory agreement between the Fund and VALIC, including the fees charged. The
Fund's Preliminary Proxy Statement describes the proposed advisory agreement.
See "Proposal 2: Approval of New Investment Advisory Agreement, Description of
the New Advisory Agreement" of the Fund's Preliminary Proxy Statement. According
to the Fund's Preliminary Proxy Statement, as compensation for VALIC's services
under the proposed advisory agreement, the Fund will pay VALIC at a fee rate
that is the same as under the previous advisory agreement with VALIC. For the
Fund's fiscal year ended June 30, 2001, the Fund paid VALIC advisory fees in the
amount of $349,267.
All of the information in this proxy statement about the proposed
advisory agreement and the fees paid to VALIC is based upon information in the
Fund's Preliminary Proxy Statement and the Trust cannot confirm the accuracy or
completeness of the information or advise shareholders whether this information
may change. The Fund is expected to file with the SEC and mail to shareholders
definitive proxy materials, including a definitive proxy statement, which should
include a final and complete description of the proposed advisory agreement.
Any new advisory agreement the Fund enters into, whether with VALIC or
a new investment adviser, is required to be approved by the Fund's shareholders.
The Fund's Board of Directors has approved an interim investment advisory
agreement with VALIC. However, in accordance with Rule 15a-4 promulgated by the
Securities and Exchange Commission (the "SEC") pursuant to the 1940 Act, such an
interim agreement that has not been approved by shareholders is valid only for
150 days.
If Proposal 2 is defeated, we do not know what action the Fund's Board
of Directors will take. We hope that they will find another adviser who will
produce better returns for the Fund's shareholders. We hope that, if Proposal 2
is defeated, the Board would consider appointing Boulder Investment Advisers,
LLC as adviser to the Fund. Voting AGAINST Proposal 2 will not result in Boulder
Investment Advisers, LLC becoming the adviser to the Fund. That would require
the preparation of a new advisory agreement, Board approval, and a separate vote
by the Fund's shareholders.
The Trust recommends that the Fund's shareholders vote AGAINST Proposal
2 for the reasons stated in the section entitled "Reasons For The Solicitation,"
above.
PROXY CARDS AND VOTING
Both of the proposals that are scheduled to be voted upon at the Annual
Meeting are included on the Trust's WHITE proxy card. If you wish to vote on the
proposals, you may do so by completing and returning a WHITE proxy card. A WHITE
proxy card that is returned to the Trust or its agent will be voted as you
indicate on the card. If a WHITE proxy card is returned without a vote
indicated, the shares represented thereby will be voted AGAINST Proposal 2 and
to "withhold" on Proposal 1.
Discretionary authority is provided in the proxy sought hereby as to
other business as may properly come before the meeting, of which the Trust is
not aware as of the date of this proxy statement, and matters incident to the
conduct of the Annual Meeting, which discretionary authority will be exercised
in accordance with Rule 14a-4 promulgated by the SEC pursuant to the Securities
Exchange Act of 1934, as amended.
Voting Quorum
Only shareholders of record on August 2, 2001 will be entitled to vote
at the Annual Meeting. According to information contained in the Fund's 2001
proxy statement, there were 5,663,892 shares of common stock issued and
outstanding as of the August 2, 2001 record date. Holders of record on August 2,
2001 will be entitled to cast one vote on each matter for each share of common
stock held. Shares of common stock do not have cumulative voting rights.
Proposal 1 (with respect to the election of directors) requires the affirmative
vote of a majority of the votes cast at the Annual Meeting, provided that a
quorum is present. Proposal 2, the proposed approval of a new investment
advisory agreement, requires the affirmative vote of the lesser of (a) 67% of
the shares present at the Annual Meeting if a quorum is present, or (b) more
than 50% of the outstanding shares of the Fund.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and shares with respect to which the broker does
not have discretionary voting authority. Under Maryland law, abstentions and
broker non-votes are counted as shares present for purposes of determining
whether a quorum is present, but are not counted as votes "for" or "against" a
matter and will be disregarded in determining the "votes cast" on a proposal,
including any adjournment. Accordingly, abstentions and broker non-votes
effectively will be a vote against adjournment or against any proposal (such as
Proposal 2) for which the required vote is a percentage of the outstanding
shares.
Under the Fund's By-Laws, a quorum for the transaction of business is
constituted by the presence in person or by proxy of a majority of the
outstanding shares of the Fund entitled to vote at the meeting.
Revocation of Proxies
You may revoke any proxy given in connection with the Annual Meeting
(whether given to the Fund or to the Trust) at any time prior to the voting of
your proxy at the Annual Meeting by executing and delivering a later dated proxy
to the Trust or the Fund or their solicitation agents, by voting in person at
the Annual Meeting, or by delivering a written revocation of your proxy to the
Secretary of the Fund or to the presiding officer at the Annual Meeting.
Attendance at the Annual Meeting will not in and of itself revoke a proxy.
There is no limit on the number of times that you may revoke your proxy
prior to the Annual Meeting. Only the latest dated, properly signed proxy card
will be counted.
The WHITE proxy card contains all of the proposals that are scheduled
to be voted upon at the annual meeting. If you wish to vote, you may do so by
completing and returning a WHITE proxy card. A white proxy card that is returned
to the Trust or its agent will be voted as you indicate thereon. If a white
proxy card is returned without a vote indicated thereon, the shares will be
voted AGAINST Proposal 2 and to WITHHOLD" on Proposal 1.
You may revoke any proxy card you send to the Board of Directors of the
Fund, and vote on the proposals by signing, dating, and mailing the enclosed
WHITE proxy card in the envelope provided. According to the Fund's Preliminary
Proxy Statement, the Board of Directors of the Fund will be soliciting you to
sign a blue proxy card.
INFORMATION CONCERNING THE TRUST
As of August 2, 2001, the Trust held 1,146,600 shares of common stock,
representing approximately 20.24% of the outstanding shares of the Fund. The
Trust is an irrevocable grantor trust that was organized under the laws of
Kansas for the benefit of Ernest Horejsi's issue. The three trustees of the
Trust are Badlands Trust Company ("Badlands"), Ms. Susan Ciciora and Mr. Larry
Dunlap. Mr. Dunlap is a director of Badlands and is a trustee of several trusts
of which various Horejsi family members are beneficiaries. The Trust is
domiciled in South Dakota and its business address is 614 Broadway, P.O. Box
801, Yankton, South Dakota 57078. Stewart Horejsi is Ernest Horejsi's son (and,
as a result, a beneficiary of the Trust) and serves from time to time as an
investment consultant to the Trust. Ms. Ciciora is Stewart Horejsi's daughter
and is a trustee of several trusts of which she and other Horejsi family members
are beneficiaries.
The trustees of the Trust may be deemed to control the Trust and may be
deemed to possess indirect beneficial ownership of the shares held by the Trust.
However, none of the trustees, acting alone, can vote or exercise dispositive
authority over shares held by the Trust. Accordingly, Badlands, Ms. Ciciora, and
Mr. Dunlap disclaim beneficial ownership of the shares of common stock
beneficially owned, directly or indirectly, by the Trust.
Badlands is a South Dakota corporation organized to act as a private trust
company to administer the Trust as well as other affiliated trusts. The
directors of Badlands are Mr. Dunlap, Stephen C. Miller, Robert Ciciora,
who is the brother-in-law of Ms. Ciciora, Gail G. Gubbells and Marty Jans.
The executive officers of Badlands are Ms. Gubbells, President, Mr. Jans,
Secretary, and Mr. Miller, Vice President and Assistant Secretary. Badlands
is wholly owned by the Stewart R. Horejsi Trust No. 2, an irrevocable trust
organized by Mr. Stewart Horejsi for the benefit of his issue. The trustees
of the Stewart R. Horejsi Trust No. 2 are Badlands, Mr. Ciciora and Robert
H. Kastner.
The Trust has indicated since 1999 that it may seek control of the
Fund, although at this time no decision has been made to actually seek control.
The Trust is part of a group of affiliated entities that successfully took
control of another closed-end fund, Preferred Income Management Fund (now
Boulder Total Return Fund) in January 1999.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of August 2,
2001, regarding the beneficial ownership of shares of common stock by (i) each
beneficial owner of more than 5% of the outstanding shares of common stock
(based upon filings with the SEC and the holdings of the Trust), (ii) the
current executive officers and directors of the Fund (based on information
contained in the Fund's most recent proxy statement), and (iii) all directors
and executive officers as a group.
Position Common Stock
with the Beneficially
Name and Address Fund Owned Percent
---------------- ---------- -------------- -------
Ernest Horejsi Trust No. 1B
P.O. Box 801 --- 1,146,600 20.24%
614 Broadway
Yankton, South Dakota 57078
Directors and officers as a group --- --- --
-------------------
The current directors and executive officers of the Fund do not own
any shares of the Fund, according to the Fund's most recent proxy statement.
SHAREHOLDER PROPOSALS
According to the Fund's Preliminary Proxy Statement, shareholder
proposals intended for inclusion in the Fund's proxy statement in connection
with the Fund's 2002 annual meeting of shareholders pursuant to Rule 14a-8 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), must be
received by the Fund at the Fund's principal executive offices by May 28, 2002.
In order for proposals made outside of Rule 14a-8 under the Exchange Act to be
considered "timely" within the meaning of Rule 14a-4(c) under the Exchange Act,
such proposals must be received by the Fund at the Fund's principal executive
offices not later than August 1, 2002. Any shareholder who wishes to submit a
proposal for consideration at a meeting of shareholders should send such
proposal to the Fund at 2929 Allen Parkway, Houston, Texas 77019. The foregoing
information is based upon the information provided in the Fund's Preliminary
Proxy Statement and the Trust cannot confirm the accuracy or completeness of the
information or advise shareholders as to whether this information may change.
THE SOLICITATION
Proxies will be solicited by mail and, if necessary to obtain the
requisite shareholder representation, by telephone, personal interview or by
other means. Certain officers, directors or employees of entities related to the
Trust may solicit proxies. In addition, the Trust has retained MacKenzie
Partners, Inc. to assist and provide advisory services in connection with the
solicitation for which it will be paid a fee of $______ and will be reimbursed
for reasonable out-of-pocket expenses. The Trust will indemnify MacKenzie
Partners, Inc. against certain liabilities and expenses in connection with this
proxy solicitation, including liabilities under the federal securities laws.
Banks, brokerage houses and other custodians, nominees and fiduciaries
will be requested to forward this proxy statement and the accompanying WHITE
proxy card to the beneficial owner of shares of common stock for whom they hold
of record and the Trust will reimburse them for their reasonable out-of-pocket
expenses.
The expenses related to this proxy solicitation will be borne by the
Trust. The Trust estimates that the total amount of expenses to be incurred by
it in this proxy solicitation will be approximately $75,000. Expenses to date
have been approximately $20,000.
If you have any questions concerning this proxy solicitation or the
procedures to be followed to execute and deliver a proxy, please contact
MacKenzie Partners, Inc. at:
Call Toll-Free: (800) 322-2885
Dated: September __, 2001
REVISED PRELIMINARY PROXY CARD
THIS PROXY IS SOLICITED IN OPPOSITION TO THE BOARD OF DIRECTORS
OF USLIFE INCOME FUND, INC. BY THE ERNEST HOREJSI TRUST NO. 1B
Proxy for the October 30, 2001 Annual Meeting of Shareholders
of
USLIFE Income Fund, Inc.
The undersigned holder of shares of common stock of USLIFE Income Fund,
Inc., a Maryland corporation (the "Fund"), hereby appoints Stewart R. Horejsi
and Stephen C. Miller, and each of them, as 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
that the undersigned is entitled to vote at the Annual Meeting of Shareholders
of the Fund to be held in Meeting Room 1 of The Variable Annuity Life Insurance
Company, Plaza Level, The Woodson Tower, 2919 Allen Parkway, Houston, Texas
77019, on Tuesday, October 30, 2001 at 2:00 p.m., local time, and any
adjournments or postponements thereof. The undersigned hereby acknowledges
receipt of the Proxy Statement in Opposition of the Trust 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.
IMPORTANT:
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 TO WITHHOLD ON
PROPOSAL 1 AND AGAINST PROPOSAL 2 BELOW.
Please refer to the Proxy Statement in Opposition for a discussion of the
reasons for the Trust's opposition to Proposal 2.
Proposal 1: Election of the following three nominees as Directors:
Judith L. Craven, Norman Hackerman, and Ben. H. Love
|_| FOR
|_| WITHHOLD
YOU MAY WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE OR
NOMINEES BY MARKING THE FOR BOX AND STRIKING OUT THE NAME OF ANY
SUCH NOMINEE.
Proposal 2: Approval of a new Investment Advisory Agreement between The
Variable Annuity Life Insurance Company and the Fund
|_| FOR
|_| AGAINST
|_| ABSTAIN
The Trust recommends that the shareholders vote AGAINST Proposal 2. The Trust
makes no recommendation with respect to Proposal 1.
IMPORTANT:
Please sign exactly as name appears hereon or on the proxy card previously sent
to you. When shares are held by joint tenants, both should sign. When signing as
an attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by the
President or other duly authorized officer. If a partnership, please sign in
partnership name by authorized person.
DATE: _____________________ ________________________________
Signature(s)
-------------------------------
Title (if applicable)
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE