Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
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Filed
by the Registrant o
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Filed
by a Party other than the Registrant þ
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Preliminary Proxy Statement
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Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
§240.14a-12
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Insured
Municipal Income Fund Inc.
(Name of
Registrant as Specified In Its Charter)
Bulldog
Investors General Partnership
(Name of
Person(s) Filing Proxy Statement, if other than the
Registrant)
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of Filing Fee (Check the appropriate box): |
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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of each class of securities to which transaction
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applies:
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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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Proposed
maximum aggregate value of
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materials.
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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.
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Bulldog
Investors General Partnership, Park 80 West
Plaza
Two, Suite 750, Saddle Brook, NJ 07663
(201)
556-0092 // Fax: (201)556-0097
info@bulldoginvestors.com
June 13, 2008
Dear
Fellow Shareholder of Insured Municipal Income Fund:
We
represent a group of shareholders that own almost 7% of the outstanding common
shares of Insured Municipal Income Fund.
Since its
launch in 1993 the Fund’s common shares have persistently traded at a discount
to their net asset value (NAV). We think fifteen years is long enough
and that shareholders deserve an opportunity to finally realize
NAV. To make matters worse, liquidity has recently dried up for
preferred shareholders as a result of the failure of the weekly
auctions.
If the
Fund open-ends, preferred shareholders will gain liquidity because their shares
will be redeemed at $25,000 per share plus accrued interest. After
that, the common shares would become redeemable at NAV. That is a
win-win outcome. Consequently, in February we wrote to the board
stating: “It is now absolutely clear that open-ending or liquidation of the Fund
would provide a benefit to both the common and
the APS shareholders.” In our letter, we offered to meet with the
board to discuss open-ending. The board responded by telling us that
it was on top of the problem and did not need any advice.
After
hearing nothing more from the board and faced with its inaction, on April 9,
2007, more than three months before the shareholder meeting, we sent the board
another letter. In it we advised the board that we intended to submit
a proposal at the meeting to open-end the Fund and would nominate directors that
would abide by the will of the shareholders. We again asked the board
to meet with us to discuss the advantages and disadvantages of open-ending the
Fund. This time the board did not even give us the courtesy of a
response.
Consequently,
we are now soliciting your proxy with the goal of open-ending the Fund so that
both common and preferred shareholders can exit at full
value. However, the board has apparently taken the position
that the three-month advance notice we gave is not enough time to prepare for a
proxy contest. Consequently it may try to hold the meeting but not
permit shareholders to vote on our open-ending proposal or to vote for our
nominees. Specifically, the board may determine to use your proxy to
establish a quorum at the meeting but not to allow it to be voted in accordance
with your instructions.
In our
view, this dirty trick is an outrageous breach of fiduciary
duty. Ironically, Meyer Feldberg, a director of the Fund, is a
Professor at Columbia University who teaches ethics. He should be
ashamed of himself. It is completely unethical for the board to use
the election machinery for the primary purpose of preserving their positions and
to frustrate a shareholder vote. This is not
Zimbabwe. Shareholders should be able to vote for the nominees of
their choice and on any proposals presented at the meeting.
Why would
the incumbent directors not want to have a fair meeting? We suspect
the reason is that they fear that many shareholders are as fed up with their
inaction as we are and may well oust them if given the opportunity to do
so.
That is
understandable. But why would the incumbent directors resist
open-ending? Why would they stoop to not even allowing a shareholder
vote on open-ending? Although open-ending the Fund would be
beneficial to both the common and preferred shareholders to whom the directors
have a fiduciary duty, you should know that the directors owe their positions to
UBS. For the year ended March 31, 2007 UBS, the Fund’s investment
advisor and administrator, earned about $4.6 million (before waivers) from the
Fund for services. If it open-ends, the size of the Fund will likely
shrink and so will UBS’ fees. Last year the directors each made
between $135,000 and $219,000 from the UBS Fund complex. Thus, even
though they are supposed to be looking out solely for our interests, the
incumbents are unlikely to support a measure that would hurt UBS -- like
open-ending the Fund. By the way, the brokerage arm of UBS has been
charged with deceiving numerous investors to whom it sold auction rate
securities and who are suffering from a similar lack of liquidity as are the
Fund’s preferred shareholders.
Interestingly,
while each of the incumbent directors has a significant investment in other
UBS-managed funds, none of them has invested a penny in Insured Municipal Income
Fund. Therefore, they will not benefit at all if the Fund open-ends
and the discount disappears. The board’s loyalty to UBS combined with
its lack of any personal economic interest in the Fund has led to a classic
conflict of interest. Unfortunately, it appears the incumbent
directors have chosen to align themselves with their benefactors at UBS rather
than the shareholders whom they are supposed to serve.
Unlike
the incumbent directors, we pledge to always respect the will of the
shareholders. That is why we are giving you the opportunity to choose
not only to vote to open-end the Fund and to elect directors that will honor
your wishes but also to refuse to have your proxies cynically misused by the
incumbents to establish a quorum. The board needs to know that its
anti-democratic Robert Mugabe-like tactics are unacceptable and that you demand
that they honor your voting instructions.
Please
vote your proxy online at WWW.PROXYVOTE.COM or
by telephone at 1-800-454-8683 if your shares are held in street
name. Alternatively, you can mail the GREEN proxy card in the
enclosed envelope but please do it today.
Very truly yours,
Phillip
Goldstein
PROXY
STATEMENT OF BULLDOG INVESTORS GENERAL PARTNERSHIP
IN
OPPOSITION TO THE SOLICITATION BY THE BOARD OF DIRECTORS
OF
INSURED
MUNICIPAL INCOME FUND INC. AT THE ANNUAL MEETING OF
SHAREHOLDERS
ON JULY 17, 2008
Bulldog
Investors General Partnership (“BIGP”) is sending this proxy statement and the
enclosed GREEN proxy card to stockholders of Insured Municipal Income Fund Inc.
(the “Fund”) of record as of May 16, 2008. We are soliciting a proxy
to vote your shares at the Annual Meeting of Shareholders (the “Meeting”) which
is scheduled for July 17, 2008. Please refer to the Fund’s
proxy soliciting material for additional information concerning the Meeting and
the matters to be considered by shareholders including the election of
Directors. This proxy statement and the enclosed GREEN proxy
card are first being sent to shareholders on or about June 13,
2008.
INTRODUCTION
The Fund
has scheduled one matter to be voted upon at the Meeting: (1) the election of
six directors. In addition, we intend to submit a shareholder
proposal to open-end the Fund. We are soliciting a proxy to vote your shares (1)
FOR the election of our six nominees as Directors and (2) FOR the shareholder
proposal.
REASONS FOR THE
SOLICITATION
The
Fund’s common shares have long traded at a sizeable discount to net asset
value. In addition, shareholders of the Fund’s auction preferred
shares (“APS”) are suffering from illiquidity as a result of the breakdown of
the auction mechanism. Open-ending or liquidating the Fund would
afford both classes of shareholders with an opportunity to realize the full
value of their investment. We have asked the board to meet with us to
discuss the advantages and disadvantages of open-ending the Fund but it has
ignored our request. Consequently, we are seeking to elect directors
that will consider open-ending the Fund if the open-ending proposal is supported
by shareholders.
HOW PROXIES WILL BE
VOTED
If you
complete and return a GREEN proxy card to us and unless you direct otherwise
your shares will be voted FOR the election of the nominees named below and FOR
the shareholder proposal to enable shareholders to realize net asset NAV for
their shares. In addition, you will be granting the proxy holders
discretionary authority to vote on any other matters that may come before the
Meeting including matters relating to the conduct of the Meeting.
VOTING
REQUIREMENTS
A quorum
is a majority of the total shares outstanding. In addition, for the
election of the two directors to be elected solely by the Fund’s APS a quorum is
a majority of the APS outstanding. A plurality of the votes cast is
sufficient to elect a director. The common and APS shareholders
voting together will elect four directors and the APS shareholders voting
separately will elect two directors. Approval of the open-ending
proposal requires the affirmative vote of a majority of the votes cast by all
shareholders. Abstentions will be ignored in determining the votes
cast with respect to the shareholder proposal and since this is a contested
solicitation, we do not expect any broker non-votes.
REVOCATION OF
PROXIES
You may
revoke any proxy prior to its exercise by: (i) delivering a written revocation
to us; (ii) executing and delivering a later dated proxy; or (iii) voting in
person at the Meeting. Attendance at the Meeting will not in and of
itself revoke a proxy. There is no limit on the number of times you
may revoke your proxy before it is exercised. Only your latest dated
proxy will be counted.
ADVANCE NOTICE
DISPUTE
We
notified the Fund of our intent to submit nominations and an open-ending
proposal more than three months before the Meeting. Nevertheless, we
believe that the board of directors may attempt to prevent us from presenting
our nominations or open-ending proposal at the Meeting by claiming that we
failed to comply with certain advance notice requirements unilaterally adopted
by the board. The enforcement of similar advance notice requirements
by other companies has been declared illegal if the requirements are unclear, if
the time between the notification deadline and the shareholder meeting is
unreasonably long, if the deadline is not waived if a material event occurs
after the deadline, and most importantly, if the board’s primary purpose in
adopting or enforcing the requirements is to frustrate or impede a shareholder
vote. We believe each of these conditions exists and that a court
would agree.
In order
to insure that shareholders are not disenfranchised by the board, we recommend
that shareholders instruct us not to present their proxies for the purpose of
establishing a quorum unless (1) the board agrees to count the votes of all
valid proxies as instructed or (2) a court resolves the dispute regarding the
validity of the advance notice requirement. Consequently, our proxy
card provides an option to provide such an instruction. Shareholders
whose shares are held in street name can also ask their custodian for a legal
form of proxy which they can then assign to any person of their choosing with
instructions to present it or to decline to present it at the Meeting for the
purpose of establishing a quorum.
PROPOSAL 1: ELECTION OF
DIRECTORS
At the
Meeting, a representative of one of our general partners intends to nominate the
six persons named below for election as Directors. Each nominee has
consented to being named in this proxy statement and to serve as a Director if
elected. Messrs. Goodstein and Samuels are the nominees for the seats
that will be elected solely by shareholders of the APS. There are no
arrangements or understandings between BIGP or any partner of BIGP and any
nominee in connection with the nominations nor do we know of any material
conflicts of interest that would prevent any nominee from acting in the best
interest of the Fund. Please refer to the Fund’s
proxy soliciting material for additional information concerning the election of
Directors.
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Name,
Principal Business
Address
and Year Born
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Principal
Occupation and Business Experience During
the
Last
Five Years; Current
Directorships; Biographical
Information
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Phillip
Goldstein
Park 80 West
Plaza Two, Suite 750
Saddle Brook, NJ 07663
1945
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Since 1992, Mr.
Goldstein has been an investment advisor and a principal of the general
partner of five investment partnerships in the Bulldog Investors group of
funds: Opportunity Partners L.P., Opportunity Income Plus Fund
L.P., Full Value Partners L.P., Full Value Offshore Ltd. and
Full Value Special Situations Fund L.P. He has been a director
of the Mexico Equity and Income Fund since 2000, Brantley Capital
Corporation since 2001 and ASA Ltd since 2008. |
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Gerald
Hellerman
5431 NW 21st Avenue
Boca Raton, FL 33496
1937
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Mr. Hellerman is a
director of MVC Acquisition Corp. and is a director and Chairman of the
Audit Committee of MVC Capital, Inc. Mr. Hellerman owns and has served as
Managing Director of Hellerman Associates, a financial and corporate
consulting firm, since the firm’s inception in 1993. He currently serves
as a director, chief financial officer and chief compliance officer for
The Mexico Equity and Income Fund, Inc. (NYSE: MXE), and is a manager and
Chairman of the Audit Committee of the Old Mutual Absolute Return and
Emerging Managers fund complex, which consists of six funds, a director of
Brantley Capital Corporation and was a director and Chairman of the Audit
Committee of AirNet Systems, Inc. until June 2008. |
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Rajeev
Das
Park 80 West
Plaza Two, Suite 750
Saddle Brook, NJ 07663
1968
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Principal of Bulldog
Investors, a group of investment funds and Managing Member of the general
partner of Opportunity Income Plus L.P.; Currently director of Mexico
Equity and Income Fund, Inc. (since 2001) In 2006 served as director of
Brantley Capital. |
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Andrew
Dakos
Park 80 West
Plaza Two, Suite 750
Saddle Brook, NJ 07663
1966
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Mr. Dakos is a
self-employed investment advisor and a principal of the general partner of
five investment partnerships in the Bulldog Investors group of funds:
Opportunity Partners L.P., Opportunity Income Plus Fund L.P., Full Value
Partners L.P., Full Value Special Situations Fund L.P., and Full Value
Offshore L.P. He has been a director of the Mexico Equity and
Income Fund since 2001 and Brantley Capital Corporation since
2007. |
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Glenn
Goodstein
2308 Camino Robledo
Carlsbad, CA 92009
1963
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Mr. Goodstein is a
registered investment advisor and managing member of the general partner
of Mercury Partners LP, an investment partnership. He is a director of
Mexico Equity and Income Fund. |
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Steve
Samuels
Park 80 West
Plaza Two, Suite 750
Saddle Brook, NJ 07663
1956
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Mr.
Samuels is a principal of the general partner of five
investment partnerships in the Bulldog Investors group of funds:
Opportunity Partners L.P., Opportunity Income Plus Fund L.P., Full Value
Partners L.P., Full Value Special Situations Fund L.P., and Full Value
Offshore L.P. |
None of
our nominees is an interested person of the Fund nor does any nominee personally
own any shares of the Fund except that as of June 6, 2008 (1) Mr. Goldstein and
his wife jointly beneficially own 10,000 common shares which were purchased
since February 14, 2008 and (2) Mr. Das and his wife beneficially own 1700
shares which were purchased between November 2007 and April
2008. Clients of Mr. Goodstein own 2,811 common shares which were
purchased between September 2000 and February 2002. Each nominee
other than Mr. Hellerman is a principal of one or more of the entities that are
general partners of BIGP and the nominees collectively beneficially own
approximately 1.4 million common shares of the Fund which were purchased since
July 2007. There have been no sales of shares by any of the
aforementioned persons.
Unless
instructions to the contrary are given, your proxy will be voted in favor of
each of the aforementioned nominees except that only those proxies given by
shareholders of the APS will be voted for. Messrs. Goodstein and
Samuels
PROPOSAL 2: A RECOMENDATION
TO CONVERT THE FUND INTO AN OPEN-END FUND.
The
Fund’s common shares have long traded at a sizeable discount to net asset
value. In addition, shareholders of the Fund’s APS are suffering from
illiquidity as a result of the breakdown of the auction
mechanism. Open-ending or liquidating the Fund would afford both
classes of shareholders with an opportunity to realize the full value of their
investment. This proposal, if adopted, is not binding on the
board. Unless instructions to the contrary are given, your proxy will
be voted in favor of this proposal.
THE
SOLICITATION
Persons
affiliated with or employed by BIGP or its affiliates may assist us in the
solicitation of proxies. Banks, brokerage houses and other
custodians, nominees and fiduciaries will be requested to forward this proxy
statement and the enclosed GREEN proxy card to the beneficial owners of common
and preferred shares for whom they hold shares of record. We will
reimburse these organizations for their reasonable out-of-pocket
expenses.
Initially,
we will bear all of the expenses related to this proxy
solicitation. Because we believe that all shareholders will benefit
from this solicitation, we intend to seek, subject to any applicable regulatory
requirements, reimbursement of our expenses from the
Fund. Shareholders will not be asked to vote on the reimbursement of
our solicitation expenses which we estimate will be $75,000. In
addition, we may seek reimbursement from the Fund of any legal expenses
necessary to resolve the aforementioned dispute about advance
notice.
LITIGATION
On
January 31, 2007 the Acting Director of the Securities Division of the
Massachusetts Secretary of State (the “Securities Division”) filed a complaint
against Bulldog Investors, Messrs. Goldstein, Samuels, Dakos and Das and certain
related parties (the “Bulldog Parties”) alleging that they violated
Massachusetts law by making information about certain unregistered investments
available on their website and by sending material about such investments to an
individual who requested such material. On October 17, 2007 the
Secretary issued a cease and desist order based on the same allegations and
ordered that a fine be imposed on the Bulldog Parties of $25,000, but stayed the
imposition of sanctions until the Massachusetts Superior Court issued a ruling
on the Bulldog Parties’ motion described in the next paragraph. On
November 15, 2007 the Bulldog Parties filed a timely appeal in Massachusetts
Superior Court of the Secretary’s October 17, 2007 order.
On March
23, 2007 the Bulldog Parties filed a lawsuit in Massachusetts Superior Court to
enjoin the aforementioned enforcement action on, among others grounds, that it
violates the Bulldog Parties’ right of free speech under the First Amendment to
the Constitution. On December 21, 2007 the Massachusetts Superior Court
ruled that information communicated by the Bulldog Parties “has not been shown
to be either misleading or related to unlawful activity” but denied the Bulldog
Parties’ motion for a preliminary injunction because “the Court is not in the
position of evaluating evidence and making ultimate findings as it would do
after trial.” On January 18, 2008 the Bulldog Parties filed a notice of
appeal with the Massachusetts Superior Court of that Court’s denial of their
motion for a preliminary injunction. Any appeal from a ruling of the
Massachusetts Superior Court would first be decided by the Appeals Court of
Massachusetts or, at its option, by the Supreme Judicial Court of
Massachusetts. The Bulldog Parties also intend to pursue their First
Amendment Claim at trial. On March 25, 2008 the Bulldog Parties filed
an amended complaint in Massachusetts Superior Court to include a claim that the
Secretary does not have personal jurisdiction over them. On April 4,
2008 the Secretary filed a motion to dismiss the Bulldog Parties’ claim of
lack of personal jurisdiction.
BIGP is
the soliciting person. As of June 6, 2008, BIGP’s general partners
and its affiliated persons beneficially owned approximately 1.4 million common
shares of the Fund, all of which were purchased between since July
2007.
June 13,
2008
PROXY
CARD
This
proxy is solicited in opposition to the Board of Directors of Insured Municipal
Income Fund Inc. (the “Fund”) by Bulldog Investors General Partnership (“BIGP”)
for the Fund’s 2008 Annual Meeting of Shareholders (the
“Meeting”). The undersigned hereby appoints Phillip Goldstein, Rajeev
Das, and Andrew Dakos and each of them, as the undersigned’s proxies, with full
power of substitution, to attend (or decline to attend) the Meeting and any
adjourned or postponed Meeting, and to vote on all matters that come before the
Meeting the number of shares that the undersigned would be entitled to vote if
present in person, as specified below.
(INSTRUCTIONS: Mark
votes by placing an “x” in the appropriate o.)
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1.
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ELECTION
OF SIX DIRECTORS (NOTE: ONLY PREFERRED SHAREHOLDERS MAY VOTE OR WITHHOLD
AUTHORITY FOR MR. GOODSTEIN OR MR.
SAMUELS)
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| o FOR
ANDREW DAKOS |
o WITHHOLD AUTHORITY |
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| o FOR
PHILLIP GOLDSTEIN |
o WITHHOLD AUTHORITY |
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| o FOR
GERALD HELLERMAN |
o WITHHOLD AUTHORITY |
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| o FOR
RAJEEV DAS |
o WITHHOLD AUTHORITY |
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| o FOR
GLENN GOODSTEIN (Preferred Only) |
o WITHHOLD AUTHORITY |
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| o FOR
STEVE SAMUELS (Preferred Only) |
o WITHHOLD AUTHORITY |
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2.
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A
RECOMENDATION TO CONVERT THE FUND INTO AN OPEN-END
FUND
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FOR o
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AGAINST o
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ABSTAIN o
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SPECIAL INSTRUCTION: THIS
PROXY MAY ONLY BE USED TO ESTABLISH A
QUORUM IF IT IS VOTED AS
INSTRUCTED AND COUNTED.
YES o NO
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Please
sign and date below. Your shares will be voted as
directed. If no direction is made, this proxy will be voted FOR the
election of the nominees named above, FOR Proposal 2 and YES on the special
instruction to condition presenting it to establish a quorum on it being voted
as instructed and counted. The undersigned hereby acknowledges
receipt of the proxy statement dated June 13, 2008 of BIGP and revokes any proxy
previously executed.
| Signature(s)___________________________________ |
Dated:
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