sec document
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /_/
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/_/ Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/_/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/_/ Soliciting Material Under Rule 14a-12
REAL ESTATE INCOME FUND INC.
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(Name of Registrant as Specified in Its Charter)
KARPUS MANAGEMENT, INC. D/B/A KARPUS INVESTMENT MANAGEMENT
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(Name of Persons(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:
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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.
(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
Karpus Management, Inc. d/b/a Karpus Investment Management ("KIM"), together
with the other participants named herein, is filing materials contained in this
Schedule 14A with the Securities and Exchange Commission ("SEC") in connection
with the solicitation of proxies to vote against approving a new Management
Agreement and a new Subadvisory Agreement at a special meeting of stockholders
of Real Estate Income Fund Inc. (the "Fund") originally scheduled to be held on
October 21, 2005, which was postponed by the Fund to November 15, 2005.
Item 1: On October 31, 2005, the following article was published on Dow Jones
Newswire.
Citigroup Closed-End Funds Could Stick Around Longer
2005-10-31 12:09 (New York)
By Angela Pruitt
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--As Citigroup Inc. (C) continues its quest to
get shareholder approval for its mutual funds transfer to Legg Mason
Inc. (LM), the company could see some closed-end funds left on its
lap. While such a scenario is rare, it could soon happen, given
Citigroup's hostile battle with well-organized dissidents in six
closed-end funds. The contested funds won't affect the closing of
Citi's $3.7 billion asset-swap deal with Legg Mason slated for Dec.
1, but they could be a lingering nuisance for Citigroup if investors
defeat the new advisor contracts.
After recently failing to achieve quorums on some of its 170 mutual
funds, Citigroup pushed back special shareholder votes to Nov. 15,
required under the asset swap, which will send Legg's brokerage
business to Citigroup in exchange for $437 billion in assets.
The Salomon Brothers Fund (SBF), Citigroup's largest and oldest
closed-end fund, did achieve a quorum, but postponed the contested
vote amid signs shareholders were going to defeat the new advisor
contract. The five other contested funds could see a similar
scenario once the quorums are achieved, which Citi has until late
December to pull off. If Citi doesn't get the nod from shareholders
by the December deadline, then it will have to keep the funds under
its wings as it figures out its next step, market observers say.
A fund has an "escape valve" where it can appoint an interim manager
for 150 days to get the required shareholder approval to validate
the contract, said Jay Baris, a mutual fund lawyer at Kramer Levin
Naftalis & Frankel. "It's rare that this ever happens, but it can
happen," he said, noting that investment advisors have a fiduciary
duty to not let "the fund just sit there without a captain at the
helm."
Citigroup Asset Management spokeswoman Mary Athridge declined to
comment on the matter. However, in a Securities and Exchange filing
last week, the company sent a notice to shareholders warning that if
the new management contract wasn't approved, the funds will face
"considerable uncertainty and its ability to pursue its investment
objectives may be disrupted."
Baris said in the absence of shareholder approval the existing
advisor could continue to service the fund under the current
agreement or a new advisor can be assigned under limited provisions,
where the fees are held in escrow until the agreement is approved.
"There are many different options. (Usually), the directors will
work very hard to ensure that there is continuity," he said.
Including the Salomon Brothers Fund, there are six contested
closed-end funds at stake. (Another 11 won shareholder approval for
the transfer to Legg Mason.) Closed-end funds are investment
vehicles that have a set number of shares that trade all day on an
exchange like a stock.
Closed-end funds often trade at a discount to the value of the their
underlying assets, prompting some institutional investors to
pressure fund boards to liquidate or open-end funds to achieve net
asset value. Indeed, Cody Bartlett, an investment strategist for
Karpus Investment Management, which initiated five of the proxy
contests, wants the targeted Citigroup funds converted or merged
into traditional mutual funds with similar investment objectives - a
move that would automatically erase the discount. "That would be
best for both parties," Bartlett said. "If Legg is good, they should
attract assets and the funds should grow."
Salomon Brothers Asset Management advises all of the contested
funds, except for the Real Estate Income Fund (RIT), which is
advised by Citi Fund Management. Citigroup's mutual funds hold $151
billion in assets and combined have about 6.5 million shareholders.
Although some of the shareholder votes on traditional open-end funds
were also pushed back, Citigroup declined to disclose how many.
Some dissidents are looking for mergers in the contested funds. Art
Lipson, manager of Western Investment LLC, who leads a group of
institutional shareholders owning over 650,000 shares, or 5.9%, of
the Real Estate Income Fund, notes the fund is subadvised by AEW
Capital Management LP, which also manages IXIS AEW Real Estate Fund
(NRFAX), an open-end fund. "For long-term investors who want to
continue with the same strategy... (merge) RIT into NRFAX," Lipson
said. He noted that accumulated return for RIT since 2002 was 86%,
compared with 93% for NRFAX during the same time period. "I would
accept a merger" of the two funds, Lipson said.
Legg Mason is not a big player in closed-end funds. The company's
Western Asset Management unit offers four closed-end funds - all
trading at discounts, while its Royce unit also manages three
closed-end funds, including Royce Value Trust, which traded at a 10%
premium to its net asset value of $17.93 as of Friday.
Legg Mason Chairman and Chief Executive Raymond A. "Chip" Mason
declined to comment on how the company plans to treat the 24
closed-end funds it will assume given that Citigroup is still in the
process of finalizing the fund transfers.
By Angela Pruitt, Dow Jones Newswires,
201-938-2269,angela.pruitt@dowjones.com
(END) Dow Jones Newswires
10-31-05 1209ET
Copyright (c) 2005 Dow Jones & Company, Inc.- - 12 09 PM EST 10-31-05
CERTAIN INFORMATION CONCERNING PARTICIPANTS
KIM, together with the other Participants (as defined below), has made a
definitive filing with the SEC of a proxy statement and accompanying proxy card
to be used in connection with the solicitation of proxies to vote against
approving a new Management Agreement and a new Subadvisory Agreement at a
special meeting of stockholders of the Real Estate Income Fund Inc. originally
scheduled to be held on October 21, 2005, which was postponed by the Fund to
November 15, 2005.
KIM STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT
AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY CONTAIN
IMPORTANT INFORMATION. SUCH PROXY MATERIALS ARE AVAILABLE AT NO CHARGE ON THE
SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THE
SOLICITATION WILL PROVIDE COPIES OF THE PROXY MATERIALS, WITHOUT CHARGE, UPON
REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO CODY B. BARTLETT JR., KARPUS
INVESTMENT MANAGEMENT, BY TELEPHONE: (585) 416-0553 OR BY EMAIL AT:
CODY@KARPUS.COM.
The participants in the proxy solicitation are Karpus Management, Inc. d/b/a
Karpus Investment Management, Western Investment LLC, Western Investment
Institutional Partners LLC, Western Investment Hedged Partners L.P., Western
Investment Activism Partners LLC, Arthur D. Lipson, Benchmark Plus Institutional
Partners, L.L.C., Benchmark Plus Management, L.L.C., Scott Franzblau, Robert
Ferguson and Michael Dunmire (together, the "Participants").
Information regarding the Participants and their direct or indirect interests is
available in their respective Schedules 13D, as amended.
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