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 |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 Section 240.14a-11(c) or
Section 240.14a-12
REAL ESTATE INCOME FUND INC.
----------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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:
----------------------------------------------------------------------
(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by the 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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REAL ESTATE INCOME FUND INC.
125 Broad Street
New York, New York 10004
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 7, 2006
--------------------
To the Shareholders of Real Estate Income Fund Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of Real
Estate Income Fund Inc. (the "Fund ") will be held at Citigroup Center, 153 E.
53rd Street, 14th Floor Conference Center, New York, New York 10022 at 3:30 p.m.
on April 7, 2006 for the following purposes:
1. To elect three (3) Class III Directors of the Fund (PROPOSAL 1); and
2. To consider and vote upon such other matters as may come before said
meeting or any adjournment thereof.
The close of business on February 28, 2006 has been fixed as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of and to vote at the meet ing and any adjournment thereof.
By Order of the Board of Directors,
Robert I. Frenkel Secretary
March 13, 2006
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YOUR VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR HOLDINGS IN THE FUND.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE ASK THAT YOU PLEASE COMPLETE
AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY 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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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 the name shown in the registration
on the proxy card.
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.
f/b/o John B. Smith, Jr. UGMA .............. John B. Smith
(2) John B. Smith ................................ John B. Smith, Executor
REAL ESTATE INCOME FUND INC.
125 Broad Street
New York, New York 10004
1-800-331-1710
--------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 7, 2006
--------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Real Estate Income Fund Inc.
(the "Fund") for use at the Annual Meeting of Shareholders (the "Meeting") of
the Fund to be held at 3:30 p.m. on April 7, 2006 at Citigroup Center, 153 East
53rd Street, 14th Floor Conference Center, New York, New York and at any
adjournments thereof. A Notice of Meeting of Shareholders (the "Notice") and a
proxy card accompany this Proxy Statement.
The cost of soliciting proxies and the expenses incurred in preparing this
Proxy Statement and its enclosure will be borne by the Fund. Solicitation costs
are expected to be approximately $15,750. In addition, the Fund will reimburse
brokerage firms or other record holders for their expenses in forwarding
solicitation materials to beneficial owners of shares of the Fund. Proxy
solicitations will be made primarily by mail, but proxy solicitations also may
be made by telephone or personal interview conducted by officers of the Fund and
officers and regular employees of the Fund's investment manager, Citi Fund
Management Inc. ("CFM" or the "Manager"), Legg Mason & Co., LLC ("Legg Mason")
and American Stock Transfer and Trust Company, the Fund's transfer agent.
The Annual Report of the Fund, including audited financial statements for
the fiscal year ended December 31, 2005, has previously been furnished to all
shareholders. This Proxy Statement is first being mailed to shareholders on or
about March 13, 2006. The Fund will provide additional copies of the annual
report to any shareholder upon request by calling the Fund at 1-800-331-1710.
The Fund has one class of Common Stock which has a par value of $.001 per
Share. As of the Record Date, there were 11,069,242.453 shares of common stock
outstanding. The Fund has one series of Preferred Stock outstanding, Taxable
Auction Rate Preferred Stock Series M, $25,000 per share liquidation preference.
As of the record date, there were 3,800 shares of Preferred Stock outstanding.
The shares of Common Stock and the shares of Preferred Stock are referred to
collectively as the "Shares."Each shareholder is entitled to one vote for each
Share held and a proportionate fraction of a vote for any fractional Share held.
If the enclosed Proxy is properly executed and returned in time to be
voted at the Meeting, the Shares 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 matter listed in the accompanying
Notice of Annual Meeting of Shareholders. For purposes of determining the
presence of a quorum for transacting business at the Meeting, abstentions and
broker "non-votes" (that is, proxies from brokers or nominees indicating that
such persons have not received instructions from the beneficial owner or other
persons entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power) will be treated as shares
that are present but which have not been voted. Approval of Proposal 1 requires
the affirmative vote of a plurality of the votes cast at the Meeting with a
quorum present. Because the Proposal requires a proportion of votes cast for its
approval, abstentions and broker non-votes may influence whether a quorum is
present, but will have no impact on the requisite approval of such Proposal. 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 the proposal are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitations of proxies. In determining whether
to adjourn the Meeting, the following factors may be considered: the nature of
the proposal that is the subject of the Meeting; the percentage of votes
actually cast; the percentage of negative votes actually cast; the nature of any
further solicitation; and the information to be provided to shareholders with
respect to the reasons for the solicitation. Any adjournment will require the
affirmative vote of a majority of the Shares represented at the Meeting in
person or by proxy. A shareholder vote may be taken on the proposal in this
Proxy Statement prior to such adjournment if sufficient votes have been received
and it is otherwise appropriate. Under the Fund's By-laws, a quorum is
constituted by the presence in person or by proxy of the holders of a majority
of the outstanding Shares entitled to vote at the Meeting.
The close of business on February 28, 2006 has been fixed as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of and to vote at the Meeting and all adjournments thereof.
As of the Record Date, to the knowledge of the Fund and the Board, no
single shareholder or "group" (as that term is used in Section 13(d) of the
Securities Exchange Act of 1934 (the "Exchange Act")) beneficially owned 5% or
more of the outstanding Shares of the Fund. As of the Record Date, Cede & Co.,
as nominee of The Depository Trust Company, was the record holder of
11,049,197.033 Shares, or 99.82% of the Fund's outstanding Shares. As of the
Record Date, the officers and Board Members of the Fund as a group beneficially
owned less than 1% of the outstanding Shares of the Fund.
2
In order that a shareholder's Shares may be represented at the Meeting,
shareholders are required to allow sufficient time for their proxies to be
received on or before 3:30 p.m. on April 7, 2006.
As of the Record Date, to the knowledge of the Fund, no securities issued
by Legg Mason were held by Directors who are not "interested persons" of the
Fund (the "Non-Interested Directors") as that term is used in the Investment
Company Act of 1940, as amended (the "1940 Act").
The Fund's manager is Citi Fund Management Inc., located at 399 Park
Avenue, New York, NY 10022.
PROPOSAL 1:
TO ELECT THREE (3) CLASS III DIRECTORS OF THE FUND
The Board of Directors of the Fund is divided into three classes: Class I,
Class II and Class III. The Directors serving in Class III have terms expiring
at the Meeting; each Class III Director currently serving on the Board has been
nominated by the Board of Directors for re-election at the Meeting to serve for
a term of three years (until the 2009 Annual Meeting of Shareholders) or until
their successors have been duly elected and qualified. The terms of office of
the Class I and Class II Directors expire at the 2007 and 2008 Annual Meeting of
Shareholders, respectively, or thereafter in each case when their respective
successors are duly elected and qualified.
Under the terms of the Fund's Articles of Incorporation, as amended (the
"Charter"), the holders of Preferred Stock are entitled as a class, to the
exclusion of the holders of Common Stock, to elect two Directors of the Fund
(the "Preferred Share Directors"). The Charter further provides that the
remaining nominees shall be elected by holders of Common Stock and Preferred
Stock voting together as a single class. One of the Directors designated as a
Preferred Share Director, Paul Hardin, has been nominated for election at this
Meeting. Therefore, the holders of the FundPreferred Stock, voting as a single
class, are being asked to vote for Mr. Hardin as a Director of the Fund.
Each nominee 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.
Certain information concerning the nominees is set forth below. For all
nominees or Directors indicated as owning shares of the Fund, such ownership
constituted less than 1% of the outstanding shares of the Fund as of the Record
Date. All of the nominees are currently Directors of the Fund. Except as
indicated, each nominee or Director has held the office shown or other offices
in the same company for the last five years.
3
Persons Nominated for Election as Directors
Number of
Portfolios
in Fund Other
Complex Directorships
Principal Overseen Held by
Position Length Occupations by Director Director
Name, Address and Held with of Time During Past or Director or Director
Year of Birth Fund Served Five Years Nominee Nominee
----------------------------------------------------------------------------------------------------------------------
CLASS III DIRECTOR NOMINEES
Non-Interested Directors:
Dwight B. Crane+ Director Since Professor, Harvard 48 None
Harvard Business School 2002 Business School.
Soldiers Field Road
Baker Library #337
Boston, MA 02163
Year of Birth: 1937
Paul Hardin+ Director Since Chancellor Emeritus and 34 None
12083 Morehead 2002 Professor of Law at the
Chapel Hill, NC University of North Carolina
27514-8426 at Chapel Hill.
Year of Birth: 1931
William R. Hutchinson+ Director Since President, WR Hutchinson & 44 Director of
535 N. Michigan 2002 Associates, Inc. (oil industry Associated
Suite 1012 consulting); formerly Group Bank;
Chicago, IL 60611 Vice President, Mergers & Director of
Year of Birth: 1942 Acquisitions BP Amoco p.l.c. Associated
Banc-Corp.
Directors Continuing in Office
CLASS I DIRECTORS
Non-Interested Director:
George M. Pavia+ Director Since Senior Partner, Pavia & 7 None
600 Madison Avenue 2002 Harcourt Attorneys.
New York, NY 10022
Year of Birth: 1928
Interested Director:
R. Jay Gerken*+ Chairman, Since Managing Director of 183 None
399 Park Avenue President 2002 Citigroup Asset Management
New York, NY 10022 and Chief ("CAM"); Chairman, President
Year of Birth: 1951 Executive and Chief Executive Officer
Officer of Smith Barney Fund
Management LLC ("SBFM")
and Citi Fund Management Inc.
("CFM"); President and Chief
Executive Officer of certain
mutual funds associated with
CAM; formerly portfolio
manager, Smith Barney Growth
and Income Fund (1994-2000)
and Smith Barney Allocation
Series Inc. (1996-2001).
----------
* An "interested person" of the Fund, as defined in the 1940 Act, because he
is a Managing Director of Legg Mason, which is an affiliate of CFM, the
Fund's Manager.
+ Director, Trustee and/or general partner of other investment companies
registered under the 1940 Act with which Legg Mason is associated.
4
Number of
Portfolios
in Fund Other
Complex Directorships
Principal Overseen Held by
Position Length Occupations by Director Director
Name, Address and Held with of Time During Past or Director or Director
Year of Birth Fund Served Five Years Nominee Nominee
----------------------------------------------------------------------------------------------------------------------
CLASS II DIRECTORS
Non-Interested Directors:
Robert A. Frankel+ Director Since Managing Partner of Robert 18 None
1961 Deergrass Way 2002 A. Frankel Management
Carlsbad, CA 92009 Consultants.
Year of Birth: 1927
Paolo M. Cucchi+ Director Since Vice President and Dean 7 None
Drew University 2002 of College of Liberal Arts
108 Brothers College at Drew University.
Madison, NJ 07940
Year of Birth: 1941
----------
+ Director, trustee and/or general partner of other investment companies
registered under the 1940 Act with which Legg Mason is associated.
5
The following table provides information concerning the dollar range of
equity securities owned beneficially by each Director and nominee for election
as Director as of December 31, 2005:
Aggregate Dollar Range of Equity
Securities in All Funds Overseen
Dollar Range of Equity by Director/Nominee and
Name of Director/Nominee Securities in the Fund Advised by CFM
------------------------ ---------------------- --------------------------------
Non-Interested Directors/Nominees
Dwight B. Crane None Over $100,000
Paolo M. Cucchi None $10,001-$50,000
Robert A. Frankel $1-$10,000 $10,001-$50,000
Paul Hardin $10,001-$50,000 Over $100,000
William R. Hutchinson $50,001-$100,000 Over $100,000
George M. Pavia None None
Interested Director/Nominee
R. Jay Gerken* $1-$10,000 Over $100,000
----------
* Mr. Gerken is an "interested person" as defined in the 1940 Act, because
he is a Managing Director of Legg Mason, which is an affiliate of the
Manager.
During the Fund's last fiscal year ended December 31, 2005, four regular
and five special meetings of the Board were held. In the last fiscal year, each
Director and Director Nominee attended at least 75% of the regular and special
meetings of the Board and each of the audit and nominating committee meetings
held. The Fund does not have a formal policy regarding attendance by Directors
at annual meetings but may consider a policy in the future. One Board member
attended the 2005 Annual Meeting.
6
COMPENSATION
Only the Non-Interested Directors receive remuneration from the Fund for
acting as a Director. Aggregate expenses (including reimbursement for travel and
out-of-pocket expenses) of $10,144 were paid to such Directors by the Fund
during the fiscal year ended December 31, 2005. Fees for the Non-Interested
Directors are currently set at $6,000 per annum plus $750 per in-person Board
meeting and $300 per telephone conference call. Officers of the Fund are
compensated by Legg Mason.
The following table shows the compensation paid by the Fund to each person
who was a Director during the Fund's last fiscal year:
Aggregate Pension or Total
Compensation Retirement Compensation Total Number
from Fund Benefits from Fund and of Funds for
for the fiscal Accrued as part Fund Complex Which Director
Name of year ended of Fund for the fiscal year Serves within
Person 12/31/05 Expenses ended 12/31/05 Fund Complex
--------- -------------- --------------- ------------------- --------------
Non-Interested Directors
Dwight B. Crane $9,575 0 $233,300 48
Paolo M. Cucchi 9,575 0 67,700 7
Robert A. Frankel 11,075 0 110,588 18
Paul Hardin 10,175 0 140,700 34
William R. Hutchinson 10,175 0 279,300 44
George M. Pavia 9,125 0 59,450 7
Interested Director
R. Jay Gerken* $0 0 $0 183
----------
* Designates a Director who is an "interested person" of the Fund as defined
under the 1940 Act because he is a Managing Director of Legg Mason, which
is an affiliate of the Manager.
At the end of the calendar year in which he or she attains age 80, a Fund
Director is required to change to emeritus status. An Emeritus Director is
entitled to serve in emeritus status for a maximum of 10 years during which time
he is paid 50% of the annual retainer fee and meeting fees otherwise applicable
to Fund Directors, together with reasonable out-of-pocket expenses for each
meeting attended. During the Fund's last fiscal year, total compensation paid by
the Fund to Directors Emeriti totaled $3,325.
Beneficial Ownership Reporting Compliance
Section 30(h) of the 1940 Act requires the Fund's officers and Directors,
investment adviser, sub-investment adviser and certain affiliated persons
thereof, and any persons who beneficially own more than ten percent of the
Fund's outstanding Shares, to file reports of ownership with the Securities and
Exchange Commission (the "SEC"), the New York Stock Exchange, Inc. (the "NYSE")
and the Fund. Based solely upon its review of the copies of such forms received
by it and representations from certain such persons, the Fund believes that
during its fiscal year ended December 31, 2005, all filing requirements
applicable to such persons were met.
7
The names of the principal officers of the Fund are listed in the table
below together with certain additional information. Each of the officers of the
Fund will hold such office until a successor is voted upon by the Board of
Directors.
Principal Occupations and
Position Other Affiliations for the
Name (Year First Elected) Past Five Years and Year of Birth
----- -------------------- ---------------------------------
R. Jay Gerken Chief Executive Officer (See table of "Directors Continuing
(2002), Chairman of the in Office")
Board (2002) and
President (2002)
Andrew B. Shoup Senior Vice President Director of CAM; Senior Vice
(2003) and Chief President and Chief Administrative
Administrative Officer Officer of mutual funds associated
(2003) with CAM; Treasurer of certain
mutual funds associated with
CAM; Head of International Funds
Administration of CAM (from
2001 to 2003); Director of
Global Funds Administration
of CAM (from 2000 to 2001).
Year of Birth: 1951
Kaprel Ozsolak Chief Financial Director of CAM; Chief Financial
Officer and Officer and Treasurer of certain
Treasurer mutual funds associated with
(2004) CAM; Controller of certain mutual
funds associated with CAM (from
2002 to 2004);
Year of Birth: 1965
Steven Frank Controller Vice President of CAM (since
(2005) 2002); Controller of certain mutual
funds associated with CAM;
Assistant Controller of CAM
(from 2001 to 2005); Accounting
Manager of CAM (from 1996 to
2001).
Year of Birth: 1967
Kevin Kennedy Vice President and Managing Director of CAM.
Investment Officer Year of Birth: 1954
(2002)
Ted P. Becker Chief Compliance Managing Director of Compliance
Officer (2006) at Legg Mason (2005-Present);
Chief Compliance Officer with
certain mutual funds associated
with CAM (since 2006); Managing
Director of Compliance at CAM
(2002-2005). Prior to 2002,
Managing Director- Internal Audit
& Risk Review at Citigroup Inc.
Year of Birth: 1951
8
Principal Occupations and
Position Other Affiliations for the
Name (Year First Elected) Past Five Years and Year of Birth
----- -------------------- ---------------------------------
John Chiota Chief Anti-Money Vice President of CAM (since
Laundering Compliance 2004); Chief Anti-Money
Officer (2006) Laundering Compliance Officer
with certain mutual funds
associated with CAM (since 2006);
prior to August 2004, Chief AML
Compliance Officer with TD
Waterhouse.
Year of Birth: 1968
Matthew A. Troxell, CFA Investment Officer Principal and Portfolio Manager of
(2002) AEW Capital Management, L.P.
Year of Birth: 1958
Robert I. Frenkel Secretary (2003) Managing Director and General
Counsel of Global Mutual Funds
for CAM and its predecessor
(since 1994); Secretary of CFM;
Secretary and Chief Legal Officer
of mutual funds associated with
CAM.
Year of Birth: 1954
The election of each Director will require a plurality of the votes cast
with a quorum present.
The principal business address of Messrs. Gerken, Becker and Kennedy is
399 Park Avenue, New York, New York 10022. The principal business address of
Messrs. Shoup, Frank and Ozsolak is 125 Broad Street, New York, New York 10004.
The principal business address of Mr. Troxell is World Trade Center East, Two
Seaport Lane, 16th Floor, Boston, Massachusetts 02210. The principal business
address of Messrs. Frenkel and Chiota is 300 First Stamford Place, Stamford,
Connecticut 06902.
THE BOARD OF DIRECTORS, INCLUDING ALL THE NON- INTERESTED DIRECTORS,
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION OF ALL NOMINEES TO THE
BOARD.
The Fund has a separately designated standing Audit Committee. The Fund's
Audit Committee is composed of all the Directors who are not "interested
persons" of the Fund, CFM or their affiliates within the meaning of the 1940
Act, and who are "independent" as defined in the NYSE listing standards, namely
Messrs. Crane, Cucchi, Frankel, Hardin, Hutchinson and Pavia. The principal
functions of the Audit Committee are to (a) assist Board oversight of (i) the
integrity of the Fund's financial statements, (ii) the Fund's compliance with
legal and regulatory requirements, (iii) the qualifications and independence of
the Fund's independent registered public accounting firm, and (iv) the
performance of the Fund's internal audit functions and independent registered
public accounting firm; (b) approve, and recommend to the Independent Board
Members (as such term is defined in the Audit Committee Charter) for their
ratification, the selection, appointment, retention or termination of
9
the Fund's independent registered public accounting firm, as well as approving
the compensation thereof; (c) approve all audit and permissible non-audit
services provided to the Fund and certain other persons by such independent
registered public accounting firm; and (d) prepare the report required to be
prepared by the Audit Committee pursuant to SEC rules for inclusion in the
Annual Proxy Statement. This Committee met six times during the fiscal year
ended December 31, 2005. The Board of Directors of the Fund has determined that
all members of the Fund's Audit Committee are financially literate. Mr.
Hutchinson has been designated as the audit committee financial expert within
the meaning of the rules adopted and implemented under Section 407 of the
Sarbanes-Oxley Act of 2002. The Fund adopted an Amended and Restated Audit
Committee Charter at a meeting held on February 14, 2006, a copy of which is
attached to this Proxy Statement as Annex A.
The Fund has a separately designated standing Nominating Committee. The
Nominating Committee, the principal function of which is to select and nominate
candidates for election or appointment by the Board as Directors of the Fund, is
currently composed of Messrs. Crane, Cucchi, Frankel, Hardin, Hutchinson and
Pavia. Only Directors who are not "interested persons" of the Fund as defined in
the 1940 Act and who are "independent" as defined in the NYSE listing standards
are members of the Nominating Committee. The Nominating Committee may consider
nominees recommended by a shareholder as it deems appropriate. Shareholders who
wish to recommend a nominee should send recommendations to the Fund's Secretary
that include all information relating to such person that is required to be
disclosed in solicitations of proxies for the election of Directors. A
recommendation must be accompanied by a written consent of the individual to
stand for election if nominated by the Board of Directors and to serve if
elected by the shareholders. The Nominating Committee met once during the Fund's
fiscal year ended December 31, 2005. The Fund adopted a Nominating Committee
Charter at a meeting held on February 11, 2004, a copy of which is attached to
this Proxy Statement as Annex B.
The Nominating Committee identifies potential nominees through its network
of contacts, and may also engage, if it deems appropriate, a professional search
firm. The Committee meets to discuss and consider such candidates'
qualifications and then chooses a candidate by majority vote. The Nominating
Committee does not have specific, minimum qualifications for nominees and has
not established specific qualities or skills that it regards as necessary for
one or more of the Fund's Directors to possess (other than any qualities or
skills that may be required by applicable law, regulation or listing standard).
However, as set forth in the Nominating Committee Charter, in evaluating a
person as a potential nominee to serve as a Director of the Fund, the Committee
may consider the following factors, among any others it may deem relevant:
o whether or not the person is an "interested person" as defined in
the 1940 Act and whether the person is otherwise qualified under
applicable laws and regulations to serve as a Director of the Fund;
10
o whether or not the person has any relationships that might impair
his or her independence, such as any business, financial or family
relationships with Fund management, the Manager of the Fund, Fund
service providers or their affiliates;
o whether or not the person serves on boards of, or is otherwise
affiliated with, competing financial service organizations or their
related mutual fund complexes;
o whether or not the person is willing to serve, and willing and able
to commit the time necessary for the performance of the duties of a
Director of the Fund;
o the contribution which the person can make to the Board and the Fund
(or, if the person has previously served as a Director of the Fund,
the contribution which the person made to the Board during his or
her previous term of service), with consideration being given to the
person's business and professional experience, education and such
other factors as the Committee may consider relevant;
o the character and integrity of the person; and
o whether or not the selection and nomination of the person would be
consistent with the requirements of the Fund's retirement policies.
Report of the Audit Committee
At a meeting of the Audit Committee on February 21, 2006, the Audit
Committee reported that it: (i) reviewed and discussed the Fund's audited
financial statements with management; (ii) discussed with KPMG LLP ("KPMG"), the
Fund's independent registered public accounting firm, the matters required to be
discussed by Statement on Auditing Standards No. 61; and (iii) received written
confirmation from KPMG that it is independent and disclosures regarding such
independence, as required by Independence Standards Board Standard No. 1, and
discussed with KPMG the firm's independence. Based on the review and discussions
referred to in items (i) through (iii) above, the Audit Committee recommended to
the Board of Directors (and the Board approved) that the audited financial
statements be included in the Fund's annual report for the Fund's fiscal year
ended December 31, 2005.
Submitted by the Audit Committee
of the Fund's Board of Directors
Dwight B. Crane
Paolo M. Cucchi
Robert A. Frankel
Paul Hardin
William R. Hutchinson
George M. Pavia
11
Representatives of KPMG are not expected to be present at the Meeting but
have been given the opportunity to make a statement if they so desire and will
be available should any matter arise requiring their presence.
Audit Fees. Fees for the annual audit of the Fund's financial statements
by KPMG for the fiscal year ended December 31, 2004 and the fiscal year ended
December 31, 2005 were $40,000 and $40,000, respectively.
Audit-Related Fees. Fees for services related to the audit of the Fund's
financial statements rendered by KPMG for the fiscal year ended December 31,
2004 and fiscal year ended December 31, 2005 were $40,000 and $40,500,
respectively. These amounts represent procedures performed and prepared for in
an agreed upon procedures letter in accordance with the terms of the Articles
Supplementary.
Tax Fees. Fees for services rendered by KPMG for tax compliance for the
fiscal year ended December 31, 2004 and the fiscal year ended December 31, 2005
were $3,500 and $3,500, respectively. These amounts represent aggregate fees
paid for tax compliance, tax advice and tax planning services, which include the
filing and amendment of federal, state and local income tax returns, timely tax
qualification review and tax distribution and analysis planning rendered by KPMG
to the Fund.
All Other Fees. There were no other fees billed to KPMG for services
rendered to the Fund for the last two fiscal years.
Pre-Approval Policies and Procedures. The Audit Committee Charter requires
that the Audit Committee shall approve (a) all audit and permissible non-audit
services to be provided to the Fund and (b) all permissible non-audit services
to be provided by the Fund's independent registered public accounting firm to
the Manager and any service providers controlling, controlled by or under common
control with the Manager that provide ongoing services to the Fund ( "Covered
Service Providers") if the engagement relates directly to the operations and
financial reporting of the Fund. The Audit Committee may implement policies and
procedures by which such services are approved other than by the full Committee.
The Audit Committee may not approve non-audit services that the Committee
believes may impair the independence of the independent registered public
accounting firm. As of the date of the approval of the Audit Committee Charter,
permissible non-audit services include any professional services (including tax
services), that are not prohibited services as described below, provided to the
Fund by the independent registered public accounting firm, other than those
provided to the Fund in connection with an audit or a review of the financial
statements of the Fund. Permissible non-audit services may not include: (i)
bookkeeping or other services related to the accounting records or financial
statements of the Fund; (ii) financial information systems design and
implementation; (iii) appraisal or valuation services, fairness opinions or
contribution-in-kind reports; (iv) actuarial services; (v) internal audit
outsourcing services; (vi) management functions or human resources; (vii) broker
or dealer, investment adviser or investment banking services; (viii) legal
services and
12
expert services unrelated to the audit; and (ix) any other service the Public
Company Accounting Oversight Board determines, by regulation, is impermissible.
Pre-approval by the Audit Committee of any permissible non-audit services
is not required so long as: (i) the aggregate amount of all such permissible
non-audit services provided to the Fund, the Manager and any Covered Service
Provider constitutes not more than 5% of the total amount of revenues paid to
the independent registered public accounting firm during the fiscal year in
which the permissible non-audit services are provided to (a) the Fund, (b) the
Manager and (c) any Covered Service Provider during the fiscal year in which the
services are provided that would not have to be approved by the Committee; (ii)
the permissible non-audit services were not recognized by the Fund at the time
of the engagement to be non-audit services; and (iii) such services are promptly
brought to the attention of the Audit Committee and approved by the Committee
(or its delegate(s)) prior to the completion of the audit.
There were no services rendered by KPMG to the Fund for which the
pre-approval requirement was waived.
Aggregate Non-Audit Fees. The aggregate non-audit fees billed by KPMG for
non-audit services rendered to the Fund, the Manager and Covered Service
Providers for the fiscal year ended December 31, 2004 and the fiscal year ended
December 31, 2005 were $75,000 and $0, respectively.
The Fund's Audit Committee has considered whether the provision of
non-audit services that were rendered by KPMG to the Manager and Covered Service
Providers which were not pre-approved (not requiring pre-approval) is compatible
with maintaining KPMG's independence. All services provided by KPMG to the Fund,
the Manager or Covered Service Providers which were required to be pre-approved
were pre-approved as required.
SHAREHOLDER PROPOSALS AND OTHER
SHAREHOLDER COMMUNICATIONS
Shareholder proposals intended to be presented at the 2007 Annual Meeting
of Shareholders of the Fund must be received by November 28, 2006 to be included
in the proxy statement and the form of proxy relating to that meeting, as the
Fund expects that the 2007 Annual Meeting will be held in April of 2007. The
submission by a shareholder of a proposal for inclusion in the proxy statement
does not guarantee that it will be included. Any shareholder who desires to
submit a proposal at the 2007 Annual Meeting of Shareholders without including
such proposal in the Fund's proxy statement must deliver written notice thereof
to the Secretary of the Fund (addressed to Real Estate Income Fund, 125 Broad
Street, New York, New York 10004) during the period from January 26, 2007 to
February 25, 2007. However, if the 2007 Annual Meeting of Shareholders is held
earlier than March 31, 2007, or later than June 30, 2007, such written notice
must be delivered to the Secretary of the Fund during the period from 90 days
before the date of the 2007 Annual Meeting to
13
the later of 60 days prior to the date of the 2007 Annual Meeting or 10 days
following the public announcement of the date of the 2007 Annual Meeting.
Shareholder proposals are subject to certain regulations under the federal
securities laws.
The persons named as proxies for the 2007 Annual Meeting of Shareholders
will have discretionary authority to vote on any matter presented by a
shareholder for action at that meeting unless the Fund receives notice of the
matter between January 26, 2007 and February 25, 2007, in which case these
persons will not have discretionary voting authority except as provided in the
SEC's rules governing shareholder proposals.
The Fund's Audit Committee has established guidelines and procedures
regarding the receipt, retention and treatment of complaints regarding
accounting, internal accounting controls or auditing matters (collectively,
"Accounting Matters"). Persons with complaints or concerns regarding Accounting
Matters may submit their complaints to the Fund's Chief Compliance Officer
("CCO"). Persons who are uncomfortable submitting complaints to the CCO,
including complaints involving the CCO, may submit complaints directly to the
Fund's Audit Committee Chair (together with the CCO, "Complaint Officers").
Complaints may be submitted on an anonymous basis.
The CCO may be contacted at:
Legg Mason
Compliance Department
399 Park Avenue, 4th Floor
New York, NY 10022
Complaints may also be submitted by telephone at 800-742-5274. Complaints
submitted through this number will be received by the CCO.
The Fund's Audit Committee Chair may be contacted at:
Real Estate Income Fund Inc.
Audit Committee Chair
Robert A. Frankel
1961 Deergrass Way
Carlsbad, CA 92009
A shareholder who wishes to send any other communications to the Board
should also deliver such communications to the Secretary of the Fund, Robert I.
Frenkel, 300 First Stamford Place, 4th Floor, Stamford, CT 06902. The Secretary
is responsible for determining, in consultation with other officers of the Fund,
counsel, and other advisers as appropriate, which shareholder communications
will be relayed to the Board.
14
ADDITIONAL INFORMATION
On December 1, 2005, Citigroup Inc. ("Citigroup") announced that it had
completed the sale of substantially all of its asset management business, CAM,
to Legg Mason. As a result, the Manager, previously an indirect wholly-owned
subsidiary of Citigroup, has become a wholly-owned subsidiary of Legg Mason.
Completion of the sale caused the Fund's existing investment management contract
(and sub-advisory contract) to terminate.
The Fund's shareholders approved a new investment management contract
between the Fund and the Manager (and a new sub-advisory contract) which became
effective on December 1, 2005.
Legg Mason's sole business is asset management, with on-the-ground
management capabilities located around the world and assets under management as
of December 31, 2005 aggregating approximately $850.8 billion (including the
combined assets of Legg Mason and Permal plus approximately $400 billion in
managed assets acquired from Citigroup).
Under a licensing agreement between Citigroup and Legg Mason, the name of
the Fund, and the names of investment advisers of the Fund, as well as all
logos, trademarks and service marks related to Citigroup or any of its
affiliates ("Citi Marks") are licensed for use by Legg Mason and by the Fund.
Citi Marks include, but are not limited to, "Smith Barney," "Salomon Brothers,"
"Citi," and "Citigroup Asset Management." Legg Mason and its affiliates, as well
as the Manager, are not affiliated with Citigroup. All Citi Marks are owned by
Citigroup, and are licensed for use until no later than one year after the date
of the licensing agreement.
Legg Mason is a global asset management firm, structured as a holding
company. The firm is headquartered in Baltimore, Maryland.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board does not intend to present any other business at the Meeting,
nor is the Fund aware of any shareholder proposals. If, however, any other
matters are properly brought before the Meeting, the persons named as proxies in
the accompanying form of proxy will vote thereon in accordance with their
judgment, to the extent permissible under applicable law.
March 13, 2006
It is important that proxies be returned promptly. Shareholders who do not
expect to attend the meeting are therefore urged to complete and sign, date and
return the proxy card as soon as possible in the enclosed postage-paid envelope.
15
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ANNEX A
AUDIT COMMITTEE CHARTER
AMENDED AND RESTATED AS OF FEBRUARY 14, 2006
ESTABLISHMENT AND PURPOSE
This document serves as the Charter for the Audit Committee (the
"Committee") of the Board of each registered investment company (the "Fund")
advised by Smith Barney Fund Management or Salomon Brothers Asset Management or
one of their affiliates (each, an "Adviser") listed on Appendix A hereto (each
such Charter being a separate Charter). The primary purposes of the Committee
are to (a) assist Board oversight of (i) the integrity of the Fund's financial
reporting, (ii) the Fund's compliance with legal and regulatory requirements
(iii) the qualifications and independence of the Fund's independent registered
public accountants and (iv) the performance of the Fund's internal audit
function and independent registered public accountants; (b) approve, and
recommend to the Independent Board Members (as such term is defined below) for
their ratification, the selection, appointment, retention or termination of the
Fund's independent registered public accountants, as well as approving the
compensation thereof; (c) approve all audit and permissible non-audit services
provided to the Fund and certain other persons by the Fund's independent
registered public accountants; and (d) for each closed-end Fund, prepare the
report required to be prepared by the Committee pursuant to the rules of the
Securities and Exchange Commission for inclusion in the Fund's annual Proxy
Statement.
DUTIES AND RESPONSIBILITIES
The Fund's independent registered public accountants are accountable to
the Committee.
The Committee shall:
1. Bear direct responsibility for the appointment, compensation,
retention and oversight of the Fund's independent registered public
accountants, or of any other public accounting firm engaged for the
purpose of performing other audit, review or attest services for the
Fund.
2. Confirm with any independent registered public accountant retained
to provide audit services that the independent registered public
accountant has ensured the appropriate rotation of the lead audit
partner pursuant to applicable regulations.
A-1
3. Approve (a) all audit and permissible non-audit services(1) to be
provided to the Fund and (b) all permissible non-audit services to
be provided by the Fund's independent registered public accountants
to the Adviser and any Covered Service Providers if the engagement
relates directly to the operations and financial reporting of the
Fund. The Committee may implement policies and procedures by which
such services are approved other than by the full Committee.
4. Discuss with the independent registered public accountants any
disclosed relationships or services that may diminish the
objectivity and independence of the independent registered public
accountants and, if so determined by the Committee, recommend that
the Board take appropriate action to ensure the independence of the
independent registered public accountants.
5. Review, in consultation with the independent registered public
accountants, the proposed scope of the Fund's audit each year,
including the audit procedures to be utilized in the review of the
Fund's financial statements.
6. Inquire of the Adviser and the independent registered public
accountants as to significant tax and accounting policies elected by
the Fund (including matters affecting qualification under Subchapter
M of the Internal Revenue Code).
7. Review with the independent registered public accountants any
problems or difficulties the registered public accountants may have
encountered during the conduct of the audit and management's
response, including a discussion with the independent registered
public accountants of the matters required to be discussed by
Statement on Auditing Standards No. 61, 89, 90 or any subsequent
Statement, relating to the conduct of the audit.
----------
(1) The Committee shall not approve non-audit services that the Committee
believes may impair the independence of the registered public accountants.
As of the date of the approval of this Audit Committee Charter,
permissible non-audit services include any professional services
(including tax services), that are not prohibited services as described
below, provided to the Fund by the independent registered public
accountants, other than those provided to the Fund in connection with an
audit or a review of the financial statements of the Fund. Permissible
non-audit services may not include: (i) bookkeeping or other services
related to the accounting records or financial statements of the Fund;
(ii) financial information systems design and implementation; (iii)
appraisal or valuation services, fairness opinions or contribution-in-kind
reports; (iv) actuarial services; (v) internal audit outsourcing services;
(vi) management functions or human resources; (vii) broker or dealer,
investment adviser or investment banking services; (viii) legal services
and expert services unrelated to the audit; and (ix) any other service the
Public Company Accounting Oversight Board determines, by regulation, is
impermissible.
Pre-approval by the Committee of any permissible non-audit services is not
required so long as: (i) the aggregate amount of all such permissible
non-audit services provided to the Fund, the Adviser and any service
providers controlling, controlled by or under common control with the
Adviser that provide ongoing services to the Fund ("Covered Service
Providers") constitutes not more than 5% of the total amount of revenues
paid to the independent registered public accountants during the fiscal
year
A-2
8. Review, in consultation, as appropriate, with the independent
registered public accountants and significant Fund service
providers, matters relating to internal controls over financial
reporting and disclosure controls and procedures of the Fund and of
the Fund's significant service providers.
9. Request, receive and/or review from the independent registered
public accountants such other materials as deemed necessary or
advisable by the Committee in the exercise of its duties under this
Charter; such materials may include, without limitation, any other
material written communications bearing on the Fund's financial
statements, or internal or disclosure controls, between the
independent registered public accountants and the Fund, the Adviser
or other Fund service providers, such as any management letter or
schedule of unadjusted differences, and any comment or "deficiency"
letter (to the extent such letters relate to financial reporting)
received from a regulatory or self-regulatory organization addressed
to the Fund or the Adviser that relates to services rendered to the
Fund.
10. For each closed-end Fund, establish procedures regarding the
receipt, retention and treatment of complaints that the Fund may
receive regarding Fund accounting, internal accounting controls or
auditing matters, including procedures for the confidential or
anonymous submission by Fund officers, employees, stockholders or
service providers of concerns regarding questionable accounting or
auditing matters related to the Fund.
11. For each closed-end Fund, obtain and review a report by the Fund's
independent registered public accountants describing (i) the
auditing firm's internal quality-control procedures; (ii) any
material issues raised by the most recent internal quality-control
review, or peer review, of the auditing firm, or by any inquiry or
investigation by governmental or professional authorities, within
the preceding five years, respecting one or more independent audits
carried out by the auditing firm, and any steps taken to deal with
any such issues; and (iii) (to assess the auditor's independence)
all relationships between the independent registered public
accountants and the Fund.
12. For each closed-end Fund, discuss policies with respect to risk
assessment and risk management.
13. For each closed-end Fund, review hiring policies for employees or
former employees of the Fund's independent registered public
accountants.
in which the permissible non-audit services are provided to (a) the Fund,
(b) the Adviser and (c) any entity controlling, controlled by or under
common control with the Adviser that provides ongoing services to the Fund
during the fiscal year in which the services are provided that would have
to be approved by the Committee; (ii) the permissible non-audit services
were not recognized by the Fund at the time of the engagement to be
non-audit services; and (iii) such services are promptly brought to the
attention of the Committee and approved by the Committee (or its
delegate(s)) prior to the completion of the audit.
A-3
14. For each closed-end Fund, discuss with management and the Fund's
independent registered public accountants the Fund's audited
financial statements and discuss with management the Fund's
unaudited financial statements, including any narrative discussion
by management concerning the Fund's financial condition and
investment performance and, if appropriate, recommend the
publication of the Fund's annual audited financial statements in the
Fund's annual report in advance of the printing and publication of
the annual report.
15. For each closed-end Fund, discuss the Fund's earnings press
releases, as well as financial information and earnings guidance
provided to analysts and rating agencies;
16. For each closed-end Fund, review and evaluate annually the
performance of the Committee and the adequacy of this Charter and
recommend any proposed changes to the Charter to the Board for
approval.
The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to retain, as it deems
necessary to carry out its duties, special counsel and other experts or
consultants at the expense of the Fund. The Fund shall provide appropriate
funding, as determined by the Committee, for the Committee to carry out its
duties and its responsibilities, including (a) for compensation to be paid to,
or services to be provided by, the Fund's independent registered public
accountants or other public accounting firm providing audit, review or attest
services for the Fund, (b) for payment of compensation to any outside legal,
accounting or other advisors, counsel or consultants employed by the Committee
and (c) for the ordinary administrative expenses of the Committee. In performing
its duties, the Committee shall consult as it deems appropriate with the members
of the Board, officers and employees of the Fund, the Adviser, the Fund's
sub-adviser(s), if any, the Fund's counsel, counsel to the Independent Board
Members and the Fund's other service providers.
COMPOSITION
The Committee shall be composed of each Board member who has been
determined not to be an "interested person," as that term is defined in Section
2(a)(19) of the Investment Company Act of 1940, as amended ("1940 Act"), of the
Fund (the "Independent Board Members"), or such lesser number as the Board of
the Fund may specifically determine and reflect in the Board's minutes, each of
whom shall be financially literate and at least one of whom shall have
accounting or related financial management expertise as determined by the Fund's
Board in its business judgment. Each member of the Committee must also meet the
independence and experience requirements as set forth in Section 303.01(B) of
the New York Stock Exchange's Listed Company Manual or as set forth in Section
121(a) of the American Stock Exchange's listing standards, as applicable, and
the independence requirements applicable to investment companies set forth in
Rule 10A-3 under of
A-4
the Securities Exchange Act of 1934. For those Funds listed on the New York
Stock Exchange, no member of the Committee may serve on the audit committees of
more than three public companies, including the Funds, unless the Board
determines that such simultaneous service would not impair the ability of such
member to serve on the Committee effectively. The Committee shall elect a
Chairperson, who shall preside over Committee meetings. The Chairperson shall
serve for a term of three years, which term may be renewed from time to time.
MEETINGS
The Committee shall meet on a regular basis, but not less frequently than
twice a year. Special meetings may also be held upon reasonable notice to the
members of the Committee. An agenda shall be established for each meeting. The
Committee may request any officer or employee of the Fund, the Fund's counsel,
counsel to the Independent Board Members, the Adviser, the Fund's independent
registered public accountants or other interested persons to attend a meeting of
the Committee or to meet with any members of, or consultants to, the Committee.
The Committee will meet periodically with the Fund's independent registered
public accountants outside the presence of the Fund's and the Adviser's officers
and employees. The Committee will also meet periodically with the Fund's
management outside the presence of the Fund's independent registered public
accountants. Meetings of the Committee may be held in person, by telephone or by
other appropriate means.
One-third of the Committee's members, but not fewer than two members,
shall constitute a quorum. At any meeting of the Committee, the decision of a
majority of the members present and voting shall be determinative as to any
matter submitted to a vote.
REPORTING
The Chairperson shall report regularly to the Board on the result of the
Committee's deliberations and make such recommendations as deemed appropriate.
LIMITS ON ROLE OF COMMITTEE
The function of the Committee is oversight. The Fund's management is
responsible for (i) the preparation, presentation and integrity of the Fund's
financial statements, (ii) the maintenance of appropriate accounting and
financial reporting principles and policies and (iii) the maintenance of
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. The independent registered public
accountants are responsible for planning and carrying out proper audits and
reviews. In fulfilling their responsibilities hereunder, it is recognized that
members of the Committee are not employees of the Fund. As such, it is not the
duty or responsibility of the Committee or its members to conduct "field work"
or other types of auditing or accounting reviews or procedures or to set auditor
independence standards. Each member of the Committee shall be entitled to rely
on (i) the integrity of those persons and organizations within
A-5
and outside the Fund from which it receives information and (ii) the accuracy of
the financial and other information provided to the Committee by such persons
and organizations absent actual knowledge to the contrary (which shall be
promptly reported to the Fund's Board) and (iii) statements made by the officers
and employees of the Fund, the Adviser or other third parties as to any
information technology, internal audit and other non-audit services provided by
the independent registered public accountants to the Fund. The designation of a
person as an "audit committee financial expert," within the meaning of the rules
adopted and implemented under Section 407 of the Sarbanes-Oxley Act of 2002,
shall not impose any greater responsibility or liability on that person than the
responsibility and liability imposed on such person as a member of the
Committee, nor does it decrease the duties and obligations of other Committee
members or the Board.
In carrying out its responsibilities, the Committee's policies and
procedures shall be adapted, as appropriate, in order to best react to a
changing environment.
AMENDMENTS
This Charter may be amended by a vote of a majority of the Board members.
A-6
Appendix A
Citigroup Investments Corporate Loan Fund Inc.*
Managed High Income Portfolio Inc.*
Managed Municipals Portfolio Inc.*
Municipal High Income Fund Inc.*
Real Estate Income Fund Inc.*
SB Adjustable Rate Income Fund
Zenix Income Fund Inc.*
----------
* Closed-end Fund. The duties and responsibilities of paragraphs 10, 11, 12
and 13 and any other provision applicable exclusively to closed-end funds
apply to these funds only.
A-7
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ANNEX B
NOMINATING COMMITTEE CHARTER
ORGANIZATION
The Nominating Committee of each registered investment company listed on
Appendix A hereto (each, a "Fund" and together, the "Funds") shall be composed
solely of Directors who are not "interested persons" of the Fund as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended (the "1940
Act") and, with respect to those Funds listed on the New York Stock Exchange,
who are "independent" as defined in the New York Stock Exchange listing
standards ("Independent Directors"). The Board of Directors of the Fund (the
"Board") shall nominate the members of the Committee and shall designate the
Chairperson of the Committee. The Chairperson shall preside at each meeting of
the Committee.
RESPONSIBILITIES
The Committee shall select and nominate persons for election or
appointment by the Board as Directors of the Fund.
EVALUATION OF POTENTIAL NOMINEES
In evaluating a person as a potential nominee to serve as a Director of
the Fund, the Committee should consider among other factors it may deem
relevant:
o whether or not the person is an "interested person" as defined in
the 1940 Act and whether the person is otherwise qualified under
applicable laws and regulations to serve as a Director of the Fund;
o whether or not the person has any relationships that might impair
his or her independence, such as any business, financial or family
relationships with Fund management, the investment manager of the
Fund, other Fund service providers or their affiliates;
o whether or not the person serves on boards of, or is otherwise
affiliated with, competing financial service organizations or their
related mutual fund complexes;
o whether or not the person is willing to serve, and willing and able
to commit the time necessary for the performance of the duties of a
Director of the Fund;
o the contribution which the person can make to the Board and the Fund
(or, if the person has previously served as a Director of the Fund,
the contribution which the person made to the Board during his or
her previous term of service), with consideration being given to the
person's business and professional experience, education and such
other factors as the Committee may consider relevant;
B-1
o the character and integrity of the person; and
o whether or not the selection and nomination of the person would be
consistent with the requirements of the Fund's retirement policies.
While the Committee is solely responsible for the selection and nomination
of Directors, the Committee may consider nominees recommended by Fund
stockholders as it deems appropriate. Stockholders who wish to recommend a
nominee should send nominations to the Secretary of the Fund that include all
information relating to such person that is required to be disclosed in
solicitations of proxies for the election of Directors. The recommendation must
be accompanied by a written consent of the individual to stand for election if
nominated by the Board of Directors and to serve if elected by the stockholders.
QUORUM
A majority of the members of the Committee shall constitute a quorum for
the transaction of business, and the act of a majority of the members of the
Committee present at any meeting at which there is a quorum shall be the act of
the Committee.
NOMINATION OF DIRECTORS
After a determination by the Committee that a person should be selected
and nominated as a Director of the Fund, the Committee shall present its
recommendation to the Board for its consideration.
MEETINGS
The Committee may meet either on its own or in conjunction with meetings
of the Board. Meetings of the Committee may be held in person, video conference
or by conference telephone. The Committee may take action by unanimous written
consent in lieu of a meeting.
Adopted: February 11, 2004
B-2
Appendix A
Citigroup Investments Corporate Loan Fund Inc.
Managed High Income Portfolio Inc.
Managed Municipals Portfolio Inc.
Municipal High Income Fund Inc.
Real Estate Income Fund Inc.
SB Adjustable Rate Income Fund
Zenix Income Fund Inc.
B-3
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ANNUAL MEETING OF STOCKHOLDERS OF
REAL ESTATE INCOME FUND INC.
April 7, 2006
COMMON STOCK
Proof #2
Common
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
--> Please detach along perforated line and mail in the envelope provided. -->
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
--------------------------------------------------------------------------------
1. Election of Director:
NOMINEE:
|_| FOR THE NOMINEE (_) Dwight B. Crane For Class III Director
(_) William R. Hutchinson For Class III Director
|_| WITHHOLD AUTHORITY
FOR THE NOMINEE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
To change the address on your account, please check the box at right and (X)
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted
via this method.
--------------------------------------------------------------------------------
2. Any other business that may properly come before the Meeting.
This proxy, when properly executed, will be voted in the manner directed by the
stockholder. If no other direction is made, this proxy will be voted
FOR the election of the nominees as Directors.
Please refer to the Proxy Statement for a discussion of the Proposal.
Please check here of you plan to attend the Meeting. |_|
Signature of Stockholder ____________________ Date: ____________ Signature of Stockholder ____________________ Date: ____________
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
Proof #1
Common
COMMON STOCK COMMON STOCK
REAL ESTATE INCOME FUND INC.
April 7, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R. Jay Gerken, Robert I. Frenkel, Grace
Sinn and Robert M. Nelson, and each of them, attorneys and proxies for the
undersigned, with full power of substitution and revocation to represent the
undersigned and to vote on behalf of the undersigned all shares of Common Stock
of Real Estate Income Fund Inc. (the "Fund") which the undersigned is entitled
to vote at the Annual Meeting of Stockholders of the Fund to be held at
Citigroup Center, 153 East 53rd Street, 14th Floor Conference Center, New York,
New York on Friday, April 7, 2006, at 3:30 p.m., and at any adjournments
thereof. The undersigned hereby acknowledges receipt of the Notice of Meeting
and accompanying Proxy Statement and hereby instructs said attorneys and proxies
to vote said shares as indicated hereon. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
Meeting. A majority of the proxies present and acting at the Meeting in person
or by substitute (or, if only one shall be so present, then that one) shall have
and may exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
(Continued and to be signed on the reverse side)
14475
ANNUAL MEETING OF STOCKHOLDERS OF
REAL ESTATE INCOME FUND INC.
April 7, 2006
PREFERRED STOCK
Proof #2
Preferred
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
--> Please detach along perforated line and mail in the envelope provided. -->
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
--------------------------------------------------------------------------------
1. Election of Directors:
NOMINEES:
|_| FOR THE NOMINEES (_) Dwight B. Crane For Class III Director
(_) Paul Hardin For Class III Director
(_) William R. Hutchinson For Class III Director
|_| WITHHOLD AUTHORITY
FOR THE NOMINEES
|_| FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: (X)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
To change the address on your account, please check the box at right |_|
and indicate your new address in the address space above. Please note
that changes to the registered name(s) on the account may not be
submitted via this method.
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2. Any other business that may properly come before the Meeting.
This proxy, if properly executed, will be voted in the manner directed by the
stockholder. If no direction is made, this proxy will be voted
FOR the election of the nominees as Directors.
Please refer to the Proxy Statement for a discussion of the Proposal.
Please check here of you plan to attend the Meeting. |_|
Signature of Stockholder ____________________ Date: ____________ Signature of Stockholder ____________________ Date: ____________
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
Proof #1
Preferred
PREFERRED STOCK PREFERRED STOCK
REAL ESTATE INCOME FUND INC.
April 7, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R. Jay Gerken, Robert I. Frenkel, Grace
Sinn and Robert M. Nelson, and each of them, attorneys and proxies for the
undersigned, with full power of substitution and revocation to represent the
undersigned and to vote on behalf of the undersigned all shares of Preferred
Stock of Real Estate Income Fund Inc. (the "Fund") which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Fund to be held at
Citigroup Center, 153 East 53rd Street, 14th Floor Conference Center, New York,
New York on Friday, April 7, 2006, at 3:30 p.m., and at any adjournments
thereof. The undersigned hereby acknowledges receipt of the Notice of Meeting
and accompanying Proxy Statement and hereby instructs said attorneys and proxies
to vote said shares as indicated hereon. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
Meeting. A majority of the proxies present and acting at the Meeting in person
or by substitute (or, if only one shall be so present, then that one) shall have
and may exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
(Continued and to be signed on the reverse side)
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