SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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 Rule 14a-11(c) or Rule 14a-12
The Emerging Markets 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)(4) 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 is determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
THE EMERGING MARKETS INCOME FUND INC
125 BROAD STREET
NEW YORK, NEW YORK 10004
-----------------
NOTICE OF SPECIAL
MEETING OF STOCKHOLDERS
-----------------
December 26, 2001
To the Stockholders:
Notice is hereby given that a Special Meeting of Stockholders (the
"Meeting") of The Emerging Markets Income Fund Inc (the "Fund") will be held at
Salomon Brothers Asset Management Inc, 388 Greenwich Street, 26th Floor,
Conference Room N, New York, New York, on Friday, February 1, 2002, at 9:00
a.m., New York time, for the purposes of considering and voting upon the
following:
1. The approval of a new Management Agreement between the Fund and Salomon
Brothers Asset Management Inc ("SBAM") (Proposal 1);
2. The approval of the retention by, and reimbursement to, SBAM of its
costs incurred in connection with services rendered to the Fund for the
period from November 28, 2000 until the date the new Management
Agreement is approved by the Fund's stockholders (Proposal 2); and
3. Any other business that may properly come before the Meeting.
The close of business on December 18, 2001 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Meeting.
By Order of the Board of Directors,
Christina T. Sydor,
Secretary
-----------------
Your vote is important to us, and we request that you give this proxy statement
your immediate attention. To avoid unnecessary expense of further solicitation,
we urge you to indicate voting instructions on the enclosed proxy, date and
sign it and return it promptly in the envelope provided, no matter how large or
how small your holdings may be.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Fund of validating your vote if you
fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to a name shown in the registration.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of
registration. For example:
Registration Valid Signature
------------ ---------------
Corporate Accounts
(1) ABC Corp.......................... ABC Corp.
(by John Doe, Treasurer)
(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
Custodial 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, Jr., Executor
THE EMERGING MARKETS INCOME FUND INC
125 BROAD STREET
NEW YORK, NEW YORK 10004
-----------------
PROXY STATEMENT
-----------------
This proxy statement is furnished in connection with a solicitation by the
Board of Directors of The Emerging Markets Income Fund Inc (the "Fund") of
proxies to be used at a Special Meeting of Stockholders of the Fund (the
"Meeting") to be held at Salomon Brothers Asset Management Inc, 388 Greenwich
Street, 26th Floor, Conference Room N, New York, New York on February 1, 2002,
at 9:00 a.m., New York time (and at any adjournment or adjournments thereof)
for the purposes set forth in the accompanying Notice of Special Meeting of
Stockholders. This proxy statement and the accompanying form of proxy are first
being mailed to stockholders on or about December 26, 2001. Stockholders who
execute proxies retain the right to revoke them in person at the Meeting or by
written notice received by the Secretary of the Fund at any time before they
are voted. Unrevoked proxies will be voted in accordance with the
specifications thereon and, unless specified to the contrary, will be voted FOR
each proposal. The close of business on December 18, 2001 has been fixed as the
record date for the determination of stockholders entitled to notice of and to
vote at the Meeting. Each stockholder is entitled to one vote for each full
share and an appropriate fraction of a vote for each fractional share held. On
December 18, 2001, there were 4,050,854 shares of the Fund's Common Stock
outstanding.
In accordance with the Fund's By-Laws, the presence in person or by proxy of
stockholders of the Fund entitled to cast at least a majority of the votes
entitled to be cast shall constitute a quorum at the Meeting. In the event that
a quorum is not present at the Meeting, or in the event that a quorum is
present but sufficient votes to approve any of the proposals are not received,
the persons named as proxies may propose one or more adjournments of the
Meeting to a date not more than 120 days after the record date to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. The persons named as proxies will vote those proxies which
they are entitled to vote FOR or AGAINST any such proposal in their discretion.
A stockholder vote may be taken on one or more of the proposals in this proxy
statement prior to any such adjournment if sufficient votes have been received
for approval.
Salomon Brothers Asset Management Inc ("SBAM"), whose principal business
address is 388 Greenwich Street, New York, New York 10013, is the Fund's
investment manager.
PIMCO Advisors L.P. ("PIMCO Advisors"), whose principal business address is
888 San Clemente Drive, Suite 100, Newport Beach, California 92660, is the
Fund's investment adviser.
PROPOSAL 1
APPROVAL OF MANAGEMENT AGREEMENT
Introduction
The Fund commenced operations on July 31, 1992. Since that time, SBAM has
acted as investment manager to the Fund and has provided the Fund with
investment management services pursuant to a Management Agreement between the
Fund and SBAM (the "Agreement"). The Agreement was last approved by the Fund's
stockholders on January 15, 1998 and was approved for continuance by a majority
of the Fund's Board of Directors, including a majority of the Directors who are
not "interested persons" (as defined in the Investment Company Act of 1940 (the
"1940 Act")) (the "Independent Directors") on November 4, 1999. In November
2000, SBAM inadvertently did not schedule the approval of the continuation of
the Agreement for action by the Board of Directors. As a result, the Agreement
terminated on November 27, 2000 because the Board of Directors did not vote to
continue the Agreement at that time. Therefore, SBAM has been performing the
services of an investment manager since November 28, 2000 without a written
contract having been approved by either the Board of Directors or the Fund's
stockholders. At a meeting held December 3, 2001, the Board of Directors,
including all of the Independent Directors, unanimously approved a new
Management Agreement (the "Proposed Agreement"). The Proposed Agreement is
identical to the Agreement except for the effective date and certain
non-material changes.
Section 15(a) of the 1940 Act provides that it shall be unlawful for any
person to serve or act as an investment adviser of a registered investment
company except pursuant to a written contract that has been approved by a
majority of the investment company's stockholders. Therefore, the Fund's
stockholders must approve the Proposed Agreement in order for SBAM to provide
investment management services to the Fund. If approved by stockholders at the
Meeting, the Proposed Agreement will become effective on the date of
stockholder approval and will continue in effect for two years from its
effective date. Thereafter, it will be subject to annual renewal by the Board
of Directors or by the stockholders. A copy of the Proposed Agreement is
attached as Exhibit A to this proxy statement, and is hereby submitted to
stockholders for approval. Additional information regarding SBAM is provided in
Annex A to this proxy statement.
2
Terms of the Proposed Agreement
The terms of the Proposed Agreement, including the fees paid to SBAM, are
identical to those of the Agreement, except for the effective date. For
additional information regarding management fees, see "Compensation and
Expenses," below. Pursuant to the Proposed Agreement, SBAM will manage and
supervise the Fund's investment program and will provide certain compliance,
administrative and clerical services to the Fund. In particular, the Proposed
Agreement provides that SBAM will (a) make investment strategy decisions for
the Fund, (b) manage the investing and reinvesting of the Fund's assets, (c)
place purchase and sale orders on behalf of the Fund, (d) provide continuous
supervision of the Fund's investment portfolio, and (e) provide or procure the
provision of research and statistical data in relation to investing and other
matters within the scope of the investment objectives and limitations of the
Fund. In addition, under the Proposed Agreement, SBAM will provide
administrative services to the Fund, including (a) compliance, record-keeping,
reporting and preparation of proxies and shareholder reports, (b) coordination
of the functions of the transfer agent, custodian, accountants, counsel and
other parties, (c) clerical services, such as accounting services, and (d)
shareholder services, including responding to shareholder inquiries.
The Proposed Agreement provides that the Fund is responsible for all of its
expenses and liabilities, except that SBAM is responsible for certain expenses
in connection with maintaining a staff within its organization to furnish the
above-named services to the Fund.
As set forth more fully in the Proposed Agreement, the Proposed Agreement
provides that, in the absence of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or reckless disregard
by it of its obligations and duties under the Proposed Agreement ("disabling
conduct"), SBAM shall not be liable to the Fund or its stockholders for any
error of judgment or mistake of law or for any act or omission or any loss
suffered by the Fund in the course of or in connection with the rendering of
its services under the Proposed Agreement.
The Proposed Agreement will have an initial term of two years, effective on
the date that stockholders approve the Proposed Agreement, and thereafter will
continue in effect for successive annual periods provided that its continuance
is specifically approved at least annually by: (i) a majority of the Fund's
Independent Directors; and (ii) the Fund's Board of Directors or the holders of
a "majority of the outstanding voting securities" (as defined in the 1940 Act).
The Proposed Agreement may be terminated, without penalty, on 60 days' notice
by the majority of the Board of Directors, by a vote of the holders of a
"majority of the outstanding voting securities" (as defined in the 1940 Act) of
the Fund, or by SBAM, and the Proposed Agreement will terminate automatically
in the event of its "assignment" (as defined in the 1940 Act).
3
Compensation and Expenses
Under the Proposed Agreement, the management fee as a percentage of average
weekly net assets of the Fund would remain the same as it was under the
Agreement. Pursuant to the Agreement, SBAM received for its services to the
Fund monthly compensation at an annual rate of 0.70% of the average weekly net
assets of the Fund. The management fee is paid by the Fund and includes
compensation for administrative services. For the fiscal year ended August 31,
2001, the Fund paid SBAM $362,364 in management fees. A portion of that amount,
representing SBAM's profit, has been reimbursed to the Fund as discussed under
Proposal 2.
Evaluation by the Board of Directors
At a meeting held on December 3, 2001, the Fund's Board of Directors,
including the Independent Directors, approved the Proposed Agreement and
recommends that stockholders of the Fund approve the Proposed Agreement. The
Independent Directors were advised by their own counsel in connection with
their review of the Proposed Agreement.
As set forth under Proposal 2, the Board also approved, subject to
stockholder approval, the retention by SBAM of its costs incurred in providing
services to the Fund from November 28, 2000 to October 31, 2001, and the
reimbursement to SBAM of its costs incurred in connection with services
rendered to the Fund from November 1, 2001 to the date stockholders approve the
Proposed Agreement.
The Board determined that the approval of the Proposed Agreement is in the
best interests of the Fund and its stockholders. The Board of Directors
believes that the Proposed Agreement enables the Fund to obtain high-quality
services at costs which it deems appropriate and reasonable. In connection with
its review of the Proposed Agreement, the Board requested and reviewed, with
the assistance of its own legal counsel, materials furnished by SBAM. These
materials included financial statements as well as other written information
regarding SBAM and its personnel, operations, financial condition and
profitability.
The Board focused primarily on the nature, quality and scope of the
operations and services provided by SBAM to the Fund. The Board also considered
SBAM's profitability with respect to the Fund and considered comparative fee
information concerning other investment companies with similar investment
objectives currently advised by SBAM. In connection with these considerations,
the Fund's Board also compared the Proposed Agreement and similar arrangements
by other investment companies, particularly with regard to levels of fees and
the anticipated benefits of SBAM's continued relationship with the Fund. The
Board confirmed that the Agreement and the Proposed Agreement, including the
terms relating to the services to be performed thereunder by SBAM and the fees
and expenses payable by the Fund, are identical in all material respects except
for the effective date.
4
In addition to these and other considerations, the Fund's Board considered
possible alternatives to approval of the Proposed Agreement.
Based upon its review of the above factors, the Board concluded that the
Proposed Agreement is in the best interests of the Fund and its stockholders.
Additional Information Regarding the Fund's Investment Advisory Arrangements
PIMCO Advisors, an investment management firm unaffiliated with SBAM, also
provides investment advisory services to the Fund. The Fund entered into a
separate Investment Advisory Agreement, dated May 5, 2000, with PIMCO Advisors,
which was approved by the Fund's stockholders on February 24, 2000 (the "PIMCO
Agreement") and which will continue in effect until May 5, 2002 and for annual
terms thereafter, subject to annual approval by the Fund's Board of Directors
or stockholders. The PIMCO Agreement will be unchanged by the Proposed
Agreement. Pursuant to the PIMCO Agreement, PIMCO Advisors supervises the
Fund's investment program, including advising and consulting with SBAM
regarding the Fund's overall investment strategy. PIMCO Advisors also provides
access to economic information, research and assistance to the Fund. Pursuant
to the PIMCO Agreement, the Fund pays PIMCO Advisors annual fees in monthly
installments at an annual rate of 0.50% of the Fund's average weekly net
assets. For the fiscal year ended August 31, 2001, the Fund paid PIMCO Advisors
$258,832 in fees under the PIMCO Agreement. Additional information regarding
PIMCO Advisors is provided in Annex A to this proxy statement.
Required Vote
As provided by the 1940 Act, approval of the Proposed Agreement will require
the affirmative vote of a "majority of the outstanding securities" of the Fund,
which means the affirmative vote of the lesser of: (a) 67% or more of the
shares of the Fund entitled to vote thereon present or represented by proxy at
the meeting, if the holders of more than 50% of the outstanding shares of the
Fund entitled to vote thereon are present or represented by proxy; or (b) more
than 50% of the total outstanding shares of the Fund entitled to vote thereon.
For this purpose, abstentions and Broker Non-Votes (defined below) will be
counted as shares present at the Meeting for quorum purposes but not voting and
will have the same effect as votes cast against the Proposal. "Broker
Non-Votes" are shares held in the name of a broker or nominee for which an
executed proxy is received by the Fund, but are not voted on the Proposal
because voting instructions have not been received from the beneficial owners
or persons entitled to vote and the broker or nominee does not have
discretionary voting power.
THE DIRECTORS OF THE FUND, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMEND
THAT THE STOCKHOLDERS OF THE FUND VOTE "FOR" PROPOSAL 1.
5
PROPOSAL 2
APPROVAL OF THE RETENTION BY, AND REIMBURSEMENT TO, SBAM OF COSTS INCURRED IN
CONNECTION WITH SERVICES RENDERED TO THE FUND
As discussed in Proposal 1, the Agreement between SBAM and the Fund
terminated on November 27, 2000. Therefore, SBAM has been performing the
services of an investment manager since November 28, 2000 without a written
contract having been approved by either the Board of Directors or the Fund's
stockholders. SBAM has reimbursed to the Fund the difference between the fees
it received since the date the Agreement terminated and the costs it incurred
in rendering investment management services to the Fund. Furthermore, SBAM has
received no compensation for its investment management services since November
1, 2001.
The Board of Directors of the Fund ratified and approved, subject to
stockholder ratification and approval, SBAM's retention of an amount equal to
$217,796, which represents the costs incurred by SBAM in connection with
services rendered to the Fund from November 28, 2000 to October 31, 2001, and
reimbursement to SBAM in an amount representing the costs incurred by SBAM in
connection with services rendered to the Fund from November 1, 2001 to the date
of stockholder approval of the Proposed Agreement. For the period November 28,
2000 to October 31, 2001, SBAM earned approximately $360,000 in management
fees. As noted above, SBAM has reimbursed to the Fund the excess of its fees
over its costs for this period. The amount that would be reimbursed to SBAM for
the period from November 1, 2001 to the date of stockholder approval will
depend on the average weekly net assets of the Fund between November 1, 2001
and the date of such stockholder approval and cannot be calculated at this
time. The costs incurred by SBAM from November 1, 2001 will be calculated using
the same methodology used to determine the costs SBAM incurred in connection
with services rendered to the Fund from November 28, 2000 to October 31, 2001.
Evaluation by the Board of Directors
In its consideration of this matter, the Board reviewed all costs incurred
by SBAM in connection with the services it rendered since November 28, 2000 as
well as the methodology used to determine such costs. The Board was satisfied
that SBAM retained no profit for this period. The Board considered that the
amount of the reimbursement was fair and reasonable, that the intents and
purposes of the 1940 Act were being met and that the Fund's stockholders were
in no worse position than they would have been had the Agreement remained in
effect. In particular, the Board considered that SBAM had provided and
continues to provide the same level of management services to the Fund as it
had prior to the termination, in conformity with
6
the terms and conditions of the Agreement. Moreover, the Board has continuously
monitored SBAM's performance of investment management services to the Fund, and
has determined that these services were rendered to its satisfaction.
As a result of the foregoing considerations, the Board ratified and
approved, subject to stockholder ratification and approval, the retention by,
and reimbursement to, SBAM of the costs it incurred in connection with services
rendered to the Fund from November 28, 2000 to the date of stockholder approval
of the Proposed Agreement.
Required Vote
Ratification and approval of the retention by, and reimbursement to, SBAM
of its costs incurred in connection with services rendered to the Fund will
require the affirmative vote of the majority of votes cast by holders of the
Fund's Common Stock present in person or represented by proxy. For purposes of
this Proposal, abstentions and Broker Non-Votes will be counted as shares
present at the Meeting for quorum but not voting purposes and will have the
same effect as votes cast against the Proposal.
THE DIRECTORS OF THE FUND, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMEND
THAT THE STOCKHOLDERS OF THE FUND VOTE "FOR" PROPOSAL 2.
PROPOSALS TO BE SUBMITTED BY STOCKHOLDERS
All proposals by stockholders of the Fund which are intended to be presented
at the Fund's next Annual Meeting of Stockholders to be held in 2002 must be
received by the Fund for inclusion in the Fund's proxy statement and proxy
relating to that meeting no later than August 15, 2002. Any stockholder who
desires to submit a proposal at the Fund's 2002 Annual Meeting of Stockholders
without including such proposal in the Fund's proxy statement must deliver
written notice thereof to the Secretary of the Fund (addressed to The Emerging
Markets Income Fund Inc, 125 Broad Street, New York, New York 10004) during the
period from August 13, 2002 to September 13, 2002.
OTHER INFORMATION
The Fund's Annual Report containing financial statements for the fiscal year
ended August 31, 2001 is available, free of charge, by writing to the Fund (c/o
Salomon Brothers Asset Management Inc) at the address listed on the front
cover, or by calling toll-free 1-888-777-0102.
EXPENSES OF THE MEETING
The expenses of the Meeting will be borne by SBAM. Proxies may be solicited
personally by officers of the Fund and by regular employees of SBAM,
7
PIMCO Advisors or their affiliates, or other representatives of the Fund and by
telephone or telegraph, in addition to the use of mails. Brokerage houses,
banks and other fiduciaries may be requested to forward proxy solicitation
material to their principals to obtain authorization for the execution of
proxies, and will be reimbursed by SBAM for out-of-pocket expenses incurred for
such activity. In addition, D.F. King & Co., Inc., a proxy solicitation firm,
has been retained to assist in the solicitation of the proxy vote. It is
anticipated that SBAM will pay D.F. King & Co., Inc. for such solicitation
services an amount not to exceed $10,000 plus reasonable out-of-pocket
expenses. Therefore, expenses of the Meeting will include costs of (i)
preparing, assembling and mailing material in connection with the solicitation,
(ii) soliciting proxies by officers or employees, personally or by telephone or
telegraph, (iii) reimbursing brokerage houses, banks and other fiduciaries and
(iv) compensating the proxy solicitor.
D.F. King & Co., Inc. may call stockholders to ask if they would be willing
to have their votes recorded by telephone. The telephone voting procedure is
designed to authenticate stockholders' identities, to allow stockholders to
authorize the voting of their shares in accordance with their instructions and
to confirm that their instructions have been recorded properly. The Fund has
been advised by counsel that these procedures are consistent with the
requirements of applicable law. A stockholder voting by telephone would be
asked for his or her social security number or other identifying information
and would be given an opportunity to authorize proxies to vote his or her
shares in accordance with his or her instructions. To insure that the
stockholder's instructions have been recorded correctly, he or she will receive
a confirmation of such instructions in the mail. The confirmation is a replica
of the proxy card but with marks indicating how the stockholder voted, along
with a special toll-free number which will be available in the event the
stockholder wishes to change or revoke the vote. Although a stockholder's vote
may be taken by telephone, each stockholder will receive a copy of this proxy
statement and may vote by mail using the enclosed proxy card. If you have any
questions or need assistance in voting, please contact D.F. King & Co., Inc. at
its toll-free number, 1-800-549-6697.
OTHER BUSINESS
The Board does not know of any other matter which may come before the
Meeting. If any other matter properly comes before the Meeting, it is the
intention of the persons named in the proxy to vote the proxies in accordance
with their judgment on that matter.
December 26, 2001
8
ANNEX A
Information Concerning SBAM
SBAM is a corporation organized under the laws of Delaware on December 24,
1987 and is registered as an investment adviser pursuant to the Investment
Advisers Act of 1940, as amended. SBAM has served as investment manager and
administrator to the Fund since commencement of the Fund's operations. As of
December 31, 2000, SBAM and its worldwide investment advisory affiliates
managed approximately $400 billion of assets.
SBAM is an indirect wholly-owned subsidiary of Salomon Brothers Holding
Company Inc, which, in turn, is a wholly-owned subsidiary of Citigroup Inc. The
principal business address of each of the foregoing entities is 388 Greenwich
Street, New York, New York 10013.
The names, titles and principal occupations of the current directors and
executive officers of SBAM are set forth in the following table.
Name Title and Principal Occupation
---- ------------------------------
Ross S. Margolies......... Member of the Board of Directors and Managing
Director
Peter J. Wilby............ Member of the Board of Directors and Managing
Director
Virgil H. Cumming......... Member of the Board of Directors
Wendy Murdock............. Member of the Board of Directors and Chief
Operating Officer for Retail Asset
Management
Heath B. McLendon......... Managing Director
Michael Fred Rosenbaum.... Chief Legal Officer
Jeffrey S. Scott.......... Chief Compliance Officer
The business address of each of the directors and officers listed above is
388 Greenwich Street, New York, New York 10013.
A-1
Comparative Fee Information
SBAM serves as an investment adviser, manager or sub-adviser to each of the
investment companies listed below which have similar investment objectives to
the Fund.
Investment Advisory,
Management or Approximate
Sub-Advisory Fee Net Assets as of
(as a percentage of October 31,
average weekly 2001
Name of Fund net assets) (in millions)
------------ -------------------- ----------------
The Emerging Markets Income Fund II Inc........ 0.70%(1) $245.9
The Emerging Markets Floating Rate Fund Inc.... 0.65%(1) 45.7
Global Partners Income Fund Inc................ 0.65%(1) 147.5
Salomon Brothers High Income Fund Inc.......... 0.70% 46.4
Salomon Brothers High Income Fund II Inc....... 1.00% 705.1
Salomon Brothers Institutional Emerging Markets
Debt Fund.................................... 0.70%(2) 72.4
Salomon Brothers Worldwide Income Fund Inc..... 0.90% 156.8
--------
(1) Fee is paid by PIMCO Advisors out of its management fee and includes
compensation for administrative services.
(2) SBAM has voluntarily agreed to limit the total expenses (including its
advisory fees) of the Fund (exclusive of taxes, interest and extraordinary
expenses, such as litigation and indemnification expenses) on an annualized
basis, to 0.75% of the fund's average daily net assets.
A-2
Information Concerning PIMCO Advisors
PIMCO Advisors was organized as a limited partnership under Delaware law in
1987. PIMCO Advisors' sole general partner is Allianz-PacLife Partners LLC.
Allianz-PacLife Partners LLC is a Delaware limited liability company with two
members, PIMCO Holding LLC, a Delaware limited liability company, and Pacific
Asset Management LLC, a Delaware limited liability company. PIMCO Holding LLC's
sole member is Allianz Asset Management of America LLC, a Delaware limited
liability company which is a wholly-owned subsidiary of Allianz of America,
Inc., which in turn is a wholly-owned subsidiary of Allianz AG. Allianz AG is a
German-based insurance and financial services holding company and a widely-held
publicly traded company in which Munchener Ruckversicherungs-Gesellschaft AG
("Munich Re"), a German re-insurance company and holding company for the Munich
Re Group, maintains a shareholder interest, an investment they have held for
many years. Because Munich Re currently owns in excess of 25% of the
outstanding voting securities of Allianz AG, it is presumed to "control"
Allianz AG within the meaning of the 1940 Act. On July 23, 2001, Allianz
acquired substantially all of the outstanding shares of capital stock of
Dresdner Bank AG, the ultimate parent company of Dresdner RCM, to create an
integrated financial services firm (the "Allianz/Dresdner Transaction"). Munich
Re is not expected to be involved in the management of Dresdner RCM. The
Allianz/Dresdner Transaction makes Allianz AG one of the world's largest asset
managers, with over $1 trillion in assets under management. Allianz AG's
address is Koniginstrasse 28, D-80802, Munich, Germany. Pacific Asset
Management LLC is a wholly-owned subsidiary of Pacific Life Insurance Company
("Pacific Life"), which is a wholly-owned subsidiary of Pacific Mutual Holding
Company. Pacific Mutual Holding Company is a Newport Beach, California-based
insurance holding company. Pacific Life's address is 700 Newport Center Drive,
Newport Beach, California 92660.
Allianz of America entered into a put/call arrangement for the possible
disposition of Pacific Life's indirect interest in PIMCO Advisors. The put
option held by Pacific Life will allow it to require Allianz of America, on the
last business day of each calendar quarter following May 5, 2000, to purchase
at a formula-based price all of the PIMCO Advisors' units owned directly or
indirectly by Pacific Life. The call option held by Allianz of America will
allow it, beginning January 31, 2003 or upon a change in control of Pacific
Life, to require Pacific Life to sell or cause to be sold to Allianz of
America, at the same formula-based price, all of the PIMCO Advisors' units
owned directly or indirectly by Pacific Life.
PIMCO Advisors is located at 888 San Clemente Drive, Suite 100, Newport
Beach, California 92660 and 1345 Avenue of the Americas, New York, New York
10105. PIMCO Advisors and its subsidiary partnerships had approximately $284
billion of assets under management as of September 30, 2001.
A-3
The names, titles and principal occupations of the executive officers of
PIMCO Advisors are set forth in the following table.
Name Title and Principal Occupation
---- ------------------------------
Kenneth M. Poovey.. Managing Director and Chief Operating Officer
David C. Flattum... Managing Director and General Counsel
John C. Maney...... Executive Vice President and Chief Financial
Officer
Stephen J. Treadway Managing Director
James G. Ward...... Executive Vice President and Director of
Human Resources
Francis C. Poli.... Senior Vice President and Director of
Compliance
Udo Frank.......... Managing Director
The business address of Messrs. Flattum, Maney and Ward is 888 San Clemente
Drive, Suite 100, Newport Beach, California 92660. The business address of
Messrs. Frank, Poli, Poovey and Treadway is 1345 Avenue of the Americas, New
York, New York.
Payments to Affiliates of PIMCO Advisors by the Fund
As of the date of this Proxy Statement, significant institutional
shareholders of Allianz AG currently include Munich Reinsurance and
HypoVereinsbank. Allianz AG in turn owns more than 95% of Dresdner Bank AG.
Credit Lyonnais, Munich Reinsurance and HypoVereinsbank, as well as certain
broker-dealers that might be controlled by or affiliated with these entities or
Dresdner Bank AG, such as DB Alex. Brown LLC and Dresdner Klienwort Benson
North America LLC (collectively, the "Affiliated Brokers"), may be considered
to be affiliated persons of PIMCO Advisors and PIMCO. Absent an SEC exemption
or other relief, the Fund generally is precluded from effecting principal
transactions with the Affiliated Brokers, and its ability to purchase
securities being underwritten by an Affiliated Broker or a syndicate including
an Affiliated Broker is subject to restrictions. Similarly, the Fund's ability
to utilize the affiliated brokers for agency
A-4
transactions is subject to the restrictions of Rule 17e-1 under the 1940 Act.
PIMCO does not believe that the restrictions on transactions with the
Affiliated Brokers described above materially adversely affect its ability to
provide services to the Fund, the Fund's ability to take advantage of market
opportunities, or the Fund's overall performance.
Comparative Fee Information
PIMCO Advisors currently serves as an investment adviser or manager to each
of the publicly offered investment companies listed below which have similar
investment objectives to the Fund.
Investment Advisory,
Management or Approximate
Sub-Advisory Fee Net Assets as of
(as a percentage of October 31,
average weekly net 2001
Name of Fund assets) (in millions)
------------ -------------------- ----------------
The Emerging Markets Income Fund II Inc.... 1.20%(1) $245.9
The Emerging Markets Floating Rate Fund Inc 1.10%(2) 45.7
Global Partners Income Fund Inc............ 1.10%(2) 147.5
--------
(1) PIMCO Advisors remits a portion of its fee to SBAM at an annual rate of
0.70% of the Fund's average weekly net assets.
(2) PIMCO Advisors remits a portion of its fee to SBAM at an annual rate of
0.65% of the Fund's average weekly net assets.
Additional Information Regarding Directors and Executive Officers of the Fund
The names of the Fund's Directors and the number of shares of the Fund's
Common Stock beneficially owned, directly or indirectly, on August 31, 2001 by
each Director are set forth in the following table:
Common Stock
of the Fund
Beneficially
Owned,
Directly or
Indirectly, on
August 31, 2001
Directors Shares(a)
--------- ---------------
Heath B. McLendon* 205
Leslie H. Gelb 100
Dr. Riordan Roett 100
Jeswald W. Salacuse 200
Stephen J. Treadway* 0
--------
(a) No Director held more than 1% of the outstanding shares of the Fund's
Common Stock as of August 31, 2001. Each Director has sole voting and
investment power with respect to listed shares.
* "Interested person" as defined in the Investment Company Act of 1940, as
amended.
A-5
At August 31, 2001, Directors and officers of the Fund as a group owned
beneficially less than 1% of the outstanding shares of the Fund's Common Stock.
To the knowledge of management, no person owned of record or beneficially more
than 5% of the Fund's shares of Common Stock outstanding at that date, except
that Cede & Co., a nominee for participants in Depository Trust Company, held
of record 3,886,843 shares, equal to approximately 96% of the outstanding
shares of the Fund's Common Stock.
Heath B. McLendon, Co-Chairman of the Board of Directors of the Fund, is
also a Managing Director of SBAM and Salomon Smith Barney Inc., and President
and Director of Smith Barney Fund Management LLC and Travelers Investment
Advisers, Inc., each an affiliate of SBAM. Stephen J. Treadway, Co-Chairman of
the Board of Directors of the Fund, is also Managing Director and Chief
Executive Officer of PIMCO Funds Distributors LLC, an affiliate of PIMCO
Advisors.
Each of the executive officers of the Fund, listed below, are also officers
or employees of SBAM. In addition to Messrs. McLendon and Treadway, the
executive officers of the Fund presently are:
Name Office
---- ------
Peter J. Wilby Executive Vice President
Thomas K. Flanagan Executive Vice President
James E. Craige Executive Vice President
Newton B. Schott, Jr. Executive Vice President
Lewis E. Daidone Executive Vice President and Treasurer
Christina T. Sydor Secretary
A-6
EXHIBIT A
THE EMERGING MARKETS INCOME FUND INC
MANAGEMENT AGREEMENT
, 2002
Salomon Brothers Asset Management Inc
388 Greenwich Street
New York, New York 10013
Dear Sirs:
This will confirm the agreement between the undersigned (the "Fund") and you
(the "Investment Manager") as follows:
1. The Fund is a closed-end, non-diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Fund proposes to engage in the business of investing and
reinvesting its assets in the manner and in accordance with the investment
objectives and limitations specified in the Fund's Articles of
Incorporation, as amended from time to time (the "Articles"), in the
Registration Statement on Form N-2, as in effect from time to time (the
"Registration Statement"), filed with the Securities and Exchange Commission
(the "SEC") by the Fund under the 1940 Act and the Securities Act of 1933,
as amended, and in such manner and to such extent as may from time to time
be authorized by the Board of Directors of the Fund. Copies of the documents
referred to in the preceding sentence have been furnished to the Investment
Manager. Any amendments to these documents shall be furnished to the
Investment Manager.
2. The Fund employs the Investment Manager to (a) make investment
strategy decisions for the Fund, (b) manage the investing and reinvesting of
the Fund's assets as specified in paragraph 1, (c) place purchase and sale
orders on behalf of the Fund, (d) provide continuous supervision of the
Fund's investment portfolio, (e) provide or procure the provision of
research and statistical data in relation to investing and other matters
within the scope of the investment objectives and limitations of the Fund.
3. (a) The Investment Manager shall, at its expense, (i) provide the Fund
with office space, office facilities and personnel reasonably necessary for
performance of the services to be provided by the Investment Manager
pursuant to this Agreement, and (ii) provide the Fund with persons
satisfactory to the Fund's Board of Directors to serve as officers and
employees of the Fund, and (iii) provide the office space, facilities,
equipment and personnel necessary to perform the following services for the
Fund:
Ex-1
(A) SEC compliance, including record keeping, reporting requirements and
preparation of registration statements and proxies; (B) supervision of Fund
operations, including coordination of functions of the transfer agent,
custodian, accountants, counsel and other parties performing services or
operational functions for the Fund, (C) administrative and clerical
services, including accounting services, development of new shareholder
services and maintenance of books and records; and (D) services to Fund
shareholders, including responding to shareholder inquiries and maintaining
a flow of information to shareholders.
(b) Except as provided in subparagraph (a), the Fund shall be responsible
for all of the Fund's expenses and liabilities, including organizational
expenses (which include out-of-pocket expenses, but not overhead or employee
costs of the Investment Manager and PIMCO Advisors, L.P. ("the Investment
Adviser")); expenses for legal, accounting and auditing services; taxes and
governmental fees; dues and expenses incurred in connection with membership
in investment company organizations; fees and expenses incurred in
connection with listing the Fund's shares on any stock exchange; costs of
printing and distributing shareholder reports, proxy materials,
prospectuses, stock certificates and distribution of dividends; charges of
the Fund's custodians, sub-custodians, administrators and
sub-administrators, registrars, transfer agents, dividend disbursing agents
and dividend reinvestment plan agents; payment for portfolio pricing
services to a pricing agent, if any; fees of the SEC; expenses of
registering or qualifying securities of the Fund for sale; freight and other
charges in connection with the shipment of the Fund's portfolio securities;
fees and expenses of non-interested directors; travel expenses or an
appropriate portion thereof of directors and officers of the Fund who are
directors, officers or employees of the Investment Manager or the Investment
Adviser to the extent that such expenses relate to attendance at meetings of
the Board of Directors or any committee thereof; salaries of shareholder
relations personnel; costs of shareholders meetings; insurance; interest;
brokerage costs; litigation and other extraordinary or non-recurring
expenses.
4. As manager of the Fund's assets, the Investment Manager shall make
investments for the Fund's account in accordance with the investment
objectives and limitations set forth in the Articles, the Registration
Statement, the 1940 Act, the provisions of the Internal Revenue Code of
1986, as amended relating to regulated investment companies, and policy
decisions adopted by the Fund's Board of Directors from time to time. The
Investment Manager shall advise the Fund's officers and Board of Directors,
at such times as the Fund's Board of Directors may specify, of investments
made for the Fund's account and shall, when requested by the Fund's officers
or Board of Directors, supply the reasons for making such investments.
Ex-2
5. The Investment Manager is authorized to obtain research, analysis and
other information and advice from the Investment Adviser under the terms of
the Advisory Agreement. In addition, the Investment Manager may contract
with or consult with such banks, other securities firms, brokers or other
parties, without additional expense to the Fund, as it may deem appropriate
regarding investment advice, research and statistical data, clerical
assistance or otherwise.
6. The Investment Manager is authorized on behalf of the Fund, from time
to time when deemed to be in the best interests of the Fund and to the
extent permitted by applicable law, to purchase and/or sell securities in
which the Investment Manager or the Investment Adviser or any of its
affiliates underwrites, deals in and/or makes a market and/or may perform or
seek to perform investment banking services for issuers of such securities.
The Investment Manager is further authorized, to the extent permitted by
applicable law, to select brokers (including brokers affiliated with the
Investment Manager or the Investment Adviser) for the execution of trades
for the Fund.
7. The Investment Manager is authorized, for the purchase and sale of the
Fund's portfolio securities, to employ such securities dealers as may, in
the judgment of the Investment Manager, implement the policy of the Fund to
obtain the best net results taking into account such factors as price,
including dealer spread, the size, type and difficulty of the transaction
involved, the firm's general execution and operational facilities and the
firm's risk in positioning the securities involved. Consistent with this
policy, the Investment Manager is authorized to direct the execution of the
Fund's portfolio transactions to dealers and brokers furnishing statistical
information or research deemed by the Investment Manager to be useful or
valuable to the performance of its investment advisory functions for the
Fund. Information so received will be in addition to and not in lieu of the
services required to be performed by the Investment Manager. It is
understood that the expenses of the Investment Manager will not necessarily
be reduced as a result of the receipt of such information or research.
8. In consideration of the services to be rendered by the Investment
Manager under this agreement, the Fund shall pay the Investment Manager a
monthly fee in United States dollars on the first business day of each month
for the previous month at an annual rate of 0.70% of the Fund's average
weekly net assets, commencing on the effective date of this agreement. If
the fee payable to the Investment Manager pursuant to this paragraph 8
begins to accrue before the end of any month or if this agreement terminates
before the end of any month, the fee for the period from such date to the
end of such month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the
proportion which such period
Ex-3
bears to the full month in which such effectiveness or termination occurs.
For purposes of calculating each such monthly fee, the value of the Fund's
net assets shall be computed at the time and in the manner specified in the
Registration Statement.
9. The Investment Manager shall exercise its best judgment in rendering
the services in accordance with the terms of this agreement. The Investment
Manager shall not be liable for any error of judgment or mistake of law or
for any act or omission or any loss suffered by the Fund in connection with
the matters to which this agreement relates, provided that nothing herein
shall be deemed to protect or purport to protect the Investment Manager
against any liability to the Fund or its shareholders to which the
Investment Manager would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or from reckless disregard by it of its obligations and duties
under this agreement ("disabling conduct"). The Fund will indemnify the
Investment Manager against, and hold it harmless from, any and all losses,
claims, damages, liabilities or expenses (including reasonable counsel fees
and expenses), including any amounts paid in satisfaction of judgments, in
compromise or as fines or penalties, not resulting from disabling conduct by
the Investment Manager. Indemnification shall be made only following: (i) a
final decision on the merits by a court or other body before whom the
proceeding was brought that the Investment Manager was not liable by reason
of disabling conduct, or (ii) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the
Investment Manager was not liable by reason of disabling conduct by (a) the
vote of a majority of a quorum of directors of the Fund who are neither
"interested persons" of the Fund nor parties to the proceeding
("disinterested non-party directors"), or (b) an independent legal counsel
in a written opinion. The Investment Manager shall be entitled to advances
from the Fund for payment of the reasonable expenses incurred by it in
connection with the matter as to which it is seeking indemnification in the
manner and to the fullest extent permissible under law. The Investment
Manager shall provide to the Fund a written affirmation of its good faith
belief that the standard of conduct necessary for indemnification by the
Fund has been met and a written undertaking to repay any such advance if it
should ultimately be determined that the standard of conduct has not been
met. In addition, at least one of the following additional conditions shall
be met: (a) the Investment Manager shall provide security in form and amount
acceptable to the Fund for its undertaking; (b) the Fund is insured against
losses arising by reason of the advance; or (c) a majority of a quorum of
disinterested non-party directors, or independent legal counsel, in a
written opinion, shall have determined, based on a review of facts readily
available to the Fund at the time the advance is proposed to be made, that
there is reason to believe that the Investment Manager will ultimately be
found to be entitled to indemnification.
Ex-4
10. This agreement shall continue in effect until , 2004 and
thereafter for successive annual periods, provided that such continuance is
specifically approved at least annually (a) by the vote of a majority of the
Fund's outstanding voting securities (as defined in the 1940 Act) or by the
Fund's Board of Directors and (b) by the vote, cast in person at a meeting
called for the purpose, of a majority of the Fund's directors who are not
parties to this agreement or "interested persons" (as defined in the 1940
Act) of any such party. This agreement may be terminated at any time,
without the payment of any penalty, by a vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act) or by a vote of a
majority of the Fund's entire Board of Directors on 60 days' written notice
to the Investment Manager or by the Investment Manager on 60 days' written
notice to the Fund. This agreement shall terminate automatically in the
event of its assignment (as defined in the 1940 Act).
11. Except to the extent necessary to perform the Investment Manager's
obligations under this agreement, nothing herein shall be deemed to limit or
restrict the right of the Investment Manager, or any affiliate of the
Investment Manager, or any employee of the Investment Manager, to engage in
any other business or to devote time and attention to the management or
other aspects of any other business, whether of a similar or dissimilar
nature, or to render services of any kind to any other corporation, firm,
individual or association.
12. This agreement shall be governed by the laws of the State of New York.
Ex-5
If the foregoing correctly sets forth the agreement between the Fund and the
Investment Manager, please so indicate by signing and returning to the Fund the
enclosed copy hereof.
Very truly yours,
THE EMERGING MARKETS INCOME FUND INC
By: ______________________________________________
Name:
Title:
ACCEPTED:
SALOMON BROTHERS ASSET MANAGEMENT INC
By:____________________________
Name:
Title:
Ex-6
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
==========================================================
THE EMERGING MARKETS INCOME FUND INC THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 and 2.
==========================================================
Mark box at right if an address change or comment has [ ] For Against Abstain
been noted on the reverse side of this card.
1. The approval of a new management [ ] [ ] [ ]
agreement between Salomon Brothers
Asset Management Inc and the Fund.
For Against Abstain
Mark box at right if you plan to attend the annual [ ] 2. The approval of the retention by, and [ ] [ ] [ ]
meeting. the reimbursement to, SBAM of its costs
incurred in connection with services
rendered to the Fund for the period
from November 28, 2000 until the date
the new management agreement is
-------------- approved by the Fund's stockholders.
Please be sure to sign and date this Proxy Date
----------------------------------------------------------
The proxies are authorized to vote in their discretion on any other
business as may properly come before the meeting or any adjournments.
RECORD DATE SHARES:
----Stockholder sign here-----Co-owner sign here----------
[Reverse of Card]
THE EMERGING MARKETS INCOME FUND INC
SPECIAL MEETING OF STOCKHOLDERS, FEBRUARY 1, 2002
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Heath B. McLendon, Robert A. Vegliante, Lewis E.
Daidone and Harris Goldblat, and each of them, the proxies for the undersigned,
with full power of substitution and revocation to each of them, to represent and
vote all shares of The Emerging Markets Income Fund Inc which the undersigned is
entitled to receive and vote proxies at the Special Meeting of Stockholders of
The Emerging Markets Income Fund Inc to be held at 388 Greenwich Street, 26th
Floor, Conference Room N, New York, New York 10013 on Friday, February 1, 2002
at 9:00 a.m., New York time, and at any adjournments thereof.
Please indicate your vote by an "X" in the appropriate box on the reverse side.
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 Proposals 1
and 2. Please refer to the Proxy Statement for a discussion of the Proposals.
--------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Note: Please sign exactly as your name appears on this Proxy. If joint
owners, EITHER may sign this Proxy. When signing as an attorney,
executor, administrator, trustee, guardian or corporate officer,
please give your full title.
--------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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