SC 13D 1 imf12-05.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 Salomon Brothers Inflation Management Fund, Inc. (IMF) (Name of Issuer) Common Stock (Title of Class of Securities) 79550V109 (CUSIP Number) George W. Karpus, President Karpus Management, Inc. d/b/a Karpus Investment Management 183 Sullys Trail Pittsford, New York 14534 (585) 586-4680 (Name, Address, and Telephone Number of Person Authorized to Receive Notices and Communications) December 28, 2005 (Date of Event which requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is subject of this Schedule 13D, and if filing this schedule because of Rule 13d-1(b) (3) or (4), check the following box. [ ] (Page 1 of 6 pages) Exhibit One Attached ITEM 1 Security and Issuer Common Stock Salomon Brothers Inflation Management Fund, Inc. Salomon Brothers Asset Management 125 Broad Street New York, NY 10004 ITEM 2 Identity and Background a) Karpus Management, Inc., d/b/a Karpus Investment Management (?KIM?) George W. Karpus, President, Director, and controlling stockholder JoAnn Van Degriff, Vice President and Director Sophie Karpus, Director b) 183 Sullys Trail Pittsford, New York 14534 c) Principal business and occupation - Investment Management for individuals, pension, and profit sharing plans, corporations, endowments, trust, and others, specializing in conservative asset management (i.e. fixed income investments). d) None of George W. Karpus, Jo Ann Van Degriff or Sophie Karpus (?the Principals?) or KIM has been convicted in the past 5 years of any criminal proceeding (excluding traffic violations). e) During the last 5 years none of the Principals or KIM has been a party to a civil proceeding as a result of which any of them is subject to a judgment, decree, or final order enjoining future violations of or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. f) Each of the Principals is a United States citizen. KIM is a New York corporation. ITEM 3 Source and Amount of Funds or Other Considerations KIM, an independent investment advisor, has accumulated 333,566 shares of IMF on behalf of accounts that are managed by KIM (?the Accounts?) under limited powers of attorney, which represents 3.46% of the outstanding shares. All funds that have been utilized in making such purchases are from such Accounts. ITEM 4 Purpose of Transaction a) KIM has purchased Shares for investment purposes. Being primarily a conservative, fixed income manager, with a specialty focus in the closed end fund sector, the profile of IMF fit the investment guidelines for various Accounts. Shares have been acquired since March 24, 2005. b) Although originally purchased for investment purposes only, we sent a letter to the Board of Directors on December 28, 2005 to express our position as to what actions the Board should take in the wake of the failure to get approval of the new investment management contract. (Exhibit 1) ITEM 5 Interest in Securities of the Issuer a) As of the date of this Report, KIM owns 333,566 shares, which represent 3.46% of the outstanding shares. None of the Principals of KIM currently owns shares of IMF. b) KIM has the sole power to dispose of and to vote all such Shares under limited powers of attorney. c) Below are the open market purchases in the last 60 days for the Accounts. There have been no dispositions and no acquisition, other than by such open market purchases, during such period. Date Shares Price Per Date Shares Price Per Share Share 11/2/2005 5000 17.07 12/1/2005 6500 17.09 11/9/2005 700 16.91 12/2/2005 12500 17.04 11/10/2005 4300 16.82 12/6/2005 14300 16.82 11/11/2005 5000 16.82 12/8/2005 3900 16.75 11/14/2005 1350 16.84 12/9/2005 200 16.79 11/18/2005 20000 17.12 12/12/2005 5200 16.79 11/21/2005 5000 17.11 12/14/2005 -3000 16.80 11/22/2005 100 17.10 11/23/2005 5000 17.11 11/28/2005 11100 17.31 11/30/2005 7400 17.11 The Accounts have the right to receive all dividends from, and any proceeds from the sale of the Shares. None of the Accounts has an interest in Shares constituting more than 5% of the Shares outstanding. ITEM 6 Contracts, Arrangements, Understandings, or Relationships with Respect to Securities of the Issuer Except as described above, there are no contracts, arrangement, understandings or relationships of any kind among the Principals and KIM and between any of them and any other person with respect to any of the IMF securities. ITEM 7 Materials to be Filed as Exhibits Not applicable Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Karpus Management, Inc. December 28, 2005 By: _________________________ Date Signature Dana R. Consler, Senior Vice President Name /Title EXHIBIT ONE Letter Sent to the Board on December 28, 2005 KARPUS INVESTMENT MANAGEMENT 183 SULLY?S TRAIL PITTSFORD, NEW YORK 14534 (585) 586-4680 for Salomon Brothers Inflation Management Fund Inc. December 28, 2005 Dear IMF Board Member: We have read your press release of December 23, 2005, confirming that your proposal to transfer permanent management of the Fund to Legg Mason failed. It is time for the Fund?s board to listen to, and serve, its shareholders, and stop acting as if its constituency is Salomon Brothers Asset Management (SBAM). As a representative of one of the largest blocs of beneficial ownership, Karpus Investment Management (Karpus) demands that the Board consider, and asks that the Board respond to, the following: The Board and SBAM should immediately begin the processes necessary to unlock the trapped net asset value for the benefit of shareholders. SBAM?s (now a subsidiary of Legg Mason) interim management agreement expires April 29, 2006. It should take steps necessary now to unlock the Fund?s net asset value and eliminate its discount. You should not waste shareholders? time or money in a re-solicitation effort to achieve what you have failed to achieve on multiple occasions since last August. To do so would be a serious breach of your fiduciary duties of loyalty and good faith. Nor should the current Board or management try to manage the Fund internally. As can be evidenced throughout this proxy contest, our best interests as shareholders are clearly not being represented by your actions. For example, we note your lack of adequate disclosure in the following instances: ? Peter Wilby, managing director of SBAM, recently announced his resignation. Shareholders were not properly apprised of this significant event, demonstrating your complete disregard for shareholders, who were expected to unquestionably ratify the only ?choice? presented to them, that of being assigned to anonymous managers to be designated by Legg Mason. ? The dishonest explanation (contained in a public filing with the SEC) of the reason for your adjournment of the November 29, 2005 meeting, solely in order to avoid recognition of the will of the shareholders, by not counting their votes when it was certain SBAM/Legg Mason would lose. Further, should you, as Board members, decide to seek reelection or nominate new members, we will not support your reelection or any candidates you nominate, as we believe that you, the designees of SBAM, do not represent the interests of shareholders. Karpus will continue to actively oppose any management which does not acknowledge that its primary function will be to maximize shareholder value via the elimination of the discount. Sincerely, Cody B. Bartlett Jr., CFA Investment Strategist Karpus Investment Management