As filed with the Securities and Exchange Commission on June 6, 2011

Securities Act File No. 333-      

Investment Company Act File No. 811-22234

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-14

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

o Pre-Effective Amendment No.
o Post-Effective Amendment No.

(Check appropriate box or boxes)

RMR REAL ESTATE INCOME FUND

(Exact Name of Registrant as Specified in Charter)

TWO NEWTON PLACE
255 WASHINGTON STREET, SUITE 300
NEWTON, MASSACHUSETTS 02458

(Address of Principal Executive Offices: Number, Street, City, State, Zip Code)

(617) 332-9530

(Area Code and Telephone Number)

Adam D. Portnoy, President
RMR Real Estate Income Fund
Two Newton Place
255 Washington Street, Suite 300
Newton, Massachusetts 02458

(Name and Address of Agent for Service)

With copies to:

AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT

(Approximate Date of Proposed Public Offering)

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

RMR REAL ESTATE INCOME FUND

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement contains the following papers and documents:

·                  Cover Sheet

·                  Contents of Registration Statement:

·                  Letter to Shareholders of RMR Asia Pacific Real Estate Fund and RMR Real Estate Income Fund from Adam D. Portnoy, President of RMR Funds

·                  Questions and Answers to Shareholders of RMR Asia Pacific Real Estate Fund and RMR Real Estate Income Fund

·                  Notice of a Joint Special Meeting of Shareholders of RMR Asia Pacific Real Estate Fund and RMR Real Estate Income Fund

·                  Part A—Joint Proxy Statement/Prospectus Relating to the Proposed Reorganization of RMR Asia Pacific Real Estate Fund Into RMR Real Estate Income Fund

·                  Part B—Statement of Additional Information Relating to the Proposed Reorganization of RMR Asia Pacific Real Estate Fund Into RMR Real Estate Income Fund

·                  Part C—Other Information

·                  Signature Page

·                  Exhibits

Important Information

[GRAPHIC]

[        ], 2011

Dear Shareholder:

I want to share with you certain details of the important enclosed proxy that requires your attention. It is being sent to you because you own shares of one or both of the following funds:

·                  RMR Asia Pacific Real Estate Fund (NYSE Amex: RAP); or

·                  RMR Real Estate Income Fund (NYSE Amex: RIF).

We propose that RMR Asia Pacific Real Estate Fund (“RAP”), a closed end fund, be reorganized by merging with and into RMR Real Estate Income Fund (“RIF”, and together with RAP, the “Funds”), a closed end fund. If the reorganization is completed, RAP and RIF would become a single closed end fund: RIF.

At a Special Meeting of shareholders, RAP shareholders will be asked to consider the proposed reorganization (the “Reorganization”) of RAP into RIF, and RIF shareholders will be asked to consider the proposed issuance of additional common shares of RIF (the “Issuance”) in connection with the Reorganization. The Reorganization and the Issuance are each conditioned upon RIF and RAP receiving a private letter ruling from the Internal Revenue Service ruling that the Reorganization will qualify as a tax free reorganization under the Internal Revenue Code of 1986, as amended. If the Reorganization is completed, RAP shareholders will hold shares in a fund that focuses its investments in the U.S. real estate sector, rather than the Asia Pacific real estate sector.

The Boards of Trustees of both Funds have unanimously approved the Reorganization and the Issuance as in the best interests of RIF and RAP and their respective shareholders, and unanimously recommend that you vote “FOR” the proposed Reorganization and Issuance.

I believe there are several important benefits of the Reorganization, including the following:

·                  You will continue to hold shares in a fund that primarily pursues investments in real estate related securities. RAP and RIF each focus on real estate related securities in different geographical areas. RIF focuses on investments in U.S. real estate investment trusts and real estate companies domiciled in the United States, whereas RAP focuses on investments in real estate related companies in the Asia Pacific region. Provided shareholders approve the Reorganization and the Issuance and the other conditions to the consummation of the Reorganization are satisfied, RAP will commence a self tender offer for up to 20% of its outstanding shares at a price equal to its net asset value per share in order to provide RAP shareholders who do not desire an investment in a fund focused on the U.S. real estate sector an opportunity to exit their investment at net asset value prior to the consummation of the Reorganization. See "Risk Factors and Special Considerations—Risks Related to the Reorganization—Tender Offer Risk" in the Joint Proxy Statement/Prospectus.

·                  RIF’s Board of Trustees has conditionally approved an increase in RIF’s regular quarterly dividend on its common shares by $0.02 per share, or $0.08 per share on an annualized basis, to $0.44 per share per quarter, or $1.76 per share per year.  This increase is conditioned upon the Reorganization being consummated, there being no material adverse change in the financial position of either RIF or RAP prior to the consummation of the Reorganization, there being no material change in the underlying pro forma financial information upon which RIF’s Board of Trustees based its conditional approval and there being no material adverse change in market conditions that might impair the yield RIF expects to receive on its investments.  RIF’s Board of Trustees thus anticipates that RIF and RAP shareholders will realize increased current income as a result of the Reorganization, stemming from the reorganized RIF being able to invest in a larger portfolio of income yielding securities.  Additionally, since RAP does not seek to pay a regular quarterly dividend like RIF, RAP’s shareholders should expect to receive more frequent dividends and RAP’s Board of Trustees believes it is likely that RAP shareholders will receive higher current income in the form of dividend distributions.  Of course, there can be no assurance that after the Reorganization, RIF will pay any specific amount of regular distribution in any specific form, pay any regular distribution at all, that quarterly distributions will continue, or that any annual capital gains distributions will be paid.  Nevertheless, the Boards believe that your approval of the Reorganization and the Issuance make the dividend increase and the narrowing of the market trading discount more likely than if these matters are not approved. The dividend increase would take effect for the first full calendar quarter following the completion of the Reorganization.

·                  RIF should realize either lower or substantially similar expense ratios after the Reorganization because certain fixed administrative costs will be spread across the reorganized RIF’s larger asset base.

·                  Holders of common shares may experience enhanced market liquidity and a narrower market trading discount to net asset value due to the expanded common shareholder base for RIF and the potential increase in current income for the reorganized RIF common shares, as discussed above, following the Reorganization. Nevertheless, there can be no assurance that RIF's historic market trading discount to net asset value will narrow.

YOUR VOTE MATTERS

No matter how large or small your Fund holdings, your vote is extremely important. Please review the enclosed proxy materials and submit your vote promptly to help us avoid the need for additional costs associated with soliciting your vote. Please call the firm assisting the Funds in the solicitation of proxies, Innisfree M&A Incorporated (“Innisfree”), if you have any questions or need assistance in voting your shares. Banks and brokers may call Innisfree, collect, at 212-750-5833. Other shareholders may call Innisfree, toll free, at 877-825-8971.

I thank you for your prompt vote on this matter.

RMR Funds, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458

The tender offer referred to in this letter has not yet commenced and relates to a planned tender offer by RAP for up to 20% of its outstanding shares at a price equal to RAP’s NAV per common share at the time the purchase is completed.  This letter is neither an offer to purchase nor a solicitation of an offer to sell any shares of RAP.  The solicitation and the offer to buy shares of RAP common stock will be made pursuant to an offer to purchase and related materials that RAP intends to file with the U.S. Securities and Exchange Commission, subject to the satisfaction of the conditions described in this letter and in the accompanying Joint Proxy Statement/Prospectus.  At the time the tender offer is commenced, RAP intends to file a Tender Offer Statement on Schedule TO containing an offer to purchase, forms of letters of transmittal and other documents relating to the tender offer.  RAP intends to mail these documents to the shareholders of RAP.  These documents will contain important information about the tender offer and shareholders of RAP are urged to read them carefully when they become available.  Investors may obtain a free copy of these documents (when they become available) filed with the SEC at the SEC’s web site at www.sec.gov. In addition, the tender offer statement and related materials may also be obtained for free (when they become available) by directing a request to: RMR Advisors, Inc., Two Newton Place, 255 Washington Street, Suite 300, Newton, MA, 02458 or by calling: (617) 332-9530.

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IMPORTANT NOTICE

TO SHAREHOLDERS OF

RMR ASIA PACIFIC REAL ESTATE FUND (“RAP”); AND

RMR REAL ESTATE INCOME FUND (“RIF”)

QUESTIONS & ANSWERS

Although you should read the complete Joint Proxy Statement/Prospectus, the following is a brief summary of certain issues which may affect your vote, in question and answer format:

Q:                                  WHAT IS BEING PROPOSED AT THE SHAREHOLDER MEETING?

A:                                   Common shareholders of RAP are being asked to vote on the proposed reorganization (the “Reorganization”) of RAP into RIF (RIF and RAP being collectively referred to as the “Funds”).

Common shareholders and preferred shareholders of RIF, voting together as a single class, are being asked to vote on the issuance of additional common shares of RIF, par value $0.001 per share (“RIF Common Shares”), in connection with the Reorganization.

If the Reorganization is completed, RAP shareholders will hold shares in a fund that focuses its investments in the U.S. real estate sector, rather than the Asia Pacific real estate sector.

Q:                                  WHY IS THE REORGANIZATION BEING RECOMMENDED?

A:                                   The Board of Trustees of each Fund (each a “Board”) has unanimously determined that the Reorganization of the Funds should offer potential benefits to common shareholders of the Funds. Each Fund invests in real estate related securities; however, RIF focuses on real estate related securities in the United States and RAP focuses on real estate related securities in the Asia Pacific region. RIF seeks to earn and pay to its common shareholders a high level of current income by investing in real estate companies, with a secondary objective of capital appreciation. RAP seeks capital appreciation. The Board of RAP believes that RIF’s broadly similar focus on investing in real estate related securities, in addition to its fundamental investment objective of providing a high level of current income with a secondary objective of capital appreciation, will continue to benefit shareholders of RAP by allowing shareholders of RAP to remain in an investment program with a focus on the real estate sector. Provided that the Funds’ shareholders approve the Reorganization and the other conditions to the consummation of the Reorganization are satisfied, RAP will commence a self tender offer for up to 20% of its outstanding shares at a price equal to its net asset value per share in order to provide RAP shareholders who do not desire an investment in RIF an opportunity to exit their investment at net asset value prior to the consummation of the Reorganization. See “Risk Factors and Special Considerations—Risks Related to the Reorganization—Tender Offer Risk” in the Joint Proxy Statement/Prospectus.

RIF’s Board has conditionally approved an increase in RIF’s regular quarterly dividend on its common shares by $0.02 per share, or $0.08 per share on an annualized basis, to $0.44 per share per quarter, or $1.76 per share per year.  This increase is conditioned upon the Reorganization being consummated, there being no material adverse change in the financial position of either RIF or RAP prior to the consummation of the Reorganization, there being no material change in the underlying pro forma financial information upon which RIF’s Board based its conditional approval and there being no material adverse change in market conditions that might impair the yield RIF expects to receive on its investments.  RIF’s Board thus anticipates that RIF and RAP shareholders will realize increased current income as a result of the Reorganization, stemming from the reorganized RIF being able to invest in a larger portfolio of income yielding securities. Additionally, since RAP does not seek to pay a regular quarterly dividend like RIF, RAP’s shareholders should expect to receive more frequent dividends and RAP’s Board believes it is likely that RAP shareholders will receive higher current income in the form of dividend distributions. Of course, there can be no assurance that after the Reorganization, RIF will pay any specific amount of regular distribution in any specific form, pay any regular distribution at all, that quarterly distributions will continue, or that any annual capital gains distributions will be paid. Nevertheless, the Boards believe that the Reorganization will make the increased distributions and the narrowing of the discount more likely than if the Reorganization were not approved. The dividend increase would take effect for the first full calendar quarter following the completion of the Reorganization.

After the Reorganization, certain fixed administrative costs will be spread across the reorganized RIF’s larger asset base, which should result in lower aggregate costs for the Funds, although the magnitude of the benefit of lower expenses for common shareholders of RAP and RIF will be different. Each Fund’s Board believes that RIF’s expense ratios, after the Reorganization, should be lower than the expense ratios for each of RIF and RAP without giving effect to the costs of RIF’s leverage, if the Reorganization did not occur. See “Expenses of the Funds—The Funds’ Expenses” in the attached Joint Proxy Statement/Prospectus.

As a result of the expected enhanced market liquidity of the reorganized RIF Common Shares, it may be easier for you to sell your reorganized RIF Common Shares, or to purchase additional common shares without materially affecting the market price of the common shares.  Additionally, this enhanced market liquidity and increase in income for the reorganized RIF common shares, as discussed above, may result in a narrowing of the trading discount to net asset value of the reorganized RIF Common Shares. Nevertheless, there can be no assurance that RIF’s historic market trading discount to net asset value will narrow.

It is anticipated that the Reorganization will not affect RIF’s preferred shareholders other than to provide a larger base of assets attributable to common shareholders to support the liquidation preference and distributions on RIF’s preferred shares.  None of the expenses of the Reorganization will be borne by preferred shareholders of RIF and the RIF Board has determined that the Reorganization will not adversely affect the RIF preferred shareholders.

The Joint Proxy Statement/Prospectus contains further details of the reasons that the Reorganization is being recommended by the Board of each Fund.

Q:                                  HOW WILL THE REORGANIZATION AFFECT MY STOCK OWNERSHIP?

A:                                   Assuming shareholders of the Funds approve their respective Reorganization related proposals and the other conditions to the consummation of the Reorganization are satisfied, RAP will merge with and into RIF pursuant to Delaware law and its separate legal existence will cease for all purposes.  Shareholders of RAP will become common shareholders of RIF.

If you are a holder of common shares of RAP, you will receive newly issued RIF Common Shares in exchange for your RAP common shares. The aggregate net asset value of the RIF Common Shares you will receive will equal the aggregate net asset value of the RAP common shares you held immediately prior to the Reorganization, after giving effect to RAP’s share of the costs of the Reorganization (determined as of the close of trading, 4:00 p.m. Eastern time, on the closing date of the Reorganization). The RIF Common Shares received by common shareholders of RAP will be listed for trading on the NYSE Amex and may trade at a discount to net asset value, which might be greater or less than any trading discount at which common shares of the Funds have historically traded prior to the Reorganization. It is a condition to the consummation of RAP’s Reorganization with RIF that RIF’s common and preferred shareholders approve the issuance of common shares to RAP’s common shareholders.

Provided that the Funds’ shareholders approve the Reorganization and the other conditions to the consummation of the Reorganization are satisfied, RAP will commence a self tender offer for up to 20% of its outstanding shares at a price equal to its net asset value per share in order to provide RAP shareholders who do not desire an investment in RIF an opportunity to exit their investment at net asset value prior to the consummation of the Reorganization. See “Risk Factors and Special Considerations—Risks Related to the Reorganization—Tender Offer Risk” in the Joint Proxy Statement/Prospectus.

Q:                                  ARE THE FUNDS’ INVESTMENT OBJECTIVES AND POLICIES SIMILAR?

A:                                   The investment objectives and policies of the Funds are similar with some differences.  RAP invests in real estate related securities and RIF also invests in real estate related securities; however, RIF focuses on real estate related securities in the United States and RAP focuses on real estate related securities in the Asia Pacific region.  RIF seeks to earn a high level of current income, with a secondary objective of capital appreciation, whereas RAP seeks capital appreciation.  The Board of RAP believes that RIF’s broadly similar focus on investing in real estate related securities, in addition to its fundamental investment objective of providing a high level of current income with a secondary objective of capital appreciation, will continue to benefit shareholders of RAP by allowing shareholders of RAP to remain in an investment program with a focus on the real estate sector.

Additionally, provided that the Funds’ shareholders approve the Reorganization and the other conditions to the consummation of the Reorganization are satisfied, RIF’s Board has approved a change in RIF’s investment policies that will be effected prior to the consummation of the Reorganization such that under normal market conditions: (1) RIF will invest at least 65% (versus 75% currently) of its managed assets in securities issued by REITs, and (2) RIF may invest up to 33 1/3% (versus 10% currently) of its managed assets in securities denominated in currencies other than the U.S. dollar or traded on a non-U.S. stock exchange.  These investment policies are not

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fundamental investment policies and thus may be changed by RIF’s Board without shareholder approval.  The Board has determined to change RIF’s investment policies in this manner in order to give RIF flexibility to retain certain of RAP’s investments if RMR Advisors, Inc., the Funds’ investment adviser (the “Advisor”), determines that it would be in RIF’s best interest to do so, as well as so RIF could make certain representations to the Internal Revenue Service (the “IRS”) in connection with its request to the IRS for a private letter ruling regarding the United States federal income tax treatment of the Reorganization, as more fully described below and in the Joint Proxy Statement/Prospectus.  The RIF Board believes that the Reorganization is in the best interests of RIF and its shareholders and, since such a ruling from the IRS is required to consummate the Reorganization, the RIF Board believes that this change in investment policy is likewise in the best interests of RIF and its shareholders. The RIF Board further believes that such a change in investment policy will benefit RIF and its shareholders by giving the Advisor greater flexibility to invest in the securities of non-U.S. issuers in response to economic and market conditions, as well as to take advantage of attractive investment opportunities.

Notwithstanding the foregoing, based on current market conditions RIF expects that it will, over time, divest its portfolio of all or substantially all of the RAP portfolio securities acquired in the Reorganization and will continue to focus its investment program on the United States real estate sector.  Additionally, in order to divest its portfolio of the RAP portfolio securities acquired in the Reorganization in an orderly manner and a manner that is in the best interests of its shareholders, RIF may, for three months following the closing of the Reorganization, have up to 50% of its managed assets invested in securities denominated in currencies other than the U.S. dollar or traded on a non-U.S. stock exchange.  The RIF Board has authorized this deviation from RIF’s investment policies for these purposes.  RIF does not currently anticipate that it will be necessary to maintain more than 33 1/3% of its managed assets in securities denominated in currencies other than the U.S. dollar or traded on a non-U.S. stock exchange for more than three months following the closing date of the Reorganization.

In approving the Reorganization, RAP’s Board also considered the changes to RIF’s investment policies described above, and the RIF Board’s reasons therefor.

Q:                                  WILL I HAVE TO PAY ANY UNITED STATES FEDERAL INCOME TAXES AS A RESULT OF THE REORGANIZATION?

A:                                   The Reorganization is conditioned upon RIF and RAP receiving a private letter ruling  from the IRS (the “IRS Ruling”) to the effect that the reorganization will qualify as a “reorganization” within the meaning of Section 368(a)(1)(A) of the United States Internal Revenue Code of 1986, as amended (the “Code” and, such ruling within the IRS Ruling, the “Reorganization Ruling”), so that shareholders of RAP will recognize no gain or loss for United States federal income tax purposes upon the receipt solely of common shares of RIF in connection with the Reorganization. Additionally, assuming the Funds receive the Reorganization Ruling, RAP will recognize no gain or loss for United States federal income tax purposes as a result of the exchange of common shares of RAP for the common shares of RIF or as a result of termination of RAP’s separate legal existence, and neither RIF nor its shareholders will recognize gain or loss for United States federal income tax purposes as a result of the Reorganization.

The Funds will not consummate the Reorganization, including not proceeding with either the 20% self tender offer by RAP or the potential dividend increase by RIF, even if approved by shareholders, unless they receive the Reorganization Ruling from the IRS regarding the tax free nature of the Reorganization for United States federal income tax purposes.

Q:                                  WILL THE REORGANIZATION AFFECT MY DISTRIBUTIONS?

A:                                   RIF intends to continue to pay distributions to its common shareholders on a quarterly basis after making payment or provision for payment of distributions on, or redeeming, preferred shares, and interest and required principal payment on borrowings, if any, provided that market and economic conditions do not dictate otherwise.  Provided that market and economic conditions do not dictate otherwise, RIF intends to make distributions to common shareholders pursuant to a “level rate dividend policy”, which is a policy by which RIF seeks to provide its common shareholders with a regular quarterly dividend. This policy is different from that of RAP, which does not seek to pay a regular quarterly dividend to shareholders, but rather only makes distributions to shareholder to the extent necessary to maintain its qualification as a “regulated investment company” under the Code. Thus, subject to market and economic conditions, if the Reorganization is consummated, RAP shareholders should expect to receive more frequent dividends and it is likely that RAP shareholders will receive higher current income in the form of dividend distributions given RIF’s focus on current income and program of investing in higher income yielding securities than RAP has historically invested in.

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RIF’s Board has conditionally approved an increase in RIF’s regular quarterly dividend on its common shares by $0.02 per share, or $0.08 per share on an annualized basis, to $0.44 per share per quarter, or $1.76 per share per year.  This increase is conditioned upon the Reorganization being consummated, there being no material adverse change in the financial position of either RIF or RAP prior to the consummation of the Reorganization, there being no material change in the underlying pro forma financial information upon which RIF’s Board based its conditional approval and there being no material adverse change in market conditions that might impair the yield RIF expects to receive on its investments.  RIF’s Board thus anticipates that RIF and RAP shareholders will realize increased current income as a result of the Reorganization, stemming from the reorganized RIF being able to invest in a larger portfolio of income yielding securities. Additionally, since RAP does not seek to pay a regular quarterly dividend like RIF, RAP’s shareholders should expect to receive more frequent dividends and RAP’s Board believes it is likely that RAP shareholders will receive higher current income in the form of dividend distributions. Of course, there can be no assurance that after the Reorganization, RIF will pay any specific amount of regular distribution in any specific form, pay any regular distribution at all, that quarterly distributions will continue, or that any annual capital gains distributions will be paid. Nevertheless, the Boards believe that the Reorganization will make the increased distributions and the narrowing of the discount more likely than if the Reorganization were not approved. The dividend increase would take effect for the first full calendar quarter following the completion of the Reorganization.

RAP has no preferred shareholders.  RIF preferred shareholders’ distributions will not be impacted by the Reorganization.

Q:                                  HOW WILL THE REORGANIZATION AFFECT FUND FEES AND EXPENSES?

A:                                   As a result of the Reorganization, total annual gross expenses incurred by common shareholders of RIF in the aggregate would decline from 2.44% of average net assets attributable to common shares (for the year ended December 31, 2010) to approximately 2.06% of average net assets attributable to common shares (for the year ended December 31, 2010) for the reorganized RIF.  As a result of the Reorganization, total annual gross expenses incurred by common shareholders of RAP in the aggregate would increase from 1.97% (1.72% taking into account RAP’s contractual advisory fee waiver) of average net assets attributable to common shares (for the year ended December 31, 2010) to approximately 2.06% of average net assets attributable to common shares (for the year ended December 31, 2010) for the reorganized RIF.  The forgoing pro forma results give effect to RIF’s use of leverage for the year ended December 31, 2010 and the reorganized RIF’s use of leverage on a pro forma basis.  Assuming RIF did not use leverage, total annual gross expenses incurred by common shareholders of RIF in the aggregate would decline from 1.85% of average net assets attributable to common shares (for the year ended December 31, 2010) to approximately 1.62% of average net assets attributable to common shares (for the year ended December 31, 2010) for the reorganized RIF; and total annual gross expenses incurred by common shareholders of RAP in the aggregate would decline from 1.97% (1.72% taking into account RAP’s contractual advisory fee waiver) of average net assets attributable to common shares (for the year ended December 31, 2010) to approximately 1.62% of average net assets attributable to common shares (for the year ended December 31, 2010) for the reorganized RIF.  Thus, RAP’s Board anticipates that any increase in total expenses as a percentage of net assets attributable to RAP common shareholders as a result of the Reorganization would be due to the reorganized RIF’s use of leverage.  RAP’s Board has determined that it is in the best interests of RAP’s shareholders to reorganize into a leveraged fund, such as RIF, notwithstanding the extra costs associated with such leverage that its shareholders might bear, due to the potential for increased distributions and current income that the use of leverage provides to shareholders in a leveraged fund under normal market conditions.  The use of leverage, however, is subject to the risks described in the Joint Proxy Statement/Prospectus under “Risk Factors and Special Considerations — General Risks of Investment in RIF — Leverage Risk”.  Additionally, the foregoing pro forma financial information assumes that 20% of RAP’s common shares are repurchased in a self tender offer prior to the consummation of the Reorganization, assumes adjustments that are intended to estimate the anticipated operating expenses of RIF after the Reorganization and assumes that RAP’s investment securities are liquidated and the net proceeds invested in securities with a yield (calculated as annualized dividend income from the portfolio of investments as a percentage of the value of the portfolio investments) at the same rate as RIF’s portfolio of investments, which as of May 31, 2011 was 5.8%. See “Expenses of the Funds—The Funds’ Expenses” in the attached Joint Proxy Statement/Prospectus.

The Funds pay different management fees and have different contractual fee waiver arrangements. RIF pays a management fee to the Advisor at an annual rate of 0.85% of the Fund’s average daily managed assets and has no contractual fee waiver. RAP pays a management fee to the Advisor at an annual rate of 1.00% of its average daily managed assets and that fee is subject to a contractual waiver of 0.25% until May 25, 2012, resulting in an effective

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management fee rate of 0.75% until May 25, 2012. RIF’s average daily managed assets include assets attributable to RIF’s preferred shares and borrowings. See “Expenses of the Funds—The Funds’ Expenses” in the attached Joint Proxy Statement/Prospectus.

Following the Reorganization, the Advisor will provide investment advisory services to RIF pursuant to the terms and conditions of an investment advisory agreement between RIF and the Advisor. Other than management fees, the terms of the investment advisory agreement between RIF and the Advisor are substantively the same as the terms of the existing investment advisory agreement between RAP and the Advisor. However, the investment advisory agreement between RIF and the Advisor does not contain a contractual fee waiver. Additionally, RAP has an investment sub-advisory arrangement with MacarthurCook Investment Managers Limited, who is responsible for the day to day management of RAP’s portfolio, whereas the Advisor directly manages RIF’s portfolio and RIF does not have any investment sub-advisory arrangements.

Because of the elimination of the Advisor’s fee waiver for RAP and a corresponding increase of 10 basis points in RAP’s management fee for the period between the closing date of the Reorganization and May 25, 2012, the Advisor has agreed to make a cash payment to RAP to compensate it for the elimination of its fee waiver. The Advisor will make this compensatory payment to RAP immediately prior to the consummation of its Reorganization with RIF. The amount of the payment will take into account (i) the amount of RAP’s managed assets as of the close of trading, 4:00 p.m. Eastern time, on the closing date of the Reorganization, (ii) the number of days by which RAP’s fee waiver expiration date exceeds the closing date of the Reorganization, (iii) the amount of RAP’s fee waiver, and (iv) an appropriate discount factor which takes into account the time value of money. RAP will, subject to applicable legal and tax requirements, either retain some or all of this payment or distribute some or all of this amount to its shareholders immediately prior to the consummation of its Reorganization with RIF. Any such amount retained by RAP or to be paid to RAP’s shareholders will be determined by the RAP’s Board after consultation with its tax and legal advisors. To the extent RAP retains any of the cash payment, the amount retained will be included as part of RAP’s net assets attributable to common shares for purposes of determining the number of RIF Common Shares to be issued to RAP in connection with the Reorganization. This compensatory payment was the subject of negotiation between the Advisor and the Board of RAP, and the compensatory payment formula has been unanimously approved by the Board of RAP, including all the trustees who are not “interested persons” (as defined in the Investment Company Act of 1940, the “1940 Act”) of RAP. Based on RAP’s managed assets as of [     ], 2011, an assumed closing date of October 21, 2011 for the Reorganization, and an applied discount factor of [    ]%, the Advisor would make a compensatory payment of $[      ] to RAP. The actual amount of this compensatory payment (after giving effect to the purchase of RAP common shares in the tender offer) will change based on the actual closing date of the Reorganization, the actual value of RAP’s managed assets on the closing date and the actual applied discount factor.

Moreover, since RIF’s management fee will be 0.85% of RIF’s average daily managed assets, shareholders of RAP will realize a 15 basis point reduction from the contractual management fees commencing on the closing date of the Reorganization, as a result of RAP’s Reorganization with RIF.

Q:                                  WILL I HAVE TO PAY ANY SALES LOAD, COMMISSION OR OTHER SIMILAR FEE IN CONNECTION WITH THE REORGANIZATION?

A:                                   You will pay no sales loads or commissions in connection with the Reorganization. However, generally, each Fund will pay its own expenses incurred in connection with the Reorganization, whether or not RAP’s Reorganization with RIF is consummated. With respect to any expenses incurred in connection with the Reorganization that are attributable to both Funds, such expenses will be allocated in proportion to the net asset values attributable to the common shares of the Funds. Expenses incurred by RAP in connection with its pre-Reorganization self tender offer will be allocated wholly to RAP, and are currently estimated to be $125,000. If the Reorganization is consummated, the current estimate of total expenses to be incurred in connection with the Reorganization, exclusive of RAP’s self tender offer expenses, is $650,000, and the portion of such expenses to be borne by each of RAP and RIF is estimated to be $307,784 and $342,216, respectively. As of December 31, 2010, the aggregate net asset values attributable to common shares of RAP and RIF, as adjusted to reflect RAP’s anticipated repurchase of 20% of its shares in a pre-Reorganization self tender offer, were $61,538,349 and $85,750,962, respectively, and the proportional net asset values as of that date (adjusted as described above) were approximately 42% and 58%, respectively. Neither the Funds nor the Advisor will pay any shareholder expenses arising out of or in connection with the Reorganization.

If the Reorganization is not approved at the meeting (or any adjournment or postponement of the meeting), the Funds will not bear any further costs of the Reorganization after that time except as may be directly attributable to or

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already incurred by it. Accordingly, the Funds may incur expenses arising from the planned Reorganization even though the proposed Reorganization may not occur.

Q:                                  WHAT HAPPENS IF SHAREHOLDERS DO NOT APPROVE THE REORGANIZATION RELATED PROPOSALS OR IF THE FUNDS DO NOT OBTAIN A FAVORABLE RULING FROM THE IRS AS TO THE TAX FREE NATURE OF THE REORGANIZATION FOR UNITED STATES FEDERAL INCOME TAX PURPOSES?

A:                                   The Funds will not consummate the Reorganization, including not proceeding with either the 20% self tender offer by RAP or the potential dividend increase by RIF. The Boards of the Funds will consider what actions, if any, to take in light of the failure to obtain shareholder approval and/or the Reorganization Ruling.

Q:                                  WHY IS THE VOTE OF COMMON SHAREHOLDERS AND PREFERRED SHAREHOLDERS OF RIF BEING SOLICITED?

A:                                   Although RIF will continue its legal existence and operations after the Reorganization, the rules of the NYSE Amex (on which RIF’s common shares are listed) require RIF’s common shareholders to approve the issuance of additional common shares in connection with the Reorganization. RIF’s preferred shareholders are also entitled, pursuant to RIF’s bylaws, to vote together with RIF’s common shareholders as a single class on any matter put to a vote of the common shareholders.

Q:                                  HOW DOES THE BOARD OF MY FUND SUGGEST THAT I VOTE?

A:                                   The Board of your Fund recommends that you vote “FOR” the items proposed for your Fund.

Q:                                  HOW DO I VOTE MY PROXY?

A:                                   You may vote by attending the meeting in person or by signing, dating and returning the enclosed proxy card in the accompanying postage prepaid envelope. Additionally, you may vote your shares over the internet or by telephone. If you wish to vote your shares over the internet or by telephone, please follow the internet or telephone voting instructions on the enclosed proxy card. Each Fund shareholder who has given a proxy may revoke it any time prior to its exercise by delivering to the secretary of his or her Fund a written revocation or a duly executed proxy bearing a later date, by voting over the internet or by telephone at a later time, or by notifying the secretary of his or her Fund at any time before his or her proxy is voted that he or she will be present at the meeting and wishes to vote in person. Votes provided over the internet or by telephone must be received by 11:59 p.m. Eastern time on [        ], 2011.

Please note: being present at the meeting alone does not revoke a previously executed and returned proxy. If you hold shares in the name of a brokerage firm, bank, nominee or other institution (commonly referred to as in “street name”), please contact the person responsible for your account and give instructions on how to vote your shares. In order to vote your shares held in street name at the meeting, you must provide a legal proxy from the institution through which you hold those shares.

Q:                                  WHO DO I CONTACT FOR FURTHER INFORMATION?

A:                                   You can contact your financial adviser for further information. We encourage you to contact the firm assisting the Funds in the solicitation of proxies, Innisfree M&A Incorporated (“Innisfree”), if you have any questions or need assistance in voting your shares. Banks and brokers may call Innisfree, collect, at 212-750-5833. Other shareholders may call Innisfree, toll free, at 877-825-8971.

The tender offer referred to in these questions and answers has not yet commenced and relates to a planned tender offer by RAP for up to 20% of its outstanding shares at a price equal to RAP’s NAV per common share at the time the purchase is completed.  These questions and answers are neither an offer to purchase nor a solicitation of an offer to sell any shares of RAP.  The solicitation and the offer to buy shares of RAP common stock will be made pursuant to an offer to purchase and related materials that RAP intends to file with the U.S. Securities and Exchange Commission, subject to the satisfaction of the conditions described in these questions and answers and in the accompanying Joint Proxy Statement/Prospectus.  At the time the tender offer is commenced, RAP intends to file a Tender Offer Statement on Schedule TO containing an offer to purchase, forms of letters of transmittal and other documents relating to the tender offer.  RAP intends to mail these documents to the shareholders of RAP.  These documents will contain important information about the tender offer and shareholders of RAP are urged to read them carefully when they become available.  Investors may obtain a free copy of these documents (when they become available) filed with the SEC at the SEC’s web site at www.sec.gov. In addition, the tender offer statement and related materials may also be obtained for free (when they become available) by directing a request to: RMR Advisors, Inc., Two Newton Place, 255 Washington Street, Suite 300, Newton, MA, 02458 or by calling: (617) 332-9530.

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RMR ASIA PACIFIC REAL ESTATE FUND (“RAP”)
RMR REAL ESTATE INCOME FUND
(“RIF”, and each, a “Fund”)

NOTICE OF A JOINT SPECIAL MEETING OF SHAREHOLDERS
OF
RMR ASIA PACIFIC REAL ESTATE FUND
AND
RMR REAL ESTATE INCOME FUND

TO BE HELD SEPTEMBER 20, 2011

This is the formal agenda for your Fund’s shareholders meeting (“Meeting”). It tells you what matters will be voted on and the time and place of the Meeting in case you want to attend in person.

To the shareholders of each Fund:

A joint special meeting of shareholders for your Fund(s) will be held at the offices of the Funds at Two Newton Place, 255 Washington Street, Suite 100, Newton, Massachusetts, at 9:30 a.m. Eastern time on September 20, 2011 to consider the following:

1.             The common shareholders of RAP are being asked to approve an Agreement and Plan of Reorganization (the “Plan of Reorganization”) between RAP and RIF and the termination of RAP’s registration under the 1940 Act.

The Board of Trustees of RAP recommends that you vote FOR this proposal.

2.             The common and preferred shareholders of RIF, voting together as a single class, are being asked to approve the issuance of common shares of RIF in connection with a Plan of Reorganization between RAP and RIF.

The Board of Trustees of RIF recommends that you vote FOR this proposal.

Whether or not you expect to attend the Meeting, please complete and return a proxy for your shares or vote your shares over the internet or by telephone. If shareholders do not return their proxies in sufficient numbers, it may result in additional shareholder solicitation.

[        ], 2011

YOUR VOTE IS IMPORTANT.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE READ THE JOINT PROXY STATEMENT/PROSPECTUS AND PROMPTLY COMPLETE AND RETURN A PROXY FOR YOUR SHARES AS SOON AS POSSIBLE NO MATTER HOW MANY SHARES YOU OWN.

YOU MAY ALSO VOTE YOUR SHARES OVER THE INTERNET OR BY TELEPHONE BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD.

The information in this preliminary prospectus is not complete and may be changed.  We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

The information in this preliminary prospectus is not complete and may be changed.  We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JUNE 6, 2011

JOINT PROXY STATEMENT/PROSPECTUS
RELATING TO THE PROPOSED REORGANIZATION OF

RMR Asia Pacific Real Estate Fund (“RAP”)

WITH AND INTO

RMR Real Estate Income Fund (“RIF”)

The address of each of the above listed funds is Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 and the telephone number of each of these funds is (617) 332-9530.

* * * * * *

This Joint Proxy Statement/Prospectus is furnished to you as a shareholder of RAP and RIF (each a “Fund” and together, the “Funds”). RAP is a non-diversified closed end management investment company. RIF is a non-diversified closed end management investment company. A joint special meeting of shareholders of RAP and RIF (the “Meeting”) will be held at Two Newton Place, 255 Washington Street, Suite 100, Newton, Massachusetts on September 20, 2011 at 9:30 a.m., Eastern time, to consider the items listed below and discussed in greater detail elsewhere in this Joint Proxy Statement/Prospectus, which sets forth the information you ought to know before voting on the proposals described herein relating to the proposed reorganization of RAP with and into RIF (the “Reorganization”). Even if you plan to attend the Meeting or any adjournment thereof, the Board of Trustees of your Fund requests that you promptly vote your shares by completing and returning the enclosed proxy card or by voting your shares over the internet or by telephone. To vote your shares over the internet or by telephone, please follow the instructions for internet or telephone voting on the enclosed proxy card. The approximate mailing date of this Joint Proxy Statement/Prospectus and accompanying form of proxy is [        ], 2011. Please read this Joint Proxy Statement/Prospectus carefully and retain it for future reference.

The common shares of closed end investment companies frequently trade at a discount to net asset value. There is no assurance that a trading price for RIF’s common shares equal to or greater than net asset value will result after the Reorganization. The risk of loss due to this discount may be greater for investors expecting to sell their common shares in a relatively short period after completion of the Reorganization.

The tender offer referred to in this Joint Proxy Statement/Prospectus has not yet commenced and relates to a planned tender offer by RAP for up to 20% of its outstanding shares at a price equal to RAP’s NAV per common share at the time the purchase is completed.  This Joint Proxy Statement/Prospectus is neither an offer to purchase nor a solicitation of an offer to sell any shares of RAP.  The solicitation and the offer to buy shares of RAP common stock will be made pursuant to an offer to purchase and related materials that RAP intends to file with the U.S. Securities and Exchange Commission, subject to the satisfaction of the conditions described in this Joint Proxy Statement/Prospectus.  At the time the tender offer is commenced, RAP intends to file a Tender Offer Statement on Schedule TO containing an offer to purchase, forms of letters of transmittal and other documents relating to the tender offer.  RAP intends to mail these documents to the shareholders of RAP.  These documents will contain important information about the tender offer and shareholders of RAP are urged to read them carefully when they become available.  Investors may obtain a free copy of these documents (when they become available) filed with the SEC at the SEC’s web site at www.sec.gov. In addition, the tender offer statement and related materials may also be obtained for free (when they become available) by directing a request to: RMR Advisors, Inc., Two Newton Place, 255 Washington Street, Suite 300, Newton, MA, 02458 or by calling: (617) 332-9530.

Investing in RIF’s common shares involves risks described in “Risk Factors and Special Considerations” beginning on page  19.

The Proposals

Proposal 1:

The common shareholders of RAP are being asked to approve an Agreement and Plan of Reorganization (the “Plan of Reorganization”) between RAP and RIF and the termination of RAP’s registration under the 1940 Act.

Proposal 2:

The common and preferred shareholders of RIF, voting together as a single class, are being asked to approve the issuance of common shares of RIF, par value $0.001 per share (“RIF Common Shares”), in connection with a Plan of Reorganization between RAP and RIF.

Shareholders Entitled to Vote

Proposal 1             RMR Asia Pacific Real Estate Fund common shareholders

Proposal 2             RMR Real Estate Income Fund common and preferred shareholders, voting together as a class

Shares of RIF are not deposits or obligations of, or guaranteed or endorsed by, any bank or other depository institution. These shares are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.

Shares of RIF have not been approved or disapproved by the Securities and Exchange Commission (the “SEC”). The SEC has not passed upon the accuracy or adequacy of this Joint Proxy Statement/Prospectus. Any representation to the contrary is a criminal offense.

The common shares of RAP and RIF are listed on NYSE Amex under the ticker symbols “RAP” and “RIF” respectively. Reports, proxy statements and other information concerning the Funds may be inspected at the offices of NYSE Amex, 20 Broad Street, New York, New York 10005. The SEC maintains a website that contains the reports, proxy statements and other information that the Funds file electronically with the SEC. Copies of these documents may be viewed on screen or downloaded from the SEC’s website at http://www.sec.gov. Reports, proxy statements and other information filed by the Funds with the SEC can also be inspected and copied (for a duplication fee) at the public reference facilities of the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You may also obtain copies of this information by mail from the SEC at the above address, at prescribed rates.

This Joint Proxy Statement/Prospectus serves as a prospectus of RIF in connection with the issuance of RIF Common Shares in the Reorganization. No person has been authorized to give any information or make any representation not contained in this Joint Proxy Statement/Prospectus and, if so given or made, such information or representation must not be relied upon as having been authorized. This Joint Proxy Statement/Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction in which, or to any person to whom, it is unlawful to make such offer or solicitation.

Where to Get More Information

The date of this Joint Proxy Statement/Prospectus is [        ], 2011.

2

TABLE OF CONTENTS

3

SUMMARY

The following is a summary of certain information contained elsewhere in this Joint Proxy Statement/Prospectus and is qualified in its entirety by reference to the more complete information contained in this Joint Proxy Statement/Prospectus and in the Statement of Additional Information (the “SAI”). Shareholders should read carefully the entire Joint Proxy Statement/Prospectus.

The Proposed Reorganization

The Board of each Fund, including the Trustees who are not “interested persons” of each Fund (as defined in the 1940 Act), has unanimously approved a Plan of Reorganization between RIF and RAP. If the common shareholders of RAP approve the Plan of Reorganization, and common and preferred shareholders of RIF, voting together as a single class, approve the issuance of the RIF Common Shares in connection with the Reorganization, then, subject to the satisfaction of certain conditions, RAP will merge with and into RIF pursuant to Delaware law, and the common shareholders of RAP will receive the RIF Common Shares. RAP will then terminate its registration under the 1940 Act. If the Reorganization is completed, RAP shareholders will hold shares in a fund that focuses its investments in the U.S. real estate sector, rather than the Asia Pacific real estate sector.

The aggregate net asset value (“NAV”) of the RIF Common Shares received by RAP’s common shareholders in the Reorganization will equal the aggregate NAV of the RAP common shares outstanding on the Valuation Date (as defined in the next paragraph below) for the Reorganization, after giving effect to RAP’s share of the costs of the Reorganization.

It is expected that the valuation date for the Reorganization will be at 4:00 p.m., Eastern time, on the closing date for the Reorganization (the “Valuation Date”). The closing date of the Reorganization is currently expected to be on October 21, 2011. It is a condition to the consummation of the Reorganization that RAP’s shareholders approve the Reorganization and that RIF’s common and preferred shareholders, voting together as a single class, approve of the issuance of the RIF Common Shares in connection with the Reorganization.

The Reorganization is also conditioned upon RIF and RAP receiving the Reorganization Ruling from the IRS. The Funds will not consummate the Reorganization, including not proceeding with either the 20% self tender offer by RAP or the potential dividend increase by RIF, even if approved by shareholders, unless they receive the Reorganization Ruling from the IRS regarding the tax free nature of the Reorganization for United States federal income tax purposes. See “Material U.S. Federal Income Tax Consequences of the Reorganization.”

Provided that the Funds’ shareholders approve the Reorganization and the other conditions to the consummation of the Reorganization are satisfied, RAP will commence a self tender offer for up to 20% of its outstanding shares at a price equal to its net asset value per share in order to provide RAP shareholders who do not desire an investment in RIF an opportunity to exit their investment at net asset value prior to the consummation of the Reorganization. See “Risk Factors and Special Considerations—Risks Related to the Reorganization—Tender Offer Risk”.

If the Reorganization is consummated, RIF will have assets and liabilities that consist of the combined assets and liabilities of RIF and RAP. Following the Reorganization, RIF will be the surviving fund for accounting purposes and for purposes of presenting investment performance history.

Subject to the requisite approval of the shareholders of the Funds with regard to the Reorganization, as well as the satisfaction of the other conditions to the Reorganization, it is expected that the Closing Date will be October 21, 2011.  If the Reorganization related proposals are not approved by shareholders, or if the Funds fail to obtain the Reorganization Ruling, the Boards of the Funds will consider what actions, if any, to take.

Background and Reasons for the Proposed Reorganization

The Board of each Fund believes that the Reorganization of its Fund offers its Fund’s shareholders potential benefits, including those listed below.

The reorganized RIF will have a combined portfolio with greater assets than those of the Funds individually. At December 31, 2010, the net and total assets of the Funds were as follows:

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(1)                                  Net Assets attributable to common shareholders. Net Assets reflect accrued or unpaid expenses.

(2)                                  Total Assets include assets attributable to preferred shares issued by RIF and RIF’s outstanding borrowings. RAP has no outstanding preferred shares or borrowings.

(3)                                  These amounts do not reflect the effects of RAP’s pre-Reorganization self tender offer for 20% of its outstanding shares or the effects of the Reorganization.

(4)                                  These amounts reflect the effects of RAP’s pre-Reorganization self tender offer for 20% of its outstanding shares and the effects of the Reorganization.

As a result of the relatively small size of the Funds compared to many other publicly held closed end management investment companies, each of the Funds pays a relatively high amount of annual costs as a percentage of net assets, including annual charges for stock exchange listing fees, transfer agency fees, administration and sub-administration fees, custodian fees, the costs of preparing separate annual audited financial statements, legal fees for ordinary business and the like. By combining the Funds, the Boards believe the Funds may be able to realize annual cost savings totaling approximately $221,000, based on actual costs incurred for the year ended December 31, 2010. Since the Advisor will make a cash payment to compensate RAP for the elimination of its advisory fee waiver, the effect of the elimination of RAP’s advisory fee waiver has not been factored into this estimate. See “Expenses of the Funds—The Funds’ Expenses.”

RIF’s Board believes that the total gross expense ratio for the reorganized RIF should be lower after the Reorganization than RIF’s total gross expense ratio would be if the Reorganization did not occur.  RAP’s Board, however, noted that the total gross expense ratio for the reorganized RIF would be higher on a pro forma basis after the Reorganization than RAP’s total gross expense ratio would be if the Reorganization did not occur.  RAP’s Board recognized that this increase was due to the fact that RIF uses leverage, whereas RAP does not use leverage, and that assuming RIF did not use leverage the reorganized RIF’s total gross expense ratio would be lower on a pro forma basis after the Reorganization than RAP’s total gross expense ratio would be if the Reorganization did not occur.  RAP’s Board determined that it is in the best interests of RAP’s shareholders to reorganize into a leveraged fund, such as RIF, notwithstanding the extra costs associated with such leverage that its shareholders might bear, due to the potential for increased distributions and current income that the use of leverage provides to shareholders in a leveraged fund under normal market conditions.  The use of leverage, however, is subject to the risks described under “Risk Factors and Special Considerations — General Risks of Investment in RIF — Leverage Risk”.

RIF intends to continue to pay distributions to its common shareholders on a quarterly basis after making payment or provision for payment of distributions on, or redeeming, preferred shares, and interest and required principal payment on borrowings, if any, provided that market and economic conditions do not dictate otherwise.  Provided that market and economic conditions do not dictate otherwise, RIF intends to make distributions to common shareholders pursuant to a “level rate dividend policy”, which is a policy by which RIF seeks to provide its common shareholders with a regular quarterly dividend. This policy is different from that of RAP, which does not seek to pay a regular quarterly dividend to shareholders, but rather only makes distributions to shareholder to the extent necessary to maintain its qualification as a “regulated investment company” under the Code. RIF’s Board has conditionally approved an increase in RIF’s regular quarterly dividend on its common shares by $0.02 per share, or $0.08 per share on an annualized basis, to $0.44 per share per quarter, or $1.76 per share per year.  This increase is conditioned upon the Reorganization being consummated, there being no material adverse change in the financial position of either RIF or RAP prior to the consummation of the Reorganization, there being no material change in the underlying pro forma financial information upon which RIF’s Board based its conditional approval and there being no material adverse change in market conditions that might impair the yield RIF expects to receive on its investments.  RIF’s Board thus anticipates that RIF and RAP shareholders will realize increased current income as a result of the Reorganization, stemming from the reorganized RIF being able to invest in a larger portfolio of income yielding securities. Additionally, since RAP does not seek to pay a regular quarterly dividend like RIF, RAP’s shareholders should expect to receive more frequent dividends and RAP’s Board believes it is likely that RAP shareholders will receive higher current income in the form of dividend distributions. Of course, there can be no assurance that after the Reorganization, RIF will pay any specific amount of regular distribution in any specific form, pay any regular distribution at all, that quarterly distributions will continue, or that any annual capital gains distributions will be paid. Nevertheless, the Boards believe that the Reorganization will make the increased distributions and the narrowing of the discount more likely than if the Reorganization were not approved. The dividend increase would take effect for the first full calendar quarter following the completion of the Reorganization.

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The number of common shares outstanding on December 31, 2010 and the average daily trading volume of these shares during the year ended December 31, 2010 for the Funds were as follows:

Because of the relatively small number of common shares of the Funds which trade on an average daily basis compared to many other publicly held closed end management investment companies, the Funds’ Boards believe that the market price of the Funds’ common shares may be more volatile than they would be if the Funds were combined. Assuming that the Funds were combined based upon their NAVs on December 31, 2010 (and without regard to any fee waiver compensatory payment, but assuming 20% of RAP’s outstanding shares on December 31, 2010 were repurchased in the self tender offer), all outstanding common shares of RAP would be cancelled and 1,660,428 RIF Common Shares would be issued, which represents an increase in outstanding RIF Common Shares of approximately 70%. The Funds’ Boards believe that due to the larger market capitalization of RIF and expanded common shareholder base for RIF following the Reorganization, the average trading volume for reorganized RIF Common Shares is likely to be greater than the individual average trading volume of the Funds on a stand alone basis and that this increased volume may make it easier for shareholders to purchase and sell their RIF Common Shares. Also, as a result of potentially enhanced market liquidity, the Funds’ Boards believe the future market prices of the reorganized RIF Common Shares may experience reduced volatility as compared to the volatility experienced with the common shares of the Funds on a stand alone basis, which may in turn narrow the market value discount to NAV of RIF’s common shares.

Each Fund invests in real estate related securities; however, RIF focuses on real estate related securities in the United States and RAP focuses on real estate related securities in the Asia Pacific region. RIF seeks to earn and pay to its common shareholders a high level of current income by investing in real estate companies, with a secondary objective of capital appreciation. RAP seeks capital appreciation. The Board of RAP believes that RIF’s broadly similar focus on investing in real estate related securities, in addition to its fundamental investment objective of providing a high level of current income with a secondary objective of capital appreciation, will continue to benefit shareholders of RAP by allowing shareholders of RAP to remain in an investment program with a focus on the real estate sector. Provided that the Funds’ shareholders approve the Reorganization and the other conditions to the consummation of the Reorganization are satisfied, RAP will commence a self tender offer for up to 20% of its outstanding shares at a price equal to its net asset value per share in order to provide RAP shareholders who do not desire an investment in RIF an opportunity to exit their investment at net asset value prior to the consummation of the Reorganization. See “Risk Factors and Special Considerations—Risks Related to the Reorganization—Tender Offer Risk”.

RAP’s Board, including all the Trustees of the Board who are not “interested persons” of RAP (as defined in the 1940 Act), has unanimously determined that the Reorganization is in the best interests of common shareholders of RAP and that the interests of RAP’s common shareholders will not be diluted as a result the Reorganization. RIF’s Board, including all the Trustees of RIF’s Board who are not “interested persons” of RIF (as defined in the 1940 Act), has also determined that its Reorganization is in the best interests of its shareholders, and that the interests of its shareholders will not be diluted as a result of the Reorganization and that RIF’s preferred shareholders will not be adversely affected as a result of the Reorganization.

See “Board Considerations.”

Proposal 1: Reorganization of RAP with RIF

For Shareholders of RAP

In the Reorganization, common shareholders of RAP will receive RIF Common Shares in exchange for their RAP common shares. The aggregate NAV of RIF Common Shares received will be equal to the aggregate NAV of RAP common shares outstanding on the Valuation Date for the Reorganization, after giving effect to the share of the costs of the Reorganization borne by RAP. If the Reorganization is completed, RAP shareholders will hold shares in a fund that focuses its investments in the U.S. real estate sector, rather than the Asia Pacific real estate sector.

RIF pays a management fee to the Advisor at an annual rate of 0.85% of the Fund’s average daily managed assets and has no contractual fee waiver. RAP pays a management fee to the Advisor at an annual rate of 1.00% of its average daily managed assets and that fee is subject to a contractual waiver of 0.25% until May 25, 2012, resulting in an effective management fee rate of 0.75% until May 25, 2012.  If the Reorganization of RAP with RIF is consummated, RAP

6

would realize an elimination of its fee waiver for the period between the closing date of the Reorganization and May 25, 2012. Consequently, the Advisor has agreed to make a cash payment to RAP to compensate it for the elimination of its fee waiver. Shareholders of RAP will realize a 15 basis point reduction from contractual management fees commencing on the closing date of the Reorganization as a result of the Reorganization.

In approving the Reorganization, RAP’s Board also considered the changes to RIF’s investment policies described under “Proposal 2: Issuance of Additional RIF Common Shares”, as well as the RIF Board’s reasons therefor.

In order for the Reorganization to take place, the affirmative vote of a “majority of the outstanding” (as defined in 1940 Act) common shares of RAP is required. “Majority of the outstanding” common shares of RAP, as defined pursuant to the 1940 Act, means the lesser of (i) 67% or more of RAP’s common shares present at a meeting of RAP’s shareholders, if the holders of more than 50% of RAP’s outstanding common shares are present or represented by proxy, or (ii) more than 50% of RAP’s outstanding common shares.

The Board of RAP recommends that you vote “FOR” RAP’s proposed Plan of Reorganization.

Proposal 2: Issuance of Additional RIF Common Shares

For Common and Preferred Shareholders of RIF

In connection with the proposed Reorganization described under “Proposal 1: Reorganization of RAP with RIF,” RIF will issue RIF Common Shares and list them for trading on the NYSE Amex. We expect the Reorganization will result in no reduction of the NAV of the RIF Common Shares, other than to reflect the costs of the Reorganization.

Provided the Funds’ shareholders approve the Reorganization and the other conditions to the consummation of the Reorganization are satisfied, RIF’s Board has approved a change in RIF’s investment policies that will be effected prior to the consummation of the Reorganization such that under normal market conditions: (1) RIF will invest at least 65% (versus 75% currently) of its managed assets in securities issued by REITs, and (2) RIF may invest up to 33 1/3% (versus 10% currently) of its managed assets in securities denominated in currencies other than the U.S. dollar or traded on a non-U.S. stock exchange.  These investment policies are not fundamental investment policies and thus may be changed by RIF’s Board without shareholder approval.  The Board has determined to change RIF’s investment policies in this manner in order to give RIF flexibility to retain certain of RAP’s investments if the Advisor determines that it would be in RIF’s best interest to do so, as well as so RIF could make certain representations to the IRS in connection with its request for the IRS to issue it a private letter ruling with respect to the United States federal income tax treatment of the Reorganization.  The RIF Board believes that the Reorganization is in the best interests of RIF and its shareholders and, since such a ruling from the IRS is required to consummate the Reorganization, the RIF Board believes that this change in investment policy is likewise in the best interests of RIF and its shareholders. The RIF Board further believes that such a change in investment policy will benefit RIF and its shareholders by giving the Advisor greater flexibility to invest in the securities of non-U.S. issuers in response to economic and market conditions, as well as to take advantage of attractive investment opportunities.

Notwithstanding the foregoing, based on current market conditions RIF expects that it will, over time, divest its portfolio of all or substantially all of the RAP portfolio securities acquired in the Reorganization and will continue to focus its investment program on the United States real estate sector.  Additionally, in order to divest its portfolio of the RAP portfolio securities acquired in the Reorganization in an orderly manner and a manner that is in the best interests of its shareholders, RIF may, for three months following the closing of the Reorganization, have up to 50% of its managed assets invested in securities denominated in currencies other than the U.S. dollar or traded on a non-U.S. stock exchange.  The RIF Board has authorized this deviation from RIF’s investment policies for these purposes.  RIF does not currently anticipate that it will be necessary to maintain more than 33 1/3% of its managed assets in securities denominated in currencies other than the U.S. dollar or traded on a non-U.S. stock exchange for more than three months following the closing date of the Reorganization.

The affirmative vote of shareholders representing at least a majority of all the votes cast by RIF Common Shares and RIF preferred shares present in person or represented by proxy at the Meeting and entitled to vote, voting together as a single class, is required to approve the issuance of additional common shares in connection with the Reorganization.

The Board of RIF recommends that you vote “FOR” RIF’s proposed issuance of additional RIF Common Shares in connection with the Reorganization.

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Summary of Expense Comparison

As a result of the Reorganization, total annual gross expenses incurred by common shareholders of RIF in the aggregate would decline from 2.44% of average net assets attributable to common shares (for the year ended December 31, 2010) to approximately 2.06% of average net assets attributable to common shares (for the year ended December 31, 2010) for the reorganized RIF.  As a result of the Reorganization, total annual gross expenses incurred by common shareholders of RAP in the aggregate would increase from 1.97% (1.72% taking into account RAP’s contractual advisory fee waiver) of average net assets attributable to common shares (for the year ended December 31, 2010) to approximately 2.06% of average net assets attributable to common shares (for the year ended December 31, 2010) for the reorganized RIF.  The forgoing pro forma results give effect to RIF’s use of leverage for the year ended December 31, 2010 and the reorganized RIF’s use of leverage of a pro forma basis.  Assuming RIF did not use leverage, total annual gross expenses incurred by common shareholders of RIF in the aggregate would decline from 1.85% of average net assets attributable to common shares (for the year ended December 31, 2010) to approximately 1.62% of average net assets attributable to common shares (for the year ended December 31, 2010) for the reorganized RIF; and total annual gross expenses incurred by common shareholders of RAP in the aggregate would decline from 1.97% (1.72% taking into account RAP’s contractual advisory fee waiver) of average net assets attributable to common shares (for the year ended December 31, 2010) to approximately 1.62% of average net assets attributable to common shares (for the year ended December 31, 2010) for the reorganized RIF.  Thus, RAP’s Board anticipates that any increase in total expenses as a percentage of net assets attributable to RAP common shareholders as as a result of the Reorganization would be due to the reorganized RIF’s use of leverage.  RAP’s Board has determined that it is in the best interests of RAP’s shareholders to reorganize into a leveraged fund, such as RIF, notwithstanding the extra costs associated with such leverage that its shareholders might bear, due to the potential for increased distributions and current income that the use of leverage provides to shareholders in a leveraged fund under normal market conditions.  The use of leverage, however, is subject to the risks described under “Risk Factors and Special Considerations — General Risks of Investment in RIF — Leverage Risk”.  Additionally, the foregoing pro forma financial information assumes that 20% of RAP’s common shares are repurchased in a self tender offer prior to the consummation of the Reorganization, assumes adjustments that are intended to estimate the anticipated operating expenses of RIF after the Reorganization and assumes that RAP’s investment securities are liquidated and the net proceeds invested in securities with a yield (calculated as annualized dividend income from the portfolio of investments as a percentage of the value of the portfolio investments) at the same rate as RIF’s portfolio of investments, which as of May 31, 2011 was 5.8%.

Comparison of the Funds: Investment Objectives and Policies

The Funds have differing investment objectives and policies as described throughout this Joint Proxy Statement/Prospectus. Below is a table designed to provide a comparison of the material differences and similarities between RAP and RIF.

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The Funds are also subject to other fundamental and non-fundamental investment restrictions. The Funds generally operate pursuant to the same fundamental and non-fundamental investment restrictions with the exception of certain restrictions primarily related to each Fund’s individual investment objective, strategy and focus. The following table summarizes these differences. For more information, see “Investment Restrictions” in the SAI.

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EXPENSES OF THE FUNDS

The Funds’ Expenses

The following tables illustrate the pro forma change in expenses for the year ended December 31, 2010 assuming that the Reorganization is approved and consummated. The tables set forth each Fund’s expenses as a percentage of average net assets attributable to common shares for the year ended December 31, 2010 and, for the tables which assume the use of leverage, reflect the cost of RIF’s outstanding preferred shares and borrowings, or leverage, in an amount equal to 22% of RIF’s average managed assets for the year, and 14% of the reorganized RIF’s average managed assets for the year on a pro forma basis. All amounts shown in the tables below are unaudited, assume that 20% of RAP’s common shares are repurchased in a self tender offer prior to the consummation of the Reorganization and assume that RAP’s investment securities are liquidated and the net proceeds invested in real estate related securities in the United States with a yield (calculated as annualized dividend income from the portfolio of investments as a percentage of the value of the portfolio investments) at the same rate as RIF’s portfolio of investments, which as of May 31, 2011 was 5.8%, and are derived from the pro forma financial statements of RIF for the year ended December 31, 2010 included as Appendix B to the SAI. These pro forma figures are presented for informational purposes only and may not necessarily be representative of what the actual combined financial position or results of operations would have been had the Reorganization taken place as of or for the period presented or for any future date or period.

(1)           The pro forma column shown assumes the Reorganization is completed, assumes that 20% of RAP’s common shares are repurchased in a self tender offer prior to the consummation of the Reorganization and assumes that RAP’s investment securities are liquidated and the net proceeds invested in real estate related securities in the United States with a yield (calculated as annualized dividend income from the portfolio of investments as a percentage of the value of the portfolio investments) at the same rate as RIF’s portfolio of investments, which as of May 31, 2011 was 5.8%, and excludes the costs and expenses of the Reorganization.

(2)           No expense information is presented with respect to preferred shares because holders of preferred shares do not bear any transaction or operating expenses of any of the Funds and will not bear any transaction or operating expenses of the combined Fund.

(3)           Common shares purchased in the secondary market may be subject to brokerage commissions or other charges. No sales load will be charged on the issuance of RIF Common Shares in the Reorganization. Common shares are not

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available for purchase from the Funds but may be purchased through a broker-dealer subject to individually negotiated commission rates.

(4)           Each participant in a Fund’s dividend reinvestment plan pays a proportionate share of the brokerage commissions incurred with respect to open market purchases in connection with such plan.

(5)           Stated as percentages of average net assets attributable to common shares, assuming no issuance of preferred shares or borrowings (no leverage), each Fund’s expenses would be as follows:

(6)           In connection with the Reorganization, there are certain transaction expenses not reflected in “Other Expenses,” even if accrued or paid on or prior to December 31, 2010, which include, but are not limited to: costs related to the preparation, printing and distribution of this Joint Proxy Statement/Prospectus to shareholders; costs related to preparation and distribution of materials distributed to each Fund’s Board; expenses incurred in connection with the preparation of the Agreement and Plan of Reorganization and the registration statement on Form N-14 and other related materials; SEC and state securities commission filing fees; expenses incurred in connection with RAP’s pre-Reorganization self tender offer and costs associated with the preparation, filing and mailing of documentation related thereto; legal and audit fees associated with the transaction; portfolio transfer taxes (if any); and any similar expenses incurred in connection with the Reorganization. In accordance with applicable SEC rules, the Board of each Fund reviewed the fees and expenses that will be borne directly or indirectly by the Funds in connection with the Reorganization. After considering various alternatives for allocating these costs, the Board of each Fund agreed that, generally, each Fund will pay its own expenses incurred in connection with the Reorganization, whether or not the Reorganization is consummated. With respect to any expenses incurred in connection with the Reorganization that are attributable to both Funds, such expenses will be allocated in proportion to the net asset values attributable to the common shares of the Funds. For the avoidance of doubt, any expenses incurred by RAP in connection with its pre-Reorganization self tender offer will be allocated wholly to RAP, and are currently estimated to be $125,000. If the Reorganization is consummated, the current estimate of total expenses to be incurred in connection with the Reorganization, exclusive of RAP’s self tender offer expenses, is $650,000 and the portion of such expenses to be borne by each of RAP and RIF is estimated to be $307,784 and $342,216, respectively. Neither the Funds nor the Advisor will pay any shareholder expenses arising out of or in connection with the Reorganization. If the Reorganization is not approved at the meeting (or any adjournment or postponement of the meeting), the Funds will not bear any further costs of the Reorganization after that time except as may be directly attributable to or already incurred by it. Accordingly, as indicated above, the Funds may incur expenses arising from the planned Reorganization even though the proposed Reorganization may not occur. The table below summarizes each Fund’s aggregate NAV attributable to common shares at December 31, 2010 (adjusted to give effect to RAP’s anticipated repurchase of 20% of its outstanding shares in a pre-Reorganization self tender offer); projected annual operating expense savings to each Fund as a result of the Reorganization; allocation of Reorganization expenses among the Funds in dollars and percentages for amounts estimated to be incurred, based on the NAVs of the Funds as of December 31, 2010 (as adjusted to give effect to RAP’s anticipated repurchase of 20% of its outstanding shares in a pre-Reorganization self tender offer); an estimated pay back period (in months); and the reduction to each Fund’s NAV per common share at December 31, 2010 due to the estimated Reorganization expenses. The projected annual operating expense savings in the table below are allocated proportionally between the Funds based upon their NAVs as of December 31, 2010 (as adjusted to give effect to RAP’s anticipated repurchase of 20% of its outstanding shares in a pre-Reorganization self tender offer). Actual Reorganization expenses will be allocated in the manner previously disclosed above. The projected annual operating expense savings are generally not expected to be immediately realized. If shareholders sell their common shares prior to the estimated pay back period, then they may not realize any of the projected operating expense savings resulting from

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the reduced aggregate operating expenses. The NAV per common share of each Fund will be reduced as of the Valuation Date of the Reorganization to reflect the allocation of Reorganization expenses to each Fund. The reduction in NAV per common share resulting from the allocation of Reorganization expenses. The numbers presented in the table, including the projected annual operating expense savings, are estimates based on the year ended December 31, 2010, and assume that 20% of RAP’s shares are repurchased in a pre-Reorganization self tender offer; actual results may differ. Since the Advisor will make a cash payment to compensate RAP for the elimination of its advisory fee waiver, the elimination of RAP’s advisory fee waiver does not affect the estimated operating expense savings in the table below.

(7)           Fund Fees and Expenses include the Fund’s pro rata portion of the cumulative expense charged by underlying investment companies in which the Fund invests (e.g., portfolio funds), which are non-operating expenses borne indirectly by Fund shareholders that represent the Fund’s pro rata portion of the cumulative expense charged by underlying investment companies in which the Fund invests.

(8)           Reflects an average dividend rate of 0.82% on RIF’s preferred shares for the year ended December 31, 2010. Actual dividend rates on preferred shares are determined by the auction process. Prevailing interest rate, yield curve and market circumstances when the dividend rate on preferred shares for the next dividend period is set substantially influence the rate determined in an auction. As these factors change over time, so do the dividend rates set. The dividend rates for RIF’s preferred shares are set on different dates and therefore would not provide a direct comparison of what these rates would be if established on the same date. If an auction fails, the dividend rate for the next succeeding dividend period is set according to a pre-determined formula, and the resulting rate may be higher than the rate which the Fund would otherwise pay as a result of a successful auction.

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The purpose of the fee tables is to assist you in understanding the various costs and expenses that you, as an investor, will bear directly or indirectly.

The following example is intended to help you compare the costs and expenses of investing in the reorganized RIF after the Reorganization with the costs and expenses of investing in the Funds without the Reorganization. An investor would pay the following costs and expenses on a $1,000 investment in common shares, assuming (i) the total annual gross expense ratio for each Fund (as a percentage of average net assets attributable to common shares) set forth in the tables above for years 1 through 10, (ii) dividends on preferred shares as set forth in the tables above and (iii) a 5% annual return throughout the period on the original $1,000 investment.

Assuming Leverage

Assuming No Leverage

The example set forth above assumes the reinvestment of all dividends and distributions at NAV and does not take into account the compensatory payment to be made to RAP described in Proposal 1 below. The example should not be considered a representation of past or future expenses or annual rates of return. Actual expenses or annual rates of return may be more or less than those assumed for purposes of the examples.

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FINANCIAL HIGHLIGHTS

RAP

The following schedule presents financial highlights for one common share of RAP outstanding throughout the periods indicated. This information is derived from RAP’s audited financial statements for the year ended December 31, 2010 and should be read in conjunction with RAP’s audited financial statements for year ended December 31, 2010 and notes thereto, which are incorporated by reference herein. These financial highlights have been audited by [        ], independent registered public accounting firm, whose report thereon, along with the audited financial statements and notes thereto, is included in RAP’s annual report to shareholders, filed with the SEC on Form N-CSR on February 28, 2011, for the fiscal year ended December 31, 2010, and are available without charge by calling RAP’s toll free number: (866) 790-8165.

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(a)           Commencement of operations of the Fund.

(b)           Based on average shares outstanding.

(c)           The Fund reorganized with predecessor RMR Funds on June 16, 2009. Share and per share information has been updated to reflect the effects of the reverse stock split that occurred immediately prior to the reorganizations. See Notes A and E to the financial statements included in RAP’s 2010 annual report.

(d)           Net asset value at May 25, 2006, reflects the deduction of the average sales load and offering costs of $0.92 per share paid by the holders of common shares of the predecessor, Old RMR Asia Pacific Real Estate Fund, from the $20.00 offering price. The Fund paid a sales load and offering cost of $0.94 per share on 1,710,000 shares sold to the public and no sales load or offering costs on 40,000 common shares sold to affiliates of the Advisor for $20 per share.

(e)           Amounts are net of expenses waived by the Advisor.

(f)            Total returns for periods of less than one year are not annualized.

(g)           Total return based on per share market price assumes the purchase of common shares at the market price on the first day and sale of common shares at the market price on the last day of the period indicated; dividends and distributions, if any, are assumed to be reinvested at market prices on the ex-dividend date. The total return based on net asset value, or NAV, assumes the purchase of common shares at NAV on the first day and sale of common shares at NAV on the last day of the period indicated; distributions are assumed to be reinvested at NAV on the ex-dividend date. Results represent past performance and do not guarantee future results. Total return would have been lower if the Advisor had not contractually waived a portion of its advisory fee.

(h)           Annualized.

See notes to financial statements, which are incorporated herein by reference to RAP’s annual report to shareholders for the year ended December 31, 2010, which was filed with the SEC on Form N-CSR on February 28, 2011.

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RIF

The following schedule presents financial highlights for one common share of RIF outstanding throughout the periods indicated. This information is derived from RIF’s audited financial statements for the year ended December 31, 2010 and should be read in conjunction with RIF’s audited financial statements for year ended December 31, 2010 and notes thereto, which are incorporated by reference herein. These financial highlights have been audited by [          ], independent registered public accounting firm, whose report thereon, along with the audited financial statements and notes thereto, is included in RIF’s annual report to shareholders, filed with the SEC on Form N-CSR on February 28, 2011, for the fiscal year ended December 31, 2010, and are available without charge by calling RIF’s toll free number: (866) 790-8165.

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(a)           Based on average shares outstanding.

(b)           The Fund reorganized with predecessor RMR Funds during the period from June 17, 2009 through June 23, 2009. Share and per share information has been updated to reflect the effects of the reverse stock split that occurred immediately prior to the reorganizations. See Notes to the financial statements included in RIF’s 2010 annual report.

(c)           Amounts for periods prior to December 18, 2008 are net of expenses waived by the Advisor.

(d)           As discussed in the Notes to the financial statements included in RIF’s 2010 annual report, a portion of the distributions we received on our investments are not included in investment income for financial reporting purposes.

(e)           Total return based on per share market price assumes the purchase of common shares at the market price on the first day and sale of common shares at the market price on the last day of the period indicated; dividends and distributions, if any, are assumed to be reinvested at market prices on the ex-dividend date. The total return based on net asset value, or NAV, assumes the purchase of common shares at NAV on the first day and sale of common shares at NAV on the last day of the period indicated; distributions are assumed to be reinvested at NAV on the ex-dividend date. Results represent past performance and do not guarantee future results. Total return would have been lower for the periods prior to December 18, 2008 if the Advisor had not contractually waived a portion of its advisory fee.

(f)            During the year ended December 31, 2007, the Advisor reimbursed the RIF $2,070 for trading losses incurred by the RIF due to a trading error. The impact of this reimbursement was less than $0.005 per share and had no impact on total return.

(g)           Asset coverage ratio of borrowings equals net assets attributable to common shares plus the outstanding balance under RIF’s revolving credit facility plus the liquidation preference of RIF’s outstanding preferred shares divided by the outstanding balance under RIF’s revolving credit facility.

(h)           Asset coverage ratio of preferred shares equals net assets attributable to common shares plus the liquidation preference of RIF’s outstanding preferred shares divided by the liquidation preference of RIF’s preferred shares.

(i)            Asset coverage ratio of borrowings and liquidation preference of RIF’s preferred shares equals net assets attributable to common shares plus the outstanding balance under RIF’s revolving credit facility plus the liquidation preference of RIF’s outstanding preferred shares divided by outstanding balance under RIF’s revolving credit facility plus the liquidation preference of RIF’s outstanding preferred shares.

See notes to financial statements, which are incorporated herein by reference to RIF’s annual report to shareholders for the year ended December 31, 2010, which was filed with the SEC on Form N-CSR on February 28, 2011.

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RISK FACTORS AND SPECIAL CONSIDERATIONS

The proposed Reorganization will cause the shareholders of RAP to become investors in RIF. The Reorganization and the resulting investment in RIF involve risks. Many of the risks arising from an investment in RIF are similar to the risks arising from an investment in RAP. The following is a brief description of the material risks arising from the Reorganization, from an investment in RIF and, where applicable, a comparison of those risks to the different risks of investments in RAP:

Risks Related to the Reorganization

Expenses

While the Funds currently estimate that the Reorganization, if consummated, will result in reduced aggregate expenses of the Funds by approximately $221,000 per year based on actual costs incurred for the year ended December 31, 2010, the realization of these reduced expenses will not affect holders of the Funds proportionately, may take longer than expected to be realized or may not be realized at all. After the Reorganization, RIF and RAP are expected to incur lower operating expenses on a per common share basis than they currently incur without giving effect to the costs of the reorganized RIF’s leverage. However, the Funds may incur higher expenses for a period prior to experiencing such savings or may never experience such savings. See “Expenses of the Funds—The Funds’ Expenses.” There can be no assurance that future expenses will not increase or that any expense savings will be realized. If shareholders do not approve their respective Reorganization related proposals, the Funds will incur expenses arising from the proposed Reorganization even though the Reorganization would not occur and those expenses may be material.

Fund Yields and Performance

Although RIF’s primary focus is to earn and pay a high level of current income, the reorganized RIF may not experience yields or future performance on its investments after the Reorganization as favorable as the yields and performance realized by the Funds on a standalone basis prior to the Reorganization or which they may have experienced if the Reorganization had not occurred. Additionally, the addition of RAP’s assets to RIF’s portfolio with no corresponding increase in RIF’s borrowings or preferred shares outstanding will lower RIF’s effective leverage ratio, which may reduce the yield and returns to RIF’s common shareholders. The Funds’ Boards believe that there are offsetting benefits that may result from the Reorganization, including the potential for economies of scale and enhanced market liquidity for the common shares of the Fund; however, these benefits cannot be readily quantified, and there are no assurances as to the degree these benefits will be experienced, if at all, by RIF and its shareholders after the Reorganization.

Market Valuation Risk

Since inception, RAP and RIF have each generally traded at a discount to their respective NAVs. After the Reorganization, RIF Common Shares may trade at a greater discount to NAV than did RIF Common Shares prior to the Reorganization. There can be no assurance as to the extent, if any, to which RIF’s common shares will trade at a discount or premium following the Reorganization. There also can be no assurance that the Funds’ relative historic discounts would continue should the Reorganization not take place.

Foreign Securities Risk

Provided that the Funds’ shareholders approve the Reorganization and the other conditions to the consummation of the Reorganization are satisfied, RIF’s Board has approved a change in RIF’s investment policies that will be effected prior to the consummation of the Reorganization such that under normal market conditions: (1) RIF will invest at least 65% (versus 75% currently) of its managed assets in securities issued by REITs, and (2) RIF may invest up to 33 1/3% (versus 10% currently) of its managed assets in securities denominated in currencies other than the U.S. dollar or traded on a non-U.S. stock exchange.  These investment policies are not fundamental investment policies and thus may be changed by RIF’s Board without shareholder approval.  Additionally, in order to divest its portfolio of the RAP portfolio securities acquired in the Reorganization in an orderly manner and a manner that is in the best interests of its shareholders, RIF may, for three months following the closing of the Reorganization, have up to 50% of its managed assets invested in securities denominated in currencies other than the U.S. dollar or traded on a non-U.S. stock exchange.  The RIF Board has authorized this deviation from RIF’s investment policies for these purposes.  RIF does not currently anticipate that it will be necessary to maintain more than 33 1/3% of its managed assets in securities denominated in currencies other than the U.S. dollar or traded on a non-U.S. stock exchange for more than three months following the closing date of the Reorganization.

These investments in foreign securities involve special risks not usually associated with investing in securities of U.S. companies, including political and economic considerations, such as greater risks of expropriation and nationalization,

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confiscatory taxation, the potential difficulty of repatriating funds, general social, political and economic instability and adverse diplomatic developments; the possibility of the imposition of withholding or other taxes on dividends, interest, capital gain or other income; the small size of the securities markets in such countries and the low volume of trading, resulting in potential lack of liquidity and in price volatility; fluctuations in the rate of exchange between currencies and costs associated with currency conversion; and certain government policies that may restrict the Fund’s investment opportunities. In addition, because non-U.S. entities are not subject to uniform accounting, auditing, and financial reporting standards, practices and requirements comparable with those applicable to U.S. companies, there may be different types of, and lower quality, information available about a non-U.S. company than a U.S. company.  There is also less regulation, generally, of the securities markets in many foreign countries than there is in the U.S., and such markets may not provide the same protections available in the U.S.  With respect to certain countries, there may be the possibility of political, economic or social instability, the imposition of trading controls, import duties or other protectionist measures, various laws enacted for the protection of creditors, greater risks of nationalization or diplomatic developments which could materially adversely affect the Fund’s investments in those countries.  Furthermore, individual economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency, and balance of payments position.  Investment in non-U.S. countries may also be subject to withholding or other taxes, which may be significant and may reduce returns.

Brokerage commissions, custodial services and other costs relating to investment in international securities markets generally are more expensive than in the U.S.  In addition, clearance and settlement procedures may be different in foreign countries and, in certain markets, such procedures have been unable to keep pace with the volume of securities transactions, thus making it difficult to conduct such transactions.

Changes in foreign currency exchange rates may affect the value of securities in the Fund and the unrealized appreciation or depreciation of investments.  Currencies of certain countries may be volatile and therefore may affect the value of securities denominated in such currencies, which means that the Fund’s NAV could decline as a result of changes in the exchange rates between foreign currencies and the U.S. dollar.  The Advisor may, but is not required to, elect for the Fund to seek to protect itself from changes in currency exchange rates through hedging transactions depending on market conditions.  In addition, certain countries, particularly emerging market countries, may impose foreign currency exchange controls or other restrictions on the transferability, repatriation or convertibility of currency.

Certain of the Fund’s investments may include investments in emerging or developing markets, some of which are highly controlled by governmental authorities.  Such investments are particularly speculative and entail all of the risks of investing in non-U.S. investments generally, but to a heightened degree.  “Emerging market” countries generally include every nation in the world except developed countries, that is, the United States, Canada, Japan, Australia, New Zealand and most countries located in Western Europe.  Particularly in developing countries, laws governing transactions in securities, commodities, derivatives and securities indices and other contractual relationships are new and largely untested.  Investments in emerging markets may, among other things, carry the risks of less publicly available information, more volatile markets, less strict securities market regulation, less favorable tax provisions, a greater likelihood of severe inflation, unstable currency, war and expropriation of personal property, inadequate investor protection, contradictory legislation, incomplete, unclear and changing laws, ignorance or breaches of regulations on the part of market participants, lack of established or effective avenues for legal redress, lack of standard practices and confidentiality customs characteristic of developed markets, and lack of enforcement of existing regulations.  Hence, it may be difficult to obtain and enforce a judgment in certain emerging countries.  There can be no assurance that this difficulty in protecting and enforcing rights will not have a material adverse effect on the Fund and its operations.  In addition, certain emerging market countries require governmental approval prior to investments by foreign persons in a particular issuer, limit the amount of investment by foreign persons in a particular issuer, limit the investment by foreign persons only to a specific class of securities of an issuer that may have less advantageous rights than the classes available for purchase by domiciliaries of the countries and/or impose additional taxes on foreign investors.

There is also the possibility of nationalization, expropriation or confiscatory taxation, imposition of withholding or other taxes on dividends, interest, capital gains or other income, limitations on the removal of funds or other assets, political changes, government regulation, social instability or diplomatic developments (including war) which could affect adversely the economies of such countries or the value of investments in those countries.  In addition, regulatory controls and corporate governance of companies in emerging markets confer little protection on minority shareholders.  Anti-fraud and anti-insider trading legislation is often rudimentary.  The concept of fiduciary duty to shareholders by officers and directors is also limited when compared to such concepts in developed markets.  In certain instances management may take significant actions without the consent of shareholders and anti-dilution protection also may be limited.  The typically small or relatively small size of markets for securities of issuers located in emerging market countries and the possibility of a low or non-existent volume of trading in those securities may also result in a lack of liquidity and increased price volatility of those securities, which may reduce the return on such investments.

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Tender Offer Risk

Provided that the Funds’ shareholders approve the Reorganization and the other conditions to the consummation of the Reorganization are satisfied, RAP will commence a self tender offer for up to 20% of its outstanding shares at a price equal to its net asset value per share in order to provide RAP shareholders who do not desire an investment in RIF an opportunity to exit their investment at net asset value prior to the consummation of the Reorganization.  There can be no assurance that RAP will be able to repurchase all shares tendered into this proposed self tender offer and, in particular, if such tenders exceed 20% of RAP’s outstanding shares, RAP will only repurchase a pro rata portion of the tendered shares. Thus, shareholders wishing to exit their entire investment in RAP in the tender offer may not be able to do so and may be forced to accept RIF shares in the Reorganization, unless such shareholders sell their RAP shares on the NYSE Amex prior to the consummation of the Reorganization. The shares of both RIF and RAP trade at a significant discount to their NAV per share, thus RAP expects that its tender offer may be oversubscribed and that all shareholders seeking to have their shares repurchased may not have all of their shares repurchased by RAP. In such circumstances, such shareholders seeking to sell their shares at a price approximating their NAV may not be able to do so and such shareholders may be forced to dispose of their RAP shares on the NYSE Amex at their market value, which RAP expects to be less than their NAV. Likewise, if such shareholders accept RIF Common Shares in the Reorganization, such shareholders will only be able to dispose of such RIF Common Shares via market price transactions on the NYSE Amex, which RIF expects to be at a discount to RIF’s NAV, notwithstanding the fact that such shareholders will receive RIF Common Shares with an aggregate NAV equal to the aggregate NAV of their RAP common shares in the Reorganization. The risk that RIF Common Shares may trade at a discount to their net asset value may be greater shortly following the Reorganization.

Additionally, such a tender offer will reduce the amount of RAP assets that RIF will acquire in the Reorganization, as well as the number of RIF Common Shares it will issue and the number of additional shareholders that it will have post-Reorganization.  This may decrease the magnitude of the benefits that the Reorganization would have for the Funds’ shareholders in the absence of the tender offer, in particular the benefits associated with the economies of scale realized by spreading RIF’s operating expenses over a larger asset base, the potential for increased trading liquidity and narrower NAV discounts discussed above and the potential for a larger portfolio of income producing securities which could increase the level of current income for RIF’s shareholders.

Potential Conflicts of Interest

The Boards of each of the Funds are comprised of the same Trustees. Although the Trustees have to weigh the benefits and detriments of the Reorganization to the Funds independently, they could be influenced, or appear to be influenced, by factors affecting the other Funds for which they are Trustees.

Also, as of April 30, 2011, Trustees and officers of the Funds beneficially owned, as a group, approximately 2.56% of the outstanding common shares of RAP and 8.63% of the outstanding common shares of RIF. The Advisor is beneficially owned by Barry M. Portnoy, a Trustee of RIF and RAP, and Adam D. Portnoy, a Trustee and the President of RIF and RAP. This disproportionate ownership of the Funds by the Trustees and officers of the Funds may be considered an incentive for the Trustees and officers to favor one Fund’s interests over another’s. The officers of the Funds are officers of the Advisor, as are the portfolio managers of RIF. These situations could create, or appear to create, conflicts of interest with respect to a Trustee’s determination of whether to recommend the Reorganization to Fund shareholders.

General Risks of Investing in RIF

Limited Operating History

RIF, was organized as a Delaware statutory trust on August 19, 2008 and began its investment operations on June 17, 2009 in connection with the reorganization of five predecessor RMR Funds (the “Old RMR Funds”) that had been in operation for one to six years at the time of those reorganizations.  RIF thus has limited operating history and is therefore subject to all of the risks and uncertainties associated with a new business, including the risk that it will not achieve its investment objective and that the value of any potential investment in RIF Common Shares could decline substantially as a consequence.

Limited Experience of the Advisor

The Advisor has limited experience managing investment companies like the Funds. The Advisor began the substantial majority of its current business activities in December 2003. As of December 31, 2010, the Advisor had $189 million of assets under management, all of which were assets of the Funds. See “Management of the Funds.”

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Concentration of Investments

RIF concentrates its portfolio in the real estate industry. If the value of real estate generally declines, the market value of the securities of those companies whose principal business is real estate is likely to decline. If these declines occur, they are likely to cause a decline in the value of RIF’s investment portfolio and reduce the asset coverage for RIF’s preferred shares and borrowings. From 2007 through 2009, market conditions caused a dramatic decline in the market value of securities associated with real estate. These market conditions continued for a prolonged period, could reoccur, and may result in RIF having to redeem some of its preferred shares, or repay some of its borrowings, in order to satisfy applicable asset coverage tests under the 1940 Act, RIF’s governing documents, the standards of the credit rating agencies which rate RIF’s preferred shares or the terms governing RIF’s borrowings. For example, in 2008, the downturn in the stock and credit markets, as well as in the general global economy, resulted in a significant and dramatic decline in the value of the Old RMR Funds’ portfolio investments, particularly their REIT investments. On several occasions, the Old RMR Funds did not have minimum asset coverage ratios for their preferred shares that are mandated by the rating agencies rating RIF’s preferred shares, RIF’s governing documents and the 1940 Act. As a result of not having these mandatory asset coverage ratios, the Old RMR Funds were forced to suspend dividends to common shareholders for a period of time until they attained these mandatory asset coverage ratios, which they did through mandatory redemptions of a portion of the Old RMR Funds’ preferred securities. Continuing market volatility could lead to not having required asset coverage ratios for RIF preferred shares or borrowings, periods in which RIF may have to suspend the declaration and payment of dividends to common shareholders, redemptions of RIF preferred shares and repayments of RIF borrowings.

To the extent RIF redeems its preferred shares or repay its borrowings, its use of leverage may decline, which may result in reduced returns for RIF’s common shareholders. Further information regarding risks associated with investments in REITs and other real estate related securities is provided below under the risk factor subheading “Real Estate Risks.” To the extent RIF invests in securities of those companies, its income would be reduced as a result.

Economic Climate

Global stock and credit markets have recently experienced significant price volatility, dislocations and liquidity disruptions, which have caused market prices of many stocks to fluctuate substantially and the spreads on prospective debt financings to widen considerably. The debt and equity capital markets in the United States have been negatively impacted by significant write-offs in the financial services sector relating to sub-prime mortgages and the re-pricing of credit risk in the broadly syndicated market, among other things.  These events, along with the deterioration of the housing market, the failure of major financial institutions and the resulting United States federal government actions have led to a decline in general economic conditions, which have materially and adversely impacted the broader financial and credit markets and have reduced the availability of debt and equity capital for the market as a whole and financial firms in particular. These developments could adversely affect the ability of the Fund to borrow for investment purposes, if it chooses to do so, and increase the cost of such borrowings, which would reduce returns to investors.  These developments have

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adversely affected the broader economy, and may continue to do so, which in turn may adversely affect the ability of issuers of securities owned by the Fund to make payments of principal and interest when due, lead to lower credit ratings and increased defaults.  Such developments could, in turn, reduce the value of securities owned by the Fund and adversely affect the NAV of the Fund.  In addition, the prolonged continuation or further deterioration of current market conditions could adversely impact the Fund’s portfolio.

The instability in the financial markets experienced since 2007 has led the U.S. Government and certain foreign governments, at times, to take a number of unprecedented actions designed to support certain financial institutions and segments of the financial markets that have experienced extreme volatility, and in some cases a lack of liquidity, including through direct purchases of equity and debt securities. There can be no assurance that any such actions will not become necessary again in the future. Federal, state, and other governments, their regulatory agencies or self-regulatory organizations may take actions that affect the regulation of the instruments in which the Fund invests, or the issuers of such instruments, in ways that are unforeseeable.  Legislation or regulation may also change the way in which the Fund is regulated. Such legislation or regulation could limit or preclude the Fund’s ability to achieve its investment objective.

The Fund does not know how long the financial markets will continue to be affected by these events and cannot predict the effects of these or similar events in the future on the U.S. economy and securities markets or on the Fund’s portfolio.  The Advisor intends to monitor developments and seek to manage the Fund’s portfolio in a manner consistent with achieving the Fund’s investment objective, but there can be no assurance that it will be successful in doing so and the Advisor may not timely anticipate or manage existing, new or additional risks, contingencies or developments, including regulatory developments and trends in new products and services, in the current or future market environment.

The Dodd-Frank Act

Congress has enacted sweeping financial legislation, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), signed into law by President Obama on July 21, 2010, regarding the operation of banks, private fund managers and other financial institutions, which includes provisions regarding the regulation of derivatives.  Many provisions of the Dodd-Frank Act will be implemented through regulatory rulemakings and similar processes over a period of time.  The impact of the Dodd-Frank Act, and of follow-on regulation, on trading strategies and operations is impossible to predict, and may be adverse.  Practices and areas of operation subject to significant change based on the impact, direct or indirect, of the Dodd-Frank Act and follow-on regulation, may change in manners that are unforeseeable, with uncertain effects.  The Dodd-Frank Act covers a broad range of topics, including, among many others, a reorganization of federal financial regulators; a process designed to ensure financial systematic stability and the resolution of potentially insolvent financial firms; new rules for derivatives (including swaps) trading; the creation of a consumer financial protection watchdog; the registration and regulation of private funds and private fund advisers; the regulation of credit rating agencies; and new federal requirements for residential mortgage loans. There can be no assurance that such legislation or regulation will not have a material adverse effect on the Fund or will not impair the ability of the Fund to achieve its investment objectives.

It is possible that implementation of these measures, or any future measures, could potentially limit or completely restrict the ability of the Fund to use certain derivative instruments, increase the costs of using these instruments or make them less effective.  Limits or restrictions applicable to the counterparties with which the Fund may engage in derivative transactions could also prevent the Fund from using these instruments or affect the pricing or other factors relating to these instruments, or may change availability of certain investments.  There can be no assurance that

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such legislation or regulation will not have a material adverse effect on the Fund or will not impair the ability of the Fund to utilize certain derivatives transactions or achieve its investment objectives.

The implementation of the Dodd-Frank Act could also adversely affect the Fund by increasing transaction and/or regulatory compliance costs.  In addition, greater regulatory scrutiny and the implementation of enhanced and new regulatory requirements may increase the Fund’s exposure to potential liabilities, and in particular liabilities arising from violating any such enhanced and/or new regulatory requirements.  Increased regulatory oversight could also impose administrative burdens on the Fund, including, without limitation, responding to investigations and implementing new policies and procedures. The ultimate impact of the Dodd-Frank Act, and any resulting regulation, is not yet certain and the Fund may be affected by the new legislation and regulation in ways that are currently unforeseeable.

Real Estate Risks

A number of risks are created by RIF’s investment focus on REITs and other real estate related securities, including the following:

Real Estate Cycle Risks.  Real estate values have been historically cyclical. As the general economy grows, demand for real estate increases, and occupancies and rents increase. As occupancies and rents increase, property values increase, and new development occurs. As development occurs, occupancies, rents and property values may decline. Because leases are usually entered into for long periods and development activities often require extended times to complete, the real estate value cycle often lags the general business cycle. Because of this cycle, real estate companies have historically often incurred large swings in their profits and the prices of their securities.

The value of real estate and securities associated with real estate dramatically declined in connection with the financial crisis and recession of 2007-2009. The decline in the values of real estate and real estate-related securities stemmed from a disruption in the financial and credit markets, which originated in and most dramatically effected the sub-prime mortgage sector of the credit market, and had severe consequences for the real estate and credit markets and, to a large degree, the economy in general. These factors created a highly volatile and uncertain business environment for investment companies, such as RIF, and the REITs in which they invest, that focus their investments in real estate and real estate-related securities and significantly increased the risk of investing in RIF. These risks included, but were not limited to, diminished income or operating losses, decreased asset values and impaired financial and mandatory operating ratios, losses of principal and interest on existing loans as a result of borrowers’ inability to either make such payments at all or to make such payments in a timely manner, loss of future revenues from a downturn in the volume of loan originations, securitizations and other directly and indirectly related business activity, a loss of collateral value, and slowdown in the housing and related industries, and in the economy generally. These factors and others resulted in poor financial results, substantial write-downs of the values of assets, volatile and declining stock prices, stricter lending standards, and increased risk of bankruptcy and business failure generally for companies with exposure to real estate-related investments and the credit markets in general. Since 2009, the value of real estate and securities associated with real estate has gradually begun to recover, however this recovery remains fragile and uncertain and there can be no assurance that this recovery will be sustained or that the value of real estate and securities associated with real estate will not again dramatically decline giving rise again to the risks discussed above.

Additionally, the residential housing sector in the United States has been under considerable pressure during the past three years with home prices nationwide down significantly on average.  Residential mortgage delinquencies and foreclosures have increased over this time and have, in turn, led to widespread selling in the mortgage-related market and put downward pressure on the prices of many securities.  In addition, the commercial real estate sector in the United States has been under pressure with prices down significantly on average.  Accordingly, instability in the credit markets may adversely

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affect the price at which REITs and real estate funds can sell real estate because purchasers may not be able to obtain financing on attractive terms or at all. These developments also may adversely affect the broader economy, which in turn may adversely affect the real estate markets. Such developments could, in turn, reduce returns from REITs and real estate funds or reduce the number of REITs and real estate funds brought to market, thereby reducing the Fund’s investment opportunities.  Properties in which REITs and real estate funds invest may suffer losses due to declining rental income and higher vacancy rates, which may reduce distributions to the Fund and reduce the value of the underlying properties.

Property Type Risks.  Many REITs focus on particular types of properties or properties which are especially suited for certain uses, and those REITs are affected by the risks which impact the users of their properties. A portion of RIF’s portfolio investments may be invested in REITs that focus on such particular types of properties and consequently be subject to the underlying risks associated with investing in such properties. For example, RIF has invested in:

·                  REITs that own healthcare facilities, age restricted apartments, congregate care properties, assisted living facilities and nursing homes. The physical characteristics of these properties and their operations are highly regulated, and those regulations often require capital expenditures or restrict the profits realizable from these properties. Some of these properties are also highly dependent upon Medicare and Medicaid payments, which are subject to changes in governmental budgets and policies. These properties may experience losses if their tenants receive lower Medicare or Medicaid rates. Additional risks with respect to these types of properties are described under the sub-heading “Patient Protection and Affordable Care Act”.

·                  REITs that own hotels and resorts. These properties usually require higher levels of capital expenditures than other types of commercial real estate. The financial performance of these properties and their values are highly sensitive to general economic conditions and travel industry changes, and the recent economic downturn has had a disproportionately negative impact on hospitality REITs.

·                  REITs that own, manage and operate shopping centers or other retail properties. The values of these properties are vulnerable to changes in consumer spending practices and to bankruptcies of large retail firms and may suffer vacancies and rejected leases as a result.

·                  REITs that own, manage and operate rental housing such as apartment buildings. Such properties may decline in value whenever mortgage financing for single family homes becomes available at low rates or when there is a slowing of job creation and household formations.

·                  REITs that focus on investing in warehouse and industrial properties. The values of these properties may be adversely affected by changing patterns of global or regional trade.

·                  REITs that own or operate office buildings. These properties may experience increased vacancies and losses if certain types of tenants, such as call centers, transfer their operations to lower wage locations, including outside the United States.

·                  REITs that own, manage and operate properties that are leased on a net basis (where the tenant agrees to pay a monthly base rent as well as property taxes, insurance, utilities and other operating expenses) to single tenants. The value of these properties will vary with the financial strength or business prospects of their tenants.

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·                  REITs that own, manage and operate other types of specialized real estate, including self storage facilities, manufactured homes and entertainment related facilities. The values of these properties are affected by changes in consumer preferences and general economic conditions.

Patient Protection and Affordable Care Act.  In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act and an associated reconciliation bill (the “Health Care Reform Law”).  The Health Care Reform Law is a sweeping law intended to broaden access to health insurance through, among other things, an individual mandate to obtain health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.  The impact on the healthcare industry, including REITs that own healthcare facilities, congregate care properties, assisted living facilities and nursing homes, of the Health Care Reform Law is extensive and includes, among other things, having the U.S. federal government assume a larger role in the healthcare system, expanding healthcare coverage of United States citizens, mandating basic healthcare benefits and changing the way healthcare is financed by both private and governmental insurers.  Many of the changes in the rate setting mechanisms for the Medicare and Medicaid programs that specifically direct reductions in reimbursements for specific procedures are coupled with requirements prohibiting reductions in the quality and quantity of the care provided; it can be expected that as these changes are implemented, the reimbursements for certain companies who offer for sale products or services that are used in treating Medicare and Medicaid program beneficiaries will drop, affecting their financial condition, the value of their securities and their ability to meet their obligations to creditors and other third parties.  Additionally, substantial new provisions affecting compliance have also been enacted, which may require healthcare companies to modify their business practices in various manners.  Elements of this legislation, such as comparative effectiveness research, an independent payment advisory board, payment system reforms, including shared savings pilots, episode of care reimbursement mechanisms, and bundled payment mechanisms and other provisions, could meaningfully change the way healthcare is developed and delivered, and may materially impact numerous aspects of the healthcare industry, which may in turn materially impact the returns available to those who invest in or provide financing to the healthcare industry, such as REITs that own healthcare facilities, congregate care properties, assisted living facilities and nursing homes.

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Location Risks.  Some REITs focus on particular geographic locations. The value of investments in these REITs and these REITs’ abilities to pay dividends may decline if economic changes occur in the areas in which they focus. For example, the value of REIT investments in some parts of the U.S. Midwest, such as the Detroit area, have recently declined as a result of losses and job cuts in the U.S. auto industry in that area.

Size Risks.  REITs tend to be small or medium sized companies compared to companies listed in the U.S. equity markets as a whole. Most REITs also use debt leverage to finance their businesses. This combination of smaller equity capitalization and debt leverage may mean that securities issued by REITs are more volatile than securities issued by larger, less relatively leveraged companies. This can adversely affect RIF’s financial performance, especially if RIF purchases or sells large amounts of an individual security within a short time.

Climate Change Risk.  Climate change, and its regulation, may affect the value of the Fund’s investments, particularly the Fund’s investments in REITs or other real estate companies that are concentrated in a particular geographic area. The Fund’s current evaluation is that the near term effects of climate change and climate change regulation on the Fund’s investments are not material, but the Fund cannot predict the long term impacts on the Fund or its investments from climate change or its regulation. The ongoing political focus on climate change has resulted in various treaties, laws and regulations which are intended to limit carbon emissions. The Fund believes these laws being enacted or proposed may cause energy costs at properties owned by the REITs or other real estate companies in which the Fund invests to increase. The Fund does not expect the direct impact of such increases to be material to the value of its investments, because the increased costs either would be the responsibility of tenants or operators of properties owned by the REITs or other real estate companies in which the Fund invests, or, in the longer term, passed through and paid by the customers of such properties. Although the Fund does not believe it is likely in the foreseeable future, laws enacted to mitigate climate change may make some buildings of property owners obsolete or cause such owners to make material investments in their properties, which could materially and adversely affect the value of the Fund’s investments in REITs or other real estate companies owning such properties. Climate change may also have indirect effects on property owners by increasing the cost of (or making unavailable) property insurance. Moreover, compliance with new laws or regulations related to climate change, including compliance with “green” building codes, may require property owners to make improvements to existing properties or increase taxes and fees assessed on their properties. There can be no assurance that climate change will not have a material adverse effect on the properties, operations or business of the Fund’s investments in REITs and other real estate companies.

The Fund cannot predict with certainty whether global warming or cooling is occurring and, if so, at what rate. However, the physical effects of climate change could have a material adverse effect on the properties, operations and business of the Fund’s portfolio investments in REITs and other real estate companies in certain geographical locations. To the extent climate change causes changes in weather patterns, properties in these markets could experience increases in storm intensity, flooding and rising sea-levels. Over time, these conditions could result in declining demand for the buildings owned by the REITs and other real estate companies in which the Fund invests, or the inability of such REITs or other real estate companies to operate such buildings at all.

Other Real Estate Risks.  REITs and real estate funds are subject to risks associated with the ownership of real estate, including terrorist attacks, war or other acts that destroy real property (in addition to market risks, such as the recent events described above).  Some REITs and real estate funds may invest in a limited number of properties, in a narrow geographic area, or in a single property type, which increases the risk that such REIT or real estate fund could be unfavorably affected by the poor performance of a single investment or investment type.  These companies are also sensitive to factors such as changes in real estate values and property taxes, interest rates, cash flow of underlying real estate assets, supply and demand, and the management skill and creditworthiness of the issuer.  Borrowers could default on or sell investments that a REIT or a real estate fund holds, which could reduce the cash flow needed to make distributions to investors.  In addition, REITs may also be affected by tax and regulatory requirements in that a REIT may not qualify for preferential tax treatments or exemptions.  REITs require specialized management and pay management expenses.  Securities issued by private partnerships in real estate may be more illiquid than securities issued by other investment funds generally, because the partnerships’ underlying real estate investments may tend to be less liquid than other types of investments.

Other special risks which affect real estate ownership and operations and such risks are not shared with the securities market generally. For example:

·                  REITs may be required to incur significant capital costs with little economic return on their investments by laws concerning public access or public safety.

·                  Environmental laws may make REITs responsible for clean up costs at properties owned by the REITs even if the environmental damage was not caused by the REITs.

·                  Property taxes and property insurance costs have recently increased materially in some geographic areas and for certain property types. If REITs are unable to pass those cost increases to their tenants, these increases may result in reduced income or greater losses and reduced valuations for affected properties and their REIT owners.

Fund Distributions

In 2008, the downturn in the stock and credit markets, as well as in the general global economy, resulted in a significant and dramatic decline in the value of the portfolio investments of the Old RMR Funds, particularly their REIT investments. On several occasions, the Old RMR Funds did not have the minimum asset coverage ratios for their preferred shares that are mandated by the rating agencies rating the preferred shares, the Old RMR Funds’ (and RIF’s) governing documents and the 1940 Act. As a result of not having these mandatory asset coverage ratios, the Old RMR Funds were forced to suspend dividends to common shareholders for a period of time until they attained these mandatory asset coverage ratios, which they did through mandatory redemptions of a portion of the Old RMR Funds’ preferred securities. Continuing market volatility could lead to not having the required asset coverage ratios for RIF preferred shares or borrowings, periods in which RIF may have to suspend the declaration and payment of dividends to common shareholders, redemptions of RIF preferred shares and repayments of RIF borrowings.

The RIF Board periodically evaluates, and will continue to periodically evaluate, its common share distribution policy and may, in the future, change its common share distribution policy. Distributions on RIF Common Shares are payable to the extent, at the rate and in the form declared by each RIF’s Board and will be determined based on market conditions and other factors the RIF Board deems relevant. There can be no assurance that after the Reorganization, RIF will pay any

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specific amount of regular distribution in any specific form, pay any regular distribution at all, that RIF’s regular quarterly distributions will continue, or that any annual capital gains distributions will be paid.

Payment Restrictions