The RREEF Funds
101 California Street
San Francisco, California 94111-5853
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 13, 1997
To RREEF Shareholders:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders of the
RREEF Real Estate Securities Fund, a portfolio of RREEF Securities Fund, Inc.
(the "RREEF Fund") will be held at American Century Tower I, 4500 Main Street,
Kansas City, Missouri, on June 13, 1997, at 10 a.m. Central time for the
following purposes:
ITEM 1 To consider and act upon a proposal to approve an Agreement and Plan
of Merger and the transaction contemplated thereby, specifically the merger of
the RREEF Fund with and into the American Century Real Estate Fund, a portfolio
of American Century Capital Portfolios, Inc.
ITEM 2 To transact such other business as may properly come before the
Special Meeting or any adjournment(s) thereof.
The proposed merger and related matters are described in the attached
Prospectus/Proxy Statement. Appendix I to the Prospectus/Proxy Statement is a
copy of the Agreement and Plan of Merger.
Shareholders of record as of the close of business on April 25, 1997, are
entitled to notice of, and to vote at, the Special Meeting or any adjournment(s)
thereof.
PLEASE EXECUTE YOUR PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE RETURN YOUR PROXY CARD EVEN IF YOU ARE PLANNING TO ATTEND THE
MEETING. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. PROXIES MAY BE
REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING A WRITTEN NOTICE OF
REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE MEETING AND
VOTING IN PERSON.
Kim G. Redding
President
May 21, 1997
PROSPECTUS/PROXY STATEMENT
DATED MAY 21, 1997
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
American Century Investments
4500 Main Street
P.O. Box 419200
Kansas City, Missouri 64141-6200
(800) 345-2021
RREEF SECURITIES FUND, INC.
The RREEF Funds
101 California Street
San Francisco, California 94111-5853
This Prospectus/Proxy Statement is furnished in connection with the
solicitation of votes by the Board of Directors of the RREEF Real Estate
Securities Fund (the "RREEF Fund") in connection with a Special Meeting of
Shareholders to be held on June 13, 1997, at 10 a.m. (Central time) at American
Century Tower I, 4500 Main Street, Kansas City, Missouri.
This prospectus/proxy statement is intended to give you the information you
need to consider and vote on the proposed merger of the RREEF Fund with and into
the American Century Real Estate Fund (the "ACRE Fund") pursuant to an Agreement
and Plan of Merger that can be found in Appendix I to this document. Both funds
are open-end management investment companies. Much of this information is
required by rules of the Securities and Exchange Commission; some of it is
highly technical. If you have any questions about these materials or how to vote
your shares, please call Peter J. Broccolo, Vice President, RREEF Client
Relations, at (312) 266-9300.
The ACRE Fund is a newly created series of American Century Capital
Portfolios, Inc. that currently has no assets. It currently possesses
substantially identical investment objectives and investment policies as the
RREEF Fund. It was created for the purpose of facilitating the addition of the
RREEF Fund to the American Century Investments mutual fund family. Both funds
are registered with the SEC. Copies of the Prospectuses and Statement of
Additional Information of both funds are included with this Prospectus/Proxy
Statement.
This Prospectus/Proxy Statement constitutes the Proxy Statement of the
RREEF Fund for the Special Meeting of Shareholders and a prospectus for the
Investor Class shares of the ACRE Fund that are to be issued in connection with
the merger. It is expected to be first sent to shareholders on or about May 21,
1997.
LIKE ALL MUTUAL FUND SHARES, THE SECURITIES OF THE ACRE FUND HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Proxy Statement Prospectus/Proxy Statement 1
TABLE OF CONTENTS
PROSPECTUS/PROXY STATEMENT.....................................................1
IMPORTANT INFORMATION YOU SHOULD CONSIDER (Q&A)................................3
TRANSACTION AND OPERATING EXPENSE INFORMATION..................................6
INFORMATION RELATING TO THE PROPOSED MERGER....................................7
ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION..........................9
Federal Income Tax Consequences...........................................9
Capitalization............................................................9
Information about the ACRE Fund...........................................9
Information about the RREEF Fund.........................................10
SHAREHOLDER TRANSACTIONS AND SERVICES.........................................12
Classes..................................................................12
Sales Loads and other Redemption Fees....................................12
Purchase Policies........................................................12
Redemption Policies......................................................13
Share Exchanges..........................................................14
Open Orders..............................................................14
Responsibility for Telephone Instructions................................14
Automated Information Line and Online Access.............................15
Distributions............................................................15
INFORMATION RELATING TO VOTING MATTERS........................................16
General Information......................................................16
Voting and Revocation of Proxies.........................................16
Record Date..............................................................16
Quorum...................................................................16
Shareholder Vote Required................................................16
Cost of Proxy Solicitation...............................................17
Certain RREEF Fund Shareholders..........................................17
Appraisal Rights.........................................................17
Annual Meetings..........................................................17
ADDITIONAL INFORMATION........................................................18
Where to Find Information Incorporated by Reference......................18
Litigation...............................................................18
Financial Statements.....................................................18
Pro Forma Financial Statements...........................................18
Other Business...........................................................18
Shareholder Inquiries....................................................18
APPENDIX I--AGREEMENT AND PLAN OF MERGER
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT
AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE RREEF FUND OR AMERICAN CENTURY CAPITAL PORTFOLIOS.
Proxy Statement Table of Contents 2
IMPORTANT INFORMATION YOU SHOULD CONSIDER
The following Q&A is a brief summary of some of the key features of the
proposed merger that may be important to you. As is true with all summaries,
however, perhaps not all of the information or topics that you may think are
important will be included below. As a result, this Q&A is qualified in its
entirety by the more detailed information contained elsewhere in this
Prospectus/Proxy Statement, or incorporated into this Prospectus/Proxy
Statement, or attached as an Appendix. Accordingly, please read all the enclosed
proxy materials before voting. Please remember to vote your shares as soon as
possible.
WHAT IS THE PURPOSE OF THE UPCOMING MEETING?
The Board of Directors has recommended merging the RREEF Fund with and into
the ACRE Fund. The merger requires shareholder approval. As a result, the Board
is soliciting your proxy for a special shareholder meeting to consider the
merger.
WHAT IS THE ACRE FUND? WHY IS THE MERGER BEING PROPOSED?
The ACRE Fund is a newly-created series of American Century Capital
Portfolios, Inc. It currently has no assets. It possesses substantially
identical investment objectives and investment policies as the RREEF Fund. It
was created for the purpose of establishing an entity into which the RREEF Fund
could merge. The merger is being proposed so that the RREEF Fund will become, in
effect, a part of the American Century Investments mutual fund family. The ACRE
Fund will be a "successor" to the RREEF Fund, which means the performance record
of the RREEF Fund, as well as its financial statements, will continue in the
ACRE Fund.
WHO IS AMERICAN CENTURY INVESTMENTS?
American Century Investments is a Kansas City, Missouri-based mutual fund
complex consisting of nearly 70 funds. It is the fund group that was created
after the acquisition of The Benham Group of mutual funds by Twentieth Century
Mutual Funds. The complex totals more than $50 billion in assets under
management, and serves over 2 million shareholders. It is currently the fourth
largest no-load mutual fund complex in the United States.
WHY DID THE RREEF BOARD OF DIRECTORS APPROVE THE MERGER?
While there were many reasons, a primary reason was to improve the level of
shareholder service available to fund shareholders. The Directors specifically
considered the benefits that will be available to fund shareholders as a result
of being part of a leading mutual fund family, such as the availability of
increased and expanded telephone services, audio response units, enhanced
shareholder statements, extended customer service hours, and improved
shareholder communications, such as fund newsletters. In addition, the Directors
considered the newly opened universe of funds that would be directly available
to RREEF Fund shareholders. The Directors also considered the much greater
network of distribution that would be available to the fund as a part of the
American Century Investments family. With regard to the fund itself, the
Directors considered that the ACRE Fund would have substantially identical
investment policies and strategies as the existing fund, the transaction would
be tax-free to existing shareholders, there would be no dilution of their
current interests, and, importantly, the same advisor, RREEF Real Estate
Advisers L.P., would still be making the day-to-day investment decisions for the
fund. The Board was advised that RREEF Real Estate Securities Advisers was
unwilling to continue to absorb expenses in its current relationship with the
RREEF Fund. Considering all these and other factors, the Board determined the
merger was in the best interests of the fund and its shareholders. The ACRE Fund
Board of Directors also came to the same conclusion regarding the ACRE Fund.
WHAT WILL SHAREHOLDERS RECEIVE IF THE MERGER IS APPROVED?
You will receive the same number of Investor Class shares of the ACRE Fund
that you now hold in the RREEF Fund. The value of the shares you receive will be
the same as the value of your holdings immediately prior to the merger.
Importantly, what you will also receive are shares of an American Century fund,
which will make the rest of the American Century fund family directly available
to you.
Proxy Statement Important Information You Should Consider 3
WHAT ARE "INVESTOR CLASS" SHARES?
The ACRE Fund has three classes of shares authorized for issuance: the
Investor Class, the Institutional Class and the Advisor Class. Investor Class
shares are sold without any commissions or other sales charges and are intended
for purchase by retail, no-load investors. The other classes are primarily
intended for purchase by institutional investors through institutional
distribution channels, and will not be offered until after the merger.
WILL THE MERGER CAUSE RREEF FUND SHAREHOLDERS TO REALIZE INCOME OR CAPITAL
GAINS FOR TAX PURPOSES?
The exchange of shares in the merger will be tax-free for federal income
tax purposes. We will obtain a legal opinion from Dechert Price & Rhoads, a law
firm that specializes in this area, confirming that the merger will not be a
taxable event for you. Your tax basis and holding period for your shares will be
unchanged. However, the distribution of ordinary income earned and net capital
gains immediately prior to the merger will be taxable to you to the same extent
ordinary distributions are currently taxable to you.
HOW DO THE FEE STRUCTURE AND TOTAL EXPENSE RATIO OF THE ACRE FUND COMPARE
TO THE RREEF FUND?
In the RREEF Fund, the Fund (and hence, its shareholders) pay separate fees
for investment advisory, administrative, custodial and transfer agency services.
In addition, there are other expenses, such as the cost of annual audits and
legal fees, that are incurred by the Fund that are also paid for by the Fund.
The aggregate total of all the fees that the Fund can incur is currently capped
at a 1.00% annual fee (although, without the cap, actual fund expenses would be
much higher). In contrast, the ACRE Fund has an "all-inclusive" management fee.
For the Investor Class of shares (the shares RREEF shareholders will receive if
the merger is approved), the all inclusive fee will be a per annum fee of 1.20%.
In exchange for the all inclusive fee, American Century Investment Management,
Inc. ("ACIM") pays for all expenses of the fund except for taxes, interest,
brokerage commissions, the fees and expenses of outside directors, and
extraordinary items. It is true that the fee for the ACRE Fund will be higher
than the current fee of the RREEF Fund. As more fully detailed under the heading
"Board Consideration" on page 7, however, the Directors have concluded that in
light of the fees and expenses charged by the fund's competitors, the increased
level of service that fund shareholders will have available, the lower account
minimum to be charged on the fund and other factors, the increased fee is fair
and reasonable to fund shareholders.
WILL THE ACRE FUND BE RISKIER THAN THE RREEF FUND?
As previously noted, the ACRE Fund has adopted investment objectives and
policies that are substantially identical to the current objectives and policies
of the RREEF Fund. Long-term capital appreciation, with income as a secondary
consideration, is the goal of both funds. Interests in real estate investment
trusts, and stocks of companies that are principally engaged in the real estate
business, are the primary investments of both funds. As a result, the risk
profiles of the two funds should be essentially the same. As a current investor
in the RREEF Fund, you likely are familiar with the way the fund operates and
the risk that comes with it. The ACRE Fund's strategy and risks are summarized
on pages 6 to 10 of the enclosed ACRE Fund prospectus.
WHEN WILL THE MEETING BE HELD? WHO IS ENTITLED TO VOTE?
The meeting will be held on Friday, June 13, 1997, at 10 a.m. at American
Century Tower I, 4500 Main Street, Kansas City, Missouri. Please note that this
will be a business meeting only. There will be no presentations about the fund.
The record date for the meeting is April 25, 1997. All shareholders who own
shares on that date are entitled to vote on the merger.
IF A SHAREHOLDER RETURNS A PROXY NOW, CAN THAT VOTE BE CHANGED PRIOR TO THE
MEETING?
Yes. You can change your vote at any time by writing to us, or by sending
us another proxy, or by attending the meeting and voting in person. In order to
help insure we can hold the meeting, we ask that you please return the enclosed
proxy at your earliest convenience. Doing so will help us achieve a quorum for
the meeting.
HOW DO SHAREHOLDERS VOTE THEIR SHARES?
You can vote by mail or in person at the Special Meeting. The fastest and
most convenient way is to complete, sign and mail the enclosed proxy voting card
to us in the enclosed postage-paid envelope. We will vote your shares EXACTLY as
you tell us. If you simply sign the card and return it, we will follow the
recommendation of the Board of Directors and vote it "FOR" the merger. If you
have any questions regarding the enclosed proxy statement or need assistance in
voting your shares, please call Peter J. Broccolo, Vice President, RREEF Client
Relations, at (312) 266-9300.
Proxy Statement Important Information You Should Consider 4
WHEN WILL THE MERGER TAKE PLACE?
Subject to receiving shareholder approval, the merger is scheduled to take
place on June 13, 1997. The RREEF Fund will be merged into the ACRE Fund, and
your shares of the RREEF Fund will be converted into the same number of ACRE
Fund Investor Class shares. The value of your shares will not change as a result
of the merger.
HOW WILL THE DAY-TO-DAY MANAGEMENT OF THE ACRE FUND BE HANDLED?
The ACRE Fund will be managed in the same way, on a day-to-day basis, as it
is now. ACIM will serve as investment manager to the Fund. However, RREEF Real
Estate Securities Advisers, the advisor to the RREEF Fund, will serve as
subadvisor for the ACRE Fund, and carry out the day-to-day management of the
funds' portfolio, just as it has since the RREEF Fund began operations.
HOW WILL THE DISTRIBUTION, PURCHASE AND REDEMPTION PROCEDURES AND EXCHANGE
RIGHTS CHANGE WITH THE ACRE FUND?
The ACRE Fund will have the same distribution, purchase and exchange
procedures as other American Century Investments funds. The distribution
policies remain unchanged. Purchases can be made by mail or by telephone or
electronically, if you have elected such services. The minimum initial purchase
will now be $2500 (waived if you establish a $50 per month automatic
investment), as opposed to the current $50,000 RREEF Fund minimum. Redemptions
can be made by mail, or by telephone if you have elected that service. A big
change will be that as a part of the American Century family, you will now have
exchange rights into other American Century funds. For a comparison of the
distribution, purchase and redemption procedures and exchange rights of each
fund, please review the discussion that begins on page 12 under the heading
"Shareholder Transactions and Services."
WHERE CAN SHAREHOLDERS GET MORE INFORMATION ABOUT THE ACRE FUND AND THE
RREEF FUND?
Both funds are registered with the Securities and Exchange Commission. As a
result, each has prospectuses and statements of additional information with even
more detailed information than is contained in this document. A copy of each
fund's Prospectus and Statement of Additional Information and the RREEF Fund's
most recent Annual Report accompanies this Prospectus/Proxy Statement.
Proxy Statement Important Information You Should Consider 5
<TABLE>
<CAPTION>
TRANSACTION AND OPERATING EXPENSE INFORMATION
The table below compares shareholder transaction expenses and annual fund
operating expenses of the RREEF Fund and the Investor Class of the ACRE Fund.
RREEF Investor Class
Fund ACRE Fund
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C> <C>
Maximum Sales Load Imposed on Purchases none none
Maximum Sales Load Imposed on Reinvested Dividends none none
Deferred Sales Load none none
Redemption Fee none* none**
Exchange Fee none none
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets):
Management Fees 0.75% 1.20%
12b-1 Fees none none
Other Expenses * (after fee waivers and/or
expense reimbursements) 0.25% 0.00%
------ ------
Total Fund Operating Expenses (after fee waivers
and/or expense reimbursements) 1.00% 1.20%
* A fee of 1% of the assets redeemed is charged on redemptions made within one
year of purchase. ** Redemption proceeds sent by wire are subject to a $10
processing fee.
EXAMPLE:
An investor would pay the following expenses on a 1 year $ 10 $ 12
$1,000 investment, assuming a 5% annual return 3 years 32 38
and redemption at the end of the following periods: 5 years 55 66
10 years 122 145
</TABLE>
Proxy Statement Transaction and Operating Expense Information 6
INFORMATION RELATING TO THE PROPOSED MERGER
The RREEF Fund has entered into an agreement whereby it will be merged with
and into the ACRE Fund. A brief summary of the Agreement and Plan of Merger
follows below. For more detailed information, please refer to the Agreement and
Plan of Merger, a copy of which is attached as Appendix I to this
Prospectus/Proxy Statement.
DESCRIPTION OF THE AGREEMENT AND PLAN OF MERGER
The Agreement and Plan of Merger provides that the RREEF Fund will be
merged with and into the ACRE Fund. In the merger shares of the RREEF Fund will
be converted into an identical number of ACRE Fund Investor Class shares, so
that the holders of shares of the RREEF Fund will hold the same number of
Investor Class shares of the ACRE Fund immediately after the merger as they held
in the RREEF Fund immediately prior to the merger. The net asset value of the
shares will not be affected by the merger.
The Agreement and Plan of Merger provides that the RREEF Fund will declare
a dividend or dividends prior to the merger which, together with all previous
dividends, will have the effect of distributing to the shareholders of the RREEF
Fund all undistributed ordinary income earned and net capital gains realized up
to and including the effective time of the merger. The distribution is necessary
to ensure that the merger will not create tax consequences to the fund. The
distribution to shareholders generally will be taxable to the extent ordinary
distributions are taxable to shareholders.
The merger is subject to a number of conditions, including approval by
RREEF Fund shareholders of the Agreement and Plan of Merger, the receipt of
certain legal opinions described in the Agreement and Plan of Merger and the
parties' performance in all material respects of their agreements and
undertakings in the Agreement and Plan of Merger. Assuming the conditions
specified in the Agreement and Plan of Merger are met, the merger is expected to
occur on June 13, 1997.
The expenses of the ACRE Fund and the RREEF Fund incurred in connection
with the merger will be paid by ACIM.
Under the Agreement, up until the time of the merger, both funds, by mutual
consent, can agree to not merge. The Agreement provides further that the
Agreement may be amended by written agreement of the funds, except that after
the approval of the Agreement by the RREEF Fund shareholders, no amendment can
be made that would have the effect of changing the number of ACRE Fund shares to
be issued to the RREEF Fund shareholders to their detriment without the further
approval of those shareholders. The Agreement also provides that either party
may waive any breach by the other party or the failure to satisfy any of the
conditions to its obligations.
BOARD CONSIDERATION
The Board of Directors of the RREEF Fund gave its final approval to the
merger at a meeting held April 16, 1997. Materials regarding the proposed
transaction, and about American Century Investments, had been provided to the
Board prior to the meeting. At the meeting the Board heard presentations both
from the management of the fund, as well as representatives of American Century
Investments. In coming to the decision to approve the merger, the Board
considered a number of factors, including the history of asset growth of the
fund, its current level of shareholder service, and the shareholder service that
could be provided by American Century Investments. The Board considered the
proposed investment management and subadvisory relationship, the performance of
the fund, and the relative performance and expense levels of the fund's major
competitors. The Board also considered the historic level of losses to RREEF
Real Estate Securities Advisers L.P. incurred in connection with advising the
fund. For the fund's fiscal year ended October 31, 1996, RREEF Real Estate
Securities Advisers absorbed $288,760 of fund expenses. The Board was advised
that RREEF Real Estate Securities Advisers was unwilling to continue to absorb
expenses in its current relationship with the RREEF Fund.
Proxy Statement Information Relating to the Proposed Merger 7
With regard to fees, the Board specifically acknowledged that the fee for
the ACRE Fund is higher than the current expense cap for the RREEF Fund. The
expense cap is, in effect, the total expense ratio for the RREEF Fund, as its
actual expenses have been, at least historically, substantially higher than the
expense cap, with the difference being absorbed by the fund's advisor. It was
noted, however, that the expense cap was implemented voluntarily by RREEF, in
part upon the expectation that fund assets would increase at a faster rate than
actually has occurred. In the absence of this voluntary cap, the total expense
ratio for the RREEF Fund for the fiscal year ended October 31, 1996, would have
been 6.83%. The Board was advised that, while the fund's current expense cap of
1% was voluntary, with no obligation on the part of RREEF Real Estate Securities
Advisers to extend it, the 1.2% total expense limit for the ACRE Fund was
established by contract, and accordingly would not go higher. In light of the
relative fees and expenses of the RREEF Fund's competitors, as well as the
greatly enhanced level of shareholder service that will be available and the
significantly lower minimum initial investment for the ACRE Fund, the Board
believes the fee level is fair and reasonable to RREEF Fund shareholders.
Based upon the factors considered, the Board approved the merger. Among the
reasons for the approval, the Board believes that the merger will improve the
level of shareholder service available to fund shareholders. The Directors
specifically considered the benefits that will be available to fund shareholders
as a result of being part of the American Century mutual fund family, such as
the availability of increased and expanded telephone services, audio response
units, enhanced shareholder statements, extended customer service hours, and
improved shareholder communications, such as fund newsletters. In addition, the
Directors believe that shareholders will benefit from having the nearly 70 funds
in the American Century family directly available to them. The Directors also
considered the much greater network of distribution that would be available to
the fund as a part of the American Century Investments family. With regard to
the fund itself, the directors considered that the ACRE Fund would have
substantially identical investment policies and strategies as the existing fund,
the transaction would be tax-free to existing shareholders, there would be no
dilution of their current interests, and, importantly, the same advisor, RREEF
Real Estate Securities Advisers, would still be making the day-to-day investment
decisions for the fund.
Considering all the factors set forth above, the Board determined the
merger was in the best interests of the fund and its shareholders and directed
that the Agreement and Plan of Merger be submitted to shareholders for approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL OF THE AGREEMENT AND PLAN OF MERGER.
If the shareholders do not approve the Agreement and Plan of Merger, or if
for any other reason the merger is not consummated, the RREEF Fund will continue
operations in its current form. The Board of Directors may consider other
courses of action, including other possible transactions, at that time.
At meetings held on February 15, 1997, and March 26, 1997, American Century
Capital Portfolios' Board of Directors considered the proposed merger. Based
upon its evaluation of the relevant information provided to them, and in light
of their fiduciary duties under federal and state law, the Directors unanimously
determined that the proposed merger is in the best interests of the ACRE Fund.
Proxy Statement Information Relating to the Proposed Merger 8
ADDITIONAL INFORMATION ABOUT
THE PROPOSED TRANSACTION
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the merger is subject to the condition that we receive a
legal opinion from Dechert Price & Rhoads to the effect that for federal income
tax purposes (i) no gain or loss will be recognized by you or the RREEF Fund,
(ii) your basis in the ACRE Fund shares you receive will be the same as your
basis in the RREEF Fund shares held by you immediately prior to the merger, and
(iii) your holding period for the ACRE Fund shares will include your holding
period for your RREEF Fund shares.
We have not sought a tax ruling from the Internal Revenue Service, but are
relying upon the opinion of counsel referred to above. That opinion is not
binding on the IRS and does not preclude them from taking a contrary position.
The opinion from Dechert Price & Rhoads does not cover state or local taxes, and
you should consult your own advisers concerning potential tax consequences.
CAPITALIZATION
The following sets forth as of April 30, 1997, the capitalization of the
RREEF Fund. Since the ACRE Fund has no assets or shares outstanding, nor will it
prior to the merger, the capitalization of the ACRE Fund immediately after the
merger will be the same as the capitalization of the RREEF Fund immediately
prior to the merger. Of course, the capitalization of the RREEF Fund immediately
prior to the merger will be different than appears in the table as a result of
market fluctuations and daily purchase and redemption activities in the RREEF
Fund.
RREEF Fund $20,570,435.47
INFORMATION ABOUT THE ACRE FUND
Complete information about the ACRE Fund is contained in the ACRE Fund
Prospectus included with this Prospectus/Proxy Statement. The content of that
Prospectus is incorporated herein by reference. Below is a list of types of
information about the ACRE Fund and the pages in the ACRE Fund Prospectus where
the information can be found.
<TABLE>
INFORMATION ABOUT THE CAN BE FOUND IN THE
FOLLOWING ITEMS: FOLLOWING PLACES:
<S> <C>
o Organization and proposed operation of the ACRE o See Further Information About American Century,
Fund, including a description of the investment page 22, Information Regarding the Fund, pages 6-10,
objectives and policies of the ACRE Fund, and how the Investment Policies of the Fund, pages 6-7 and Other
ACRE Fund seeks to achieve such objectives Investment Practices, Their Characteristics and Risks,
pages 8-10 of the ACRE Fund prospectus
o A description of the individuals who will be managing o See Management - Investment Management, pages
the ACRE Fund, the services the investment manager 20-21 of the ACRE Fund prospectus
and subadvisor will provide, and their fees
o The ACRE Fund's policy with respect to dividends and o See Distributions, page 18-19 and Taxes, pages 19-20
distributions and tax consequences of an investment of the ACRE Fund prospectus
in the ACRE Fund
o An explanation of "net asset value" of your shares o See When Share Price Is Determined, page 18, and
How Share Price is Determined, page 18 of the ACRE
Fund prospectus
o Information about the ACRE Fund transaction and o See Transaction and Operating Expense Table, page 4
operating expenses of the ACRE Fund prospectus
Proxy Statement Additional Information About the Proposed Transaction 9
INFORMATION ABOUT THE CAN BE FOUND IN THE
FOLLOWING ITEMS: FOLLOWING PLACES:
o Information about distribution of the ACRE Fund's o See Distribution of Fund Shares, page 22 of the ACRE
shares, such as the name of the Fund's transfer agent Fund prospectus and Transfer and Administrative
and dividend paying agent, distributor of fund shares, Services, pages 21-22 of the ACRE Fund prospectus
and charges that may be imposed by broker-dealers
o The fund's minimum initial and subsequent o See How to Open An Account, pages 11-12 and
investments Subsequent Investments, page 12 of the ACRE Fund
prospectus
o Information regarding the ACRE Fund's classes of o See Further Information About American Century,
securities, description of 12b-1 Plan and discussion of page 22 of the ACRE Fund prospectus
voting rights and restrictions of ACRE Fund shareholders
o Procedures for redeeming shares, refusals to honor o See How To Redeem Shares, pages 13-14, Special
redemption requests and involuntary redemption of Requirements for Large Redemptions, page 14 and
shares Redemption of Shares in Low-Balance Accounts, page
14 of the ACRE Fund prospectus
INFORMATION ABOUT THE RREEF FUND
Complete information about the RREEF Fund is contained in the RREEF Fund
Prospectus included with this Prospectus/Proxy Statement. The content of that
prospectus is incorporated herein by reference. Below is a list of types of
information about the RREEF Fund and the pages in the RREEF Fund Prospectus
where the information can be found.
INFORMATION ABOUT THE CAN BE FOUND IN THE
FOLLOWING ITEMS: FOLLOWING PLACES:
o Condensed financial information about the RREEF o See Financial Highlights, page 4 of the RREEF Fund
Fund prospectus
o Organization and operation of the RREEF Fund, o See The Fund, page 11, and Investment Objectives
including a description of the investment objectives and Policies, pages 5-9 of the RREEF Fund prospectus
and policies of the RREEF Fund, and how the RREEF
Fund seeks to achieve such objectives
o A description of the individuals who manage the o See Management of the Fund, pages 11-12 of the
RREEF Fund, the services the investment manager RREEF Fund prospectus
provides and its fees
o Information about the administrator, transfer agent, o See Administrator, Transfer Agent, Custodian and
dividend paying agent and distributor of the RREEF Dividend Paying Agent, page 14 of the RREEF Fund
Fund and description of services provided prospectus
o RREEF Fund transaction and operating expenses o See Fees and Expenses, page 3 of the RREEF Fund
prospectus
Proxy Statement Additional Information About the Proposed Transaction 10
INFORMATION ABOUT THE CAN BE FOUND IN THE
FOLLOWING ITEMS: FOLLOWING PLACES:
o Management's discussion of fund performance, including o See President's Letter, pages 1-4 of the RREEF Fund
relevant market conditions, investment strategies annual report, a copy of which is included herewith
and techniques, and a graphic depiction of the value of
an investment in the fund at the end of each fiscal year
o The RREEF Fund's policy with respect to dividends o See Dividends, Distributions and Taxes, pages 10-11
and distributions, and the tax consequences of an of the RREEF Fund prospectus
investment in the RREEF Fund
o An explanation of "net asset value" of your shares o See Calculation of Net Asset Value, pages 9-10 of the
RREEF Fund prospectus
o The RREEF Fund's minimum initial and subsequent o See How to Purchase Shares, pages 14-15 of the
investments RREEF Fund prospectus
o Procedures for redeeming shares, involuntary redemption o See How To Redeem Shares, pages 15-16 of the RREEF
of shares and refusal to honor redemption Fund prospectus
requests
</TABLE>
Proxy Statement Additional Information About the Proposed Transaction 11
SHAREHOLDER TRANSACTIONS AND SERVICES
The discussion below describes and compares the shareholder transactions
and services that are currently available to RREEF Fund shareholders, and those
that will be available to ACRE Fund shareholders.
CLASSES
The RREEF Fund is an investment portfolio offering a single class of
shares. The ACRE Fund is authorized to offer three classes of shares: Investor
Class, Institutional Class and Advisor Class shares. Shareholders of the RREEF
Fund will receive Investor Class shares if the merger is approved.
Investor Class shares are intended for purchase by retail investors.
Institutional Class and Advisor Class shares will be primarily offered to
institutional investors or through institutional distribution channels.
Institutional Class shares will be made available for purchase by large
institutional shareholders, such as bank trust departments, corporations,
endowments, foundations and financial advisors that meet the ACRE Fund's minimum
investment requirements for the Institutional Class. Institutional Class shares
will not be available for purchase by insurance companies or participant
directed employer-sponsored retirement plans. Advisor Class shares are intended
for purchase by participants in employer-sponsored retirement or savings plans
and for persons purchasing shares through broker-dealers, banks, insurance
companies and other financial intermediaries that provide various administrative
and distribution services.
Each of the Investor Class, Institutional Class and Advisor Class shares
are sold at net asset value without sales charges or commissions. Neither
Investor Class nor Institutional Class shares are subject to any Rule 12b-1 or
other distribution fees. Advisor Class shares are subject to a Rule 12b-1
shareholder services fee of 0.25% annually of the aggregate average daily net
assets of the Advisor Class shares for the purpose of paying the costs and
expenses incurred by financial intermediaries in providing recordkeeping and
administrative services, and are also subject to a Rule 12b-1 distribution fee,
equal to 0.25% (for a total of 0.50%) annually of the average daily net assets
of the Advisor Class shares. The distribution fee is paid for the purpose of
paying the costs of providing various distribution services. The shareholder
servicing and distribution fees payable as described above are administered in
accordance with the requirements of Rule 12b-1 under the Investment Company Act
of 1940. Shareholders interested in the eligibility requirements for investing
in the Institutional and Advisor Classes should contact American Century.
SALES LOADS AND OTHER REDEMPTION FEES
Neither fund imposes any sales loads or other charges on the purchase of
shares or the reinvestment of dividends. In addition, neither fund imposes any
contingent deferred sales charges or other charges upon the redemption of fund
shares. With respect to each fund, redemption proceeds which are sent by wire
are subject to a $10 processing fee, and any redemptions made within one year of
purchase of the RREEF Fund are subject to a redemption fee of 1% of the assets
redeemed. Shareholders of the ACRE Fund will be able to exchange fund shares to
other American Century funds up to six times per year per account.
PURCHASE POLICIES
The following table summarizes the existing purchasing policies for each of
the ACRE Fund and the RREEF Fund.
<TABLE>
POLICY ACRE FUND RREEF FUND
<S> <C> <C>
Minimum Initial Investment $2,500 ($1,000 for IRA accounts and $50,000; Minimum may be waived for
Uniform Gifts/Transfers to Minors (i) accounts beneficially owned or
Acts ("UGMA/UTMA"). Minimums controlled by officers, directors and
waived if automatic investment plan employees of the fund, the Advisor
to account is established that is and any affiliated entities; (ii) an
equivalent of at least $50 per month. investor when the aggregate of all
fund accounts beneficially
owned or controlled by that investor
total at least $50,000; and (iii)
clients of the Advisor and clients of
any affiliated entities of the Advisor,
including officers, directors and other
affiliates of such clients.
Proxy Statement Shareholder Transactions and Services 12
POLICY ACRE FUND RREEF FUND
Minimum Subsequent Investment $250 for checks submitted without the $1,000
investment slip portion of a previous
statement or confirmation, $50 for all
other types of subsequent investments.
Automatic Investment Plan Shareholders may elect to make None
investments automatically by
authorizing payment directly from
the shareholder's bank account.
Automatic investments must be at
least $50 per month. Shareholders
may also utilize automatic payroll
and government direct deposits.
Purchase Methods Shares are offered to the general public Shares are offered to the general public
and may be purchased directly and may be purchased directly
from American Century Investment from Investors Bank & Trust Company
Services, Inc. by mail, telephone, by mail or wire.
online access (subsequent purchases
only), by wire, in person at one of
American Century's Investor Centers,
or through registered broker-dealers
and other qualified providers.
Qualified service providers may
charge investors fees for their
services.
Payment Methods Check, money order or wire payable in Check or wire.
U.S. dollars. Subsequent investments
may also be made by authorizing a
direct draw on shareholder's
bank account.
REDEMPTION POLICIES
The following table summarizes the existing redemption policies for each of
the ACRE Fund and the RREEF Fund.
POLICY ACRE FUND RREEF FUND
Redemption Requests Can be made by mail or telephone. Same
Certain redemptions may require a
signature guarantee.
Check-A-Month Shareholders with a balance of at No
least $10,000 may automatically
receive a check per month in an
amount designated by the shareholder
(minimum $50) to be redeemed
from the shareholder's account.
Other Automatic Redemptions Shareholders with a balance of at None
least $10,000 may elect to make
redemptions automatically by authorizing
American Century to send
funds directly to the shareholder or
to deposit automatically to the
shareholder's account at a bank or
other financial institution.
Proxy Statement Shareholder Transactions and Services 13
SHARE EXCHANGES
The following table summarizes the existing share exchange policies for
each of the ACRE Fund and the RREEF Fund.
POLICY ACRE FUND RREEF FUND
Share Exchange Policy Up to six times per year per account None
if within minimum investment
requirements.
Minimum Required Each exchange must have a N/A
value of at least $100, except
as noted below.
Automatic Exchange Plan Shareholders may set None
up an automatic exchange plan
between any two funds in an amount
of at least $50 per month.
OPEN ORDERS
The following table summarizes the existing policies regarding open orders
for each of the ACRE Fund and the RREEF Fund.
POLICY ACRE FUND RREEF FUND
Open Order Service Shareholders may designate a price None
at which they wish to purchase or
redeem shares of a variable-priced
fund by exchange from or to an
American Century money market
fund. Orders not executed within 90
days will be canceled. Open orders
are accepted only by telephone or in
person.
</TABLE>
RESPONSIBILITY FOR TELEPHONE INSTRUCTIONS
Both the RREEF Fund and the ACRE Fund have established procedures designed
to ensure the authenticity of instructions received by telephone. These
procedures include requesting personal identification of callers, recording
telephone calls and providing written confirmations of telephone transactions.
Telephone callers to the RREEF Fund are also asked to identify the account
registration and tax identification number for any account from which shares are
requested to be redeemed. These procedures are designed to protect shareholders
from unauthorized or fraudulent instructions. In the event that either fund
fails to employ reasonable procedures to confirm the genuineness of
instructions, it may be liable for losses due to unauthorized or fraudulent
instructions.
Proxy Statement Shareholder Transactions and Services 14
AUTOMATED INFORMATION LINE AND ONLINE ACCESS
The following table summarizes the existing automated information line and
online access available for each of the ACRE Fund and the RREEF Fund.
<TABLE>
POLICY ACRE FUND RREEF FUND
<S> <C> <C>
Automated Information Line Available 24 hours a day, 7 days a None
week, to receive fund prices, yields
and total return figures.
Share Transactions via Automated Provided certain conditions are satisfied, N/A
Information Line shareholders may make investments,
obtain share balance, value
and information on their most recent
transactions, and make exchanges
from one fund to another.
Redemption Instructions via No No
Automated Information Line
Internet Access Available 24 hours a day, 7 days a No
week, to access information on fund
daily share prices, updates on major
market indices and view historical
performance of funds. Shareholders
may also view account balances and
activity, make subsequent investments
from bank accounts and
exchange shares between funds if
they select this service on account
applications.
DISTRIBUTIONS
The following table shows the policies concerning the declaration and
payment of dividends from net investment income for each of the ACRE Fund and
the RREEF Fund.
POLICY ACRE FUND RREEF FUND
Income and Dividend Distributions Declared and paid quarterly. Declared and paid twice yearly
(usually June and December).
Capital Gains Distributions Declared and paid annually unless Same (usually distributed in
compliance with the Internal December).
Revenue Code and its Regulations
require more frequent distributions.
</TABLE>
Proxy Statement Shareholder Transactions and Services 15
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This Prospectus/Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of the RREEF Fund. Proxies may
be solicited by officers of the RREEF Fund and the ACRE Fund, as well as their
affiliates and employees. It is anticipated that the solicitation of proxies
will be primarily by mail, telephone, facsimile or personal interview.
Authorizations to execute proxies may be obtained by telephonic or
electronically transmitted instructions in accordance with procedures designed
to authenticate the shareholder's identity and to confirm that the shareholder
has received the Prospectus/Proxy Statement and proxy card. If you have any
questions regarding voting your shares or the proxy, you should call Peter J.
Broccolo, Vice President, RREEF Client Relations, at (312) 266-9300.
VOTING AND REVOCATION OF PROXIES
The fastest and most convenient way to vote your shares is to complete,
sign and mail the enclosed proxy voting card to us in the enclosed envelope.
This will help us obtain a quorum for the meeting and avoid the cost of
additional proxy solicitation efforts. If you return your proxy to us, we will
vote it exactly as you tell us. If you simply sign the card and return it, we
will follow the recommendation of the Board of Directors and vote "FOR" the
merger.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by submitting a written notice of revocation, or a subsequently
executed proxy, or by attending the meeting and voting in person.
RECORD DATE
Only shareholders of record at the close of business on April 25, 1997,
will be entitled to vote at the meeting. On that date there were 1,490,611.266
shares of the RREEF Fund entitled to be voted at the meeting or any adjournment
of the meeting.
QUORUM
A quorum is the number of shareholders legally required to be at a meeting
in order to conduct business. The quorum for the Shareholders Meeting is a
majority of all of the outstanding votes of the fund entitled to be cast at the
meeting. Shares may be represented in person or by proxy. Proxies properly
executed and marked with a negative vote or an abstention will be considered to
be present at the meeting for the purposes of determining the existence of a
quorum for the transaction of business. If a quorum is not present at the
meeting, or if a quorum is present at the meeting but sufficient votes are not
received to approve the Agreement and Plan of Merger, the persons named as
proxies may propose one or more adjournments of the meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of those shares affected by the adjournment that are represented
at the meeting in person or by proxy. If a quorum is not present, the persons
named as proxies will vote those proxies for which they are required to vote FOR
the Agreement and Plan of Merger in favor of such adjournments, and will vote
those proxies for which they are required to vote AGAINST such proposals against
any adjournment.
SHAREHOLDER VOTE REQUIRED
The Agreement and Plan of Merger must be approved by the holders of a
majority of the outstanding shares of the RREEF Fund entitled to vote on the
merger.
In tallying shareholder votes, abstentions and broker non-votes (i.e.,
proxies sent in by brokers and other nominees that cannot be voted on a proposal
because instructions have not been received from the beneficial owners) will be
counted for purposes of determining whether or not a quorum is present for
purposes of convening the meeting. Abstentions and broker non-votes will,
however, be considered to be a vote against the Agreement and Plan of Merger.
Proxy Statement Shareholder Transactions and Services 16
COST OF PROXY SOLICITATION
The cost of the proxy solicitation and shareholder meeting will be borne by
ACIM and not by the shareholders of either fund.
CERTAIN RREEF FUND SHAREHOLDERS
At April 25, 1997, the name, address, number of shares and percentage of
ownership of the persons who owned of record 5% or more of the RREEF Fund, and
the percentage of the respective Investor Class shares of the ACRE Fund that
would be owned by those persons upon the consummation of the merger based upon
their holdings on April 25, 1997, are as follows. Any shareholder who owns
greater than 25% of the shares of either fund may be deemed to be a controlling
person of that fund.
<TABLE>
Percentage of Shares
to be Owned After
Shareholder Name Number Percentage Consummation of
and Address of Shares of Ownership the Merger
- ----------- --------- ------------ ----------
<S> <C> <C> <C>
Merrill Lynch Trust Company
of California
FBO RREEF Management Co
P.O. Box 30532
New Brunswick, New Jersey 463,298 31.08% 31.08%
Lafayette College
234 Markle Hall
Easton, Pennsylvania 359,195 24.10% 24.10%
Arntz Builders
19 Pamaron Way
Novato, California 131,905 8.85% 8.85%
Colorado Cement Masons
Pension Trust Fund
7000 N. Broadway
Bldg. 3, Suite 300A
Denver, Colorado 116,528 7.82% 7.82%
Gregory L. Melchor
635 Emerson St.
Palo Alto, California 100,200 6.72% 6.72%
</TABLE>
At April 25, 1997, the trustees and officers of the RREEF Fund, as a group,
directly owned approximately 7.33% of the outstanding shares of the RREEF Fund,
and an additional 7.38% as owners of a portion of the account at Merrill Lynch
Trust Company of California FBO RREEF Management Company.
APPRAISAL RIGHTS
Shareholders are not entitled to any rights of share appraisal under the
Company's Articles of Incorporation, or under the laws of the State of Maryland.
ANNUAL MEETINGS
American Century Capital Portfolios does not intend to hold regular annual
meetings of shareholders. Shareholders have the right to call a meeting of
shareholders to consider the removal of one or more directors or for other
matters and such meetings will be called when requested in writing by the
holders of record of 10% or more of the fund's votes. To the extent required by
law, American Century Capital Portfolios will assist in shareholder
communications on such matters.
Proxy Statement Shareholder Transactions and Services 17
ADDITIONAL INFORMATION
WHERE TO FIND INFORMATION INCORPORATED BY REFERENCE
Information about the RREEF Fund is incorporated herein by reference from
its Prospectus and Statement of Additional Information, each dated March 1,
1997, and its Annual Report for the fiscal year ended October 31, 1996. The
Prospectus, Statement of Additional Information and Annual Report accompany this
Prospectus/Proxy Statement. Information about the ACRE Fund is incorporated
herein by reference from the ACRE Fund's Prospectus and Statement of Additional
Information, each dated May 21, 1997. The ACRE Fund Prospectus and Statement of
Additional Information also accompany this Prospectus/Proxy Statement.
Reports and other information filed by the RREEF Fund and the ACRE Fund can
be inspected and copied at the Public Reference Facilities maintained by the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of such material
can be obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, Washington, D.C.
20549, at prescribed rates or by accessing the Web site maintained by the SEC
(www.sec.gov).
LITIGATION
Neither the RREEF Fund nor American Century Capital Portfolios is involved
in any litigation or proceeding.
FINANCIAL STATEMENTS
The financial highlights and financial statements for the RREEF Fund for
the year ended October 31, 1996, are contained in its Annual Report to
shareholders, which accompanies and is incorporated by reference into this
Prospectus/Proxy Statement. Because it is a newly organized fund, the ACRE Fund
has no financial highlights or financial statements.
The audited financial statements of the RREEF Fund for the fiscal year
ended October 31, 1996, contained in its Annual Report and incorporated by
reference in this Prospectus/Proxy Statement, have been incorporated herein in
reliance on the reports of Deloitte & Touche LLP, independent accountants, given
upon the authority of such firm as experts in accounting and auditing.
PRO FORMA FINANCIAL STATEMENTS
Because the ACRE Fund, immediately prior to the merger, will have no
assets, the financial statements of the RREEF Fund immediately prior to the
merger will constitute the financial statements of the ACRE Fund immediately
after the merger. Therefore, financial statements of the RREEF Fund for the
fiscal year ended October 31, 1996, are incorporated herein as the pro forma
financial statements of the ACRE Fund illustrating the effect of the merger.
OTHER BUSINESS
The Board of Directors of the RREEF Fund knows of no other business to be
brought before the meeting. However, if any other matters come before the
meeting, it is the intention that proxies which do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the RREEF Fund in writing at the
address or telephone number set forth on the cover page of this Prospectus/Proxy
Statement.
SHAREHOLDERS ARE REQUESTED TO DATE AND SIGN EACH ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE. PLEASE RETURN YOUR PROXY CARD EVEN IF YOU
ARE PLANNING TO ATTEND THE MEETING. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
Proxy Statement Information Relating to Voting Matters 18
APPENDIX I
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made as of the 8th
day of May, 1997, by and between RREEF SECURITIES FUND, INC. ("RREEF Fund")
and AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. ("ACCP"), each of which is a
Maryland corporation.
This Agreement is intended to be and is adopted as a plan of reorganization
pursuant to Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
WITNESSETH:
WHEREAS, ACCP is an open-end management investment company registered with
the Securities and Exchange Commission (the "SEC") under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS, ACCP may offer its common shares in multiple series, each of which
represents a separate and distinct portfolio of assets and liabilities; and
WHEREAS, certain of the authorized shares of ACCP have been designated as
the shares of the American Century Real Estate Fund, Investor Class ("ACRE
Fund"); and
WHEREAS, RREEF Fund is a registered, open-end management investment company
registered with the SEC under the 1940 Act; and
WHEREAS, the Boards of Directors of ACCP and RREEF Fund have determined
that it is advisable and in the best interests of their respective corporations
and shareholders to merge RREEF Fund into a newly created series of ACCP,
whereupon the common shares of RREEF Fund shall be converted into ACRE Fund
shares;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, and intending to be legally bound hereby, the
parties hereto covenant and agree as follows:
1. THE MERGER
1.1 Subject to the terms and conditions set forth herein and on the basis
of the representations and warranties contained herein, ACCP and RREEF
Fund agree that RREEF Fund shall be merged with and into ACRE Fund
(hereinafter, the "Merger") as of the effective time provided for in
Section 3.1 (the "Effective Time"). The Merger shall be conducted in
accordance with Section 3-105 of the Maryland General Corporation Law.
ACCP shall be the surviving corporation and shall be governed by the
laws of the State of Maryland. The terms and conditions of the Merger
and the mode of carrying the same into effect are as herein set forth
in this Agreement.
1.2 The Articles of Incorporation of ACCP, as in effect at the Effective
Time, shall continue to be the articles of incorporation of the
surviving corporation until amended in accordance with the provisions
thereof and applicable law.
1.3 The Bylaws of ACCP, as in effect at the Effective Time, shall continue
to be the Bylaws of the surviving corporation until amended in
accordance with the provisions thereof and applicable law.
1.4 The directors of ACCP shall continue in office for their current terms
and until their successors are elected and qualified, or until their
death, resignation or removal.
1.5 The officers of ACCP shall remain the officers of ACCP at the
Effective Time and shall serve at the pleasure of the Board of
Directors of ACCP.
1.6 The Investment Management Agreement, Subadvisory Agreement, Rule 12b-1
Plan and Distribution Agreement of ACCP relating to ACRE Fund, as in
effect at the Effective Time, shall continue to be the Investment
Management Agreement, Subadvisory Agreement, Rule 12b-1 Plan and
Distribution Agreement of the surviving corporation until amended in
accordance with the provisions thereof.
2. CONVERSION OF OUTSTANDING FUND SHARES
2.1 At the Effective Time, each share of RREEF Fund issued and outstanding
shall be converted by reason of the Merger and without any action on
the part of the holders thereof into ACRE Fund shares. The manner and
basis of converting the issued and outstanding shares of RREEF Fund
into ACRE Fund shares shall be as follows:
(a) Upon the effectiveness of the Merger, each share of the RREEF
Fund shall be converted into a share of the ACRE Fund.
(b) Upon the effectiveness of the Merger, each fraction of a share of
the RREEF Fund shall be converted into the same fraction of a
share of the ACRE Fund.
2.2 The sole ACRE Fund share issued and outstanding at the Effective Time
shall be canceled.
2.3 As soon as practicable after the Effective Time, the transfer agent
for the ACRE Fund will send a notice to each record holder of RREEF's
shares at the Effective Time advising such holder of the effectiveness
of the Merger. ACCP will issue confirmations to such shareholder
setting forth the number and net asset value of ACRE Fund shares held
by such shareholders after the Merger.
3. EFFECTIVE TIME OF THE MERGER
3.1 After the approval of this Agreement by the vote of the requisite
number of holders of shares of RREEF Fund, the Merger shall become
effective at the close of business on the date the Articles of Merger
are filed with the Secretary of State of Maryland (the "Effective
Time").
3.2 At the Effective Time, the separate existence of RREEF Fund shall
cease. RREEF Fund shall be merged with and into ACRE Fund series of
ACCP as the surviving corporation. All of the property, assets,
rights, privileges, powers, franchises and immunities of RREEF Fund
and the ACRE Fund shall vest in the ACRE Fund series of ACCP as the
surviving corporation, and all of the debts, liabilities, duties and
obligations of RREEF Fund and the ACRE Fund shall become the debts,
liabilities, and obligations of the ACRE Fund series of ACCP as the
surviving corporation. The assets and liabilities of RREEF Fund
immediately prior to the Effective Time shall inure to the benefit of
the ACRE Fund shareholders.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 RREEF Fund represents, warrants and covenants to ACCP as follows:
(a) The RREEF Fund is registered as an investment company under the
Investment Company Act of 1940. It is a duly formed and validly
existing corporation, in good standing under Maryland law, and is
not required to be registered as a foreign corporation in any
jurisdiction. All RREEF Fund shares are registered and qualified
for sale to the extent required by applicable federal and state
law. The RREEF Fund has complied in all material respects with
all applicable federal and state securities laws, as well as
applicable investment policies and restrictions.
(b) It has full power and authority to carry on its business as it is
presently being conducted and to enter into this Agreement and
the Merger contemplated hereby.
(c) It is not in violation, and the execution, delivery and
performance of this Agreement and the transactions contemplated
hereby will not result in a violation, of its Articles of
Incorporation or Bylaws, both as currently in effect, or of any
material agreement, indenture, instrument, contract, lease or
other undertaking to which RREEF Fund is a party or by which it
is bound.
(d) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Effective Time by all
necessary action on the part of RREEF Fund's Board of Directors,
and, subject to the approval of its shareholders, this Agreement
will constitute a valid and binding obligation of RREEF Fund.
(e) All information pertaining to RREEF Fund and included in the
Registration Statement (as defined in Section 5.5), or supplied
by RREEF Fund for inclusion in the Registration Statement, on the
effective date of the Registration Statement and up to and
including the Effective Time, will not contain any untrue
statement of material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which such
statements are made, not misleading.
(f) Immediately prior to the Effective Time, RREEF Fund will have
good, marketable and unencumbered title to its cash, securities
and other assets.
(g) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by RREEF
Fund of the transactions contemplated by the Agreement, except
such as may be required under the Securities Act of 1933, as
amended (the "1933 Act"), the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the 1940 Act, and rules and regulations
thereunder, or state securities laws.
(h) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or, to RREEF Fund's knowledge, threatened
against RREEF Fund or any of its properties or assets. RREEF Fund
is not a party to or subject to the provisions of any order,
injunction, decree or judgment of any court or governmental body
which materially and adversely affects its business or its
ability to consummate the transactions herein contemplated.
(i) All reports and registration statements filed with the SEC
regarding the RREEF Fund (i) were prepared in all material
respects in accordance with applicable federal and state
securities laws and (ii) as of their respective dates, such
filings did not contain any untrue statement of material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(j) All financial statements (whether audited or unaudited) of the
RREEF Fund made available or furnished to ACCP in connection with
its due diligence investigation of the RREEF Fund present fairly,
in all material respects, the respective financial position and
results of operations of the RREEF Fund on the dates and for the
periods to which they relate, and have been prepared in
accordance with consistently applied generally accepted
accounting principles, subject only, in the case of unaudited
financial statements, to year end adjustments and appropriate
footnote disclosure, and there are no known material liabilities
(contingent or otherwise) of the RREEF Fund as of such respective
dates not disclosed therein.
(k) The RREEF Fund has made a valid election to be taxed as a
regulated, investment company under Subchapter M of the Code, and
such Fund has complied in all material respects with all
applicable provisions of federal, state and local law necessary
to preserve and retain such Fund's election and status as a
regulated investment company.
(l) The RREEF Fund has timely filed (including pursuant to
permissible extensions) all federal and state tax returns such
fund is required to file for returns which are due up to the
Effective Time. The RREEF Fund has timely paid all taxes which
such fund was required to pay. All such tax returns are in all
material respects true, correct and complete and present fairly
and accurately in all material respects the information required
to be shown therein. None of such returns have been examined by
any taxing or other authority having jurisdiction, and to RREEF's
knowledge, no such examination of any tax return is in progress,
nor has any notice of such examination been received.
(m) The RREEF Fund has materially complied with all recordkeeping,
information reporting and withholding requirements imposed by any
federal, state or local law, such as requirements relating to
shareholder information reporting, backup withholding,
withholding of tax on non-resident aliens and foreign
corporations and other such similar withholding and information
requirements.
(n) No material adverse change has occurred in the financial
condition of the RREEF Fund since October 31, 1996.
(o) The books of the RREEF Fund reflecting the purchase and sale of
such fund's shares are correct and complete in all material
respects. The issued and outstanding shares of the RREEF Fund
have been duly and validly issued, are fully paid and
non-assessable, and have not been issued in violation of and are
not subject to any preemptive right. There are no shares of the
RREEF Fund outstanding other than the shares of the single class
of the RREEF Fund reflected in such Fund's transfer agency
records, nor are there any rights of any kind to acquire such
shares outstanding.
4.2 ACCP REPRESENTS, WARRANTS AND COVENANTS TO RREEF FUND AS FOLLOWS:
(a) ACCP is registered as an investment company under the Investment
Company Act of 1940. It is a duly formed and validly existing
corporation, in good standing under Maryland law, and is not
required to be registered as a foreign corporation in any
jurisdiction. All ACRE Fund shares are or will be prior to the
Effective Time, registered and qualified for sale to the extent
required by applicable federal and state law. The ACRE Fund has
complied in all material respects with all applicable federal and
state securities laws, as well as applicable investment policies
and restrictions.
(b) ACCP has full power and authority to enter into this Agreement
and the Merger contemplated hereby.
(c) ACCP is not in violation, and the execution, delivery and
performance of this Agreement and the transactions contemplated
hereby will not result in a violation, of any provision of its
Articles of Incorporation or Bylaws or of any material agreement,
indenture, instrument, contract, lease or other undertaking to
which ACCP is a party or by which it is bound.
(d) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of the
Board of Directors of ACCP and this Agreement constitutes a valid
and binding obligation of ACCP.
(e) The Registration Statement, on its effective date and up to and
including the Effective Time, will (i) conform in all material
respects to the applicable requirements of the 1933 Act, the 1934
Act, and the 1940 Act and the rules and regulations of the
Commission thereunder, and (ii) not contain any untrue statement
of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made,
not misleading; provided, however, that the representations and
warranties in clause (ii) of this paragraph shall not apply to
statements in (or omissions from) the Registration Statement made
in reliance upon and in conformity with information furnished by
RREEF Fund for use therein.
(f) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by ACRE
Fund of the transactions contemplated by the Agreement, except
such as may be required under the 1933 Act, the 1934 Act, the
1940 Act, and rules and regulations thereunder, or state
securities laws.
(g) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or, to ACCP's knowledge, threatened against
ACCP or any of its properties or assets. ACCP is not a party to
or subject to the provisions of any order, injunction, decree or
judgment of any court or governmental body which materially and
adversely affects its business or its ability to consummate the
transactions herein contemplated.
5. FURTHER COVENANTS OF ACCP AND RREEF FUND
5.1 RREEF Fund will operate its business in the ordinary course between
the date hereof and the Effective Time, it being understood that such
ordinary course of business will include the declaration and payment
of customary dividends and distributions, and any other distributions
that may be advisable (which may include distributions prior to the
Effective Time of net income and/or net realized capital gains not
previously distributed).
5.2 RREEF Fund will call a meeting of its shareholders to consider and act
upon this Agreement and to take all other action necessary to obtain
approval of the transactions contemplated herein.
5.3 RREEF Fund will assist ACCP in obtaining such information as ACCP
reasonably requests concerning the beneficial ownership of its common
shares.
5.4 Subject to the provisions of this Agreement, ACCP and RREEF Fund will
take, or cause to be taken, all actions, and do or cause to be done
all things reasonably necessary, proper or advisable to consummate and
make effective the transaction contemplated by this Agreement.
5.5 RREEF Fund will provide ACCP with information reasonably necessary
with respect to such Fund for the preparation of the Registration
Statement on Form N-14 of ACCP (the "Registration Statement"), in
compliance with the 1933 Act, the 1934 Act and the 1940 Act.
5.6 As of the Effective Time, RREEF Fund shall declare and pay a dividend
or dividends which, together with all previous dividends, shall have
the effect of distributing to its shareholders all of its investment
company taxable income, if any, for the taxable periods or years ended
on or before the fiscal year end, and for the period from said date to
and including the Effective Time, and all of its net capital gain, if
any, for the taxable periods or years ended on or before the fiscal
year end, and for the period from said date to and including the
Effective Time.
5.7 ACCP agrees to use all reasonable efforts to obtain the approvals and
authorizations required by the 1933 Act, the 1934 Act, the 1940 Act
and such of the state blue sky or securities laws as may be necessary
in order to conduct its operations after the Effective Time.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF RREEF FUND
The obligation of RREEF Fund to consummate the transaction provided for herein
shall be subject, at its election, to the performance by ACCP of all the
obligations to be performed by it hereunder at or before the Effective Time,
and, in addition thereto, the following further conditions (any of which may be
waived by RREEF Fund, in its sole and absolute discretion):
6.1 All representations and warranties of ACCP contained in this Agreement
shall be true and correct as of the date hereof and as of the
Effective Time with the same force and effect as if made at such time.
6.2 ACCP shall have delivered to RREEF Fund a certificate executed in its
name by its President or any Vice President and its Treasurer or
Assistant Treasurer, dated as of the date of the Merger, to the effect
that the representations and warranties of ACCP made in this Agreement
are true and correct at the Effective Time.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACCP
The obligations of ACCP to complete the transaction provided for herein shall be
subject, at its election, to the performance by RREEF Fund of all of the
obligations to be performed by it hereunder at or before the Effective Time and,
in addition thereto, the following conditions (any of which may be waived by
ACCP, in its sole and absolute discretion):
7.1 All representations and warranties of RREEF Fund contained in this
Agreement shall be true and correct as of the date hereof and as of
the Effective Time with the same force and effect as if made at such
time.
7.2 RREEF Fund shall have delivered to ACCP a certificate executed in its
name by its President or any Vice President and its Treasurer or
Assistant Treasurer, dated as of the date of the Merger, to the effect
that the representations and warranties RREEF Fund made in this
Agreement are true and correct at and as of the Effective Time.
7.3 RREEF Fund shall have delivered to ACCP as of the Effective Time
confirmations or other adequate evidence as to the adjusted tax basis
of RREEF Fund assets then delivered to ACCP in accordance with the
terms of this Agreement.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF ACCP AND RREEF FUND
The following shall constitute further conditions precedent to the consummation
of the Merger, provided, however, that any of the following conditions may be
waived by ACCP and RREEF Fund except for the conditions set forth in Sections
8.1:
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the RREEF Fund shareholders in
accordance with the provisions of its Articles of Incorporation and
Bylaws and applicable law.
8.2 ACCP's investment manager or RREEF Fund's investment advisor, as the
case may be, shall have paid or agreed to pay the costs incurred by
ACCP and RREEF Fund in connection with the Merger, including the fees
and expenses associated with the preparation and filing of the
Registration Statement, and the expenses of printing and mailing the
Proxy Statement/Prospectus, soliciting proxies and holding the
shareholders meeting required to approve the transactions contemplated
by this Agreement.
8.3 As of the Effective Time, no action, suit, injunction or other
proceeding shall be threatened or pending before any court or
governmental agency in which it is sought to restrain or prohibit, or
obtain damages or other relief in connection with, this Agreement or
the transactions contemplated herein.
8.4 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities deemed
necessary by ACCP or RREEF Fund to permit consummation, in all
material respects, of the transactions contemplated hereby shall have
been obtained, except where failure to obtain any such consent, order
or permit would not involve a risk of a material adverse effect on the
assets or properties of ACCP or RREEF Fund, provided that any party
hereto may for itself waive any of such conditions.
8.5 The Registration Statement shall have become effective under the 1933
Act, and no stop orders suspending the effectiveness thereof shall
have been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the 1933
Act.
8.6 The parties shall have received the opinion of a law firm reasonably
acceptable to RREEF Fund and ACCP, addressed to RREEF Fund, based in
part on certain representations to be furnished by RREEF, ACCP, and
ACCP's investment manager, substantially to the effect that:
(a) The Merger will qualify as a "reorganization" under Section
368(a) of the Code, and RREEF Fund will qualify as a party to the
reorganization under Section 368(b) of the Code;
(b) RREEF Fund shareholders will recognize no income, gain or loss
upon the exchange of RREEF Fund shares for ACRE Fund shares in
the Merger;
(c) The basis of ACRE Fund shares received by each RREEF Fund
shareholder pursuant to the Merger will be the same as the basis
of the RREEF Fund shares surrendered in exchange therefor;
(d) The holding period of ACRE Fund shares received by each RREEF
Fund shareholder pursuant to the Merger will include the period
during which the shareholder held the RREEF Fund shares
surrendered in exchange therefor, provided that such common
shares were held as a capital asset at the Effective Time;
(e) RREEF Fund will recognize no income, gain or loss by reason of
the Merger;
(f) The tax basis of the assets received by ACRE Fund pursuant to the
Merger will be the same as the basis of those assets in the hands
of RREEF Fund as of the Effective Time;
(g) The holding period of the assets received by ACRE Fund pursuant
to the Merger will include the period during which such assets
were held by RREEF Fund; and
(h) ACRE Fund will succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of RREEF Fund as of
the Effective Time.
9. FURTHER ASSURANCES
From time to time on and after the Effective Date, each party hereto agrees that
it will execute and deliver or cause to be executed and delivered all such
further assignments, assurances or other instruments, and shall take or cause to
be taken all such further actions, as may be necessary or desirable to complete
the Merger and the other transactions contemplated by this Agreement.
10. ENTIRE AGREEMENT
ACCP and RREEF Fund each agree that it has not made any representation, warranty
or covenant not set forth herein and that this Agreement constitutes the entire
agreement between the parties.
11. TERMINATION
This Agreement and the transactions contemplated hereby may be terminated and
abandoned by mutual consent of the parties hereto by resolution of the parties'
Boards of Directors, at any time prior to the Effective Time.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as may be
mutually agreed upon in writing by the authorized officers of RREEF Fund and
ACCP; provided, however, that following the meeting of RREEF Fund shareholders
called pursuant to Section 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions for determining the number of ACRE Fund shares
to be issued to RREEF Fund's shareholders under this Agreement to the detriment
of such shareholders without their further approval.
13. NOTICES
All notices and other communications hereunder shall be given or made in writing
and shall be delivered personally, or sent by telex, telecopy, express delivery
or registered or certified mail, postage prepaid, return receipt requested, to
the party or parties to whom they are directed at the following addresses, or at
such other addresses as may be designated by notice from such party to all other
parties.
To RREEF Fund:
RREEF Real Estate Securities Advisers L.P.
875 North Michigan Avenue, 41st Floor
Chicago, Illinois 60611
Attention: Kim G. Redding
Copy to: Barry H. Braitman, Esq.
(312) 266-9300 (office number)
(312) 266-9346 (telecopy number)
To ACCP:
American Century Investments
4500 Main Street
Kansas City, Missouri 64111
Attention: Patrick A. Looby, Esq.
(816) 340-4349 (office number)
(816) 340-4964 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
Section shall be deemed to have been delivered on receipt.
14. MISCELLANEOUS
14.1 The Article and Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall
constitute one and the same agreement.
14.3 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment
or transfer hereof or of any rights or obligations hereunder shall be
made by any party without the prior written consent of the other
party. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give any person, firm or corporation,
other than the parties hereto and their respective successors and
assigns, any rights or remedies under or by reason of this Agreement.
14.4 The validity, interpretation and effect of this Agreement shall be
governed exclusively by the laws of the State of Maryland, without
giving effect to the principles of conflict of laws thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the date first above written.
RREEF SECURITIES FUND, INC. AMERICAN CENTURY CAPITAL
PORTFOLIOS, INC.
By:___________________________ By: ___________________________
Kim G. Redding, President William M. Lyons, Executive Vice President
