SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant __X__
Filed by a Party other than the Registrant _____
Check the appropriate box:
_____ Preliminary Proxy Statement
_____ Confidential, for use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
__X__ Definitive Proxy Statement
_____ Definitive Additional materials
_____ Soliciting Material Pursuant to ss.240.14a-l l(c) or ss.240.14a-12
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
__X__ No fee required.
_____ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
_____ Fee paid previously with preliminary materials.
<PAGE>
[american century logo]
American
Century(reg.sm)
Proxy
Statement
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
MARCH 20, 1998
IMPORTANT VOTING INFORMATION INSIDE!
TABLE OF CONTENTS
LETTER FROM THE PRESIDENT ................................................. 1
PROXY STATEMENT SUMMARY ................................................... 2
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS ................................. 5
DETAILED DISCUSSION OF PROXY ISSUES ....................................... 6
SHARE OWNERSHIP ........................................................... 8
PROPOSAL 1: APPROVAL OF NEW SUBADVISORY AGREEMENT
WITH RREEF AMERICA, L.L.C ........................................ 9
PROPOSAL 2: ELECTION OF DIRECTORS ......................................... 13
PROPOSAL 3: RATIFICATION OF INDEPENDENT AUDITORS .......................... 17
OTHER MATTERS ............................................................. 18
APPENDIX I: PROPOSED NEW SUBADVISORY AGREEMENT ............................ 19
TABLE OF CONTENTS AMERICAN CENTURY INVESTMENTS
LETTER FROM THE PRESIDENT
American Century Investment Management, Inc.
4500 Main Street
Kansas City, Missouri 64111
March 20, 1998
Dear American Century Shareholder,
I am writing to inform you of the upcoming Special Meeting of the
shareholders of the American Century Real Estate Fund. At this meeting, you are
being asked to vote on important proposals affecting your fund. The Board of
Directors of your fund unanimously believes that these proposals are in the
fund's and your best interest.
I'm sure that you, like most people, lead a busy life and are tempted to put
this proxy aside for another day. Please don't. When shareholders do not return
their proxies, additional expenses are incurred to pay for follow-up mailings
and telephone calls. PLEASE TAKE A FEW MINUTES TO REVIEW THIS PROXY STATEMENT
AND SIGN AND RETURN THE PROXY CARD TODAY.
The Board of Directors of your fund has unanimously approved these proposals
and recommends a vote "FOR" each proposal. If you have any questions regarding
the issues to be voted on or need assistance in completing your proxy card,
please contact us at 1-800-345-2021 or 816-531-5575 weekdays from 7 a.m. to 7
p.m. Central time.
I appreciate you taking the time to consider these important proposals. Thank
you for investing with American Century and for your continuing support.
Sincerely,
/s/Robert C. Puff Jr.
Robert C. Puff Jr.
President
PROXY STATEMENT LETTER FROM THE PRESIDENT 1
PROXY STATEMENT SUMMARY
The following Q&A is a brief summary of the proposals to be considered at the
Special Meeting. The information below is qualified in its entirety by the more
detailed information contained elsewhere in this proxy statement. Accordingly,
please read all the enclosed proxy materials before voting.
WHEN WILL THE SPECIAL MEETING BE HELD? WHO IS ELIGIBLE TO VOTE?
The meeting will be held on Wednesday, May 20, 1998, at 10 a.m. Central time
at the Company's offices at 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 the close of business on March 13,
1998. Only shareholders who own shares at that time are entitled to vote at the
meeting.
WHY IS THE FUND HAVING A SPECIAL MEETING?
Because there has been a change in control of the Subadvisor of the fund, as
described below, it is necessary to have a meeting of shareholders to approve a
new Subadvisory Agreement. This affects only one of the funds issued by the
Company, and therefore the Board of Directors decided to call a Special Meeting
of the shareholders of the affected fund only, rather than an Annual Meeting of
the shareholders of all funds issued by the Company. Since a meeting is
necessary, your Board of Directors decided to give you the opportunity to elect
directors and approve the selection of auditors, as well. Therefore, your Board
of Directors is recommending that shareholders consider the following proposals
PROPOSAL
----------------------------------------------------------------------------
1. To approve a New Subadvisory Agreement with RREEF America, L.L.C.;
2. To elect a Board of Directors of nine members; and
3. To ratify the selection of Deloitte & Touche LLP as independent auditors.
HOW DO THE DIRECTORS RECOMMEND THAT I VOTE ON THESE PROPOSALS?
The Directors unanimously recommend that you vote "FOR" each proposal.
WHAT CHANGES ARE BEING PROPOSED TO THE SUBADVISORY AGREEMENT?
The proposed New Subadvisory Agreement is only slightly different from the
Old Subadvisory Agreement. The changes relate to the acquisition of RREEF
America, L.L.C. and certain affiliates, including RREEF Real Estate Securities
Advisers, L.P., the Subadvisor, by RoProperty Services, B.V., a Dutch investment
management company. The proposed New Subadvisory Agreement does not change the
services to be provided to, or the fee payable by, the fund.
A full discussion of the proposal to approve the New Subadvisory Agreement
begins on page 9.
2 PROXY STATEMENT SUMMARY AMERICAN CENTURY INVESTMENTS
WHO ARE THE NOMINEES FOR DIRECTOR? HAVE ALL OF THEM BEEN ELECTED BEFORE?
The Nominating Committee of your Board of Directors has proposed that
shareholders elect nine members to the Board of Directors. All but Dr. Hall have
been elected before. The nominees are:
Thomas A. Brown Lloyd T. Silver, Jr.
Robert W. Doering, M.D. James E. Stowers, Jr.
Andrea C. Hall, Ph.D. James E. Stowers III
D.D. (Del) Hock M. Jeannine Strandjord
Donald H. Pratt
A full discussion of the proposal to elect Directors begins on page 13.
WHAT IS THE "RATIFICATION" OF THE INDEPENDENT AUDITORS?
The Investment Company Act requires your Board of Directors to select
independent auditors for the fund and also requires them to submit their
selection to the shareholders for approval (technically called a "ratification")
in any year that an annual shareholder meeting is being held. Although this is a
Special Meeting, your Board of Directors decided to give you the opportunity to
ratify their selection of auditors at this meeting. Your Board of Directors, in
part to provide uniform auditors for all the funds in the American Century
family, selected Deloitte & Touche LLP in late 1996.
A full discussion of the proposal to ratify the selection of Deloitte &
Touche begins on page 17.
WHEN WILL THE PROPOSALS TAKE EFFECT IF THEY ARE APPROVED?
If approved, the proposed New Subadvisory Agreement will be effective
immediately and the Subadvisor will begin to receive the subadvisory fees. In
accordance with an exemptive order granted by the Securities and Exchange
Commission, RREEF America, L.L.C. is currently providing subadvisory services to
the fund pursuant to the proposed New Subadvisory Agreement, but the
compensation for such services it would usually receive is being held in escrow
pending the shareholder vote on the new agreement. The other proposals also will
be effective immediately upon approval.
WHO IS ASKING FOR MY VOTE?
Your Board of Directors is asking you to sign and return the enclosed proxy
so your votes can be cast at the Special Meeting. In the unlikely event the
meeting is adjourned, these proxies would also be voted at the reconvened
meeting.
HOW DO I VOTE MY SHARES?
We've made it easy for you. You can vote by mail or by fax. To vote by mail,
sign and send us the enclosed proxy voting card in the envelope provided. To
vote by fax, sign the proxy voting card and fax both sides of the card to
1-888-796-9932. Or, you can vote in person at the Special Meeting on May 20,
1998.
PROXY STATEMENT PROXY STATEMENT SUMMARY 3
IF I SEND MY PROXY IN NOW AS REQUESTED, CAN I CHANGE MY VOTE LATER?
A proxy can be revoked at any time by writing to us, by sending us another
proxy, or by attending the meeting and voting in person. Even if you plan to
attend the meeting and vote in person, we ask that you return the enclosed
proxy. Doing so will help us ensure that an adequate number of shares are
present at the meeting.
If you have any questions regarding the proxy statement or need assistance in
voting your shares, please call us at 1-800-345-2021 or 816-531-5575 weekdays
from 7 a.m. to 7 p.m. Central time.
4 PROXY STATEMENT SUMMARY AMERICAN CENTURY INVESTMENTS
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
TO BE HELD ON MAY 20, 1998
American Century Investments
4500 Main Street
P. O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021
816-531-5575
NOTICE IS HEREBY GIVEN that a Special Meeting of shareholders of the American
Century Real Estate Fund (the "fund"), a series of American Century Capital
Portfolios, Inc., a Maryland corporation (the "Company"), will be held at the
Company's offices at 4500 Main Street, Kansas City, Missouri, on Wednesday, May
20, 1998, at 10 a.m. Central time, for the following purposes:
1. To approve a New Subadvisory Agreement with RREEF America, L.L.C.;
2. To elect a Board of Directors of nine members to hold office until their
successors are duly elected and qualified;
3. To ratify the selection of Deloitte & Touche LLP as the independent
auditors of the Company; and
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
This is a Notice and Proxy Statement for the fund. Please complete, sign and
return the enclosed proxy.
Shareholders of record as of the close of business on March 13, 1998, are the
only persons entitled to notice of and to vote at the meeting and any
adjournments thereof. Your attention is directed to the attached Proxy
Statement.
We urge you to mark, sign, date and mail the enclosed proxy in the
postage-paid envelope provided so you will be represented at the meeting.
The Board of Directors of the Company unanimously recommends that you cast
your vote "FOR" each of the proposals.
March 20, 1998 BY ORDER OF THE BOARD OF DIRECTORS
Patrick A. Looby
Vice President
PROXY STATEMENT NOTICE OF SPECIAL MEETING OF SHAREHOLDERS 5
DETAILED DISCUSSION
OF PROXY ISSUES
March 20, 1998
The enclosed proxy is solicited by the Board of Directors of American Century
Capital Portfolios, Inc. in connection with a Special Meeting of shareholders of
the American Century Real Estate Fund to be held on Wednesday, May 20, 1998, at
the Company's offices at 4500 Main Street, Kansas City, Missouri, at 10 a.m.
Central time, and any adjournments thereof. In this proxy statement, the
investment company will be referred to as the "Company." The series of capital
stock of the Company for which the special meeting is called, the American
Century Real Estate Fund, will be referred to as the "fund."
The costs of soliciting proxies, including the cost of preparing and mailing
the notice of meeting and this proxy statement, will be paid by RREEF America,
L.L.C.(referred to in this Proxy Statement as "New RREEF"), the new investment
subadvisor of the fund. This notice of meeting and proxy statement are first
being mailed to shareholders around March 20, 1998. Supplemental solicitations
for the meeting may be made by New RREEF or by American Century Investment
Management, Inc. (referred to in the Proxy Statement as "ACIM"), the investment
manager of the fund.
VOTING OF PROXY. If you provide a proxy, you may revoke it before the meeting
by mailing written notice of revocation to the Secretary of the Company before
the meeting, or personally delivering your revocation to the Secretary any time
prior to the taking of the vote at the meeting. Unless revoked, proxies that
have been returned by shareholders without instructions will be voted in favor
of all proposals. In instances where choices are specified on the proxy, those
proxies will be voted as the shareholder has instructed.
The fund is divided into three classes. All classes of shares of the fund
have identical voting rights, except where a proposal affects only one class,
only that class gets to vote on it. Of the proposals to be considered at the
meeting, only Proposal 1, the approval of the New Subadvisory Agreement, will be
voted upon separately by class. The number of outstanding votes of each class of
the fund, as of the close of business on February 27, 1998, is: Investor class,
131,549,411.39 votes and Institutional class, 14,379,180.19 votes. The Advisor
class had no assets as of February 27, 1998.
Only those shareholders owning shares as of the close of business on March
13, 1998 may vote at the meeting or any adjournments thereof. Each share of the
fund gets one vote for each dollar of the fund's net asset value the share
represents. If we do not receive enough "for" votes by May 20, 1998, to approve
the proposals being considered at the meeting, the named proxies
6 DETAILED DISCUSSION OF PROXY ISSUES AMERICAN CENTURY INVESTMENTS
may propose adjourning the meeting to allow the gathering of more proxy votes.
An adjournment requires a vote "for" by a majority of the votes present at the
meeting (whether in person or by proxy). The named proxies will vote the "for"
votes they have received in favor of the adjournment, and any "against" or
"abstain" votes will count as votes against adjournment.
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 the meeting. Abstentions and
broker non-votes will, however, be considered to be votes against the proposals
INVESTMENT MANAGER. ACIM is the fund's investment manager. American Century
Services Corporation ("ACSC"), an affiliate of ACIM, provides the fund with
transfer agency services. ACIM and ACSC are wholly-owned subsidiaries of
American Century Companies, Inc. ("ACC"). The mailing address of ACC, ACIM, ACSC
and the fund is P.O. Box 419200, Kansas City, Missouri 64141-6200.
INVESTMENT SUBADVISOR. New RREEF is the fund's subadvisor. The mailing
address of New RREEF is 875 N. Michigan Avenue, 41st Floor, Chicago, Illinois
60611.
ANNUAL REPORT. The fund will furnish, without charge, a copy of its most
recent annual report and semiannual report upon request. To request these
materials, please call American Century at 1-800-345-2021 or 816-531-5575.
PROXY STATEMENT DETAILED DISCUSSION OF PROXY ISSUES 7
SHARE OWNERSHIP
The following table sets forth, as of the close of business on February 27,
1998, the share ownership of those shareholders known by ACIM to own more than
5% of the fund's outstanding shares.
<TABLE>
<CAPTION>
Percent of
Title of Outstanding
Class Name of Record Owner Shares Own Shares
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investor
Class Merrill Lynch Trust Company of 460,570 5.5%
California (FBO RREEF
Management Company)
San Francisco, CA
Charles Schwab & Co. Inc. 793,895 9.5%
San Francisco, CA
Institutional
Class Gregory L. Melchor 84,946 9.3%
Palo Alto, CA
Lafayette College 371,575 40.7%
Easton, PA
North Carolina Engineering 86,173 9.4%
Foundation Inc.
Raleigh, NC
Arntz Builders General Partnership 140,177 15.4%
Novato, CA
Eugene S. Arntz Foundation 46,633 5.1%
Novato, CA
Colorado Cement Masons 79,063 8.7%
Pension Trust Fund
Denver, CO
Trustees of Arntz Builders 57,261 6.3%
Profit Sharing Trust
Novato, CA
</TABLE>
8 SHARE OWNERSHIP AMERICAN CENTURY INVESTMENTS
PROPOSAL 1:
APPROVAL OF NEW
SUBADVISORY AGREEMENT WITH
RREEF AMERICA, L.L.C.
RREEF Real Estate Securities Advisers, L.P. ("RESA") served as the investment
subadvisor to the fund from June 13, 1997 to January 27, 1998 pursuant to an
investment subadvisory agreement between ACIM and RESA (the "Old Subadvisory
Agreement"). RESA was a California limited partnership.
The Old Subadvisory Agreement provided that RESA would make investment
decisions for the fund in accordance with the fund's investment objectives,
policies, restrictions and whatever additional written guidelines it may receive
from ACIM from time to time and that in providing those services, RESA would
supervise the fund's investments and conduct a continual program of investment
evaluation and, if appropriate, sale and reinvestment of the fund's assets. All
investments made by RESA were subject to approval or ratification by ACIM. For
such services, ACIM paid RESA a monthly fee on the first business day of each
month at an annual rate computed at 0.425% of the fund's average daily net
assets.
The Old Subadvisory Agreement also provided, in accordance with the
Investment Company Act of 1940, as amended (the "Investment Company Act"), that
it would terminate automatically in the event of its assignment and may be
terminated by the fund at any time without payment of any penalty on 60 days'
written notice by ACIM, by a majority of Directors of the fund in office at the
time, or by vote of a majority of the fund's outstanding votes. The Old
Subadvisory Agreement was last approved by shareholders of the fund on May 8,
1997.
On January 27, 1998, substantially all of the assets of RESA and certain of
its affiliates were acquired (the "Acquisition") by an indirect, wholly-owned
subsidiary of RoProperty Services, B.V. ("RoProperty Services"), a Dutch
investment management company. The new entity, New RREEF, adopted the name RREEF
America, L.L.C. As a result of the Acquisition, the Old Subadvisory Agreement
automatically terminated on January 27, 1998, and it became necessary to enter
into a new subadvisory agreement with New RREEF (the "New Subadvisory
Agreement"), in order to continue uninterrupted the investment management of the
fund.
The terms of the New Subadvisory Agreement between the fund, New RREEF and
ACIM are identical in all substantive respects to the terms of the Old
Subadvisory Agreement, except for the changes noted on the following page. Under
the New Subadvisory Agreement, New RREEF will supervise the fund's investments
and conduct a continual program of investment eval-
PROXY STATEMENT PROPOSAL 1 9
uation and, if appropriate,sell and reinvest the fund's assets, on the same
terms and conditions as under the Old Subadvisory Agreement. The individual
portfolio managers providing investment advice to the fund will remain the same
as under the Old Subadvisory Agreement. The monthly fee payable by ACIM to New
RREEF for such services will be at an annual rate computed at 0.425% of the
fund's average daily net assets, the same fee paid under the Old Subadvisory
Agreement. Actual fees paid to RESA under the Old Subadvisory Agreement for the
last fiscal year are set forth on the following page under "Supplemental
Information Regarding New RREEF." Such fees would have been the same had the New
Subadvisory Agreement been in effect. The New Subadvisory Agreement appears as
Appendix I to this Proxy Statement.
The only substantive change to the Old Subadvisory Agreement is the addition
of escrow provisions to permit the escrow procedures described below during the
period from February 18, 1998 to the date of shareholder approval of the
proposed New Subadvisory Agreement, if it is obtained. In addition, language
relating to the merger between the RREEF Real Estate Securities Fund with the
fund in June, 1997 was deleted as it was no longer necessary. No other changes
were or will be made to the New Subadvisory Agreement at this time.
As noted earlier, when RESA was acquired by RoProperty Services, the Old
Subadvisory Agreement terminated in accordance with its terms and the Investment
Company Act. ACIM and New RREEF entered into the New Subadvisory Agreement on
the same day so that the fund's investment management program would continue
uninterrupted. The Investment Company Act, however, generally requires that (i)
a majority of the noninterested members of the Board of Directors of the fund
approve the New Subadvisory Agreement and (ii) shareholders approve the New
Subadvisory Agreement, in each case prior to New RREEF receiving any fees under
the New Subadvisory Agreement other than reimbursement of its expenses.
In anticipation of the Acquisition and in accordance with the Investment
Company Act, the Board of Directors of the fund met to consider the New
Subadvisory Agreement and to evaluate whether the terms of the New Subadvisory
Agreement were in the best interests of the fund and its shareholders. At the
meeting, RESA represented that New RREEF would continue to serve as investment
subadvisor after the closing of the Acquisition and prior to obtaining
shareholder approval in a manner consistent with its fiduciary duty to provide
investment subadvisory services to the fund. In addition, RESA represented that
there would be no material changes in personnel providing material services to
the fund pursuant to the New Subadvisory Agreement and no adverse change in the
resources available to New RREEF in connection with providing subadvisory
services to the fund. On January 23, 1998, the Board of Directors, including the
noninterested Directors, unanimously approved the proposed New Subadvisory
Agreement.
10 PROPOSAL 1 AMERICAN CENTURY INVESTMENTS
The Investment Company Act generally prohibits New RREEF from receiving its
subadvisory fee under the New Subadvisory Agreement prior to shareholders
approving the New Subadvisory Agreement. In order to permit New RREEF to receive
such subadvisory fees, the fund, RESA, New RREEF and ACIM sought and obtained
from the Securities and Exchange Commission on February 18, 1998 an exemption
from the Investment Company Act (the "Exemptive Order"). Pursuant to the
Exemptive Order, any investment subadvisory fees that New RREEF would otherwise
have been paid between the date of the Exemptive Order and the date on which
shareholders vote to approve or disapprove the New Subadvisory Agreement will be
placed in an escrow account, and will be paid to New RREEF only if shareholders
approve the proposed New Subadvisory Agreement. If shareholders do not approve
the New Subadvisory Agreement, New RREEF will receive only reimbursement of its
out of pocket expenses with respect to the investment subadvisory services it
provided to the fund and the balance of any money held in escrow will be
remitted to the fund. If the New Subadvisory Agreement is approved by the fund's
shareholders, it will become effective immediately, and will remain in effect,
unless earlier terminated, until May 8, 1999, and will continue from
year-to-year thereafter, subject to approval annually by the Board of Directors
of the fund, including a majority of the noninterested Directors, or by
affirmative vote of a majority of the outstanding votes of the fund. In order to
comply with the Investment Company Act, between January 27, 1998 and the date of
the Exemptive Order, New RREEF received no fees for acting as subadvisor, other
than reimbursement for its actual out of pocket expenses.
Approval of the New Subadvisory Agreement requires the affirmative vote of
the holders of a majority of the outstanding votes of each class of the fund.
For this purpose, the term "majority of the outstanding votes" means the vote of
(i) 67% or more of the votes of the fund present at the meeting, so long as the
holders of more than 50% of the fund's outstanding votes are present or
represented by proxy; or (ii) more than 50% of the outstanding votes of the
fund, whichever is less.
THE DIRECTORS OF THE FUND UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS VOTE
"FOR" THE APPROVAL OF THE NEW SUBADVISORY AGREEMENT.
SUPPLEMENTAL INFORMATION REGARDING NEW RREEF
RESA served as the fund's investment subadvisor since the fund's inception on
June 13, 1997, the date the fund merged with the RREEF Real Estate Securities
Fund. RESA served as the investment advisor to the RREEF Real Estate Securities
Fund from September 21, 1995, its inception date, until its merger with the
fund. New RREEF is an indirect subsidiary of RoProperty Services, B.V., a Dutch
investment management company with a global presence. In addition to the fund,
New RREEF provides investment management services for other private
institutional accounts.
PROXY STATEMENT PROPOSAL 1 11
For the period ended December 31, 1997, ACIM paid $157,974 to RESA for its
services under the Old Subadvisory Agreement.
The directors and principal executive officers of New RREEF and their
principal occupations are listed below.
<TABLE>
<CAPTION>
Name(1) Title or Status Principal Occupation
- -----------------------------------------------------------------------------------------
<S> <C> <C>
King, Jr., Donald A. Member of Management Member of Management Board,
Board, Executive Officer Executive Officer, RREEF
America, L.L.C.; Member of
Management Board, Sr. Vice
President, RREEF Management, L.L.C.
King, James D. Member of Management Member of Management Board,
Board, Executive Officer Executive Officer, RREEF America,
L.L.C.; Member of Management
Board, Sr. Vice President, RREEF
Management, L.L.C.
Greig, D. Wylie Member of Management Member of Management Board,
Board, Executive Officer Executive Officer, RREEF America,
L.L.C.; Member of Management
Board, Sr. Vice President, RREEF
Management, L.L.C.
Steppe, Stephen M. Member of Management Member of Management Board,
Board, Executive Officer Executive Officer, RREEF America,
L.L.C.; Member of Management
Board, Sr. Vice President, RREEF
Management, L.L.C.
Callan, Patrick J. Member of Management Member of Management Board,
Board, Executive Officer Executive Officer, RREEF America,
L.L.C.; Member of Management
Board, Sr. Vice President, RREEF
Management, L.L.C.
Egan, Gerald E. Member of Management Member of Management Board,
Board, Executive Officer Executive Officer, RREEF America,
L.L.C.; Member of Management
Board, Sr. Vice President, RREEF
Management, L.L.C.
de Kreij, Jan A. Member of Management Managing Director and Vice
Rodamco N.V., Board, Executive Officer Chairman Rodamco N.V.; Managing
Coolsingel 120,3000 Director, RoProperty Services B.V.; Vice
AZ Rotterdam, President of Executive Committee,
The Netherlands Robeco Group
Bartram, Chris J. Member of Management Managing Director, Haslemere Estate
Haslemere Estates Board, Executive Officer Management Limited
Management Limited,
46 Berkeley Square,
London W1X 6LA
- ---------------------------------------
(1) Unless otherwise noted, the address for all Management Board Members is 875
N. Michigan Ave., 41st Floor, Chicago, IL 60611.
</TABLE>
12 PROPOSAL 1 AMERICAN CENTURY INVESTMENTS
PROPOSAL 2:
ELECTION OF DIRECTORS
NOMINEES
At the meeting, the shareholders of the fund will be asked to elect nine
members of the Company's Board of Directors. It is intended that the enclosed
Proxy will be voted for the election of the nine people named below as
Directors, unless such authority has been withheld in the Proxy. The term of
office of each person elected will be for one year or until his or her successor
is duly elected and shall qualify. The Company does not intend to hold regular
annual meetings of shareholders. Information regarding each nominee is set forth
following his or her name below.
Name Age Principal Occupation
(Year Elected Director)
- -------------------------------------------------------------------------------
Thomas A. Brown 57 Director of Plains States Development,
(1993) Applied Industrial Technologies, Inc.
Robert W. Doering, M.D. 64 Retired, formerly General
(1993) Surgeon
Andrea C. Hall, Ph.D. 53 Senior Vice President,
(1997) Midwest Research Institute
D.D. (Del) Hock 62 Retired, formerly Chairman, Public Service
(1996) Company of Colorado; Director, Serv-Tech,
Inc.; Director, Hathaway Corporation;
Director, J.D. Edwards & Company
Donald H. Pratt 59 President and Director, Butler
(1995) Manufacturing Company
Lloyd T. Silver, Jr. 69 President, LSC, Inc.,
(1993) Manufacturers Representative
James E. Stowers, Jr.* 73 Chairman of the Board and
(1993) Director, ACC, ACSC and ACIM
James E. Stowers III* 38 Chief Executive Officer and
(1993) Director, ACC, ACSC and ACIM
M. Jeannine Strandjord 51 Senior Vice President and
(1994) Treasurer, Sprint Corporation;
Director, DST Systems, Inc.
- -------------------
* Denotes directors who are "interested persons" (as defined by the
Investment Company Act) of ACIM. Messrs. Stowers, Jr. And Stowers III are
considered interested persons since they serve as officers of, and have
ownership interests in, ACC and its affiliated entities. Messrs. Stowers,
Jr. and Stowers III also serve in similar capacities for other funds
managed by ACIM and its affiliates. Mr. Stowers, Jr. controls ACC by virtue
of his ownership of a majority of its voting stock. Mr. Stowers, Jr. is the
father of Mr. Stowers III.
PROXY STATEMENT PROPOSAL 2 13
The directors and officers as a group own less than 1% of the outstanding
shares of the fund.
Each of the nominees was unanimously nominated by the Board of Directors and
each has agreed to serve as a Director. If any unforeseen event prevents one or
more of the nominees from serving as a Director, your votes will be cast (unless
you have elected to withhold authority as to the election of Directors) for the
election of such person or persons as the Board of Directors shall nominate.
Unless otherwise instructed, the proxies will vote for the re-election of each
Director.
COMMITTEES
The Board of Directors of the Company has established four standing
committees: an Executive Committee, an Audit Committee, a Compliance Committee
and a Nominating Committee.
Messrs. Stowers, Jr., Stowers III and Pratt serve on the Executive Committee
of the Board of Directors. The committee performs the functions of the Board of
Directors between meetings of the Board, subject to the limitations on its power
set out in the Maryland Corporation Law, and except for matters required by the
Investment Company Act to be acted upon by the whole Board.
Ms. Strandjord (chair), Dr. Doering and Mr. Hock serve on the Audit
Committee. The functions of the Audit Committee include recommending the
engagement of the fund's independent auditors, reviewing the arrangements for
and scope of the annual audit, reviewing comments made by the independent
auditors with respect to internal controls and the considerations given or the
corrective action taken by management and reviewing nonaudit services provided
by the independent auditors.
Messrs. Brown (chair), Pratt and Silver and Dr. Hall serve on the Compliance
Committee. The functions of the Compliance Committee include reviewing the
results of the fund's compliance testing program, reviewing quarterly reports
from ACIM to the Board regarding various compliance matters and monitoring
compliance with the fund's Code of Ethics.
The Nominating Committee has as its principal role the consideration and
recommendation of individuals for nomination as directors. This committee also
reviews and makes recommendations to the Board with respect to the composition
of Board committees and other Board-related matters, including its organization,
size, composition, responsibilities, functions and compensation. The members of
the Nominating Committee are Messrs. Pratt (chair), Stowers III and Hock.
For the twelve months ended December 31, 1997, the Board of Directors of the
Company met six times. During the same period, the Audit Committee met four
times, the Compliance Committee met four times and the Executive and Nominating
Committees each met twice. No director attended fewer than 75% of the total
number of Board meetings or meetings of committees on which such Director
served.
14 PROPOSAL 2 AMERICAN CENTURY INVESTMENTS
EXECUTIVE OFFICERS
In addition to Messrs. Stowers, Jr. and Stowers III, the following
individuals, except as noted, are executive officers of the fund:
RICHARD W. INGRAM, 42, President. Mr. Ingram became President in 1998. Mr.
Ingram is also Executive Vice President of Funds Distributor, Inc., the Fund's
distributor ("FDI".)
CHRISTOPHER J. KELLEY, 33, Vice President. Mr. Kelley became Vice President
in 1998. Mr. Kelley is also Vice President and Associate General Counsel of FDI.
MARY A. NELSON, 33, Vice President. Ms. Nelson became Vice President in 1998.
Ms. Nelson is also Vice President of FDI.
MARYANNE L. ROEPKE CPA, 42, Vice President, Treasurer, and Principal
Accounting Officer. Ms. Roepke assumed these positions in 1993. Ms. Roepke is
also Vice President of ACSC.
PATRICK A. LOOBY, 39, Vice President, Secretary, and Associate General
Counsel. Mr. Looby assumed these positions in 1993. Mr. Looby is also Vice
President and Associate General Counsel of ACSC.
MERELE A. MAY, 35, Controller. Mr. May became Controller in 1993.
COMPENSATION
The Directors of the Company serve as Directors for 31 of the 66 funds
advised by ACIM and its affiliates. Each non-interested Director, i.e., all
directors other than Mr. Stowers, Jr. and Mr. Stowers III, receives for service
as a member of the Board of all 31 funds an annual director's fee of $44,000,
and an additional fee of $1,000 per regular Board meeting attended and $500 per
special Board meeting and committee meeting attended. In addition, those
directors that also serve as chairman of a committee of the Board of Directors
receive an additional $2,000 for acting as chairman. These fees and expenses are
divided among the 31 funds based upon their relative net assets. Under the terms
of the management agreement with ACIM, the funds are responsible for paying such
fees and expenses.
The table on the following page sets forth the total compensation received by
each non-interested Director from the Company for its most recent fiscal year,
as well as the total compensation received by each Director from the American
Century family of funds as a whole for the twelve months ended December 31,
1997. Messrs. Stowers, Jr. and Stowers III receive no compensation from the
funds for serving as a Director. The salaries of Messrs. Stowers, Jr. and
Stowers III are paid by ACIM. No officer of the funds received compensation from
the funds during its most recent fiscal year. No director receives pension or
retirement benefits from the funds.
PROXY STATEMENT PROPOSAL 2 15
<TABLE>
<CAPTION>
TOTAL COMPENSATION FROM THE COMPANY
Brown Doering Hall(1) Hock Pratt Silver Strandjord Lundgaard
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$1,416 1,168 208 1,168 1,416 1,156 1,152 999
TOTAL COMPENSATION FROM ALL AMERICAN CENTURY FUNDS
Brown Doering Hall(1) Hock Pratt Silver Strandjord Lundgaard
- -------------------------------------------------------------------------------------------------
$60,000 49,500 8,833 49,500 60,000 49,000 48,833 42,353
- -------------------------------
(1) Dr. Hall replaced Mr. Lundgaard as a director effective November 1, 1997.
* Totals include amounts deferred at the election of the Directors under the
American Century Mutual Funds Deferred Compensation Plan for Non-Interested
Directors. The total amount of deferred compensation included in the
preceding table is as follows: Mr. Brown, $6,900; Mr. Hock, $42,333; Mr.
Lundgaard, $18,167; Mr. Pratt, $15,180; Mr. Silver, $42,333; and Ms.
Strandjord, $36,590.
</TABLE>
DEFERRED COMPENSATION
In September 1997, the Company adopted the Amended and Restated American
Century Mutual Funds Deferred Compensation Plan for Non-Interested Directors
(the "Plan"). Under the Plan, the non-interested person Directors may defer
receipt of all or any part of the fees to be paid to them for serving as
Directors of American Century mutual funds.
Under the Plan, all deferred fees are credited to an account established in
the name of the participating Director. The amounts credited to the account then
increase or decrease, as the case may be, in accordance with the performance of
one or more of the funds in the American Century family of funds that are
selected by the participating Director. The account balance continues to
fluctuate in accordance with the performance of the selected fund or funds until
final payment of all amounts credited to the account. Directors are allowed to
change their designation of funds from time to time.
No deferred fees are payable until such time as a participating Director
resigns, retires or otherwise ceases to be a member of the Board of Directors.
Directors may receive deferred fee account balances in either a lump sum payment
or in payments made over a period not to exceed ten years. Upon the death of a
Director, all remaining deferred fee account balances are paid to the Director's
beneficiary or, if none, to the Director's estate.
The Plan is an unfunded plan and, accordingly, the Company has no obligation
to segregate assets to secure or fund the deferred fees. The rights of Directors
to receive their deferred fee account balances are the same as rights of a
general unsecured creditor of the Company. The Plan may be terminated at any
time by the administrative committee of the Plan. If terminated, all deferred
fee account balances will be paid in a lump sum.
VOTING INFORMATION
Each nominee will be re-elected to the Board of Directors of the Company if
he or she receives the approval of a plurality of the votes of that Company
represented at the meeting, provided at least a quorum
16 PROPOSAL 2 AMERICAN CENTURY INVESTMENTS
(50% of the outstanding votes), is represented in person or by proxy. By
completing the proxy, you give the named proxies the right to cast your votes.
If you elect to withhold authority for any nominees, you may do so by striking a
line through the nominee name on the proxy, as further explained on the proxy
itself.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" ALL NOMINEES.
PROPOSAL 3:
RATIFICATION OF INDEPENDENT
AUDITORS
The Investment Company Act, which is the primary federal law that regulates
the Company, requires every registered investment company be audited at least
once a year by independent auditors selected by the Board of Directors including
a majority of the Directors who are not "interested persons" (as defined in the
Investment Company Act). The Investment Company Act also requires that the
selection be submitted for ratification by the shareholders at their next
meeting following the selection.
At the meeting, the shareholders of the Company will be asked to ratify the
selection of Deloitte & Touche LLP as the Company's independent auditors. The
Board of Directors chose Deloitte & Touche upon the recommendation of the Audit
Committee of the Board. The Board selected Deloitte & Touche based upon its
expertise as an auditor of investment companies, the quality of its audit
services, its commitment of experienced audit personnel to the fund, its tax and
international experience in the mutual fund area, and its use and commitment of
technology in performing its audit functions.
Deloitte & Touche has no direct or material indirect financial interest in
the Company, ACIM, or ACC, other than receipt of fees for services to the
Company. Deloitte & Touche representatives will be present at the meeting and
will have an opportunity to make a statement to the shareholders and to respond
to questions.
The approval of a majority of the votes of the Company represented at the
meeting, provided at least a quorum is represented in person or by proxy, is
necessary to ratify the selection of the independent auditors. Unless otherwise
instructed, the proxies will vote for the ratification of the selection of
Deloitte & Touche LLP as the Company's independent auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP.
PROXY STATEMENT PROPOSAL 2 17
OTHER MATTERS
OTHER BUSINESS TO BE BROUGHT BEFORE THE MEETING.
The Board of Directors knows of no other business to be brought before the
meeting. However, if any other matters are properly brought 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.
SUBMISSION OF SHAREHOLDER PROPOSALS.
The fund does not hold annual shareholder meetings. Shareholders wishing to
submit proposals for inclusion in a proxy statement for a subsequent shareholder
meeting should send their written proposals to Patrick A. Looby, Vice President,
American Century Investments, P.O. Box 419200, Kansas City, Missouri 64141-6200.
NOTICE TO BANKS, BROKER-DEALERS, AND VOTING TRUSTEES AND THEIR NOMINEES.
Please advise the fund, in care of American Century Investments, P.O. Box
419200, Kansas City, Missouri 64141-6200, whether other people are beneficial
owners of shares for which proxies are being solicited and, if so, the number of
copies of the proxy statement you wish to receive in order to supply copies to
the beneficial owners of the respective shares.
March 20, 1998 Patrick A. Looby
Vice President
18 OTHER MATTERS AMERICAN CENTURY INVESTMENTS
APPENDIX I
PROPOSED NEW SUBADVISORY AGREEMENT
THIS INVESTMENT SUBADVISORY AGREEMENT ("Agreement") is made as of the 27th
day of January, 1998, by and among AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
("ACCP"), a Maryland corporation acting on behalf of American Century Real
Estate Fund (the "ACRE Fund"), a series of shares of ACCP, AMERICAN CENTURY
INVESTMENT MANAGEMENT, INC. ("ACIM"), a Delaware corporation, and RREEF
AMERICA L.L.C., f/k/a ROMEO AMERICA L.L.C. (the "Subadvisor"), a Delaware
limited liability company.
WITNESSETH:
WHEREAS, ACCP is an open-end management investment company registered with
the Securities and Exchange Commission under the Investment Company Act of
1940, as amended; and
WHEREAS, ACIM and the Subadvisor are both investment advisors registered with
the Securities and Exchange Commission under the Investment Advisers Act of
1940, as amended; and
WHEREAS, ACCP has engaged ACIM to serve as the investment manager for the
ACRE Fund pursuant to a Management Agreement dated May 8, 1997; and
WHEREAS, ACCP and ACIM desire to engage the Subadvisor as a subadvisor for
the ACRE Fund, and the Subadvisor desires to accept such engagement; and
WHEREAS, the Boards of Directors of ACCP, ACIM and the Subadvisor have
determined that it is advisable to enter into this Agreement.
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. INVESTMENT DESCRIPTION -- APPOINTMENT.
ACCP desires to appoint the Subadvisor to provide certain advisory services
to the ACRE Fund in accordance with the ACRE Fund's Prospectus and Statement
of Additional Information as in effect and as amended from time to time, in
such manner and to such extent as may be approved by the Board of Directors
of ACCP. ACCP agrees to provide the Subadvisor copies of all amendments to
the ACRE Fund's Prospectus and Statement of Additional Information on an
ongoing
PROXY STATEMENT APPENDIX 1 19
basis. In consideration for the compensation set forth below, the Subadvisor
accepts the appointment and agrees to furnish the services described herein.
2. SERVICES AS INVESTMENT SUBADVISOR.
(a)Subject to the general supervision of the Board of Directors of ACCP, and
of ACIM, the Subadvisor will (i) act in conformity with the ACRE Fund's
Prospectus and Statement of Additional Information, the Investment Company
Act of 1940, the Investment Advisers Act of 1940, the Internal Revenue
Code and all other applicable federal and state laws and regulations, as
the same may from time to time be amended; (ii) make investment decisions
for the ACRE Fund in accordance with the ACRE Fund's investment objective
and policies as stated in the ACRE Fund's Prospectus and Statement of
Additional Information and with such written guidelines as ACIM may from
time to time provide to the Subadvisor; (iii) place purchase and sale
orders on behalf of the ACRE Fund; (iv) maintain books and records with
respect to the securities transactions of the ACRE Fund and furnish ACCP's
Board of Directors such periodic, regular and special reports as the Board
may request; and (v) treat confidentially and as proprietary information
of ACCP all records and other information related to ACCP and its prior,
present or potential shareholders. The Subadvisor will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to
and approval in writing by ACCP, which approval shall not be unreasonably
withheld. Such records may not be withheld when the Subadvisor may be
exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted
authorities, or when so requested by ACCP, but in any case the Subadvisor
will provide reasonable notice to ACCP prior to disclosing any such
records or information.
(b)In providing those services, the Subadvisor will supervise the ACRE
Fund's investments and conduct a continual program of investment,
evaluation and, if appropriate, sale and reinvestment of the ACRE Fund's
assets. In addition, the Subadvisor will furnish ACCP or ACIM whatever
information, including statistical data, ACCP or ACIM may reasonably
request with respect to the instruments that the ACRE Fund may hold or
contemplate purchasing.
(c)The Subadvisor will at all times comply with the policies adopted
20 APPENDIX 1 AMERICAN CENTURY INVESTMENTS
by ACCP's Board of Directors of which it has received written notice. If
the Subadvisor shall believe that a change in any of such policies shall
be advisable, it shall recommend such change to ACIM and the Board of
Directors of ACCP. Any change to any such policies shall be approved by
ACCP's Board of Directors prior to the implementation of such change.
3. BROKERAGE.
(a)In executing transactions for the ACRE Fund and selecting brokers or
dealers, the Subadvisor will use its best efforts to obtain the best net
price and execution available and shall execute or direct the execution of
all such transactions as permitted by law and in a manner that best suits
the interest of the ACRE Fund and its shareholders. In assessing the best
net price and execution available for any ACRE Fund transaction, the
Subadvisor will consider all factors it deems relevant including, but not
limited to, breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker
or dealer and the reasonableness of any commission for the specific
transaction and on a continuing basis. Consistent with this obligation,
when the execution and price offered by two or more brokers or dealers are
comparable, the Subadvisor may, at its discretion, execute transactions
with brokers and dealers who provide the ACRE Fund with research advice
and other services, but in all instances best net price and execution
shall control. The Subadvisor is authorized to place purchase and sale
orders for the ACRE Fund with brokers and/or dealers subject to the
supervision of ACIM and the Board of Directors of ACCP and in accordance
with the limitations set forth in the registration statement for the ACRE
Fund shares then in effect.
(b)On occasions when the Subadvisor deems the purchase or sale of a security
to be in the best interest of the ACRE Fund as well as one or more of its
other clients, the Subadvisor may to the extent permitted by applicable
law, but shall not be obligated to, aggregate the securities to be sold or
purchased with those of its other clients. In such event, allocation of
the securities so purchased or sold will be made by the Subadvisor in a
manner it considers to be equitable and consistent with its fiduciary
obligations to ACCP and to such other clients. Securities so allocated
will be delivered in proportion to the consideration paid. The expenses
incurred in the transaction shall be allocated pro-rata.
4. INFORMATION PROVIDED TO ACCP.
(a)The Subadvisor will keep ACCP and ACIM informed of developments
materially affecting the ACRE Fund and will take initiative
PROXY STATEMENT APPENDIX 1 21
to furnish ACCP and ACIM on at least a quarterly basis with whatever
information the Subadvisor and ACIM believe is appropriate for this
purpose. Such regular quarterly reports shall include (i) a discussion of
the ACRE Fund's performance relative to its benchmark; (ii) an assessment
of investment decisions and analysis of the components of the ACRE Fund's
performance; (iii) the decisions it has made with respect to the ACRE
Fund's assets and the purchase and sale of its portfolio securities; (iv)
the reasons for such decisions and related actions; and (v) the extent to
which those decisions have been implemented.
(b)The Subadvisor will provide ACCP and ACIM with such investment records,
ledgers, accounting and statistical data, and other information as ACCP
and ACIM require for the preparation of registration statements, periodic
and other reports and other documents required by federal and state laws
and regulations, and particularly as may be required for the periodic
review, renewal, amendment or termination of this Agreement, and such
additional documents and information as ACCP and ACIM may reasonably
request for the management of their affairs. At least twice annually a
representative of the Subadvisor shall attend a meeting of the Board of
Directors to make a presentation on the ACRE Fund's performance during the
preceding six and twelve months periods, as well as such other time
periods as the Subadvisor and ACIM believe is appropriate.
(c)The Subadvisor shall furnish to regulatory authorities any information or
reports in connection with such services as may be lawfully requested. The
Subadvisor shall also, at ACCP's request, certify to ACCP's independent
auditors that sales or purchases aggregated with those of other clients of
the Subadvisor, as described in Section 3 above, were equitably allocated.
(d)In compliance with the requirements of the Investment Company Act, the
Subadvisor hereby agrees that all records that it maintains for the ACRE
Fund are the property of ACCP and further agrees to surrender to ACCP
promptly upon ACCP's request any of such records. In addition, the
Subadvisor agrees to cooperate with ACCP and ACIM when either of them is
being examined by any regulatory authorities, and specifically agrees to
promptly comply with any request by such authorities to provide
information or records. The Subadvisor further agrees to preserve for the
periods of time prescribed by the Investment Company Act and the
Investment Advisers Act the records required to be maintained thereunder.
22 APPENDIX 1 AMERICAN CENTURY INVESTMENTS
5. LIABILITY AND INDEMNIFICATION.
(a)The Subadvisor shall be responsible for the exercise of reasonable care
in carrying out its responsibilities hereunder; provided, however, that no
provision of this Agreement be construed to protect any trustee, director,
officer, agent or employee of the Subadvisor or an affiliate from
liability by reason of gross negligence, willful malfeasance, bad faith in
the performance of such person's duties or by reason of reckless disregard
of obligations and duties hereunder. No party shall be liable for any
actions or omissions taken or made pursuant to this Agreement unless such
actions or omissions result from gross negligence, willful malfeasance, or
bad faith in the performance of such party's duties or by reason of
reckless disregard of obligations and duties hereunder.
(b)ACIM agrees to indemnify and hold harmless the Subadvisor and its
officers, directors, employees, agents, affiliates and each person, if
any, who controls the Subadvisor within the meaning of the Securities Act
of 1933 (collectively, the "Indemnified Parties" for purposes of this
Section 5(b)) against any losses, claims, expenses, damages or liabilities
(including amounts paid in settlement thereof) or litigation expenses
(including legal and other expenses) (collectively, "Losses"), to which
the Indemnified Parties may become subject, insofar as such Losses result
from (a) a breach by ACCP or ACIM of a material provision of this
Agreement, (b) gross negligence, willful malfeasance or bad faith in the
performance by ACCP or ACIM of its respective duties or reckless disregard
by ACCP or ACIM of its respective duties hereunder, or (c) any violation
by ACCP or ACIM of any applicable law or regulation where the Subadvisor
was not contributing to or a part of the violation. ACIM will reimburse
any legal or other expenses reasonably incurred by the Indemnified Parties
in connection with investigating or defending any such Losses. ACIM shall
not be liable for indemnification hereunder if such Losses are
attributable to the gross negligence or misconduct of the Subadvisor in
performing its obligations under this Agreement.
(c)The Subadvisor agrees to indemnify and hold harmless ACIM and ACCP, and
their respective officers, directors, employees, agents, affiliates and
each person, if any, who controls ACIM or ACCP within the meaning of the
Securities Act of 1933 (collectively, the "Indemnified Parties" for
purposes of this Section 5(c)) against any Losses to which the Indemnified
Parties may become subject, insofar as such Losses result from (a) a
breach by the Subadvisor of a material provision of this Agreement, (b)
gross negligence, willful malfeasance, or bad faith in performance by the
Subadvisor
PROXY STATEMENT APPENDIX 1 23
or its affiliates of their duties or reckless disregard by the Subadvisor
or its affiliates of their duties hereunder, or (c) any violation by the
Subadvisor of any applicable law or regulation where neither ACCP or ACIM
was contributing to or was a part of the violation. The Subadvisor will
reimburse any legal or other expenses reasonably incurred by the
Indemnified Parties in connection with investigating or defending any such
Losses. The Subadvisor shall not be liable for indemnification hereunder
if such Losses are attributable to the gross negligence or misconduct of
ACIM or ACCP in performing their obligations under this Agreement.
(d)Promptly after receipt by an indemnified party hereunder of notice of the
commencement of action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party hereunder, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under this Section 5.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish to, assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election to assume the
defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 5 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(e)If the indemnifying party assumes the defense of any such action, the
indemnifying party shall not, without the prior written consent of the
indemnified parties in such action, settle or compromise the liability of
the indemnified parties in such action, or permit a default or consent to
the entry of any judgment in respect thereof, unless in connection with
such settlement, compromise or consent, each indemnified party receives
from such claimant an unconditional release from all liability in respect
of such claim.
6. COMPENSATION.
(a)In consideration of the services rendered pursuant to this Agreement,
ACIM will pay the Subadvisor a per annum management fee (the "Applicable
Fee"), as follows:
24 APPENDIX 1 AMERICAN CENTURY INVESTMENTS
Name of Series Applicable Fee
- --------------------------------------------------------------------------------
American Century Real Estate Fund 0.425%
(b)On the first business day of each month, ACIM shall pay the Subadvisor
the Applicable Fee for the previous month. The fee for the previous month
shall be calculated by multiplying the Applicable Fee for such series by
the aggregate average daily closing value of all classes of the series'
net assets during the previous month, and further multiplying that product
by a fraction, the numerator of which shall be the number of days in the
previous month, and the denominator of which shall be 365 (366 in leap
years).
(c)In the event that the Board of Directors of ACCP shall determine to issue
any additional series of shares for which it is proposed that the
Subadvisor serve as investment manager, ACCP, ACIM and the Subadvisor
shall enter into an Addendum to this Agreement setting forth the name of
the series, the Applicable Fee and such other terms and conditions as are
applicable to the management of such series of shares.
(d)The Subadvisor shall have no right to obtain compensation directly from
the ACRE Fund or ACCP for services provided hereunder and agrees to look
solely to ACIM for payment of fees due. Upon termination of this Agreement
before the end of a month, or in the event the Agreement begins after the
beginning of the month, the fee for that month shall be prorated according
to the proportion that such period bears to the full monthly period and
shall be payable upon the date of termination of this Agreement.
(e)Notwithstanding anything else set forth herein, ACIM shall deposit into
an interest-bearing escrow account maintained by an unaffiliated financial
institution the Applicable Fee earned by the Subadvisor from and after the
later of (i) the day on which the acquisition of the Subadvisor by ROMEO
U.S. Group, Inc., a Delaware corporation, is closed (the "Closing") and
(ii) the date on which relief from Section 15(a) of the Investment Company
Act of 1940 is granted (the "Order Date") (Investment Company Act of 1940,
File No. 812-10932, filed with the Securities Exchange Commission,
December 29, 1997, as amended February 3, 1998) to but not including the
date on which the shareholders of the ACRE Fund have approved this
Agreement; provided, however, that any fees (other than expenses) earned
by the Subadvisor during the time period between the Closing and the Order
Date shall not be paid into the escrow account by ACIM and shall be
refunded to the ACRE Fund. As soon as
PROXY STATEMENT APPENDIX 1 25
practicable after the date on which this Agreement is approved by the
shareholders of the ACRE Fund in accordance with Section 15(a) of 1940, as
amended, ACIM agrees to deliver to the escrow agent a certificate from an
officer of ACIM who is not affiliated with the Subadvisor stating that
this Agreement has been approved by the shareholders of the ACRE Fund and
that moneys held in escrow are to be delivered to the Subadvisor.
7. EXPENSES.
The Subadvisor will bear all of its expenses in connection with the
performance of its services under this Agreement, which expenses shall not
include brokerage fees or commissions in connection with the execution of
securities transactions.
8. SERVICES TO OTHER COMPANIES OR ACCOUNTS.
ACCP understands that the Subadvisor or its affiliates now acts and will
continue to act as investment advisor to other clients. ACCP has no objection
to the Subadvisor so acting, provided that, as described in Section 3 above,
whenever the ACRE Fund and one or more other client of the Subadvisor have
funds available for investment, investments suitable and appropriate for each
will be allocated equitably to each entity in accordance with procedures,
with no preference given to other clients. Similarly, opportunities to sell
securities will be allocated in an equitable manner, with no preference given
to other clients. In addition, ACCP understands that the persons employed by
the Subadvisor to assist in the performance of the Subadvisor's duties
hereunder will not devote their full time to such service and nothing
contained herein shall be deemed to limit or restrict the right of the
Subadvisor of any affiliate of the Subadvisor to engage in and devote time
and attention to other business or to render services of whatever kind or
nature. Further, from time to time, the Subadvisor may refer or introduce
certain institutional investors and existing clients of the Subadvisor and
its affiliates to ACCP. ACCP understands that nothing herein shall be deemed
to limit or restrict the right of the Subadvisor, in the event the
Subadvisor's clients purchase shares of ACCP, to subsequently suggest or
induce such clients to redeem such shares and open a separate advisory
account with the Subadvisor.
9. TERMS OF AGREEMENT.
This Agreement shall become effective as of the date first written above and
shall continue until May 8, 1999 and thereafter so long as such continuance
is specifically approved at least annually by (i) the Board of Directors of
ACCP or (ii) a vote of a majority of the Fund's outstanding voting
securities, provided that in either event the continuance is also
26 APPENDIX 1 AMERICAN CENTURY INVESTMENTS
approved by a majority of the Board of Directors who are not interested
persons (as defined in the Investment Company Act) of any party to this
Agreement, by a vote cast at a meeting called for the purpose of voting on
such approval. This Agreement is terminable without penalty on 60 days'
written notice by the Board of Directors of ACCP, or by vote of holders of a
majority of the ACRE Fund's shares, or upon six months' written notice by the
Subadvisor, and will terminate automatically upon any termination of the
investment management agreement between ACCP and ACIM. This Agreement will
terminate automatically in the event of its assignment. The Subadvisor agrees
to notify ACCP of any circumstances that might result in this Agreement being
deemed to be assigned.
10. REPRESENTATIONS OF ACIM, THE SUBADVISOR AND ACCP.
(a)ACIM and the Subadvisor each hereby represents that it is registered as
an investment advisor under the Investment Advisers Act, that it will use
its reasonable best efforts to maintain such registration, and that it
will promptly notify the other if it ceases to be so registered, if its
registration is suspended for any reason, or if it is notified by any
regulatory organization or court of competent jurisdiction that it should
show cause why its registration should not be suspended or terminated.
ACIM and the Subadvisor each further represents that it is registered
under the laws of all jurisdictions in which the conduct of its business
hereunder requires such registration.
(b)ACCP and ACIM represent and warrant that (i) the appointment of the
Subadvisor has been duly authorized; and (ii) each of them has full power
and authority to execute and deliver this Agreement and to perform the
services contemplated hereunder, and such execution, delivery and
performance will not cause either to be in violation of its Articles of
Incorporation, Bylaws, or any material laws.
(c)The Subadvisor represents and warrants that (i) its service as subadvisor
hereunder has been duly authorized; and (ii) it has full power and
authority to execute and deliver this Agreement and to perform the
services contemplated hereunder, and such execution, delivery and
performance will not cause it to be in violation of its organizational
documents, its Bylaws or material laws.
PROXY STATEMENT APPENDIX 1 27
11. AMENDMENT OF THIS AGREEMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.
12. LIMITATION OF LIABILITY.
This Agreement has been executed on behalf of ACCP by the undersigned officer
of ACCP solely in his capacity as an officer of ACCP.
13. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties hereto on
the subject matter described herein.
14. INDEPENDENT CONTRACTOR.
In the performance of its duties hereunder, the Subadvisor is and shall be an
independent contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent ACCP or ACIM in
any way, or otherwise be deemed to be an agent of ACCP or ACIM.
15. SEVERABILITY.
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or similar authority, the remainder of this Agreement
shall not be affected thereby.
16. 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.
28 APPENDIX 1 AMERICAN CENTURY INVESTMENTS
To the Subadvisor:
RREEF America, L.L.C.
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 or ACIM:
American Century Investments
4500 Main Street
Kansas City, Missouri 64111
(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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first written
above.
RREEF AMERICA L.L.C.
By: /s/ Kim G. Redding
Name: Kim G. Redding
Title: Senior Vice President
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
By: /s/ Patrick A. Looby
Name: Patrick A. Looby
Title: Vice President
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
By: /s/ Robert C. Puff Jr.
Name: Robert C. Puff Jr.
Title: President
PROXY STATEMENT APPENDIX 1 29
[american century logo]
American
Century(sm)
9803 [recycled logo]
SH-BKT-11747 Recycled
