Registration No. 33-90762
811-9016
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No. -----
Post-Effective Amendment No. 1 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 X
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Amendment No. 2 X
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RREEF SECURITIES FUND, INC.
(Exact name of Registrant as Specified in Charter)
650 California Street, San Francisco, CA 94108
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (415) 781-3300
Arthur Don
D'Ancona & Pflaum
30 North LaSalle Street
Chicago, Illinois 60602
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
X immediately upon filing pursuant to paragraph 485(b)
on (date) pursuant to paragraph 485(b)
60 days after filing pursuant to paragraph 485(a)(1)
on (date) pursuant to paragraph 485(a)(1)
75 days after filing pursuant to paragraph 485 (a)(2)
on (date) pursuant to paragraph 485(a)(2) of rule 485.
The Registrant has registered an indefinite amount of shares under the
Securities Act of 1933, pursuant to Rule 24f-2 (a)(1) under the Investment
Company Act of 1940. Registrant's Rule 24f-2 Notice for the fiscal year ended
October 31, 1995 was filed on January 5, 1996.
<PAGE>
FORM N-1A
RREEF SECURITIES FUND, INC.
REGISTRATION STATEMENT NO. 33-90762 UNDER THE
SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 1
AND REGISTRATION STATEMENT NO. 811-9016 UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 2
CROSS REFERENCE SHEET
N-1A
ITEM NO. Prospectus Caption or Placement
1 Front Cover
2 Fees and Expenses
3 Financial Highlights
4 Investment Objective and Policies; The Fund
5 Investment Objective and Policies; Management
of the Fund; How to Purchase Shares; How to
Redeem Shares
6 The Fund; Certain Shareholders of the Fund;
Shareholder Inquiries; Dividends,
Distributions and Taxes
7 How to Purchase Shares; Calculation of Net
Asset Value; Dividends, Distributions and
Taxes
8 How to Redeem Shares
9 (Not Applicable)
Part B Caption or Placement
10 Cover Page
11 Table of Contents
12 (Not Applicable)
13 Fundamental Investment Restrictions;
Non-Fundamental Investment Restrictions and
Other Policies; Additional Information
Concerning Certain Investment Techniques;
Portfolio Transactions
14 Management of the Fund
15 See Prospectus-Certain Shareholders of the
Fund
16 Investment Advisory Services; Custodian;
Legal Counsel and Auditors
17 Portfolio Transactions
18 See Prospectus-The Fund
19 In kind Purchases of Shares of the Fund;
Additional Information on Redemptions; See
<PAGE>
also Prospectus - Calculation of Net Asset
Value
20 Additional Information on Tax Issues; See
also Prospectus-Dividends, Distributions and
Taxes
21 (Not Applicable)
22 Calculation of Performance Data
23 Financial Statements
<PAGE>
RREEF REAL ESTATE SECURITIES FUND
SUPPLEMENT DATED JANUARY 24, 1996 TO
THE PROSPECTUS DATED AUGUST 1, 1995
The following is inserted after the section entitled "Fees and
Expenses" on page 3 of the Prospectus:
The following financial highlights have been audited by Deloitte &
Touche LLP, independent auditors of the RREEF Real Estate Securities Fund (the
"Fund"). This information should be read in conjunction with the financial
statements and notes thereto which appear in the Annual Report for the year
ended October 31, 1995, and which are contained in the Statement of Additional
Information. Further information about the performance of the Fund is contained
in the Annual Report which may be obtained without charge from the Fund.
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<CAPTION>
FINANCIAL HIGHLIGHTS
(FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<S> <C>
PERIOD FROM
SEPTEMBER 21, 1995*
TO OCTOBER 31, 1995
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
Income from investment operations:
Net investment income 0.07
Net unrealized loss on investments (0.25)
Total from investment operations (0.18)
NET ASSET VALUE, END OF PERIOD $ 9.82
AGGREGATE TOTAL RETURN (1.80%)
RATIOS/SUPPLEMENTAL DATA:
Net expenses as a percentage of
average net assets 1.50% **
Net investment income as a percentage of
average net assets 6.66% **
Portfolio turnover rate 0%
Net assets, end of period (000's) $ 2,983
The Adviser has voluntarily agreed to waive its
management fee and reimburse certain expenses
incurred by the Fund. The Custodian has offset
part of its fees for balance credits given to the
Fund. Without the waiver and offset of fees and
reimbursement of expenses, the ratios of expenses
and net income as a percentage of average net assets
would have been:
Net expenses as a percentage of
average net assets 14.83% **
Net investment income as a percentage of
average net assets (6.67%)**
* Commencement of Operations
** Annualized
</TABLE>
<PAGE>
RREEF
REAL ESTATE
SECURITIES FUND
PROSPECTUS AUGUST 1, 1995
RREEF
The RREEF Funds
650 California Street
San Francisco, California 94108
(800) 909-9234 (415) 781-3300
RREEF Real Estate Securities Fund (the "Fund") is a series of RREEF Securities
Fund, Inc. (the "Company") which is a non-diversified, open-end management
investment company. The Fund's primary objective is long-term capital
appreciation. Current income is a secondary objective. The Fund seeks to achieve
its objective by investing primarily in securities issued by Real Estate
Investment Trusts ("REITs").
The minimum initial investment in the Fund is $500,000. The Fund is 100%
no-load. There are no sales charges and no 12b-1 marketing fees.
The Fund's investment portfolio is managed by RREEF Real Estate Advisers L.P.
(the "Adviser").
This prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Please read this prospectus
and retain it for future reference. A Statement of Additional Information dated
August 1, 1995 has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. A copy of the Statement of Additional
Information may be obtained without charge by writing to or calling the Fund at
the above address or telephone number.
THESE SECURITIES 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 UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
PAGE
Fees and Expenses 3
Investment Objectives and Policies 4
Calculation of Net Asset Value 8
Dividends, Distributions and Taxes 9
The Fund 10
Mangement of the Fund 10
Performance History of the Adviser 11
How to Purchase Shares 13
How to Redeem Shares 14
Certain Shareholders of the Fund 16
Performance Information 16
Shareholder Inquiries 16
<PAGE>
FEES AND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load None
Redemption Fee 1.00%(1)
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees(2) 0.75%
12b-1 Fees None
Other Expenses (after expense reimbursement)(3) 0.75%
Total Fund Operating Expenses (after expense reimbursement)(3) 1.50%
(1) A redemption fee of 1.00% of the amount redeemed, payable to the Fund, will
be charged on all redemptions within one year of purchase.
(2) Management Fees are reduced with respect to net assets of the Fund in
excess of $100 million. See "Management of the Fund".
(3) This information is based on estimated amounts for the Fund's current
fiscal year. RREEF Real Estate Securities Advisers L.P. (the "Adviser") has
agreed to absorb certain Fund operating expenses, or waive a portion of its
management fee, through at least the end of the fiscal year ended October
31, 1996 to the extent the total Fund operating expenses exceed 1.5%.
Absent any expense reimbursement or fee waiver, it is estimated that Other
Expenses would be 1.75% of average net assets and that Total Fund Operating
Expenses would be 2.5% of average net assets.
This table is intended to assist you in understanding the various costs and
expenses that an investor in the Fund will bear directly or indirectly. THE 5%
ANNUAL RATE OF RETURN USED IN THE EXAMPLE BELOW IS ONLY FOR ILLUSTRATION AND IS
NOT INTENDED TO BE INDICATIVE OF THE FUTURE PERFORMANCE OF THE FUND, WHICH MAY
BE MORE OR LESS THAN THE ASSUMED RATE. FUTURE EXPENSES MAY BE MORE OR LESS THAN
THOSE SHOWN. You can refer to the section "How to Purchase Shares" and
"Management of Fund" for more information on transaction and operating expenses
of the Fund.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each period:
1 YEAR 3 YEARS
$25 $47
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Fund's primary investment objective is long-term capital appreciation.
Current income is a secondary consideration. The Fund will seek to achieve its
objective by investing primarily in securities issued by Real Estate Investment
Trusts ("REITs"). In addition, the Fund may invest in the securities of
companies which are principally engaged in the real estate industry. There can
be no assurance that the Fund will achieve its objective.
Under normal conditions, the Fund will invest not less than 65% of its total
assets in equity securities of companies which are principally engaged in the
real estate industry. Equity securities include common stock, preferred stock
and securities convertible into common stock. A company will be considered to be
"principally engaged in the real estate industry" if, in the opinion of RREEF
Real Estate Securities Advisers L.P., the Fund's investment adviser (the
"Adviser"), at the time its securities are purchased by the Fund, at least 50%
of its revenues or at least 50% of the market value of its assets, is
attributable to the ownership, construction, management or sale of residential,
commercial or industrial real estate. Companies principally engaged in the real
estate industry may include, among others, equity REITs and real estate master
limited partnerships, mortgage REITs, and real estate brokers and developers.
The specific risks of investing in companies principally engaged in the real
estate industry are summarized below under the heading "Investment
Considerations and Risks."
The Fund may also invest up to 35% of its total assets in other securities.
Other securities may include debt securities and equity securities of companies
not principally engaged in the real estate industry. See "Debt Securities."
REITs pool investors' funds for investment primarily in income producing real
estate or real estate related loans or interests. A REIT is not taxed on income
distributed to shareholders if it complies with various requirements relating to
its organization, ownership, assets and income and with the requirement that it
distribute to its shareholders at least 95% of its taxable income (other than
net capital gains) for each taxable year. REITs can generally be classified as
equity REITs, mortgage REITs and hybrid REITs. Equity REITs invest the majority
of their assets directly in real property and derive their income primarily from
rents. Equity REITs can also realize capital gains by selling property that has
appreciated in value. Mortgage REITs invest the majority of their assets in real
estate mortgages and derive their income primarily from interest payments.
Hybrid REITs combine the characteristics of both equity REITs and mortgage
REITs.
Debt Securities. The Fund may invest in fixed income securities for income or as
a defensive strategy when the Adviser believes adverse economic or market
conditions exist. As a temporary defensive strategy, the Adviser may invest part
or all of the Fund's assets in debt securities. The value of fixed income
securities is sensitive to interest rate changes as well as the financial
strength of the debtor. When interest rates go down, debt securities in the
portfolio tend to appreciate in value. Conversely, when interest rates go up,
such securities tend to depreciate in value. Generally, the debt securities in
which the Fund may invest are investment grade securities. These are securities
rated in the four highest grades assigned by Moody's Investors Service, Inc. or
Standard and Poor's Corporation or that are unrated but deemed to be of
comparable quality by the Adviser. The lowest of these grades has speculative
characteristics; changes in economic conditions or other circumstances are more
likely to lead to a weakened capacity to make principal and interest payments.
The Fund may invest in securities below investment grade (so called "junk
bonds") although the Fund will not
<PAGE>
purchase such bonds if such investment would cause more than 5% of its net
assets to be so invested. Such bonds are considered speculative. In the event of
a downgrade of a debt security held by the Fund to below investment grade, the
Fund is not usually required to sell the issue, but the Adviser will consider
this in determining whether to hold the security. However, if such a downgrade
would cause more than 5% of net assets to be invested in debt securities below
investment grade, sales will be made as soon as practicable to reduce the
proportion of debt below investment grade to 5% of net assets or less. When the
Adviser believes that economic or market conditions require a more defensive
strategy, the Fund's assets may be invested without limitation in cash or cash
equivalents such as obligations issued or guaranteed by the U.S. Government, its
agencies and/or instrumentalities ("U.S. Government Securities") or high quality
money market instruments such as notes, certificates of deposit or bankers'
acceptances.
Diversification. The Fund is classified as a "non-diversified" investment
company under the Investment Company Act of 1940 (the "1940 Act"), which means
the Fund is not limited by the 1940 Act in the proportion of its assets that may
be invested in the securities of a single issuer. However, the Fund intends to
conduct its operations so as to qualify as a regulated investment company for
purposes of the Internal Revenue Code, so that it will not be subject to U.S.
federal income tax on income and capital gain distributions to shareholders. See
"Dividends, Distributions and Taxes." To so qualify, among other requirements,
the Fund will limit its investments so that, at the close of each quarter of the
taxable year, (i) not more than 25% of the market value of the Fund's total
assets will be invested in the securities of a single issuer, and (ii) with
respect to 50% of the market value of its total assets, not more than 5% of the
market value of its total assets will be invested in the securities of a single
issuer and the Fund will not own more than 10% of the outstanding voting
securities of a single issuer. The Fund's investments in securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities are not
subject to these limitations.
Restricted and Illiquid Securities. The Fund may invest in restricted
securities, i.e., securities which, if sold, would cause the Fund to be deemed
an "underwriter" under the Securities Act of 1933 or which are subject to
contractual restrictions on resale. The Fund will not purchase or hold illiquid
securities (which may include restricted securities) if more than 15% of the
Fund's net assets would then be illiquid. If at any time more than 15% of the
Fund's net assets are illiquid, sales will be made as soon as practicable to
reduce the percentage of illiquid assets to 15% or less.
Restricted securities which the Fund may purchase include securities which have
not been registered under the Securities Act of 1933 (the "1933 Act") but are
eligible for purchase and sale pursuant to Rule 144A ("Rule 144A Securities").
This Rule permits certain qualified institutional buyers, such as the Fund, to
trade in privately placed securities even though such securities are not
registered under the 1933 Act. The Adviser, under criteria established by the
Fund's Board of Directors, will consider whether Rule 144A Securities being
purchased or held by the Fund are illiquid and thus subject to the Fund's policy
that it will not make an investment causing more than 15% of its net assets to
be invested in illiquid securities. In making this determination, the Adviser
will consider the frequency of trades and quotes, the number of dealers and
potential purchasers, dealer undertakings to make a market, and the nature of
the security and the market place trades (for example, the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
transfer). The liquidity of Rule 144A Securities held by the Fund
<PAGE>
will also be monitored by the Adviser and, if as a result of changed conditions,
it is determined that a Rule 144A Security is no longer liquid, the Fund's
holding of illiquid securities will be reviewed to determine what, if any,
action is required in light of the Fund's policy limiting investments in such
securities. Investing in Rule 144A Securities could have the effect of
increasing the amount of investments in illiquid securities if qualified
institutional buyers are unwilling to purchase such securities.
Borrowing. The Fund's investment restrictions allow the Fund to borrow money,
for any reason, in amounts up to 33 1/3% of the value of the Fund's total assets
at the time of borrowing. However, as a matter of operating policy, the Fund
will not borrow money except from banks for temporary or emergency purposes (to
facilitate orderly redemption of its shares while avoiding untimely disposition
of portfolio holdings). Further, the Fund may not (i) borrow money in excess of
10% of the value of its total assets (excluding the amount borrowed), at the
time of the borrowing or (ii) mortgage, pledge or hypothecate any assets except
to secure permitted borrowings and then only in an amount not in excess of 15%
of the value of its total assets (excluding the amount borrowed) at the time of
such borrowings. The Fund will not purchase securities while any borrowing
exceeds 5% of total assets. The Fund's operating policies with respect to
borrowing may be changed by vote of the Board of Directors without a shareholder
vote.
Repurchase Agreements. The Fund may enter into repurchase agreements, but
normally will not enter into repurchase agreements maturing in more than seven
days. A repurchase agreement involves a sale of securities to the Fund with the
concurrent agreement of the seller (a member bank of the Federal Reserve System
or securities dealer which the Adviser determines to be financially sound at the
time of the transaction) to repurchase the securities at the same price plus an
amount equal to accrued interest at an agreed-upon interest rate, within a
specified time, usually less than one week, but, on occasion, at a later time.
The repurchase obligation of the seller is, in effect, secured by the underlying
securities. In the event of a bankruptcy or other default of a seller of a
repurchase agreement, the Fund could experience both delays in liquidating the
underlying securities and losses, including possible declines in the value of
the collateral during the period while the Fund seeks to enforce its rights,
possible loss of all or a part of the income during such period and expenses of
enforcing its rights.
Portfolio Transactions. The Fund's primary investment objective is long-term
capital appreciation and the Adviser does not attempt to time the market for
quick gains. However, the Fund may sell securities recently purchased as a
result of changes in market conditions or the circumstances of a particular
issuer. Because of its long term growth emphasis, the Fund expects that total
portfolio turnover rate generally will not exceed 100% annually. The Fund's
annual rate of portfolio turnover may vary widely from year to year depending on
market conditions and prospects. High portfolio turnover in any given year
indicates a substantial amount of short-term trading, which may result in
payment by the Fund of above-average amounts of brokerage commissions and could
result in the payment by shareholders of above-average amounts of taxes on
realized investment gain. In placing portfolio transactions, the Adviser may
take into account assistance with the placement of sales for the Fund and
research services. The Adviser may use such research in servicing its other
fiduciary accounts and not all services received may be used by the Adviser in
connection with its services to the Fund. However, the Fund may also benefit
from research services received by the Adviser in connection with transactions
effected on behalf of other fiduciary accounts.
<PAGE>
Fundamental and Non-Fundamental Policies. The investment restrictions set forth
as fundamental in the Statement of Additional Information cannot be changed
without a vote of the shareholders. The investment objective and all other
restrictions and policies of the Fund are not fundamental and may be changed
without shareholder approval. In the event that the Fund's investment objective
should ever be changed, such change may result in an objective different from
the objective the shareholder considered appropriate at the time of investment
in the Fund. Any percentage restrictions (except those with respect to illiquid
securities and the Fund's fundamental restrictions with respect to borrowing)
set forth in the Prospectus or in the Statement of Additional Information apply
as of the time of investment without regard to later increases or decreases in
the values of securities or total or net assets.
INVESTMENT CONSIDERATIONS AND RISKS
The Fund may be subject to certain risks similar to those associated with the
direct ownership of real estate because of its policy of concentration in the
securities of companies which are principally engaged in the real estate
industry. The risks of direct ownership of real estate include: risks related to
general, regional and local economic conditions and fluctuations in interest
rates; overbuilding and increased competition; increases in property taxes and
operating expenses; changes in zoning laws; heavy cash flow dependency; possible
lack of availability of mortgage funds; losses due to natural disasters;
regulatory limitations on rents; variations in market rental rates; and changes
in neighborhood values. In addition, the Fund may incur losses due to
environmental problems. If there is historic contamination at a site, the
current owner is one of the parties that may be responsible for clean up costs.
Equity REITs may be affected by changes in the value of the underlying property
owned by the trusts, while mortgage REITs may be affected by default or payment
problems relating to underlying mortgages, the quality of credit extended and
self-liquidation provisions by which mortgages held may be paid in full and
distributions of capital returns may be made at any time. Equity and mortgage
REITs are dependent upon the skill of their individual management personnel and
generally are not diversified. In addition, equity and mortgage REITs could be
adversely affected by failure to qualify for tax-free pass-through of income
under the Internal Revenue Code, or to maintain their exemptions from
registration under the Investment Company Act of 1940, as amended. By investing
in REITs indirectly through the Fund, a shareholder will bear not only a
proportionate share of the expenses of the Fund, but also indirectly, similar
expenses of the REITs, including compensation of management.
To the extent the Fund is invested in debt securities (including asset-backed
securities) or mortgage REITs, it will be subject to credit risk and interest
rate risk. Credit risk relates to the ability of the issuer to meet interest and
principal payments when due. Interest rate risk refers to the fluctuations in
the net asset value of any portfolio of fixed income securities resulting solely
from the inverse relationship between the price and yield of fixed income
securities; that is, when interest rates rise, bond prices generally fall and,
conversely, when interest rates fall, bond prices generally rise. In general,
bonds with longer maturities are more sensitive to interest rate changes than
bonds with shorter maturities.
The Fund, as a non-diversified investment company, may invest in a smaller
number of individual issuers than a diversified investment company. Therefore,
an investment in the Fund may present greater risk and volatility to an investor
than an investment in a diversified investment company.
<PAGE>
INVESTMENT PHILOSOPHY
The Adviser believes that successful investing in real estate securities
requires in-depth knowledge of the securities market and a complete
understanding of the factors influencing the performance of real estate assets.
The Adviser strives to provide superior performance via investment in a select
group of real estate securities which are attractively valued and have strong
growth prospects.
The investment process generally begins with property type sector allocations
determined by the Adviser. The Adviser, among other things, may review, analyze
and rank REIT securities based on certain financial ratios and relative
valuation measures. The financial analysis process includes a review of the
capital structure and the on-going capital needs of the company. Finally,
particular emphasis is placed on analyzing each company's cash flow stream and
its dividend safety, predictability and prospects for growth.
The Adviser's fundamental real estate analysis depends on extensive, localized
research on property markets across the United States, direct inspection of
individual property assets and familiarity with company management, operating
styles and investment strategies. The Adviser utilizes the nationwide network of
real estate professionals employed by RREEF America L.L.C. and its affiliates to
assist in evaluating and monitoring properties held by public REITs. See
"Management of the Fund" for more information.
CALCULATION OF NET ASSET VALUE
Shares of the Fund are purchased or redeemed, on a continuing basis without a
sales charge, at their next determined net asset value per share. Net asset
value per share is determined as of 4:00 p.m., Eastern Time, Monday through
Friday, exclusive of days on which the New York Stock Exchange ("NYSE") is
closed, by dividing the aggregate net assets of the Fund by the total number of
shares of the Fund outstanding. The NYSE is ordinarily closed on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. In the event that the NYSE and other
financial markets close earlier, as on the eve of a holiday, the net asset value
per share will be determined earlier in the day at the close of trading on the
NYSE.
A portfolio security listed or traded on a stock exchange or quoted on NASDAQ is
valued at the last reported sale price prior to the time when assets are valued.
Lacking any sales on that day, the security is valued at the mean between the
last reported bid and ask prices. Over-the-counter portfolio securities for
which market quotations are readily available are valued at the mean between the
most recent bid and ask prices as obtained from one or more dealers that make
markets in the securities. Portfolio securities which are traded both in the
over-the-counter market and on a stock exchange are valued according to the
broadest and most representative market as determined by the Adviser. When
market quotations are not readily available, or when restricted securities or
other assets are being valued, such assets are valued at fair value as
determined in good faith by or under procedures established by the Board of
Directors.
Debt securities (other than short-term obligations) are normally valued on the
basis of valuations provided by a pricing service when such prices are believed
to reflect the fair value of such securities. Other assets and securities for
which no quotations are readily available are valued at fair value as determined
in good faith by the Fund. Short-term investments with maturities of 60 days or
less at the time of purchase are valued on the basis of the amortized cost. This
involves
<PAGE>
valuing an instrument at its cost initially and, thereafter, assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument.
DIVIDENDS, DISTRIBUTIONS AND TAXES
THIS SECTION IS NOT INTENDED TO BE A FULL DISCUSSION OF ALL THE ASPECTS OF THE
FEDERAL INCOME TAX LAW AND ITS EFFECTS ON THE FUND AND ITS SHAREHOLDERS.
SHAREHOLDERS MAY BE SUBJECT TO STATE AND LOCAL TAXES ON DISTRIBUTIONS. EACH
INVESTOR SHOULD CONSULT A TAX ADVISER REGARDING THE EFFECT OF FEDERAL, STATE AND
LOCAL TAXES ON AN INVESTMENT IN THE FUND.
All income dividends and capital gains distributions are normally reinvested,
without charge, in additional full and fractional shares of the Fund.
Alternatively, investors may choose: (1) automatic reinvestment of capital gains
distributions in Fund shares and payment of income dividends in cash; (2)
payment of capital gains distributions in cash and automatic reinvestment of
dividends in Fund shares; or (3) all income dividend and capital gain
distributions paid in cash. The share price of the reinvestment will be the net
asset value of the Fund shares computed at the close of business on the date the
dividend or distribution is paid. Dividend and distribution checks returned to
the Fund as being undeliverable will automatically be reinvested in shares of
the Fund at the current net asset value on the day returned or on the 181st day,
and the distribution option will be changed to full reinvestment.
At the time of purchase, the share price of the Fund may reflect undistributed
income, capital gains or unrealized appreciation of securities. Any dividend or
capital gains distribution paid to a shareholder shortly after a purchase of
shares will reduce the per share net asset value by the amount of the
distribution. Although in effect a return of capital to the shareholder, these
dividends and distributions are fully taxable.
The Fund generally pays dividends twice each year (usually in June and
December). Capital gains, if any, usually will be distributed annually in
December.
The Fund intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code (the "Code") and, if so qualified, will not be
liable for federal income tax to the extent its earnings are distributed. If,
for any calendar year the required distribution of the Fund exceeds the amount
distributed, an excise tax equal to 4% of the excess will be imposed on the
Fund. The Company intends to make distributions during each calendar year
sufficient to prevent imposition of the excise tax. During its initial
operations, the Fund may be a personal holding company ("PHC") under the Code
due to substantial ownership of the Fund's shares by a few shareholders. In that
event, the Fund intends to distribute all its PHC income so that there is no PHC
tax imposed on the Fund.
Dividends from taxable net investment income and distributions of net short-term
capital gains paid by the Fund are taxable to shareholders as ordinary income,
whether received in cash or reinvested in additional shares of the Fund. A
portion of these dividends may qualify for the 70% dividends received deduction
available to corporations; dividends that are attributable to distributions made
by REITs to the Fund will not qualify. Distributions of net capital gains will
be taxable to shareholders as long-term capital gains, whether paid in cash or
reinvested in additional shares, and regardless of the length of time the
investor has held his shares.
A gain or loss for tax purposes may be realized on the redemption of shares. If
the shareholder realizes a loss on the sale or exchange of any shares held for
six months or less and if the shareholder received a
<PAGE>
capital gain distribution during such period, then such loss is treated as a
long-term capital loss to the extent of such capital gain distribution.
The Fund may invest in REITs that hold residual interests in real estate
mortgage investment conduits ("REMICs"). Under Treasury regulations that have
not yet been issued, but may apply retroactively, a portion of the Fund's income
from a REIT that is attributable to the REIT's residual interest in a REMIC
(referred to in the Code as an "excess inclusion") will be subject to federal
income tax in all events. (See "Additional Information on Tax Issues-Taxation of
Certain Mortgage REITs" in the Statement of Additional Information.)
The Fund is required to withhold a portion of the dividends, capital gains
distributions and proceeds of redemptions payable to any shareholder who fails
to furnish the Fund with a correct taxpayer identification number. In order to
avoid this withholding requirement, you must certify on your application, or on
a separate W-9 Form supplied by the Fund's Transfer Agent, that your taxpayer
identification number is correct and that you are not currently subject to
backup withholding or you are exempt from backup withholding. For individuals,
your taxpayer identification number is your social security number.
THE FUND
RREEF Securities Fund, Inc. (the "Company") is a non-diversified, open-end
investment management company organized in 1995 as a Maryland corporation. The
Company may issue multiple series, each of which represents an interest in a
separate investment portfolio. Currently, the Fund is the only series issued by
the Company. The Board of Directors may offer additional series in the future
and thus create additional funds within the Company.
Each share, when issued and paid for in accordance with the terms of the
offering, is fully paid and non-assessable. Shares have no preemptive or
subscription rights and are freely transferable. Each share of the Fund
represents an interest in the assets of the Fund and has identical voting,
dividend, liquidation and other rights and the same terms and conditions as any
other shares. Each fractional share has the same rights, in proration, as a full
share. Shares do not have cumulative voting rights; therefore, the holders of
more than 50% of the voting power of the Fund can elect all of the directors of
the Fund.
The Company does not hold regular annual shareholder meetings. Shareholder
meetings are held when they are required under the Investment Company Act of
1940 or otherwise called for special purposes. Special meetings may be called
upon the written request of shareholders holding at least 10% of the voting
power of the Company.
MANAGEMENT OF THE FUND
Subject to the direction and supervision of the Company's Board of Directors,
RREEF Real Estate Securities Advisers L.P. (the "Adviser") serves as the Fund's
investment adviser. The Adviser is a California limited partnership registered
as an investment adviser under the Federal securities laws. RREEF Real Estate
Securities Advisers, Inc. is the sole general partner of the Adviser. Donald A.
King, Jr., D. Wylie Greig and Stephen M. Steppe are the directors of the
Adviser's general partner. The Adviser is under common control with RREEF
America L.L.C., also a registered investment adviser. The Adviser's affiliates
have provided real estate investment management services to institutional
investors since 1975. Its principal office is located at 650 California Street,
San Francisco, California. The Adviser was formed in April, 1993 to manage
accounts for institutional clients on a discretionary basis. As of May 1995, the
Adviser had assets under management of over $200,000,000. The Adviser has no
previous experience advising a mutual fund.
<PAGE>
The Adviser manages the investment and reinvestment of the assets of the Fund
and is responsible for managing the fund's business affairs. The Adviser
furnishes continuous advice concerning the Fund's investments. In addition, the
Adviser provides office space for the Fund, pays the salaries, fees and expenses
of all Fund officers and directors who are affiliated with the Adviser and pays
all expenses of marketing the Fund's shares. For such services, the Fund pays
the Adviser a fee of 0.75% per annum on daily net assets of the Fund up to $100
million and 0.65% per annum on daily net assets of the Fund in excess of $100
million. This fee is higher than that paid by most mutual funds but is not
necessarily higher than that paid by funds with similar objectives. The Adviser
has agreed to absorb certain Fund operating expenses through at least the end of
the fiscal year ending October 31, 1996 to the extent that the ratio of expenses
to average net assets exceed 1.5%.
Primary Portfolio Manager. Kim G. Redding is the Fund's primary portfolio
manager. Mr. Redding has served as the President of the Adviser's general
partner since inception in 1993, is currently a member of RREEF America L.L.C.
and is a Senior Vice-President of RREEF Management Company. From 1990 to 1993,
he was a principal in K.G. Redding & Associates, an investment adviser, and
prior thereto he was the President of Redding, Melchor & Company, an investment
adviser. Mr. Redding has been professionally managing portfolios of real estate
securities since 1987.
PERFORMANCE HISTORY OF THE ADVISER
While the Adviser has no operational history with the newly organized Fund, set
forth below are certain performance data, provided by the Adviser, relating to
the performance of all private accounts managed by the Adviser using investment
strategies and techniques similar to those that will be used by the Fund. Also
set forth below, for comparison, are the performances of widely recognized
indices of market activity based upon the aggregate performance of selected
unmanaged portfolios of publicly traded common stocks.
The results presented may not necessarily equate with the returns experienced by
the Fund, owing to the differences in brokerage commissions, investment and
management fees, the size of positions taken in relation to account size and
diversification of securities, as well as other costs, such as registration fees
borne by the Fund but not incurred by the private accounts. Investors should not
rely on the following data as an indication of future performance of the Adviser
or of the Fund. Investors should be aware that the use of methods for computing
performance numbers different than that used by the Adviser with respect to its
accounts could result in performance data different than that shown.
<PAGE>
PERFORMANCE HIGHLIGHTS
ANNUALIZED RETURNS FROM OCTOBER 1987 THROUGH JUNE 1995
RREEF Real Estate Securities Advisers
Before Fees 12.2%
After Fees 10.9%
NAREIT Equity Less Healthcare 6.4%
Wilshire REIT Index 4.8%
ANNUAL TIME-WEIGHTED RETURNS
<TABLE>
<CAPTION>
YEAR
TO
FOR THE YEARS ENDED DECEMBER DATE
1988 1989 1990 1991 1992 1993 1994 6/95
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RREEF Real Estate Securities Advisers
Before Fees 8.2% 7.7% (4.8)% 32.9% 29.4% 19.0% 4.8% 3.4%
After Fees 6.8% 6.1% (6.4)% 30.9% 28.1% 18.0% 4.3% 3.1%
NAREIT Equity Less Healthcare 15.8% 4.6% (23.6)% 29.4% 20.7% 18.7% 3.0% 5.1%
Wilshire REIT Index 17.5% 2.7% (23.4)% 23.8% 15.3% 15.2% 2.7% 3.4%
</TABLE>
Notes: RREEF Real Estate Securities Advisers "After Fees" performance includes
reinvested dividends, capital gains and losses, and deducts advisory fees
(generally between 0.65% and 0.75%) and other account expenses. RREEF Real
Estate Securities Advisers before fees performance is presented before
applicable advisory fees and reflects growth investment results. Other indices
noted do not deduct advisory fees. Past performance indicated for RREEF Real
Estate Securities Advisers relates to all discretionary accounts managed using
investment strategies and techniques similar to those that will be used by the
Fund, and includes, for the period prior to July 1993, performance under a
predecessor adviser (K.G. Redding & Associates) using the same investment
approach and under the same portfolio manager. Past performance is not
necessarily indicative of future results nor can it be assumed that any
recommendations will be profitable.
These results have been prepared and presented in compliance with the AIMR
Performance Presentation Standards since inception. The Wilshire Real Estate
Securities Index (REIT component) is a market capitalization weighted index
comprised of 124 equity REITs as of December 1994. It does not include special
purpose or healthcare REITs. The NAREIT Equity without Healthcare Index is a
market capitalization weighted index comprised of 168 REITs, as of December
1994, with 75% or greater of their gross assets invested in equity ownership of
real estate and excludes healthcare REITs.
<PAGE>
ADMINISTRATOR, TRANSFER AGENT, CUSTODIAN AND
DIVIDEND PAYING AGENT
The Company has entered into Administration, Custodian and Transfer Agency and
Service Agreements with Investors Bank & Trust Company ("Investors Bank"), 89
South Street, Boston, Massachusetts 02111.
Investors Bank generally assists the Adviser in all matters relating to the
administration of the Fund, including the coordination and monitoring of any
third parties furnishing services to the Fund, the preparation and maintenance
of financial and accounting records, and the provision of the necessary office
space, equipment and personnel to perform administrative and clerical functions.
Investors Bank is not involved in the investment decisions made with respect to
the Fund.
Investors Bank also serves as the Transfer Agent of the Fund. In its capacity as
Transfer Agent, Investors Bank maintains the records of each shareholder's
account, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
servicing functions.
As compensation for its services as Administrator, Custodian and Transfer Agent
of the Fund, Investors Bank receives a monthly fee at the annual rate of 0.10%
of the average daily net assets of the Fund, subject to certain minimums, plus
transaction fees and any applicable shareholder account charges.
HOW TO PURCHASE SHARES
Investors may purchase Fund shares at net asset value by wire, telephone or mail
as described below. The Fund imposes no sales charges. The minimum initial
investment in the Fund is $500,000. The minimum initial investment may be waived
for accounts beneficially owned or controlled by officers, directors and
employees of the Fund, the Adviser and any affiliated entities. In addition, the
Adviser may waive the minimum initial investment for an investor when the
aggregate of all Fund accounts beneficially owned or controlled by that investor
total at least $500,000. The minimum subsequent investment is $1,000. The Fund
does not issue certificates representing ownership of its shares.
Your purchase order will be processed at the net asset value next determined
with respect to the shares being purchased after your purchase order (or your
wire, if applicable) has been received and accepted by the Fund's Transfer
Agent. See "Calculation of Net Asset Value." You are deemed to be a shareholder
as of the first business day following the day the Transfer Agent has received
payment for your order. Orders will be accepted only upon receipt by the
Transfer Agent of all documentation required to be submitted in connection with
such order.
When you purchase shares by check, the Fund reserves the right to hold payment
on redemptions until your purchase check has cleared (which can take up to 15
days from the purchase date). If you anticipate the need for more immediate
access to your investment you should purchase shares by Federal Funds wire, as
described below.
YOU MAY INVEST IN THE FOLLOWING WAYS:
BY WIRE
Investors may purchase shares through the Transfer Agent by bank wire. Bank wire
purchases will be treated as received after the Transfer Agent is notified that
the bank wire has been credited to the Fund. To open an account by wire
purchase, investors must first call the Transfer
<PAGE>
Agent at (800) 909-9234 for an account number. Then wire the money to:
Investors Bank & Trust Company
Attn.: Transfer Agent
Boston, MA 02205-1537
ABA#011001438
DDA#453211234
Include the Fund name, account name(s)
and account number(s)
The completed application should be mailed to the Transfer Agent at the address
below. Subsequent wire investments may be made by existing shareholders by
following the instructions outlined above. It is not necessary, however, for
such shareholders to call for another account number.
BY MAIL
Send the completed and signed Application enclosed with this Prospectus with a
check to the Transfer Agent. Checks should be made payable to RREEF Securities
Fund and be drawn on a U.S. bank. Send your purchase order to:
RREEF Securities Fund
c/o Investors Bank & Trust Company
P.O. Box 1537, MFD23
Boston, MA 02205-1537
When making subsequent investments, enclose your check with the return
remittance portion of the confirmation of your previous investment or indicate
on your check or a separate piece of paper your name, address and account number
and mail to the address set forth above. Third party checks will not be
accepted; and the Fund reserves the right to refuse to accept second party
checks.
The Fund reserves the right to suspend the offering of shares for a period of
time. It also reserves the right to reject any specific purchase order.
HOW TO REDEEM SHARES
You may redeem all or a portion of your shares on any day on which the Fund's
net asset value is calculated. Your shares will be redeemed at the net asset
value determined after the Transfer Agent has received and accepted your
redemption request. See "Calculation of Net Asset Value." There is a redemption
fee of 1.00% of the amount redeemed, payable to the Fund, charged on all
redemptions within one year of purchase. Other than this fee, there are no
redemption charges or expenses.
BY TELEPHONE
You may select an optional feature on your Application which will permit you or
your authorized representatives to redeem up to your entire account by telephone
request. If you do not elect this privilege, you can redeem up to $25,000 by
telephone request if your address of record has not changed within the last 60
days. These proceeds will only be mailed to your address of record payable
exactly as registered or to a pre-designated bank account.
To redeem by telephone, call the Transfer Agent at (800) 909-9234 and specify
the number of shares or the dollar amount to be redeemed, your name and your
account number. Telephone instructions will be accepted between 9:00 a.m. and
4:00 p.m., Eastern Time, on any day the New York Stock Exchange is open. It may
be difficult to implement telephone redemptions during periods of drastic
economic or market changes, in which case, you may redeem your shares by sending
a written request to the Transfer Agent. The Fund and the Transfer Agent will
employ reasonable procedures, as described below, to attempt to confirm that
instructions communicated by telephone are genuine, and if such procedures are
not employed, the Fund may be liable for any losses due to unauthorized or
fraudulent instructions. Specifically, the
<PAGE>
person initiating the call will be asked to identify the account registration
and tax identification number of the account from which shares are to be
redeemed or exchanged. In addition, all telephone calls may be recorded and
written confirmation of such transactions will be provided. The Fund and its
agents will not be liable for following instructions communicated by telephone
reasonably believed to be genuine. The Fund reserves the right to terminate,
suspend or modify telephone transaction privileges at any time without notice to
shareholders.
The Transfer Agent will normally send the redemption proceeds on the first
business day following receipt of your redemption request. If you request that
your redemption proceeds be sent by wire transfer to a preauthorized account,
the amount redeemed must be at least $1,000. If making immediate payment could
adversely affect the Fund, it may take up to seven days to pay you. The Fund
cannot suspend the right of redemption for more than seven days except when the
New York Stock Exchange is closed (or when trading is restricted) for any reason
other than its customary weekend or holiday closings, or under any emergency
circumstances as determined by the Securities and Exchange Commission to merit
such action.
BY MAIL
To redeem your shares by mail, send a written redemption request to the Transfer
Agent at the following address:
Investors Bank & Trust Company
P.O. Box 1537, MFD23
Boston, MA 02205-1537
Specify the Fund's name, the number of shares or the dollar amount to be
redeemed, your account number, and the requirements listed below that apply to
your particular account. You should also specify whether you wish to have the
proceeds sent to the account registration address or to your preauthorized
account if you have established this option. If you request: (i) a redemption of
more than $50,000; (ii) a redemption of any amount to be sent to an address
other than that on record with the Fund; or (iii) a redemption payable other
than as your account is registered, all owners must sign the redemption request
and all signatures must be guaranteed. For some types of accounts, additional
documentation may be required. The Transfer Agent accepts signature guarantees
from all acceptable financial institutions as defined under Rule 17A(d)-15 of
the Securities Exchange Act of 1934. Those financial institutions which
participate in a medallion signature program must use the specific "Medallion
Guaranteed" stamp.
If any portion of the shares to be redeemed represents an investment made by
check, the Fund reserves the right to hold payment on such redemption until the
purchase check has cleared (which could take up to 15 days from receipt of the
check). If you anticipate the need for more immediate access to your investment,
you should purchase shares by Federal Funds wire.
In order to reduce expenses of the Fund, the Fund reserves the right to redeem
all of the shares in any shareholder account if, for a period of more than three
months, the account has a net asset value of $250,000 or less due to shareholder
redemptions. If the Fund elects to close such accounts, it will notify
shareholders whose accounts are below the minimum of its intention to do so, and
will provide those shareholders with an opportunity to increase their accounts
by investing a sufficient amount to bring their accounts up to the minimum
amount within sixty (60) days of the notice.
<PAGE>
CERTAIN SHAREHOLDERS OF THE FUND
The following table sets forth, as of June 20, 1995, the name and holdings of
each person known by the Fund to be a record holder of more than 5% of its
outstanding shares. As of such date there were 10,001 shares outstanding.
% OF
NUMBER OF OUTSTANDING
NAME AND ADDRESS SHARES OWNED SHARES
RREEF America L.L.C.
650 California Street
San Francisco, CA 94108 10,000 100%
Kim G. Redding
650 California Street
San Francisco, CA 94108 1 *
* Represents less than 1%.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders or
prospective shareholders, the Fund may compare its performance, in terms of its
total return, to that of other mutual funds with similar investment objectives
and to stock or other indices. For example, the Fund may compare its performance
to rankings prepared by Lipper Analytical Services, Inc., a widely recognized
independent service which monitors the performance of mutual funds, to
Morningstar's Mutual Fund Values and to various indices, including Lehman
Brothers REIT Index, NAREIT Equity-Less Health Care Index, Standard & Poor's 500
Composite Stock Price Index and Wilshire REIT Only Index. Performance
information and rankings as reported in the Realty Stock Review, Changing Times,
Business Week, Institutional Investor, the Wall Street Journal, Mutual Fund
Forecaster, No-Load Investor, Money Magazine, Forbes, Fortune, Investor's
Business Daily and Barrons magazine may also be used in comparing performance of
the Fund. The Fund's past performance comparisons should not be considered as
representative of the future performance of the Fund.
The Fund's average annual total return is computed by determining the average
annual compounded rate of return for a specified period that, if applied to a
hypothetical $1,000 initial investment, would produce the redeemable value of
that investment at the end of the period, assuming reinvestment of all dividends
and distributions and with recognition of all recurring charges. The Fund may
also utilize a total return for differing periods computed in the same manner
but without annualizing the total return.
SHAREHOLDER INQUIRIES
Call (800) 909-9234 from 9:00 a.m.--5:00 p.m. Eastern Time for prompt service on
any questions about your account. During unusual market conditions, the Fund may
experience difficulty in accepting telephone inquiries. In such circumstances,
you should contact the Fund directly at (415) 781-3300 weekdays from 9:00
a.m.--5:00 p.m. Pacific Time or by mail at 650 California Street, San Francisco,
CA 94108
<PAGE>
RREEF REAL ESTATE SECURITIES FUND
650 California Street
San Francisco, California 94108
INVESTMENT ADVISER
RREEF Real Estate Securities Advisers L.P.
650 California Street
San Francisco, California 94108
DIRECTORS
Donald A. King, Jr.
Gregory L. Melchor
Willis K. Polite
Kim G. Redding
William Wilson, III
ADMINISTRATOR
CUSTODIAN
TRANSFER AGENT
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
LEGAL COUNSEL
D'Ancona & Pflaum
30 N. LaSalle Street
Chicago, Illinois 60602
INDEPENDENT ACCOUNTANTS
Deloitte & Touche L.L.P.
2 World Financial Center
New York, NY 10281
RREEF
REAL ESTATE
SECURITIES
FUND
PROSPECTUS
& APPLICATION
AUGUST 1, 1995
RREEF
The RREEF Funds
<PAGE>
RREEF
The RREEF Funds
RREEF SECURITIES FUND ACCOUNT APPLICATION
Send to: RREEF Securities Fund, Inc.
P.O. Box 1537, MFD23
Boston, MA 02205-1537
I. ACCOUNT INFORMATION
Name of Account Owner
Name of Co-Owner (if applicable)
Street or P.O. Box
City
State Zip Code
Unless otherwise indicated, Co-Owners will be registered as joint tenants with
right of survivorship.
Telephone Number
Taxpayer Identification Number
US Citizen, Resident or Entity [ ] Yes [ ] No
II. ADDRESS FOR CONFIRMATIONS/STATEMENTS
Confirmations and statements will be sent to the party listed in Section I. If
additional statements are needed, please list to whom they should be sent:
Daily Confirmations (limit of one):
Monthly Statements (additional addresses can be listed on a separate page):
III. INVESTMENT INFORMATION
RREEF Real Estate Securities Fund $
IV. DIVIDEND/DISTRIBUTIONS REMITTANCE PLANS
CHECK APPROPRIATE BOX (SEE "DIVIDENDS, DISTRIBUTIONS AND TAXES" IN THE
PROSPECTUS)
All distributions will be reinvested if no item is checked.
Dividends: [ ] Cash [ ] Reinvested
Capital Gains: [ ] Cash [ ] Reinvested
V. REDEMPTIONS
I/we authorize RREEF Securities Fund, Inc. and the Transfer Agent to honor
telephone instructions for my/our account. In an effort to confirm that
telephone requests are genuine, the Fund will employ reasonable procedures which
currently include, but are not limited to, requiring the caller to provide
certain information unique to the account. As long as the Fund's telephone
representatives comply with these procedures neither the Fund nor the Transfer
Agent will be liable for any losses due to fraudulent or unauthorized
transactions.
[ ] Permit redemption of shares via telephone
Redemptions requested via telephone will only be wired to pre-existing bank
account instructions. No bank instruction changes will be accepted via
telephone.
If you do not authorize telephone redemptions, only written transaction
instructions will be accepted. Each request must contain the signature of the
owner(s) exactly as the name(s) appear in the registration with a signature
guarantee by a member of the New York Stock Exchange's Medallion Signature
Program, or certain banks, savings and loan institutions, credit unions,
securities dealers, securities exchanges, clearing agencies and registered
securities associations in accordance with a regulation of the Securities and
Exchange Commission and acceptable to the Fund and the Transfer Agent.
VI. REDEMPTION AND DIVIDEND WIRE INSTRUCTIONS
Proceeds of any redemptions and dividend disbursements (if applicable) should be
wired to my/our bank as follows:
Bank Name
ABA Number
Street Address
City State Zip Code
Account Name
Account Number
<PAGE>
VII. AUTHORIZED SIGNERS
By the execution of this RREEF Securities Fund Application, the undersigned
represents and warrants that it has full right, power and authority to make the
investment applied for pursuant to this Application and is acting for itself or
in some fiduciary capacity in making such investment, and the individual(s)
signing on behalf of the registered owner(s) represent and warrant that they are
duly authorized to sign this Application and to purchase and redeem shares of
the Fund described in the accompanying Prospectus on behalf of the undersigned.
THE UNDERSIGNED AFFIRMS THAT IT HAS RECEIVED A CURRENT RREEF SECURITIES FUND
PROSPECTUS AND HAS REVIEWED THE SAME, AND AGREES TO BE BOUND BY THE TERMS
DETAILED THEREIN, AND AS AMENDED FROM TIME TO TIME.
Signature
Print Name and Title, if any
VIII. CERTIFICATION
TAXPAYER IDENTIFICATION NUMBER
Under penalties of perjury, the account owner named in Section I above certifies
that:
(1) The number shown on this form is the account owner's correct Taxpayer
Identification Number (or the account owner has applied or is applying for
such number), and;
(2) The account owner is not subject to backup withholding because the account
owner (a) is exempt from backup withholding, (b) has not been notified by
the Internal Revenue Service (IRS) that the account owner is subject to
backup withholding as a result of failure to report all interest or
dividends, or (c) has received notice from the IRS that backup withholding
no longer applies.
CERTIFICATION INSTRUCTIONS: Item (2) above must be crossed out if the account
owner has received IRS notice that backup withholding currently applies because
of under reporting of dividends on the account owner's return. (Also see
"Guidelines for Certification of Taxpayer Identification Number" at the bottom
of this application.)
NOTE: FAILURE TO COMPLETE THIS SECTION MAY RESULT IN BACKUP WITHHOLDING OF 31%
OF ANY PAYMENTS MADE TO THE ACCOUNT OWNER.
BY CHECKING ONLY THE APPROPRIATE BOX BELOW, THE ACCOUNT OWNER CERTIFIES UNDER
PENALTY OF PERJURY THAT:
[ ] The account owner does not have a taxpayer identification number, but has
applied for or intends to apply for one. Owner understands that the
required 31% withholding may apply before the account owner provides such
number and required certifications, which should be provided within 60
days.
[ ] The account owner is an exempt recipient.
[ ] The account owner is neither a citizen nor a resident of the United
States for the purposes of the Internal Revenue Code. Owner is a resident
of .
ALL RECIPIENTS, INCLUDING EXEMPT RECIPIENTS, MUST REPORT THEIR TAXPAYER
IDENTIFICATION NUMBERS AND PROVIDE THE CERTIFICATIONS REQUESTED TO PREVENT
WITHHOLDING.
A PARTIAL LIST OF EXEMPT RECIPIENTS FOLLOWS:
Retirement Plans
Corporations
Common Trust Funds
Financial Institutions
Colleges, Churches, Charitable Organizations
Agents, Fiduciaries, Middlemen
Registered Securities Dealers
SIGNATURE:
DATE:
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
Federal law requires that taxable distributions and proceeds of redemptions be
reported to the IRS and that 31% be withheld if you fail to provide your correct
Taxpayer Identification Number (TIN) and the certifications in Section VIII, or
you are otherwise subject to backup withholding. Amounts withheld and forwarded
to the IRS can be credited as a payment of tax when completing your Federal
income tax return. For most individual taxpayers, the TIN is your social
security number. Special rules apply for certain accounts. For example, for an
account established under the Uniform Gift to Minors Act, the TIN of the minor
should be furnished. If you do not have a TIN, you may apply for one using the
forms available at local offices of the Social Security Administration of the
IRS. Recipients exempt from backup withholding, including corporations and
certain other entities, should provide their TIN and complete the appropriate
items in Section VIII of the application to avoid possible erroneous
withholding. Non-resident aliens and foreign entities may be subject to
non-resident alien withholding of up to 30% on certain distributions received
from the Fund and must provide certain certifications on IRS Form W-8 to avoid
backup withholding with respect to other payments. For further information, see
IRC Sections 1441, 1442 and 3406, or consult your tax advisor.
<PAGE>
RREEF REAL ESTATE SECURITIES FUND
SUPPLEMENT DATED JANUARY 24, 1996 TO THE
STATEMENT OF ADDITIONAL INFORMATION
DATED AUGUST 1, 1995
The following information supplements the information provided on pages
7 through 10 of the Statement of Additional Information, regarding the Directors
and Officers of the RREEF Real Estate Securities Fund (the "Fund"):
Effective December 12, 1995, David R. Ball resigned as Vice President
of the Fund.
On June 19, 1995, the Board of Directors elected Barry H. Braitman as
Assistant Secretary of the Fund and on December 12, 1995, the Board of Directors
elected Susan C. Mosher and Kevin M. Connerty as Assistant Secretary and
Assistant Treasurer, respectively, of the Fund.
Mr. Braitman has been Vice President and General Counsel of RREEF
Management Company since 1990 and Senior Vice President of RREEF Management
Company since 1993.
Prior to joining Investors Bank & Trust Company ("Investors Bank") as a
Director in 1995, Ms. Mosher was employed by 440 Financial Group of Worcester,
Inc. as Associate Counsel from 1993 to 1995. From 1986 to 1992, Ms. Mosher was
an associate and partner at Gallagher, Callahan & Gartrell, P.A.
Mr. Connerty joined Investors Bank in 1992 as an Account
Manager-Financial Reporting & Compliance. Prior to joining Investors Bank, he
was Assistant Manager of Financial Reporting at The Boston Company for six
years.
<PAGE>
The following Financial Statements for the fiscal year ended October
31, 1995 for the Fund are included after page 18 of the Statement of Additional
Information and the Financial Statement for the Fund dated June 20, 1995 is
deleted.
RREEF Real Estate Securities Fund
Portfolio of Investments
October 31, 1995
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Share/Par Market Percent of
Description Amount Value Net Assets
- ----------- ------ ----- ----------
<S> <C> <C> <C>
REAL ESTATE INVESTMENT TRUSTS
Multi-Family Residential
Avalon Properties, Inc.......................... 4,500 $ 87,750
Bay Apartment Communities....................... 6,000 123,750
Equity Residential Properties Trust............. 4,800 134,400
Gables Residential Trust........................ 6,400 137,600
Mid-America Apartment Communities, Inc.......... 5,700 131,100
Oasis Residential, Inc.......................... 2,800 60,900
Security Capital Pacific Trust.................. 4,900 87,588
Summit Properties, Inc.......................... 6,400 118,400
United Dominion Realty Trust.................... 8,900 122,375
-----------
1,003,863
----------- 33.7%
Retail
Regional Malls
CBL & Associates Properties..................... 7,200 153,000
Macerich Company................................ 10,300 207,289
Simon Property Group, Inc....................... 8,600 199,950
-----------
560,239 18.8%
-----------
Neighborhood and Community Shopping Centers
Developers Diversified Realty Corporation....... 4,700 133,950
Vornado Realty Trust............................ 1,900 68,163
-----------
202,113 6.8%
-----------
762,352 25.6%
----------- ----------
Industrial
Centerpoint Properties Corporation.............. 5,800 131,225
First Industrial Realty Trust................... 7,500 152,813
Spieker Properties, Inc......................... 8,100 196,425
-----------
480,463 16.1%
-----------
Office
Beacon Properties Corporation................... 1,500 32,621
Cali Realty Corporation......................... 2,800 54,600
Highwood Properties, Inc........................ 6,300 167,738
Koger Equity, Inc.*............................. 6,900 66,413
-----------
321,372 10.8%
-----------
Storage
Sovran Self Storage, Inc........................ 2,400 59,400
Storage Equities, Inc........................... 4,700 86,363
Storage Trust Realty............................ 5,600 109,900
Storage USA, Inc................................ 1,500 43,875
-----------
299,538 10.0%
----------- ----------
TOTAL REAL ESTATE INVESTMENT TRUSTS (Cost $2,950,178) 2,867,588 96.2%
----------- ----------
SHORT-TERM INVESTMENT
Bank of Boston Cash Sweep..... 5.20% 11/01/95 $ 150,128 150,128 5.0%
----------- ----------
TOTAL SHORT-TERM INVESTMENT (at Amortized Cost) 150,128 5.0%
----------- ----------
TOTAL INVESTMENTS (Cost $3,100,306**) 3,017,716 101.2%
Excess of Other Assets over Liabilities (34,753) (1.2)%
----------- ----------
NET ASSETS $ 2,982,963 100.0%
=========== ==========
</TABLE>
Notes to the Portfolio of Investments:
*Non-Income producing security.
**Aggregate cost for Federal tax purposes.
See accompanying notes to the financial statements.
<PAGE>
RREEF Real Estate Securities Fund
Statement of Assets and Liabilities
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments, at value (cost $3,100,306) $ 3,017,716
Cash 90,683
Dividends and interest receivable 10,671
Unamortized organizational expenses (Note 1) 95,682
----------
Total assets 3,214,752
----------
Liabilities:
Net payable to Adviser 85,695
Payable for investments purchased 131,653
Accrued expenses 14,441
----------
Total liabilities 231,789
----------
Net Assets (equivalent to $9.82 per share based on 303,769
shares outstanding, unlimited shares authorized)* $ 2,982,963
==========
Net assets consist of:
Paid-in capital $ 3,045,764
Undistributed net investment income 19,789
Net unrealized depreciation of investments (82,590)
----------
Net assets $ 2,982,963
==========
</TABLE>
* Shares of the Fund are sold and redeemed at net asset value.
See accompanying notes to the financial statements.
<PAGE>
RREEF Real Estate Securities Fund
Statement of Operations
For the period September 21, 1995 (Commencement of Operations) to October 31,
1995
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income:
Dividends $ 23,809
Interest 435
---------
Total income 24,244
---------
Expenses:
Management fees (Note 2) 2,227
Custodian, transfer agent and administration fees 19,296
Audit and tax fees 14,159
Amortization of organizational expense 2,199
Directors fees 1,011
Miscellaneous 5,136
---------
Total expenses 44,028
Less: fees waived and expenses reimbursed by Adviser (Note 2) (37,700)
Less: fees offset by Custodian (Note 2) (1,873)
---------
Net expenses 4,455
---------
Net investment income 19,789
---------
Change in net unrealized depreciation on investments (82,590)
---------
Net decrease in net assets resulting from operations $ (62,801)
=========
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
RREEF Real Estate Securities Fund
Statement of Changes in Net Assets
For the period September 21, 1995 (Commencement of Operations) to October 31,
1995
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 19,789
Change in net unrealized depreciation on investments (82,590)
----------
Net decrease in net assets resulting from operations (62,801)
Net increase in net assets resulting
from Fund share transactions (Note 4) 2,945,754
----------
Total increase in net assets 2,882,953
Net assets:
Beginning of period 100,010
----------
End of period (including undistributed net investment income of $19,789) $ 2,982,963
==========
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
RREEF Real Estate Securities Fund
Financial Highlights
(For a Fund share outstanding throughout the period)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
September 21, 1995*
to October 31, 1995
---------------------
<S> <C>
Net asset value, beginning of period $ 10.00
------
Income from investment operations:
Net investment income 0.07
Net unrealized loss on investments (0.25)
------
Total from investment operations (0.18)
------
Net asset value, end of period $ 9.82
======
Aggregate Total Return (1.80%)
Ratios/Supplemental Data:
Net expenses as a percentage of
average net assets 1.50%**
Net investment income as a percentage of
average net assets 6.66%**
Portfolio turnover rate 0%
Net assets, end of period (000's) $ 2,983
The Adviser has voluntarily agreed to waive its management fee
and reimburse certain expenses incurred by the Fund. The
Custodian has offset part of its fees for balance credits
given to the Fund. Without the waiver and offset of fees and
reimbursement of expenses, the ratios of expenses and net
income as a percentage of average net assets would have been:
Net expenses as a percentage of
average net assets 14.83%**
Net investment income as a percentage of
average net assets (6.67%)**
- ------------------------------------------------------------------
</TABLE>
* Commencement of Operations
** Annualized
See accompanying notes to the financial statements.
<PAGE>
RREEF Real Estate Securities Fund
Notes to Financial Statements
- -------------------------------------------------------------------------------
1. Significant accounting policies
RREEF Real Estate Securities Fund (the "Fund") is a series of RREEF
Securities Fund, Inc. (the "Company"). The Fund is registered under the
Investment Company Act of 1940, as amended, as an open end, non-diversified
management investment company. The Company was organized in Maryland on
March 15, 1995 and commenced operations on September 21, 1995. The following
is a summary of significant accounting policies consistently followed by the
Fund in the preparation of its financial statements.
Portfolio valuation
Equity securities listed or regularly traded on a securities exchange
(including NASDAQ) are valued at the last quoted sales price on the day the
valuations are made. A security which is listed or traded on more than one
exchange is valued according to the broadest and most representative market
as determined by RREEF Real Estate Securities Advisers L.P. (the "Adviser").
Other equity securities and those listed securities that are not traded on a
particular day are valued at the mean between the latest bid and asked
prices. Debt securities are generally traded in the over-the-counter market
and are valued at a price deemed best to reflect fair value as quoted by
dealers who make markets in these securities or by an independent pricing
service. Short-term debt obligations and money market securities maturing in
sixty days or less are valued at amortized cost which approximates value.
Securities for which the above valuation procedures are inappropriate or are
deemed not to reflect fair value are stated at fair value as determined in
good faith by or under the supervision of the officers of the Fund as
authorized by the Board of Directors.
Repurchase agreements
The Fund may enter into repurchase agreements with certain banks and
broker/dealers whereby the Fund acquires a security for cash and obtains a
simultaneous commitment from the seller to repurchase the security at an
agreed upon price and date. The Fund, through its custodian, takes
possession of securities collateralizing the repurchase agreement. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The collateral is marked to
market daily to ensure that the market value including accrued interest of
the underlying assets remains sufficient to protect the Fund in the event of
default by the seller. In connection with transactions in repurchase
agreements, if the seller defaults and the value of the collateral declines
or if the seller enters insolvency proceedings, realization of collateral by
the Fund may be delayed or limited. The Fund may enter into repurchase
agreements only with dealers or banks determined by the Adviser to present
minimal credit risks pursuant to procedures established by the Board of
Directors to evaluate creditworthiness.
<PAGE>
RREEF Real Estate Securities Fund
Notes to Financial Statements
- -------------------------------------------------------------------------------
Taxes
The Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Internal Revenue Code, as amended (the "Code").
The Fund intends to distribute to shareholders all of its taxable income,
including any net realized gain on investments not offset by loss
carryovers, to shareholders within the prescribed time periods. Accordingly,
no provision for federal income or excise tax is provided.
Distributions to shareholders
The Fund intends to declare distributions from net investment income, if
any, semi-annually. The Fund intends to distribute capital gains, if any,
annually.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
losses deferred due to wash sales, excise tax regulations and utilization of
capital loss carryovers. Permanent differences relating to shareholder
distributions will result in reclassifications to paid-in capital.
Investment transactions and income
Security transactions are accounted for on the trade date. Dividend income
and distributions to shareholders are recorded on the ex-dividend date.
Interest income is recorded on the accrual basis. In determining the net
realized gain or loss on securities sold, the cost of securities is
determined on the identified cost basis.
Deferred organization expenses
Costs incurred by the Fund in connection with its organization have been
deferred and are being amortized on a straight-line basis over a five year
period beginning on the commencement of operations. In the event that any of
the initial shares of the Fund are redeemed during such amortization period,
the Fund will be reimbursed for any unamortized costs in the same proportion
as the number of shares redeemed bears to the number of initial shares
outstanding at the time of redemption.
Investment risk
There are certain additional risks involved in investing in Real Estate
Investment Trusts ("REITs") than a more diversified portfolio of
investments. The Fund may be subject to certain risks similar to those
associated with direct ownership of real estate including: local or regional
economic conditions, changes in zoning laws, credit risk, and interest rate
risk.
<PAGE>
RREEF Real Estate Securities Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
2. Management fee and other transactions with affiliates
The Fund pays the Adviser, for management and investment advisory services,
a fee at an annual rate of 0.75% of daily net assets of the Fund up to $100
million and 0.65% on daily net assets in excess of $100 million. The Adviser
has currently agreed to waive its fee and additionally reimburse the Fund to
the extent the Fund's annual expenses (including management fee but
excluding taxes, interest, extraordinary expenses and brokerage commissions
or transaction costs) exceed 1.50% of average daily net assets.
Certain Officers and Directors of the Fund are also Officers or Directors of
the Adviser. Officers and Directors of the Adviser do not receive any
compensation from the Fund for serving as Director or Officer of the Fund.
The fund has entered into an expense offset arrangement as part of its
Custody agreement with Investors Bank & Trust Company ("Investors Bank").
Under this arrangement, the Fund's custody fees are reduced when the Fund
maintains cash on deposit at the Custodian.
3. Purchases and sales of securities
Cost of purchases of securities, excluding short-term investments, for the
period from September 21, 1995 (commencement of operations) to October 31,
1995 was $2,950,178. There were no sales of securities during the period.
The cost and unrealized appreciation or depreciation in value of the
investments owned by the Fund, as computed on a federal income tax basis,
are as follows:
<TABLE>
<S> <C>
Aggregate cost $3,100,306
----------
Gross unrealized depreciation (94,420)
Gross unrealized appreciation 11,830
----------
Net unrealized depreciation $ (82,590)
----------
</TABLE>
<PAGE>
RREEF Real Estate Securities Fund
Notes to Financial Statements
- -------------------------------------------------------------------------------
4. Share transactions
The Articles of Incorporation of the Company permit the Directors to issue
an unlimited number of full and fractional shares of beneficial interest
(without par value). Transactions in Fund shares during the period from
September 21, 1995 (commencement of operations) to October 31, 1995 were as
follows:
<TABLE>
<CAPTION>
Dollars Shares
---------- -------
<S> <C> <C>
Shares sold $2,945,754 293,768
Shares issued to shareholders in
reinvestment of distributions --- ---
Shares repurchased --- ---
---------- -------
Net increase $2,945,754 293,768
========== =======
</TABLE>
5. Principal shareholders
Three shareholders, each owning greater than 10% of the outstanding shares
of the Fund, cumulatively own 90% of the outstanding shares.
<PAGE>
Independent Auditors' Report
To the Directors and Shareholders of RREEF Real Estate
Securities Fund:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RREEF Real Estate Securities Fund (a series of
RREEF Securities Fund, Inc.) as of October 31, 1995, the related statements of
operations and changes in net assets, and the financial highlights, for the
period September 21, 1995 (commencement of operations) through October 31, 1995.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned at October 31, 1995 by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of RREEF Real Estate
Securities Fund at October 31, 1995, the results of its operations, the changes
in its net assets, and its financial highlights for the period September 21,
1995 through October 31, 1995 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 8, 1995
<PAGE>
[LOGO OF RREEF SECURITIES FUND, INC]
RREEF Funds, Inc.
650 California Street
San Francisco, CA 95108
415-781-3300
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
August 1, 1995
RREEF REAL ESTATE SECURITIES FUND
650 California Street
San Francisco, CA 94108
1-800-909-9234
1-415-781-3300
This Statement of Additional Information is not a prospectus but contains
information which should be read in conjunction with the prospectus of the RREEF
Real Estate Securities Fund (the "Fund") dated August 1, 1995 (the
"Prospectus"), which may be obtained free of charge by writing to or calling the
Fund at the above address or telephone number.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
FUNDAMENTAL INVESTMENT RESTRICTIONS........................................... 3
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS AND OTHER POLICIES.................... 3
ADDITIONAL INFORMATION CONCERNING CERTAIN INVESTMENT TECHNIQUES .............. 5
PORTFOLIO TRANSACTIONS........................................................ 6
MANAGEMENT OF THE FUND........................................................ 7
INVESTMENT ADVISORY SERVICES..................................................10
IN KIND PURCHASES OF SHARES OF THE FUND ......................................12
ADDITIONAL INFORMATION ON REDEMPTIONS ........................................13
CALCULATION OF PERFORMANCE DATA ..............................................13
ADDITIONAL INFORMATION ON TAX ISSUES..........................................14
CUSTODIAN.....................................................................17
LEGAL COUNSEL AND AUDITORS....................................................17
<PAGE>
FUNDAMENTAL INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental and may not
be changed without the approval of the holders of the lesser of (i) 67% of the
eligible votes, if the holders of more than 50% of the eligible votes are
present in person or by proxy or (ii) more than 50% of the eligible votes.
THE FUND MAY NOT:
(1) Issue senior securities, except as permitted under the Investment
Company Act of 1940.
(2) Borrow in amounts exceeding 33 1/3% of the value of the Fund's total
assets at the time of borrowing. The Fund may not pledge or hypothecate
any of its assets, except in connection with permitted borrowing.
(3) Underwrite the securities of other issuers, except to the extent that
the Fund may be deemed to act as an underwriter in certain cases when
disposing of restricted securities.
(4) Invest in real estate, except the Fund may invest in securities secured
by real estate interests therein or securities issued by companies which
invest in real estate or interests therein including real estate
investment trusts ("REITs"). (This does not prevent the Fund from owning
and liquidating real estate or real estate interests incident to a
default on portfolio securities.)
(5) Purchase or sell commodities or commodity futures contracts.
(6) Lend money, except that it may purchase and hold debt securities
publicly distributed or traded or privately placed and may enter into
repurchase agreements. The Fund will not lend securities if such a loan
would cause more than 20% of the value of its net assets to then be
subject to such loans.
(7) Invest 25% or more of its total assets in securities of companies
principally engaged in any one industry, except that the Fund may invest
without limitation in securities of companies engaged principally in the
real estate industry.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS AND OTHER POLICIES
These policies and the Fund's investment objective set forth in the
Prospectus may be changed by the Board of Directors without a shareholder vote.
THE FUND MAY NOT:
(8) Purchase any security on margin, except that it may obtain such
short-term credits as are necessary for clearance of securities
transactions.
(9) Invest more than 5% of its total assets in warrants to purchase common
stock.
(10) Invest in companies for the purpose of exercising control or management.
3
<PAGE>
(11) Purchase a security (other than obligations issued or guaranteed by the
U.S., any state or local government, or any foreign government, their
agencies or instrumentalities) if, as a result, more than 5% of the
value of the Fund's total assets would be invested in the securities of
issuers which at the time of purchase have been in operation for less
than three years (for this purpose, the period of operation of any
issuer shall include the period of operation of any predecessor or
unconditional guarantor of such issuer). The restriction does not apply
to securities of real estate investment trusts or other pooled
investment vehicles or mortgage- or asset-backed securities.
(12) Invest more than 15% of its net assets in illiquid securities (including
restricted securities which are illiquid and repurchase agreements
maturing in more than seven days).
(13) Purchase or retain the securities of any issuer if, to the Fund's
knowledge, (i) one or more officers, directors or partners of the Fund
or the Adviser individually owns or would own, directly or beneficially,
more than 1/2% of the securities of such issuer, and (ii) in the
aggregate, such persons own or would own, directly or beneficially, more
than 5% of such securities.
(14) Purchase participations or other direct interests or enter into leases
with respect to oil, gas, or other mineral exploration or development
programs.
(15) Purchase or write puts, calls, or any combination thereof.
(16) Purchase the securities of open-end or closed-end investment companies
except in compliance with the Investment Company Act of 1940.
PLEASE NOTE: All percentage restrictions, whether fundamental or
non-fundamental, except those restrictions in Fundamental Restriction #2, with
respect to borrowing, and Non-Fundamental Restriction #13, with respect to
illiquid securities, apply as of the time of an investment without regard to any
later fluctuations in the value of portfolio securities or other assets.
OPERATING POLICIES
In addition to the above investment restrictions, the Board of
Directors has approved the following operating policies which may be changed by
the Board of Directors without a shareholder vote.
(i) The Fund may not borrow money except from banks for temporary or
emergency purposes in amounts not in excess of 10% of the value of the
Fund's total assets (excluding the amount borrowed) at the time of such
borrowing.
(ii) The Fund may not pledge or hypothecate any of its assets except in
connection with permitted borrowing in amounts not exceeding 15% of the
value of its total assets (excluding the amount borrowed) at the time of
such borrowing.
(iii) The Fund will not purchase any securities at any time when
borrowings exceed 5% of the value of its total assets.
(iv) The Fund may not loan portfolio securities.
4
<PAGE>
STATE UNDERTAKINGS
The Fund has voluntarily undertaken with a state in which its shares
are registered for sale (i) not to engage in futures transactions except in
conformity with the state's regulations, and (ii) not to invest in REITs that
are not listed on the American Stock Exchange, the New York Stock Exchange or
NASDAQ NMS unless such REITs follow guidelines set forth by the National
Association of State Securities Administrators. These restrictions will be in
force for so long as the Fund's Shares are sold in that state and may be changed
at any time without approval of the shareholders.
ADDITIONAL INFORMATION CONCERNING
CERTAIN INVESTMENT TECHNIQUES
LOANS OF PORTFOLIO SECURITIES
The fundamental investment restrictions provide that the Fund may make
secured loans of portfolio securities in order to realize additional income,
provided that the Fund will not lend securities if such a loan would cause more
than 20% of the total value of its net assets to then be subject to such loans.
However, as a matter of operating policy, the Fund does not intend to make such
loans. This policy may be changed by the Board of Directors should they
determine that such loans would benefit the Fund.
If the Fund were to lend securities, the borrower would provide cash
collateral which the Fund could invest in order to receive short-term interest
income. The borrower also would pay the Fund an amount equal to the dividends or
interest which the Fund would have received if the Fund had not loaned the
securities. The cash collateral which the borrower would provide must be equal
to the market value of the securities loaned. If this market value rises, the
borrower would provide more cash on each business day. If it declines, the
borrower is entitled to be paid back some of its cash. Determinations of market
value are made at the end of each business day. If the cash collateral drops
below 100% and the required additional cash is not immediately deposited by the
borrower, the loan would immediately become due and the Fund would be entitled
to replace the securities by purchase. There can be no assurance that the
borrower would be able to deposit any required additional cash. The Fund would
exercise its right to replace the securities within such reasonable time as the
Fund deemed appropriate under the circumstances.
There are other policies which would govern the Fund's lending
securities. The borrower must agree to return the securities after notice,
within the normal settlement time of five business days. The Fund would invest
the cash collateral only in readily marketable short-term interest bearing
securities of prime quality so that the Fund could return the borrower's cash
when due. Part of the interest the Fund receives on these investments may be
paid to the borrower.
If the voting rights or rights to consent on securities loaned pass to
the borrower, the Fund would retain the right to cancel the loan and retain its
rights in time to vote upon or consent to a matter which the Fund deems
important.
The Fund would loan its portfolio securities only to brokers, dealers
and other financial institutions, and the Fund's loans would comply with
applicable regulatory requirements. The Fund may pay reasonable finder's,
administrative and custodian fees in connection with securities loans.
Some, but not all, of the Fund's policies are necessary to meet certain
requirements of the tax laws relating to the lending of securities. The Fund's
policies will not be changed unless the change is permitted under these
requirements. The Fund intends not to lend portfolio securities if, or to the
extent that, such activity would jeopardize its qualification as a regulated
investment company under the tax laws.
5
<PAGE>
FIRM COMMITMENT AGREEMENTS
The Fund may enter into firm commitment agreements ("when-issued"
purchases) for the purchase of securities at an agreed upon price on a specified
future date. The Fund will not enter into such agreements for the purpose of
investment leverage.
Liability for the purchase price and all the rights and risks of
ownership of the securities accrue to the Fund at the time it becomes obligated
to purchase the securities, although delivery and payment occur at a later date,
generally within 45 days of the date of the commitment to purchase. Accordingly,
if the market price of the security should decline, the effect of the agreement
would be to obligate the Fund to purchase the security at a price above the
current market price on the date of delivery and payment. During the time the
Fund is obligated to purchase such securities, it will maintain with the
Custodian a segregated account with U.S. Government Securities, cash or cash
equivalents of an aggregate current value sufficient to make payment for the
securities.
PORTFOLIO TRANSACTIONS
The Advisory Agreement between the Fund and the Adviser requires that
the Adviser, in executing portfolio transactions and selecting brokers or
dealers, seek the best overall terms available. In this regard, the Adviser will
seek to obtain the most favorable price and execution for the transaction given
the size and risk involved. In placing executions and paying brokerage
commissions, the Adviser considers the financial responsibility and reputation
of the broker or dealer, the range and quality of the brokerage and research
services made available to the Fund and the professional services rendered,
including execution, clearance procedures, wire service quotations, assistance
with the placement of sales for the Fund and ability to provide supplemental
performance, statistical and other research information for consideration,
analysis and evaluation by the Adviser's staff. Under the Advisory Agreement,
the Adviser is permitted, in certain circumstances, to pay a higher commission
than might otherwise be obtained in order to acquire brokerage and research
services. The Adviser must determine in good faith, however, that such
commission is reasonable in relation to the value of the brokerage and research
services provided -- viewed in terms of that particular transaction or in terms
of all the accounts over which investment discretion is exercised. In such case,
the Board of Directors will review the commissions paid by the Fund to determine
if the commissions paid over representative periods of time were reasonable in
relation to the benefits obtained. The advisory fee paid to the Adviser would
not be reduced by reason of its receipt of such brokerage and research services.
To the extent that research services of value are provided by broker/dealers
through or with whom the Fund places portfolio transactions the Adviser may be
relieved of expenses which it might otherwise bear. In addition, the Adviser may
use such research in servicing its other fiduciary accounts and not all services
received may be used by the Adviser in connection with its services to the Fund.
However, the Fund may also benefit from research services received by the
Adviser in connection with transactions effected on behalf of other fiduciary
accounts.
On occasions when the Adviser deems the purchase or sale of a security
to be in the best interests of the Fund as well as other fiduciary accounts, the
Adviser may aggregate the securities to be sold or purchased for the Fund with
those to be sold or purchased for other accounts in order to obtain the best net
price and most favorable execution. In such event, the allocation will be made
by the Adviser in the manner considered to be most equitable and consistent with
its fiduciary obligations to all such fiduciary accounts, including the Fund. In
some instances, this procedure could adversely affect the Fund but the Company
deems that any disadvantage in the procedure would be outweighed by the
increased selection available and the increased opportunity to engage in volume
transactions.
6
<PAGE>
MANAGEMENT OF THE FUND
The Directors and Officers of the Fund, their current business
addresses and principal occupations during the past five years are set forth
below. Prior to January 1995, RREEF America L.L.C. operated as a limited
partnership under the name RREEF America Partners, L.P. All references to RREEF
America include its predecessor.
<TABLE>
<CAPTION>
Age at Address and
Name Fund Position 8/1/95 Principal Occupation(s) During Past 5 Years**
- ------------------------- ------------------ --------- -----------------------------------------------------
<S> <C> <C> <C>
Kim G. Redding* Director and 40 650 California Street, San Francisco, CA 94108
President
Member of RREEF America L.L.C. since January
1995, Senior Vice President of RREEF Management
Company and President of the Adviser's General
Partner since May 1993; from 1990 through 1993,
principal of K.G. Redding & Associates, an
investment adviser. Director and investment
manager of Redding, Melchor & Company, an
investment adviser, until 1990.
Donald A. King, Jr.* Director and 55 650 California Street, San Francisco, CA 94108
Executive Vice
President Managing Member or RREEF America, and Senior
Vice President of RREEF Management Company for
the past five years. Director of RREEF Real
Estate Securities Advisers, Inc. ("the Adviser's
General Partner") since its inception in 1993.
Member of the Pension Real Estate Association
and the Urban Land Institute. Member of the
Executive Committee of the National Realty
Committee, the Advisory Board of McIntire School
of Commerce at the University of Virginia, and
the Executive Committee of the Policy Advisory
Board of the Center for Real Estate and Urban
Economics at the University of California,
Berkeley.
- -----------
* This Director may be deemed an "interested person" of the Fund as
defined in the Investment Company Act.
** RREEF America L.L.C. is a registered investment adviser that provides
investment advisory services to various group trusts, separate accounts
and real estate investment trusts. The RREEF Corporation is a registered
investment adviser that provides discretionary investment advisory
services to corporations and group trusts. RREEF Management Company
provides administrative, property management, real estate brokerage and
other services to RREEF America L.L.C., its affiliates and their
clients.
7
<PAGE>
Gregory L. Melchor Director 46 635 Emerson Street, Palo Alto, CA 94301
President of Melchor Corporation, asset
management firm since 1979.
Willis K. Polite Director 67 650 California Street, San Francisco, CA 94108
Founding General Partner of Seagate Investment
Company, Pepper Pike, Ohio and Seagate
Investment Company, San Francisco, California.
Founder and former President of Deerfield
Corporation, a family investment entity.
Currently, Director of Solarflo Corporation, a
manufacturer of combustion equipment and SEV
Corporation, a specialty automotive paint
company.
William Wilson, III Director 59 2929 Campus Dr., San Mateo, CA 94403
President since 1978 of William Wilson and
Associates, a property management and real
estate development firm.
David R. Ball Vice President 54 650 California Street, San Francisco, CA 94108
Vice President of the Adviser since May 1995;
Principal of Ball Enterprises, a real estate
investment and consulting firm from 1985 until
May 1995.
Paula M. Ferkull Treasurer and 44 875 No. Michigan Avenue, Chicago, IL 60611
Secretary
Treasurer of the RREEF Corporation and the
Adviser's General Partner, Comptroller of RREEF
America Partners, L.P. and Senior Vice President
of RREEF Management Company since 1979.
Comptroller and Member of RREEF America L.L.C.
since January 1995.
Patrick J. Callan Vice President 59 650 California Street, San Francisco, CA 94108
Member, RREEF America and Vice President of the
RREEF Corporation for the past five years.
8
<PAGE>
D. Wylie Greig Vice President 50 650 California Street, San Francisco, CA 94108
Member, RREEF America since April 1991 and Vice
President of The RREEF Corporation since 1987.
Suzanne M. Hauer Vice President 47 650 California Street, San Francisco, CA 94108
Senior Vice President of the RREEF Corporation
since 1975. Member RREEF America, L.L.C. since
January 1993.
James D. King Vice President 50 650 California Street, San Francisco, CA 94108
Member RREEF America since March 1983 and Vice
President of RREEF Corporation since March 1983.
Nancy A. Sims Vice President 40 650 California Street, San Francisco, CA 94108
Vice President of the Adviser's General Partner
since April, 1993; Senior Vice President of The
RREEF Corporation since 1981.
Webb Sowden, Jr. Vice President 60 650 California Street, San Francisco, CA 94108
Vice President of the Adviser's General Partner
since April, 1993; Member RREEF America and
Senior Vice President of The RREEF Corporation
since June 1990. Formerly, Executive Vice
President of Lehndorff & Babsen, a real estate
investment advisory firm, from February 1990
until June 1990.
Stephen M. Steppe Vice President 48 650 California Street, San Francisco, CA 94108
Member, RREEF America since 1988 and Vice
President of The RREEF Corporation since 1986.
Gary L. Thompson Vice President 59 650 California Street, San Francisco, CA 94108
Member, RREEF America since January 1993 and
Vice President of The RREEF Corporation since
January 1984.
9
<PAGE>
Michael S. Young Assistant Vice 50 650 California Street, San Francisco, CA 94108
President
Vice President, Director of Quantitative
Research, Real Estate Securities of the
Adviser's General Partner since 1991. Vice
President of Real Asset Management, a real
estate investment management company, from May
1988 until August 1990 and President of Young
Information Systems, a computer software company
serving the real estate industry from May 1982
until November 1991.
Adrian Fernandez Assistant Vice 26 650 California Street, San Francisco, CA 94108
del--Campo President
Trader, Real Estate Securities for the Adviser's
General Partner since 1993. Student, University
of California, Berkeley from 1988 to 1993.
Natalie A. Stern Assistant Vice 31 650 California Street, San Francisco, CA 94108
President
Director of Fundamental Analysis for the
Adviser's General Partner since 1991; Analyst,
Copley Real Estate Advisors from 1989 to 1991.
</TABLE>
The Fund does not pay any direct remuneration to any Director who is an
"interested person" of the Fund, or any officer employed by the Adviser or its
affiliates. It is anticipated that Directors of the Fund who are not "interested
persons" will be paid an annual retainer of $3,000, a fee of $1,000 per meeting
attended and a fee of $200 for each telephone conference meeting, plus expenses,
with a maximum fee of $10,000 per Director.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Pension or Retirement Estimated Annual
Total estimated Benefits Accrued as Benefits Upon
Name Compensation* Part of Fund Expenses Retirement
---- ------------ --------------------- ----------
<S> <C> <C> <C>
Gregory L. Melchor $7,000 0.00 0.00
Willis K. Polite $7,000 0.00 0.00
William Wilson, III $7,000 0.00 0.00
</TABLE>
*Based on four Board meetings for the first year.
INVESTMENT ADVISORY SERVICES
RREEF Real Estate Securities Advisers L.P. (the "Adviser"), a
California limited partnership, acts as the Fund's investment adviser pursuant
to an Advisory Agreement adopted in accordance with the Investment Company Act
of 1940, as amended (the "Advisory Agreement").
10
<PAGE>
In addition to the services described in the Fund's prospectus, the
Adviser will compensate all personnel, Officers and Directors of the Fund if
such persons are employees of the Adviser or its affiliates. The Adviser pays
the expense of printing and mailing prospectuses and sales materials used for
promotional purposes.
The Fund pays all other expenses of its operations and activities. The
expenses borne by the Fund include its organizational expenses, the charges and
expenses of any transfer agents and dividend disbursing agents, custodian fees,
legal and auditors' expenses, bookkeeping and accounting expenses, brokerage
commissions for portfolio transactions, taxes, if any, the advisory fee,
extraordinary expenses, expenses of issuing and redeeming shares, expenses of
shareholder and trustee meetings, and of preparing, printing and mailing proxy
statements, reports and other communications to shareholders, expenses of
registering and qualifying shares for sale, fees of Directors who are not
"interested persons" of the Adviser, fidelity bond premiums, directors' and
officers insurance premiums, for directors who are not "interested persons" of
the Fund, cost of maintaining the books and records of the Fund, and any other
charges and fees not specifically enumerated.
For the services and facilities provided to the Fund by the Adviser,
the Fund pays to the Adviser a monthly fee based upon the monthly average net
assets of such Fund for such calendar month equal to 0.75% per annum on assets
of the Fund up to $100 million and 0.65% per annum on assets of the Fund in
excess of $100 million.
The total operating expenses of the Fund, exclusive of taxes, interest,
brokerage commissions and extraordinary expenses, but inclusive of the Adviser's
fee, are subject to the most restrictive of the expense limitations imposed by
state securities commissions of the states in which the Fund's shares are
registered or qualified for sale. The current most restrictive limitation that
may apply to the Fund is 2.5% of the first $30 million of average net assets, 2%
of the next $70 million and 1.5% of any excess over $100 million. The Adviser
has agreed to absorb certain Fund operating expenses through at least October
31, 1996 to the extent that the ratio of expenses to average daily net assets
exceeds 1.5%.
The Board of Directors of the Fund (including a majority of the
Directors who are not "Interested" persons of the Fund) approved the Advisory
Agreement on March 17, 1995. The Advisory Agreement provides that it will
continue initially for two years, and from year to year thereafter as long as it
is approved at least annually both (i) by a vote of a majority of the
outstanding voting securities of the Fund (as defined in the Investment Company
Act) or by the Board of Directors of the Fund, and (ii) by a vote of a majority
of the Directors who are not parties to the Advisory Agreement or "interested
persons" of any party thereto, cast in person at a meeting called for the
purpose of voting on such approval. The Advisory Agreement may be terminated on
60 days' written notice by either party and will terminate automatically if it
is assigned. The Advisory Agreement provides in substance that the Adviser shall
not be liable for any action or failure to act in accordance with its duties
thereunder in the absence of willful misfeasance, bad faith or gross negligence
on the part of the Adviser or of reckless disregard of its obligations
thereunder.
The Fund has adopted procedures under Rule 17a-7 of the Investment
Company Act, as amended, to permit purchase and sales transactions to be
effected between the Fund and the other registered investment companies for
which the Adviser acts as investment adviser or between the Fund and any
advisory clients of the Adviser. The Fund may from time to time engage in such
transactions but only in accordance with these procedures, and if they are
equitable to each participant and consistent with each participant's investment
objectives. The Fund does not intend to do so to any large extent in the near
future.
11
<PAGE>
The Adviser has adopted a Code of Ethics which regulates the personal
securities transactions of the Adviser's investment personnel and other
employees and affiliates with access to information regarding securities
transactions of the Fund. The Code of Ethics requires investment personnel to
disclose personal securities holdings upon commencement of employment and all
subsequent trading activity to the Adviser's Compliance Officer. Investment
personnel are prohibited from (a) engaging in any transactions involving real
estate securities, (b) purchasing securities in a private offering and (c)
purchasing securities in an initial public offering, without the prior consent
of the Compliance Officer. Additionally, such personnel are prohibited from
trading in any securities (i) for which the Fund has a pending buy or sell
order, (ii) which the Fund is considering buying or selling, or (iii) which the
Fund purchased or sold within seven calendar days.
IN KIND PURCHASES OF SHARES OF THE FUND
Shares of the Fund are continuously offered at their net asset value
next determined after an order is accepted. The methods available for purchasing
shares of the Fund are described in the Prospectus. In addition, shares of the
Fund may be purchased using securities, so long as the securities delivered to
the Fund meet the investment objective and policies of the Fund, do not cause
the violation of any investment restrictions at the time of acceptance and are
otherwise acceptable to the Adviser, which reserves the right to reject all or
any part of the securities offered in exchange for shares of the Fund. On any
such "in kind" purchase, the following conditions will apply:
(1) the securities offered by the investor in exchange for shares of
the Fund must not be in any way restricted as to resale or
otherwise be illiquid;
(2) the securities must have a value which is readily ascertainable
(and not established only by evaluation procedures) as evidenced
by a listing on the AMEX, the NYSE, or NASDAQ; and
(3) no over-the-counter securities will be accepted unless the
principal over-the-counter market is in the United States.
The Fund believes that this ability to purchase shares of the Fund
using securities provides a means by which holders of certain securities may
obtain diversification and continuous professional management of their
investments without the expense of selling those securities in the public
market. Benefits to the Fund may include the ability to purchase desirable
securities without brokerage commissions.
An investor who wishes to make an "in kind" purchase should furnish
(either in writing or by telephone) to the Fund a list with a full and exact
description of all of the securities which he or she proposes to deliver. The
Fund will advise him or her as to those securities which it is prepared to
accept and will provide the investor with the necessary forms to be completed
and signed by the investor. The investor should then send the securities, in
proper form for transfer, with the necessary forms to the Fund and certify that
there are no legal or contractual restrictions on the free transfer and sale of
the securities. The securities will be valued as of the close of business on the
day of receipt by the Fund in the same manner as portfolio securities of the
Fund are valued. (See the section entitled "Calculation of Net Asset Value" in
the Prospectus.) The number of shares of the Fund, having a net asset value as
of the close of business on the day of receipt equal to the value of the
securities delivered by the investor, will be issued to the investor, less
applicable stock transfer taxes, if any.
The exchange of securities by the investor pursuant to this offer will
constitute a taxable transaction and may result in a gain or loss for Federal
income tax purposes. Each investor should consult his or her tax adviser to
determine the tax consequences under Federal and state law of making such an "in
kind" purchase.
12
<PAGE>
ADDITIONAL INFORMATION ON REDEMPTIONS
REDEMPTION IN KIND. The Fund reserves the right, at its sole
discretion, to redeem shares of the Fund in cash or in kind. However, the Fund
has elected to be governed by Rule 18f-1 under the Investment Company Act,
pursuant to which the Fund is obligated to redeem shares of the Fund solely in
cash up to the lesser of $250,000 or one percent of the net asset value of the
Fund during any 90-day period for any one shareholder. Any shareholder of the
Fund receiving a redemption in kind would then have to pay brokerage fees in
order to convert his Fund investment into cash. All redemptions in kind will be
made in marketable securities of the Fund.
SUSPENSION OF REDEMPTION PRIVILEGES. The Fund may suspend redemption
privileges or postpone the date of payment for up to seven calendar days, but
cannot do so for more than seven days after the redemption order is received
except during any period (1) when the NYSE is closed, other than customary
weekend and holiday closings, or trading on the Exchange is restricted as
determined by the SEC, (2) when an emergency exists, as defined by the SEC,
which makes it not reasonably practicable for the Fund to dispose of securities
owned by it or to fairly determine the value of its assets, or (3) as the SEC
may otherwise permit.
CALCULATION OF PERFORMANCE DATA
TOTAL RETURN
The Fund may advertise performance in terms of average annual total
return for 1-, 5- and 10-year periods, or for such lesser periods as the Fund
has been in existence. Average annual total return is computed by finding the
average annual compounded rates of return over the periods that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the
1-, 5- or 10-year periods at the end of the
year or period.
The calculation assumes all charges are deducted from the initial
$1,000 payment and assumes all dividends and distributions by the Fund are
reinvested at the price stated in the prospectus on the reinvestment dates
during the period, and includes all recurring fees that are charged to all
shareholder accounts.
YIELD
The Fund may advertise performance in terms of a 30-day yield
quotation. The 30-day yield quotation is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
Yield = 2[(a-b/cd + 1)^6 - 1]
13
<PAGE>
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursement)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
NONSTANDARDIZED TOTAL RETURN
The Fund may provide the above described standard total return results
for a period which ends not earlier than the most recent calendar quarter end
and which begins either twelve months before or at the time of commencement of
the Fund's operations. In addition, the Fund may provide nonstandardized total
return results for differing periods, such as for the most recent six months.
Such nonstandardized total return is computed as otherwise described under
"Total Return" except that no annualization is made.
DISTRIBUTION RATES
In its sales literature, the Fund may also quote its distribution rate
along with the above described standard total return and yield information. The
distribution rate is calculated by annualizing the latest distribution and
dividing the result by the offering price per share as of the end of the period
to which the distribution relates. A distribution can include gross investment
income from debt obligations purchased at a premium and in effect include a
portion of the premium paid. A distribution can also include gross short-term
capital gains without recognition of any unrealized capital losses. Further, a
distribution can include income from the sale of options by the Fund even though
such option income is not considered investment income under generally accepted
accounting principles.
Because a distribution can include such premiums, capital gains and
option income, the amount of the distribution may be susceptible to control by
the Adviser through transactions designed to increase the amount of such items.
Also, because the distribution rate is calculated in part by dividing the latest
distribution by net asset value, the distribution rate will increase as the net
asset value declines. A distribution rate can be greater than the yield rate
calculated as described above.
ADDITIONAL INFORMATION ON TAX ISSUES
THIS SECTION IS NOT INTENDED TO BE A FULL DISCUSSION OF ALL THE ASPECTS
OF THE FEDERAL INCOME TAX LAW AND ITS EFFECTS ON THE FUND AND ITS SHAREHOLDERS.
SHAREHOLDERS MAY BE SUBJECT TO STATE AND LOCAL TAXES ON DISTRIBUTIONS. EACH
INVESTOR SHOULD CONSULT A TAX ADVISOR REGARDING THE EFFECT OF FEDERAL, STATE AND
LOCAL TAXES ON AN INVESTMENT IN THE FUND.
TAXATION OF THE FUND -- IN GENERAL
As stated in its Prospectus, the Fund intends to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
(the "Code"). To qualify as a regulated investment company, the Fund must, among
other things, (a) derive in each taxable year at least 90% of its gross income
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currencies, or
other income derived with respect to its business of investing in such stock,
securities or currencies (the "90% test"); (b) derive in each taxable year less
than 30% of its gross income from the sale or other disposition of stock,
securities or certain options, futures or foreign currencies held less than
three months (the "30% test"), and (c) satisfy certain diversification
requirements at the close of each quarter of the Fund's taxable year.
14
<PAGE>
If the Fund qualifies as a regulated investment company and distributes
at least 90% of its net investment income, the Fund will not be subject to
Federal income tax on the income so distributed. However, the Fund would be
subject to corporate income tax on any undistributed income other than tax-
exempt income from municipal securities.
The Code imposes a non-deductible 4% excise tax on a regulated
investment company that fails to distribute during each calendar year an amount
equal to the sum of (1) at least 98% of its ordinary income for the calendar
year, (2) at least 98% of its capital gain net income for the twelve-month
period ending on October 31 of the calendar year, and (3) any portion not
taxable to the Fund of the respective balance from the preceding calendar year.
The Fund intends to make such distributions as are necessary to avoid imposition
of this excise tax.
TAXATION OF CERTAIN MORTGAGE REITS
The Fund may invest in REITs that hold residual interests in real
estate mortgage investment conduits ("REMICs"). Under Treasury regulations that
have not yet been issued, but may apply retroactively, a portion of the Fund's
income from a REIT that is attributable to the REIT's residual interest in a
REMIC (referred to in the Code as an "excess inclusion") will be subject to
Federal income tax in all events. These regulations are also expected to provide
that excess inclusion income of a regulated investment company, such as the
Fund, will be allocated to shareholders of the regulated investment company in
proportion to the dividends received by them with the same consequences as if
the shareholders held the related REMIC residual interest directly. In general,
excess inclusion income allocated to shareholders (i) cannot be offset by net
operating losses (subject to a limited exception for certain thrift
institutions) and (ii) will constitute unrelated business taxable income to
entities (including a qualified pension plan, an individual retirement account,
a 401(k) plan, a Keogh plan or other tax-exempt entity) subject to tax on
unrelated business income, thereby potentially requiring such an entity that is
allocated excess inclusion income, and otherwise might be required to file a tax
return, to file a tax return and pay tax on such income. In addition, if at any
time during any taxable year a "disqualified organization" (as defined in the
Code) is a record holder of a share in a regulated investment company, then the
regulated investment company will be subject to a tax equal to that portion of
its excess inclusion income for the taxable year that is allocable to the
disqualified organization, multiplied by the highest Federal income tax rate
imposed on corporations.
TAXATION OF DEBT INSTRUMENTS
For Federal income tax purposes, debt securities purchased by the Fund
may be treated as having original issue discount. Original issue discount can
generally be defined as the excess of the stated redemption price at maturity of
a debt obligation over the issue price. Original issue discount is treated as
interest earned by the Fund for Federal income tax purposes, whether or not any
income is actually received, and therefore, is subject to the distribution
requirements of the Code. However, original issue discount with respect to
tax-exempt obligations generally will be excluded from the Fund's taxable
income, although it will be included in gross income for purposes of the 90%
test and the 30% test described above. Original issue discount with respect to
tax-exempt securities is accrued and added to the adjusted tax basis of such
securities for purposes of determining gain or loss upon sale or at maturity.
Generally, the amount of original issue discount for any period is determined on
the basis of a constant yield to maturity which takes into account the
compounding of accrued interest. Under section 1286 of the Code, an investment
in a stripped bond or stripped coupon will result in original issue discount.
15
<PAGE>
The Fund may purchase debt securities at a discount which exceeds the
original issue price plus previously accrued original issue discount remaining
on the securities, at the time of purchase. This additional discount represents
market discount for income tax purposes. Generally, market discount is accrued
on a daily basis, and any gain realized on disposition will be treated as
interest income for purposes of the 90% test to the extent it does not exceed
the accrued market discount on the security (unless the Fund elects to include
such accrued market discount in income in the tax year to which it is
attributable).
The Fund may purchase debt securities at a premium, i.e., at a purchase
price in excess of face amount. With respect to tax-exempt securities, the
premium must be amortized to the maturity date but no deduction is allowed for
the premium amortization. Instead, the amortized bond premium will reduce the
Fund's adjusted tax basis in the securities. For taxable securities, the premium
may be amortized if the Fund so elects. The amortized premium on taxable
securities is allowed as a deduction, and, generally for securities issued after
September 27, 1985, must be amortized under an economic accrual method.
TAXATION OF THE SHAREHOLDER
Taxable distributions generally are included in a shareholder's gross
income for the taxable year in which they are received. However, dividends
declared in October, November and December and made payable to shareholders of
record in such a month will be deemed to have been received on December 31 if
paid by the Fund during the following January.
Distributions by the Fund will result in a reduction in the fair market
value of the Fund's shares. Should a distribution reduce the fair market value
below a shareholders cost basis, such distribution nevertheless would be taxable
to the shareholder as ordinary income or long-term capital gain, even though,
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares of the Fund just prior to a distribution. The price of such shares
includes the amount of any forthcoming distribution so that those investors may
receive a return of investment upon distribution which will nevertheless be
taxable to them.
A redemption of shares is a taxable event and, accordingly, a capital
gain or loss may be recognized. If a shareholder receives a distribution taxable
as long-term capital gain and redeems or exchanges shares which he has not held
for more than six months, any loss on the redemption or exchange (not otherwise
disallowed as attributable to an exempt-interest dividend) will be treated as
long-term capital loss to the extent of the long-term capital gain previously
recognized.
FOREIGN HOLDERS
A "Foreign Holder" is a person or entity that, for U.S. Federal income
tax purposes, is a nonresident alien individual, a foreign corporation, a
foreign partnership, or a non-resident fiduciary of a foreign estate or trust.
If a distribution of the Fund's taxable income (without regard to its net
capital gain) to a Foreign Holder is not effectively connected with a U.S. trade
or business carried on by the investor, such distribution will be subject to
withholding tax at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty. In addition, distributions from the Fund will
generally be subject to information reporting.
If at least 50% of the value of the Fund is represented by shares of
REITs that are "domestically controlled" within the meaning of Section 897(h) of
the Code, or is represented by shares of classes of REIT stock that (i)
represent not more than 5% of such classes and (ii) are "regularly traded on an
established securities market" within the meaning of Section 897(c)(3) of the
Code, a Foreign Holder
16
<PAGE>
should not be subject to withholding tax under the Foreign Investment in Real
Property Tax Act ("FIRPTA") with respect to gain arising from the sale or
redemption of Units. In addition, based upon advice of counsel as to existing
law, the Trustee does not intend to withhold under FIRPTA on distributions of
the Fund's net capital gain (designated as capital gain by the Fund). Such
income generally will not be subject to Federal income tax unless the income is
effectively connected with a trade or business of such Foreign Holder in the
United States. In the case of a Foreign Holder who is a non-resident alien
individual, however, gain arising from the sale or redemption of shares or
distributions of the Fund's net capital gain ordinarily will be subject to
Federal income tax at a rate of 30% if such individual is physically present in
the U.S. for 183 days or more during the taxable year and, in the case of the
gain arising from the sale or redemption of Units, either the gain is
attributable to an office or other fixed place of business maintained by the
Holder in the United States or the Holder has a "tax home" in the United States.
In addition, shares held by an individual who is not a citizen or resident of
the United States at the time of his death will generally be subject to United
States federal estate tax.
The tax consequences to a Foreign Holder entitled to claim the benefits
of an applicable tax treaty may be different from those described herein.
Foreign Holders should consult their own tax advisers to determine whether
investment in the Fund is appropriate.
CUSTODIAN
The Custodian of the Fund's assets is Investors Bank & Trust Company,
89 South Street, Boston, Massachusetts. The Custodian maintains all of the
instruments representing the investments of the Fund and all cash. The Custodian
delivers securities against payment upon sale and pays for securities against
delivery upon purchase. The Custodian also remits Fund assets in payment of Fund
expenses pursuant to instructions of officers and resolutions of the Board of
Directors.
LEGAL COUNSEL AND AUDITORS
D'Ancona & Pflaum, 30 N. LaSalle Street, Chicago, Illinois 60602, are
legal counsel to the Fund.
Deloitte & Touche LLP, 2 World Financial Center, New York, NY 10281 are
the independent auditors for the Fund. The audit includes examination of annual
financial statements furnished to shareholders and filed with the Securities and
Exchange Commission, consultation on financial accounting and reporting matters
and meeting with the Audit Committee of the Board of Directors. In addition, the
auditors review federal and state income tax returns and related forms.
17
<PAGE>
APPENDIX
CORPORATE BOND RATINGS
The following is a description of Moody's Investors Service, Inc.'s bond
ratings:
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they compromise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make long-term risks appear somewhat larger than Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
The following is a description of Standard & Poor's Corporation's investment
grade bond ratings:
AAA: Bonds rated AAA are considered highest grade obligations. They possess the
ultimate degree of protection as to principal and interest. They move with
market interest rates, and thus provide the maximum safety on all counts.
AA: Bonds rated AA are high-grade obligations. In the majority of instances,
they differ from AAA issues only to a small degree. Prices of AA bonds also move
with the long-term money market.
A: Bonds rated A are upper medium grade obligations. They have considerable
investment strength, but are not entirely free from adverse effects of change in
economic and trade conditions. Interest and principal are regarded as safe. They
predominantly reflect money rates in their market behavior but, to some extent,
also economic conditions.
BBB: Bonds rated BBB are medium grade obligations. They are considered
borderline between definitely sound obligations and those where the speculative
element begins to predominate. These bonds have adequate asset coverage and are
normally protected by satisfactory earnings. Their susceptibility to changing
conditions, particularly to depressions, necessitates constant monitoring. These
bonds are more responsive to business and trade conditions than to interest
rates. This group is the lowest that qualifies for commercial bank investment.
18
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Financial Highlights
Included in Part B:
Financial Statements for the fiscal year ended October 31,
1995 for RREEF Real Estate Securities Fund are incorporated
into the Annual Report of RREEF Real Estate Securities Fund
Portfolio of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets for the Period September
21, 1995 (commencement of operations) to October 31, 1995
Financial Highlights
Notes to Financial Statements
Report of Deloitte & Touche LLP, Independent Auditors
(b) Exhibits:
1. Articles of Incorporation.
2. By-Laws.
3. Not Applicable.
4. Not Applicable.
5. (a) Investment Advisory Agreement.
(b) Administration Agreement.
6. Not Applicable.
7. Not Applicable.
8. Custodian Agreement.
9. Transfer Agency Contract.
10. Legal opinion is incorporated by reference to
Rule 24f-2 Notice as filed with the SEC on
January 5, 1996.
11. Consent of Independent Auditors.
12. Not Applicable.
13. Not Applicable.
<PAGE>
14. Not Applicable.
15. Rule 12b-1 Distribution Plan.
16. Schedule for Computation of Performance Quotation.
18. Not Applicable.
19. Powers of Attorney.
27. Financial Data Schedule.
Item 25. Persons Controlled By or Under Common Control With Registrant
Not Applicable.
Item 26. Number of Holders of Securities
As of January 1, 1996 there were seven holders of record of
Registrant's shares.
Item 27. Indemnification
Registrant's Articles of Incorporation indemnify its directors,
officers and employees to the full extent permitted by Section 2-418 of the
Maryland General Corporation Law (the "Law"), subject only to the provisions of
the Investment Company Act of 1940. The indemnification provisions of the Law
permit, among other things, corporations to indemnify directors and officers
unless it is proved that the individual (1) acted in bad faith or with active
and deliberate dishonesty, (2) actually received an improper personal benefit in
money, property or services, or (3) in the case of a criminal proceeding, had
reasonable cause to believe that his or her act or omission was unlawful. The
Law also permits corporations to indemnify directors and officers for amounts
paid in settlement of stockholders' derivative suits.
In addition, the Registrant's directors and officers are covered under
a policy to indemnify them for loss
<PAGE>
(subject to certain deductibles) including costs of defense incurred by reason
of alleged errors or omissions, neglect or breach of duty. The policy has a
number of exclusions including alleged acts, errors, or omissions which are
finally adjudicated or established to be deliberate, dishonest, malicious or
fraudulent or to constitute willful misfeasance, bad faith, gross negligence or
reckless disregard of their duties in respect to any registered investment
company. This coverage is incidental to a general policy carried by the
Registrant's Adviser.
In addition to the foregoing indemnification, Registrant's Articles of
Incorporation exculpate directors and officers with respect to monetary damages
except to the extent that an individual actually received an improper benefit in
money property or services or to the extent that a final adjudication finds that
the individual acted with active and deliberate dishonesty.
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
RREEF Real Estate Securities Advisers, L.P., the Registrant's
investment adviser, renders investment advisory services to individual,
institutional and pension and profit-sharing plan accounts. The following
officers and directors of the Adviser's general partner, RREEF Real Estate
Securities Advisers, Inc. have been engaged in other professions and/or
employment capacities during the past two fiscal years, as indicated below.
Name of Company,
Name and Title Principal Business
With Adviser Address
Capacity
Kim G. Redding,
President RREEF America L.L.C.
Member
Stephen M. Steppe,
Vice President,
Secretary, Director RREEF America L.L.C.
Member
Donald A. King, Jr.,
Vice President, Director RREEF America L.L.C.
Member
D. Wylie Grieg,
Director RREEF America L.L.C.
Member
Suzanne M. Hauer,
Vice President RREEF America L.L.C.
Member
Webb Sowden, Jr.,
Vice President RREEF America L.L.C.
Member
Gary L. Thompson,
Vice President RREEF America L.L.C.
Member
<PAGE>
Paula M. Ferkull,
Treasurer RREEF America L.L.C.
Member
RREEF America L.L.C., which is under common control with the Adviser, a
registered investment adviser, is located at 650 California Street, San
Francisco, CA 94108. RREEF America L.L.C. provides investment advisory services
to various group trusts, separate accounts and real estate investment trusts.
All of the above-listed persons are also affiliated with The RREEF Corporation,
a registered investment adviser that provides discretionary investment advisory
services to corporations and group trusts. Such persons are also affiliated with
RREEF Management Company, an affiliated California corporation providing
administrative, property management, real estate brokerage and other support
services to RREEF America L.L.C., its affiliates and their clients.
<PAGE>
Item 29. Principal Underwriters
Not Applicable.
Item 30. Location of Accounts and Records.
All documents and records related to portfolio transactions are located
at RREEF Real Estate Securities Advisers, L.P., 650 California Street, San
Francisco, CA 94108.
All other documents and records are located at Investors Bank & Trust
Company, 89 South Street, Boston, MA 02111.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
Commencing with Registrant's annual report to shareholders for the year
ending October 31, 1995, Registrant undertakes to furnish to each person to whom
a Prospectus is delivered, a copy of the Registrant's latest Annual Report to
Shareholders, upon request and without charge.
<PAGE>
RREEF SECURITIES FUND, INC.
SIGNATURES
Registrant certifies that this Amendment meets all of the requirements
for effectiveness pursuant to Rule 485(b).
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago and State of Illinois on the 23rd day of
January, 1996.
RREEF SECURITIES FUND, INC.
*By: /s/ Arthur Don
Arthur Don,
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
Kim G. Redding* Chief Executive January 23, 1996
Kim G. Redding Officer and Director
Paula M. Ferkull* Principal January 23, 1996
Paula M. Ferkull Financial and
Accounting Officer
*By: /s/ Arthur Don
Arthur Don,
Attorney-in-Fact
* Arthur Don signs this document on behalf of the Registrant and the
foregoing officers pursuant to the powers of attorney filed as Exhibit 19 to
this Registration Statement.
<PAGE>
RREEF SECURITIES FUND, INC.
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment has been signed on January 23, 1996 by the following
persons in the capacities indicated.
Signature Title
Donald A. King, Jr.* Director
Donald A. King, Jr.
Gregory Melchor* Director
Gregory Melchor
Willis K. Polite* Director
Willis K. Polite
William Wilson, III* Director
William Wilson, III
* Arthur Don signs this document on behalf of each of the foregoing
persons pursuant to the powers of attorney filed as Exhibit 19 to this
Registration Statement.
*/s/Arthur Don
Arthur Don,
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Item
Page
1 Registrant's Articles of Incorporation dated March 15, 1995.
2 Registrant's By-Laws dated March 17, 1995.
5 (a) Investment Advisory Agreement between the Registrant and RREEF Real
Estate Securities Advisers, L.P. on behalf of RREEF Securities Fund,
Inc. dated March 17, 1995.
5 (b) Administration Agreement between the Registrant and Investors Bank &
Trust Company on behalf of RREEF Securities Fund, Inc. dated
May 24, 1995.
8 Custody Agreement between the Registrant and Investors Bank & Trust
Company dated May 24, 1995.
9 Transfer Agency and Service Agreement between the Registrant and
Investors Bank & Trust Company dated May 24, 1995.
11 Consent of Independent Accountants.
15 Rule 12b-1 Distribution Plan dated June 19, 1995.
16 Schedule for Computation of Performance Quotation.
19 Powers of Attorney.
27 Financial Data Schedule dated October 31, 1995.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from RREEF Real Estate Securities Fund
form N-SAR for the period ended October 31, 1995
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 3,100,306
<INVESTMENTS-AT-VALUE> 3,017,716
<RECEIVABLES> 10,671
<ASSETS-OTHER> 95,682
<OTHER-ITEMS-ASSETS> 90,683
<TOTAL-ASSETS> 3,214,752
<PAYABLE-FOR-SECURITIES> 131,653
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100,136
<TOTAL-LIABILITIES> 231,789
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,045,764
<SHARES-COMMON-STOCK> 303,769
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 19,789
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (82,590)
<NET-ASSETS> 2,982,963
<DIVIDEND-INCOME> 23,809
<INTEREST-INCOME> 435
<OTHER-INCOME> 0
<EXPENSES-NET> 4,455
<NET-INVESTMENT-INCOME> 19,789
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (82,590)
<NET-CHANGE-FROM-OPS> (62,801)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 293,768
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,882,953
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,227
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 44,028
<AVERAGE-NET-ASSETS> 2,643,562
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> (0.25)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.82
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
EXHIBIT 1
(As filed with the State of Maryland on March 15, 1995)
ARTICLES OF INCORPORATION
OF
RREEF SECURITIES FUND, INC.
FIRST: Incorporation: The undersigned, Arthur Don, whose address is 30
North LaSalle Street, Chicago, Illinois 60602, being at least 18 years of age,
is acting as sole incorporator with the intention of forming a corporation under
and by virtue of the General Laws of the State of Maryland authorizing the
formation of corporations.
SECOND: Name. The name of the Corporation is RREEF Securities Fund,
Inc. (hereinafter called the "Corporation").
THIRD: Purpose. The purpose for which the Corporation is formed is to
engage in, conduct, operate and carry on the business of an open-end management
investment company under the Investment Company Act of 1940 (including any
amendment thereof or other applicable Act of Congress hereinafter enacted)
(hereinafter called the "1940 Act"), and to do any and all acts or things as are
necessary, convenient, appropriate, incidental or customary in connection
therewith.
FOURTH: Principal Office and Resident Agent. The post office address of
the place at which the principal office of the Corporation in the State of
Maryland will be located is 32 South Street, Baltimore, Maryland 21202.
The Corporation's registered agent is The Corporation Trust
Incorporated whose post office address is 32 South Street, Baltimore, Maryland
21202. Said registered agent is a corporation of the State of Maryland.
FIFTH: Capitalization. (a) The total number of shares of capital stock
which the Corporation shall have authority to issue is two billion
(2,000,000,000) shares of capital stock of the par value of $.001 per share
("Shares"), having an aggregate par value of $2,000,000, five hundred million
(500,000,000) shares of which are classified as Shares of the RREEF Real Estate
Securities Fund series of the Corporation.
(b) The Shares may be issued by the Board of Directors in such
separate and distinct series ("Series") and classes of Series ("Classes") as the
Board of Directors shall from time to time create and establish. The Board of
Directors shall have full power and authority, in its sole discretion, to create
and establish Series and Classes having such preferences, rights, voting powers,
terms of conversion, restrictions, limitations on dividends, qualifications, and
terms and conditions of redemption as shall be fixed and determined from time to
time byresolution or resolutions providing for the issuance of such Shares
adopted by the Board of Directors. In the event of
<PAGE>
establishment of Classes, each Class of a Series shall represent interests in
the assets of that Series and have identical voting, dividend, liquidation and
other rights and the same terms and conditions as any other Class of that
Series, except as provided in these Articles of Incorporation and except that
expenses allocated to the Class of a Series may be borne solely by such Class
and a Class of a Series may have exclusive voting rights with respect to matters
affecting only that Class. Expenses related to the distribution of, and other
identified expenses that should properly be allocated to, the Shares of a
particular Class or Series shall be charged to and borne solely by such Class or
Series and the bearing of expenses solely by a Class or Series may be
appropriately reflected and cause differences in the net asset value
attributable to, and the dividend, redemption and liquidation rights of, the
Shares of each Class or Series. In addition, the Board of Directors is hereby
expressly granted authority to increase or decrease the number of Shares of any
Series or Class, but the number of Shares of any Series or Class shall not be
decreased by the Board of Directors below the number of Shares thereof then
outstanding.
(c) The Board of Directors, in its sole discretion, may
classify or reclassify any unissued Shares from time to time by setting or
changing the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of such Shares. Without limiting the generality of the
foregoing, the Board of Directors may, from time to time and in its sole
discretion, (i) classify or reclassify any unissued Shares into Series having
"assets belonging to" such Series, as described in Paragraph (d)(i) of this
Article, (ii) divide any Series having "assets belonging to" such Series into
Classes and classify or reclassify any unissued Shares of such Class, and (iii)
name and change the name of any Series or Class of outstanding or unissued
Shares.
(d) Subject to the authority granted to the Board of Directors
in subparagraphs (b) and (c) of this Article FIFTH, each Series of Shares
hereafter designated as a Series which shall have assets belonging to such
Series shall have the following described powers, preferences and rights and the
qualifications, limitations and restrictions thereof shall be as follows:
(i) All consideration received by the Corporation for the
issue or sale of Shares of a particular Series, together with all
income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, and any assets
derived from any reinvestment of such proceeds, in whatever form the
same may be, are herein referred to as "assets belonging to" such
Series.
(ii) The assets belonging to a particular Series of Shares
shall be charged with the liabilities (including, in the discretion of
the Board of Directors or its delegate, accrued expenses and reserves)
incurred in respect of such Series, and such Series shall also be
charged with its share of any general liabilities of the Corporation
not incurred in respect of any particular Series, such general
liabilities to be allocated in proportion to the net asset value of the
respective
<PAGE>
Series. The allocation of such liabilities to any Series or Class
shall be determined by the Board of Directors or its delegate. The
determination of the Board of Directors or its delegate shall be final
and conclusive as to the amount of assets and liabilities, including
accrued expenses and reserves, which are to be allocated to one or
more particular Series or Class. The power to make such determinations
may be delegated by the Board of Directors from time to time to one or
more of the directors and officers of the Corporation, or to an agent
of the corporation appointed for such purpose.
(iii) In the event of the liquidation or dissolution of the
Corporation (for whatever reason), stockholders of each Series shall be
entitled to receive as a class, out of the assets of the Corporation
available for distribution to stockholders the assets belonging to such
Series; and the assets so distributable to the stockholders of any
Series shall be distributed among such stockholders in proportion to
the relative aggregate net asset values of the Shares held by such
stockholders. In the event that there are any general assets available
for distribution not belonging to any particular Series, any
distribution thereof shall be made to the holders of all such Series in
proportion to the net asset value of the respective Series or any Class
thereof.
(iv) The voting rights of the Shares of each Series shall be
as set forth in subparagraph (e) of this Article FIFTH.
(v) The relative rights of the Shares of each Series to be
redeemed or repurchased shall be as set forth in Article SEVENTH.
(vi) The relative rights of the Shares of each Series to
receive dividends shall be as set forth in Article NINTH.
(e) At any meeting of the stockholders, each stockholder shall
have one vote for each dollar of net asset value per Share for each Share held
irrespective of the Series or Class thereof, except in the event that net asset
value voting would disqualify the Corporation from offering Shares for sale in
any jurisdiction in which Shares are to be offered for sale, then each whole
Share shall be entitled to one vote as to any matter on which it is entitled to
vote, and each Fractional Share shall be entitled to a proportionate fractional
vote and this method of voting shall continue until such time as such legal
requirement is no longer in force or applicable. On any matter submitted to a
vote of stockholders, all Shares then issued and outstanding and entitled to
vote shall be voted in the aggregate and not by Series or Class except to the
extent Series or Class voting is required as to any matter by the laws of the
State of Maryland, the 1940 Act or any rule or regulation thereunder or by the
Board of Directors.
(f) Fractional Shares shall carry proportionately all the
rights of a whole Share.
<PAGE>
SIXTH: Preemptive Rights. No holder of any Shares shall as such holder
have any preemptive or other right to purchase or subscribe for or otherwise
acquire any Shares of the Corporation which the Corporation proposes to issue,
reissue or sell, other than such, if any, as the Board of Directors in its sole
discretion may from time to time determine to offer.
SEVENTH: Redemption. (a) Each holder of the Shares shall be entitled at
any time to require the Corporation, to the extent that the Corporation shall
have any surplus available for such purpose and out of such surplus, to purchase
all or any part of the Shares standing in the name of such holder on the books
of the Corporation at the net asset value of such Shares; provided, however,
that the Corporation may suspend such right of redemption or postpone payment
for such Shares pursuant to the 1940 Act or any rule, regulation or order
thereunder.
(b) Any redemptions or purchases of Shares by the Corporation
of any Series of the Shares shall be made solely from assets belonging to such
Series.
(c) The Corporation, without the vote or consent of the
stockholders of the Corporation, may redeem all Shares in any stockholder's
account in which the value of such Shares is less than $250,000, or such other
minimum amount as the Board of Directors may from time to time establish, in its
sole discretion; provided, that any such redemption is at a price determined in
accordance with the Corporation's then current prospectus.
(d) The Board of Directors, without the vote or consent of the
stockholders, may determine that conditions exist making cash payments upon
redemption undesirable. If the Board makes such a determination, payment may be
made in assets other than cash pursuant to the requirements of the 1940 Act or
any rule, regulation or order thereunder.
EIGHTH: Number of Directors. (a) The number of directors of the
Corporation shall be one (1), provided however, that the number may be increased
or decreased in accordance with the By-Laws of the Corporation so long as after
the first annual meeting, the number of directors is never less than three (3).
Kim G. Redding is the initial director and shall act until the first annual
meeting and until his successor is elected and qualifies.
(b) The By-laws of the corporation may divide the Directors of
the Corporation into classes and prescribe the tenure of office of the several
classes. In the event the By-Laws provide for multiple classes of Directors, no
class shall be elected for a period shorter than that from the time of the
election following the division into classes until the next annual meeting and
thereafter for a period shorter than the interval between annual meetings or for
a period longer than five years, and the term of office of at least one class
shall expire each year.
<PAGE>
NINTH: Board of Directors. (a) In furtherance and not in limitation of
the powers conferred by the laws of the state of Maryland, the Board of
Directors, without the vote of the stockholders of the Corporation, is expressly
empowered:
(i) To authorize the issuance from time to time of Shares of
any Series or Class, whether now or hereafter authorized or created,
provided, however, that the consideration per Share to be received by
the Corporation upon the issuance or sale of any Shares of any Series
or Class shall be the net asset value per share;
(ii) To adopt, alter and repeal the By-Laws of the
Corporation;
(iii) To determine the time, date and manner in which
redemption orders and purchase orders shall be made and paid for; and
(iv) To change the name of the Corporation at any time and
from time to time.
(b) In addition to the powers and authorities by these
Articles of Incorporation or by statute expressly conferred upon it, the Board
of Directors is empowered to exercise all such powers and do all such acts and
things as may be exercised or done by the Corporation, subject, however, to the
provisions of these Articles of Incorporation, the By-Laws of the Corporation,
the applicable laws of the State of Maryland, the 1940 Act and the rules and
regulations of the Securities and Exchange Commission (or any succeeding
governmental authority) thereunder.
TENTH: Net Asset Value, Other Determinations. The net asset value of
Shares shall be determined by or pursuant to the direction of the Board of
Directors of the Corporation. Any determination made in good faith by or on
behalf of the Board of Directors or pursuant to its delegation or direction, as
to the amount of the assets, debts, obligations or liabilities of the
Corporation, as to the net asset value, bid price or asked price of the Shares,
as to the value of any asset or assets of the Corporation, or as to any other
matter relating to the issue, sale, redemption, purchase, acquisition or
disposition of the Shares, shall be final and conclusive and shall be binding
upon the Corporation and all holders of Shares issued by it, and the Shares
shall be issued and sold on the condition and understanding that any and all
such determinations shall be binding.
ELEVENTH: Indemnification. Subject to the provisions of the 1940 Act,
the Corporation shall indemnify and advance expenses to a director or officer,
or former director or officer, of the Corporation in connection with any
proceeding to the fullest extent permitted by and in accordance with Section
2-418 of the Maryland General Corporation Law, as amended from time to time (the
"Indemnification Section"). Subject to the provisions of the 1940 Act, with
respect to an employee or agent, other than a director or officer of the
Corporation, the Corporation may, as determined by and in the discretion of the
Board of Directors of the Corporation, indemnify and advance
<PAGE>
expenses to such employee or agent in connection with a proceeding to the extent
permitted by and in accordance with the Indemnification Section. As used in this
Article Eleventh, any word or words that are defined in the Indemnification
Section shall have the same meaning as provided in the Indemnification Section.
The indemnification and advancement of expenses provided or authorized by these
Articles shall not be deemed exclusive of any other rights to which a director,
officer, employee or agent of the Corporation may be entitled.
TWELFTH: Exculpation. Subject to the provisions of the 1940 Act, no
director or officer of the Corporation shall be liable to the Corporation or its
stockholders for money damages, except (i) to the extent that it is proved that
such director or officer actually received an improper benefit or profit in
money, property or services, for the amount of the benefit or profit in money,
property or services actually received, or (ii) to the extent that a judgment or
other final adjudication adverse to such director or officer is entered in a
proceeding based on a finding in the proceeding that such director's or
officer's action, or failure to act, was the result of active and deliberate
dishonesty and was material to the cause of action adjudicated in the
proceeding.
THIRTEENTH: Majority Vote. Notwithstanding any provision of the General
Corporation Law of the State of Maryland requiring that any action be taken or
authorized by the affirmative vote of the holders of a designated proportion
greater than a majority of votes entitled to be cast, such action shall be
effective and valid if taken or authorized by the affirmative vote of the
holders of a majority of the total number of votes entitled to vote thereon.
When Shares are voted by individual Series or Class, any such action shall be
effective and valid if taken or authorized by the affirmative vote of the
holders of a majority of the total number of votes entitled to such vote
thereon.
FOURTEENTH: Amendments. The Corporation reserves the right from time to
time to amend, alter, change, add to, or repeal any provision contained in these
Articles of Incorporation in the manner now or hereafter prescribed or permitted
by statute, including any amendment which alters the contract rights, as
expressly set forth in these Articles of Incorporation, of any outstanding
Shares, and all rights conferred on stockholders and others herein are granted
subject to this reservation.
FIFTEENTH: Meetings. The Corporation shall not be required to hold an
annual meeting of stockholders in any year in which the election of directors is
not required to be acted upon under the 1940 Act.
<PAGE>
SIXTEENTH: Titles. The titles contained in these Articles of
Incorporation are for convenience only and shall not affect the interpretation
of any of the provisions hereof.
/s/ Arthur Don
- -------------------------------
Arthur Don, Incorporator
EXHIBIT 2
BYLAWS
March 17, 1995
RREEF SECURITIES FUND, INC.
<PAGE>
BYLAWS OF
RREEF SECURITIES FUND, INC.
ARTICLE I
STOCKHOLDERS
SECTION 1. Place of Meeting. All meetings of the stockholders shall be
held at the principal office of the Corporation in the State of Maryland or at
such other place within or without the State of Maryland as may from time to
time be designated by the Board of Directors and stated in the notice of
meeting.
SECTION 2. Annual Meetings. An annual meeting of stockholders shall be
held in 1995. Thereafter annual meetings shall not be required to be held in any
year in which the election of Directors is not required to be acted upon under
the Investment Company Act of 1940 (hereinafter, the "1940 Act"). An annual
meeting shall be held in accordance with the 1940 Act in the event that less
than a majority of the Directors then in office were elected by the vote of
stockholders. Any annual meeting may be called (i) by the Board of Directors, or
(ii) if required by the 1940 Act, by the Chief Executive Officer solely for the
purposes of electing Directors and considering the ratification of the
independent public accountant selected by the Board of Directors to audit the
financial statements of the Corporation. Annual meetings called by the Chief
Executive Officer may consider other business which is proposed by the Chief
Executive Officer and properly brought before such meetings; provided, however,
that specific matters other than election of Directors and ratification of
selection of accountants may be placed on the agenda of the meeting solely with
the approval of a majority of the entire Board of Directors.
SECTION 3. Special Meetings. Special meetings of stockholders may be
called by the Chief Executive Officer or the Board of Directors, and shall be
called upon the written request of stockholders holding at least ten percent
(10%) of the outstanding shares of stock. A request by stockholders for a
meeting shall state the purpose of the meeting and the matters proposed to be
acted upon. Unless requested by stockholders entitled to cast a majority of all
the votes entitled to be cast at the meeting, a special meeting need not be
called to consider any matter which is substantially the same as a matter voted
on at any special meeting of the stockholders held during the preceding 12
months. Whenever ten or more stockholders of record who have been such for at
least six months preceding the date of application, and who hold in the
aggregate shares constituting at least one percent (1%) of the outstanding
shares of stock, shall apply to the Directors in writing, stating that they wish
to communicate with other stockholders with a view to obtaining signatures to a
request for a meeting to consider removal of a Director and accompanied by a
form of the communication and request that they wish to transmit, the Directors
shall, within five business days after receipt of such application, inform such
applicants as to the approximate
<PAGE>
cost of mailing to thestockholders of record the proposed communication and form
of request. Upon the written request of such applicants, accompanied by a tender
of the material to be mailed and of the reasonable expenses of mailing, as
determined by the Directors, the Directors shall, with reasonable promptness,
mail such material to all stockholders of record at their addresses as recorded
on the books of the Corporation. Notwithstanding the foregoing, the Directors
may refuse to mail such material on the basis and in accordance with the
procedures for refusing to mail such material set forth in the last two
paragraphs of Section 16 (c) of the 1940 Act, or any substitute or replacement
provision therefor.
SECTION 4. Notice of Meetings of Stockholders. Not less than ten days'
and not more than ninety days' written or printed notice of every meeting of
stockholders, stating the time and place thereof (and the general nature of the
business proposed to be transacted at any special meeting), shall be given to
each stockholder entitled to vote thereat and each other stockholder entitled to
notice of the meeting by leaving the same with him or at his residence or usual
place of business or by mailing it, postage prepaid, and addressed to him or at
his address as it appears upon the books of the Corporation.
No notice of the time, place or purpose of any meeting of stockholders
need be given to any stockholder who attends in person or by proxy or to any
stockholder who, in writing executed and filed with records of the meeting,
either before or after the holding thereof, waives such notice.
SECTION 5. Closing of Transfer Books and Record Dates. The Board of
Directors may fix the time, not exceeding twenty days preceding the date of any
meeting of stockholders, any vote at a meeting, any dividend payment date or any
date for the allotment of rights, during which the books of the Corporation
shall be closed against transfers of stock. If such books are closed for the
purpose of determining stockholders entitled to notice of or to vote at a
meeting of stockholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of providing for the closing of the
books against transfers of stock as aforesaid, the Board of Directors may fix,
in advance, a date, not exceeding ninety days and not less than ten days
preceding the date of any meeting of stockholders, and not exceeding ninety days
preceding any dividend payment date or any date for the allotment of rights, as
a record date for the determination of the stockholders entitled to notice of or
to vote at such meeting, or entitled to receive such dividends or rights, as the
case may be; and only stockholders of record on such date shall be entitled to
notice of and to vote at such meeting or to receive such dividends or rights, as
the case may be.
SECTION 6. Quorum and Adjournment of Meetings. The presence in person
or by proxy of the holders of record of a majority of all of the votes entitled
to be cast thereat shall constitute a quorum at all meetings of the
stockholders. If at any meeting of the stockholders there shall be less than a
quorum present, the stockholders present at such
<PAGE>
meeting may, without further notice, adjourn the same from time to time until a
quorum shall attend, but no business shall be transacted at any such adjourned
meeting except such as might have been lawfully transacted had the meeting not
been adjourned.
SECTION 7. Voting and Inspectors. At all meetings of stockholders every
stockholder of record entitled to vote shall be entitled to one vote for each
dollar of net asset value per share standing in his or her name on the books of
the Corporation irrespective of the Series or Class thereof, (and such
stockholders of record holding fractional shares, if any, shall have
proportionate voting rights.)
All elections shall be had and all questions decided by a majority of
the votes cast at a duly constituted meeting, except as otherwise provided in
the Articles of Incorporation or in these Bylaws or by specific statutory
provision, including requirements for approval of any matters by the provisions
of the 1940 Act.
At any election of Directors, the Board of Directors prior thereto may,
or if they have not so acted, the Chairman of the meeting may, and upon the
request of the holders of ten percent (10%) of the votes entitled to be cast at
such election shall, appoint at least one inspector of election who shall first
subscribe an oath or affirmation to execute faithfully the duties of inspector
at such election with strict impartiality and according to the best of his or
her ability, and shall after the election make a certificate of the result of
the vote taken. No candidate for the office of Director shall be appointed such
Inspector.
The Chairman of the meeting may cause a vote by ballot to be taken upon
any election or matter, and such vote shall be taken upon the request of the
holders of ten percent (10%) of the votes entitled to be cast at such election
or on such matter.
SECTION 8. Conduct of Stockholders' Meetings. The meetings of the
stockholders shall be presided over by the President or, if the President shall
not be present, by a Vice President or, if neither the President nor any Vice
President is present, by a chairman to be elected at the meeting. The Secretary
of the Corporation, if present, shall act as Secretary of such meeting or, if
the Secretary is not present, an Assistant Secretary shall so act; if neither
the Secretary nor an Assistant Secretary is present, then the meeting shall
elect its Secretary.
SECTION 9. Concerning Validity of Proxies, Ballots, Etc. At every
meeting of the stockholders, all proxies shall be received and taken in charge
of and all ballots shall be received and canvassed by the secretary of the
meeting, who shall decide all questions touching the qualification of voters,
the validity of the proxies, and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed as provided in Section 7, in
which event such inspectors of election shall decide all such questions.
<PAGE>
SECTION 10. Consents. Whenever stockholders are required or permitted
to take any action by vote, such action may be taken without a meeting if the
following are filed with the records of stockholders meetings: (a) a unanimous
written consent which sets forth the action and is signed by each stockholder
entitled to vote on the matter, and (b) a written waiver of any right to dissent
signed by each stockholder entitled to notice of the meeting but not entitled to
vote at it.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Number, Vacancies and Tenure. The Directors may, at any time
when the stockholders are not assembled in meeting, establish, increase or
decrease the number of seats on the Board of Directors by majority vote of the
entire Board of Directors; provided, that after the first annual meeting the
number of Directors shall never be less than three (3) nor more than fifteen
(15). The number of Directors may not be decreased so as to affect the term of
any incumbent Director. Except as hereinafter provided, (i) if the number of
Directors is increased, the additional Directors to fill the vacancies thus
created may be elected by majority vote of the entire Board of Directors, and
(ii) any vacancy occurring for any other cause may be filled by a majority of
the remaining Directors, even if such majority is less than a quorum. No vacancy
may be filled for any cause whatsoever unless, immediately after the filling of
such vacancy, at least two-thirds of the entire Board of Directors shall have
been elected by the stockholders of the Corporation. A Director shall hold
office until his successor is elected and qualified, or until such Director's
earlier death, resignation, retirement or removal; provided, however, that if a
Director was not elected to office by a vote of stockholders, the term of such
Director shall, in any event, end as of the date of the next annual meeting of
stockholders which is required to be held pursuant to Article I, Section 1 of
these Bylaws following such Director's election to office. Such a Director may
be a candidate for election to office at such annual meeting and, if elected at
such meeting, shall serve for the indefinite term specified above.
SECTION 2. Removal. At any meeting of stockholders, duly called and at
which a quorum is present, the stockholders may, by the affirmative vote of the
holders of a majority of the votes entitled to be cast thereon, remove any
director or directors from office and may elect a successor or successors to
fill any resulting vacancies for the unexpired terms of removed directors.
SECTION 3. Place of Meeting. The Directors may hold their meetings,
have one or more offices, and keep the books of the Corporation outside the
State of Maryland, at
<PAGE>
any office or offices of the Corporation or at any other place as they may from
time to time by resolution determine, or in the case of meetings, as they may
from time to time by resolution determine or as shall be specified or fixed in
the respective notices or waivers of notice thereof.
SECTION 4. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such time and on such notice, if any, as the Directors may from
time to time determine.
SECTION 5. Special Meetings. Special meetings of the Board of Directors
may be held from time to time upon call of the President or two or more of the
Directors, by oral or telegraphic or written notice (including written notice
transmitted electronically) duly served on or sent or mailed to each Director
not less than one day before such meeting. No notice need be given to any
Director who attends in person or to any Director who, in writing executed and
filed with the records of the meeting either before or after the holding
thereof, waives such notice. Such notice or waiver of notice need not state the
purpose or purposes of such meeting.
SECTION 6. Quorum. One-third of the Directors then in office shall
constitute a quorum for the transaction of business, provided that a quorum
shall in no case be less than two Directors. If at any meeting of the Board
there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum shall have been obtained.
The act of the majority of the Directors present at any meeting at which there
is a quorum shall be the act of the Directors, except as may be otherwise
specifically provided by statute, by the Articles of Incorporation or by these
Bylaws.
SECTION 7. Executive Committee. The Board of Directors may, by the
affirmative vote of a majority of the entire Board, elect from the Directors an
Executive Committee to consist of such number of Directors, but not less than
two, as the Board may from time to time determine. The Board of Directors by
such affirmative vote shall have power at any time to change the members of such
Committee and may fill vacancies in the Committee by election from the
Directors. When the Board of Directors is not in session, the Executive
Committee shall have and may exercise any or all of the powers of the Board of
Directors in the management of the business and affairs of the Corporation
(including the power to authorize the seal of the Corporation to be affixed to
all papers which may require it) except as provided by law and except the power
to increase or decrease the size of, or fill vacancies on, the Board, to remove
or appoint executive officers or to dissolve or change the permanent membership
of the Executive Committee, and the power to make or amend the Bylaws of the
Corporation. The Executive Committee may fix its own rules of procedure, and may
meet, when and as provided by such rules or by resolution of the Board
<PAGE>
of Directors, but in every case the presence of a majority shall be necessary to
constitute a quorum. In the absence of any member of the Executive Committee,
the members thereof present at any meeting, whether or not they constitute a
quorum, may appoint a member of the Board of Directors to act in the place of
such absent member.
SECTION 8. Other Committees. The Board of Directors, by the affirmative
vote of a majority of the entire Board, may appoint other committees which shall
in each case consist of such number of members, and shall have and may exercise
such powers as the Board may determine in the resolution appointing them. A
majority of all members of any such committee may determine its action, and fix
the time and place of its meetings, unless the Board of Directors shall
otherwise provide. The Board of Directors shall have power at any time to change
the members and powers of any such committee, to fill vacancies, and to
discharge any such committee.
SECTION 9. Informal Action by Directors and Committees. Any action
required or permitted to be taken at any meeting of the Board of Directors or
any committee thereof may be taken without a meeting, if a written consent to
such action is signed by all members of the Board, or of such committee, as the
case may be, and if such consent is filed with the minutes of proceedings of the
Board, or of such committee, as the case may be.
SECTION 10. Compensation of Directors. Directors shall be entitled to
receive such compensation from the Corporation for their services as may from
time to time be voted by the Board of Directors.
ARTICLE III
OFFICERS
SECTION 1. Executive Officers. The executive officers of the
Corporation shall be chosen by the Board of Directors. These shall include a
President, one or more Vice Presidents (the number thereof to be determined by
the Board of Directors), a Secretary and a Treasurer. The Board of Directors or
the Executive Committee may also in its discretion appoint a Chairman of the
Board of Directors, Assistant Secretaries, Assistant Treasurers, and other
officers, agents and employees, who shall have such authority and perform such
duties as the Board or the Executive Committee may determine. The Board of
Directors may fill any vacancy which may occur in any office. Two or more
offices, except those of President and Vice President, may be held by the same
person, but no officer shall execute, acknowledge or verify any instrument in
more than one capacity, if such instrument is required to be executed,
acknowledged or verified by two or more officers.
<PAGE>
SECTION 2. Term of Office. Unless a longer, shorter or indefinite term
of office is provided by the Board of Directors for any officer or all officers,
the term of office of all officers shall be one year and until their respective
successors are chosen and qualify. Any officer may be removed from office at any
time with or without cause by the vote of a majority of the entire Board of
Directors, if the Board of Directors in its judgment finds that the best
interests of the Corporation are served thereby.
SECTION 3. Powers and Duties. The officers of the Corporation shall
have such powers and duties as generally pertain to their respective offices, as
well as such powers and duties as may from time to time be conferred by the
Board of Directors or the Executive Committee.
ARTICLE IV
CAPITAL STOCK
SECTION 1. Certificate of Shares. No certificate will be issued to
evidence ownership of any Series of Shares.
SECTION 2. Transfer of Shares. Shares of the Corporation shall be
transferable on the books of the Corporation by the holder thereof in person or
by the holder's duly authorized attorney-in-fact or legal representative upon
presentation of proper instruments of assignment and transfer, with such proof
of the authenticity of the signature and the capacity of the signator as the
Corporation or its transfer agent may reasonably require. If certificates have
been issued evidencing the ownership of the Shares to be transferred, such
certificates must be surrendered and cancelled before the transfer may be
effected.
SECTION 3. Stock Ledgers. The stock ledgers of the Corporation,
containing the names and addresses of the stockholders and the number of Shares
held by them respectively, shall be kept at the principal offices of the
Corporation or, if the Corporation employs a transfer agent, at the offices of
the transfer agent of the Corporation.
SECTION 4. Lost, Stolen or Destroyed Certificates. The Corporation may
determine the conditions upon which a new certificate of stock of the
Corporation of any class may be issued in place of a certificate which is
alleged to have been lost, stolen or destroyed; and may require the owner of
such certificate or his legal representative to give bond, with sufficient
surety to the Corporation and each transfer agent, if any, to indemnify
<PAGE>
it and each transfer agent against any and all loss or claims which may arise by
reason of the issue of a new certificate in the place of the one so lost, stolen
or destroyed.
ARTICLE V
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of
Directors.
ARTICLE VII
INDEMNIFICATION
Each Director and officer (and his heirs, executors and administrators)
shall be indemnified by the Corporation to the extent set forth in the Articles
of Incorporation.
ARTICLE VIII
AMENDMENT OF BYLAWS
The Bylaws of the Corporation may be altered, amended, added to or
repealed by majority vote of the entire Board of Directors.
EXHIBIT 5(a)
RREEF SECURITIES FUND, INC.
INVESTMENT ADVISORY AGREEMENT
March 17, 1995
RREEF Real Estate Securities
Advisers, L.P.
650 California Street
San Francisco, California 94108
Dear Sirs:
We herewith confirm our agreement with you as follows:
1. We desire to employ you to invest and reinvest the capital of RREEF
Securities Fund, Inc. (the "Company") in securities of the type and in
accordance with the limitations specified from time to time in the registration
statement under the Securities Act of 1933 and the Investment Company Act of
1940 (the "1940 Act"), of which we enclose a copy. You shall for all purposes
herein be deemed an independent contractor, and shall, unless otherwise
expressly provided for or authorized, have no authority to act or represent us.
2. In this connection it is understood that you will from time to time
employ or associate with yourselves such person or persons as you may believe to
be particularly fitted to assist you in the execution of this Agreement, it
being understood that the compensation of such person or persons shall be paid
by you and that no obligation may be incurred on our behalf in any such respect.
This does not apply to such individuals as we may in due course elect as
officers of our corporation, except that no officer, director, stockholder,
partner or employee of your firm or of your firm's general partner shall receive
compensation from us for acting as director, officer or employee of our
corporation, and you agree to pay the compensation of all such persons. We
understand that, during the continuance of this agreement, officers of your firm
will, if elected, serve as directors of our corporation and as its principal
officers.
3. You are to have complete and exclusive authority to develop and
handle for us any business of the type above mentioned which you may consider
advantageous for us, subject to the direction and control of our officers and
directors. You will furnish us with such statistical information with respect to
the securities which we may hold or contemplate purchasing as we may request. We
wish to be kept in touch with important developments affecting our Company and
shall expect you on your own initiative to furnish us from time to time with
such information as you may believe appropriate for this purpose, whether
concerning the individual companies whose securities are included
<PAGE>
in our portfolio or the industries in which they are engaged. We shall also
expect you of your own motion to advise us whenever in your opinion conditions
are such as to make it desirable that a specific security be eliminated from our
portfolio.
4. We shall expect of you your best judgment in rendering these
services to us, and we agree as an inducement to your undertaking the same that
you shall not be liable hereunder for any mistake of judgment or in any other
event whatsoever, except for lack of good faith, provided that nothing herein
shall be deemed to protect or purport to protect you against any liability to us
or to our security holders to which you would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of your
duties hereunder, or by reason of your reckless disregard of your obligations
and duties hereunder.
5. In consideration of such services, we shall pay you a monthly fee as
of the last day of each month in each year based upon the average daily value of
net assets during a month for which the monthly fee is calculated, for the
respective Funds set forth in one or more written addenda to this Agreement
executed by both parties. Provided, however, that such fee for any period which
shall not be a full monthly period shall be prorated according to the proportion
which such period bears to the full month and no payment of any fee shall be
made before the commencement of the public offering of any common stock. For
this purpose, the value of our net assets shall be computed in the same manner
as the value of such net assets are computed in connection with the
determination of the net asset value of our shares.
6. Except as otherwise provided below in this paragraph, you will
attend to, or arrange for the performance, at your expense, of such clerical and
accounting work related to the investment and reinvestment of our capital for us
as we may specify, and shall provide office space, facilities and business
equipment therefor. We shall, however, bear all costs and expenses of or
attendant upon: (i) preparation of our federal, state and local tax returns;
(ii) preparation and filing of reports and documents we must file with the
Securities and Exchange Commission; (iii) calculation of net asset value; (iv)
determination of the status and payment of dividends; (v) reconciling and
reviewing output of our custodian bank, determining the adequacy of various
accruals, approving our expenses, authorizing our bank to receive and disburse
money and securities and verifications related thereto, and interfacing with our
auditors; (vi) verification of our security ledger and preparation and
maintenance of other corporate books and records; (vii) brokerage commissions
and other transaction expenses; (viii) stockholders' and Directors' meetings;
(ix) corporate reports and proxy materials, including their preparation,
printing and distribution (but not including the expense of printing and mailing
prospectuses and sales materials used for promotional purposes); (x) fees of
Directors not affiliated with you or any other firm acting as an investment
adviser to us; (xi) taxes and interest expenses; (xii) reports to government
authorities including all expenses and costs relating to such reports and to
state securities law compliance; (xiii) custodian and transfer agent fees; (xiv)
association membership dues; (xv) premiums on all insurance and bonds maintained
for us or on our behalf; (xvi) retention of the transfer agent and registrar for
our shares and the disbursing agent for our stockholders, including costs and
<PAGE>
expenses attendant upon shareholder servicing, purchase, repurchase and
redemption of our shares; (xvii) our counsel; and (xviii) our independent
auditors. We may arrange for you or for another party or parties to provide some
or all of the services relating to items (i) to (xvii)above, and any other
services not directly relating to investment and reinvestment of our capital,
upon such terms and conditions, including compensation, as we may agree and
subject to the approval and review of our Board of Directors.
7. You are authorized to place purchase and sale orders for our
portfolio transactions with brokers and/or dealers subject to the supervision of
the Board of Directors and in accordance with the limitations set forth in the
Registration Statement for our shares then in effect.
8. You may act as investment adviser for any other person, firm or
corporation. We recognize that you have given us the right to use the name
"RREEF" and "RREEF Real Estate Securities" in our corporate title, which were
names previously established by you and your affiliates. If for any reason you
no longer act as our investment adviser, we shall remove the name "RREEF" from
our corporate title upon demand made by you.
9. All of our expenses shall be paid by us except for those you
specifically agree to assume under this Agreement. If the total expenses payable
by us for any fiscal year (inclusive of all fees payable under this agreement
but exclusive of interest, taxes, brokerage fees and payments under any Rule
12b-1 distribution plan) shall exceed the most restrictive applicable expense
limitation, if any, prescribed by any statute or regulatory authority of any
jurisdiction in which our shares are qualified for offer and sale, you will pay
or refund to us the amount by which such expenses exceed the amount so computed.
10. This Agreement shall become effective for an initial period through
February 28, 1997, and shall continue in full force and effect continuously
thereafter, if its continuance is approved at least annually as required by the
1940 Act. The effective date of this Agreement shall be the later of (i) the
effective date of the initial registration statement covering the offer and sale
of our shares under the Securities Act of 1933, or (ii) the date this Agreement
has been approved as required by the 1940 Act. This Agreement may be terminated
at any time, without the payment of any penalty, by our Board of Directors or by
vote of a majority of our outstanding voting securities (as defined in the 1940
Act) on 60 days' written notice to you, or by you on 60 days' written notice to
us, and it shall be automatically terminated in the event of its assignment (as
defined in said Act).
11. As of the date of this Agreement, the Company has only one series
of shares (the "RREEF Real Estate Securities Fund") and this Agreement shall
apply to that series. This Agreement shall apply to and be effective as to any
series hereafter created by the Board of Directors for which this Agreement has
been approved in the manner required by the 1940 Act, provided that there is a
written addendum to this Agreement executed by both parties which identifies
such series as a Fund to be managed pursuant to this Agreement, specifies the
fees payable to the Adviser with respect to such series
<PAGE>
(which may be different than the fee paid with respect to any other series), and
states the initial effective and termination dates of this Agreement with
respect to each series.
If the foregoing is in accordance with your understanding, will you so
kindly indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
RREEF SECURITIES FUND, INC.
By: /s/ Kim G. Redding
Its: President
Accepted as of the day
and year first above written.
RREEF REAL ESTATE SECURITIES ADVISERS, L.P.
By: RREEF REAL ESTATE SECURITIES, INC., General Partner
By: /s/ Kim G. Redding
Its: President
<PAGE>
ADDENDUM TO INVESTMENT ADVISORY AGREEMENT
DATED MARCH 17, 1995 BETWEEN
RREEF REAL ESTATE SECURITIES ADVISERS, L.P.
AND RREEF SECURITIES FUND, INC.
RREEF Real Estate Securities Advisers, L.P. (the "Adviser") shall be
the investment adviser for the series of RREEF Securities Fund, Inc. (the
"Company") designated RREEF Real Estate Securities Fund (the "Fund") pursuant to
the Investment Advisory Agreement between the Adviser and the Company dated
March 17, 1995 with an initial effective date of July 27, 1995 and an initial
term ending February 28, 1997 unless sooner terminated as provided in the
Agreement. The compensation payable out of the assets of the Fund pursuant to
Section 5 of the Agreement shall be at the following monthly rates:
VALUE OF AVERAGE
DAILY NET ASSETS
1/12 of .75% of ....................... First $100 Million
1/12 of .65% of ....................... Amounts In Excess of $100 Million
RREEF SECURITIES FUND, INC.
By: /s/ Kim G. Redding
Its: President
RREEF REAL ESTATE SECURITIES ADVISERS, L.P.
By: RREEF REAL ESTATE SECURITIES, INC., General Partner
By: /s/ Kim G. Redding
Its: President
EXHIBIT 5(b)
ADMINISTRATION AGREEMENT
BETWEEN
RREEF SECURITIES FUND, INC.
And
INVESTORS BANK & TRUST COMPANY
<PAGE>
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT is made as of May 24, 1995 by and between
RREEF SECURITIES FUND, INC., a corporation organized under the laws of the State
of Maryland (the "Fund"), and INVESTORS BANK & TRUST COMPANY, a Massachusetts
trust company ("Investors Bank").
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
consisting initially of one separate portfolio; and
WHEREAS, the Fund desires to retain Investors Bank to render certain
administrative services to the Fund and Investors Bank is willing to render such
services;
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints Investors Bank to act as
Administrator of the Fund on the terms set forth in this Agreement. Investors
Bank accepts such appointment and agrees to render the services herein set forth
for the compensation herein provided.
2. Delivery of Documents. The Fund has furnished Investors Bank with
copies properly certified or authenticated of each of the following:
(a) Resolutions of the Fund's Board of Directors authorizing the
appointment of Investors Bank to provide certain administrative services to the
Fund and approving this Agreement;
(b) The Fund's incorporating documents filed with the state of Maryland
on March 15, 1995 and all amendments thereto (the "Articles");
(c) The Fund's by-laws and all amendments thereto (the "By-Laws");
(d) The Fund's agreements with all service providers which include any
investment advisory agreements, sub-investment advisory agreements, custody
agreements, distribution agreements and transfer agency agreements
(collectively, the "Agreements");
(e) The Fund's most recent Registration Statement on Form N-1A (the
"Registration Statement") under the Securities Act of 1933 and under the 1940
Act and all amendments thereto; and
<PAGE>
(f) The Fund's most recent prospectus and statement of additional
information (the "Prospectus"); and
(g) Such other certificates, documents or opinions as may mutually be
deemed necessary or appropriate for Investors Bank in the proper performance of
its duties hereunder.
The Fund will immediately furnish Investors Bank with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing. Furthermore, the Fund will notify Investors Bank as soon as possible
of any matter materially affecting the performance of Investors Bank of its
services under this Agreement.
3. Duties of Administrator. Subject to the supervision and direction of
the Board of Directors of the Fund, Investors Bank, as Administrator, will
assist in supervising various aspects of the Fund's administrative operations
and undertakes to perform the following specific services:
(a) Maintaining office facilities (which may be in the offices of
Investors Bank or a corporate affiliate);
(b) Furnishing internal executive and administrative services and
clerical services;
(c) Furnishing corporate secretarial services including preparation and
distribution of materials for Board of Directors meetings;
(d) Accumulating information for and, subject to approval by the Fund's
treasurer and legal counsel, coordination of the preparation, filing, printing
and dissemination of reports to the Fund's shareholders of record and the SEC
including, but not necessarily limited to, post-effective amendments to the
Fund's registration statement, annual reports, semiannual reports, Form N-SAR,
24f-2 notices and proxy material;
(e) Participating in the preparation and filing of various reports or
other documents required by federal, state and other applicable laws and
regulations, including "Blue Sky" state securities law registration filings,
other than those filed or required to be filed by the Fund's investment adviser
or transfer agent;
(f) Coordinating the preparation and filing of the Fund's tax returns;
(g) Monitor activity and prepare reports concerning compliance with the
1940 Act; Subchapter M of the Internal Revenue Code of 1986, as amended, the
Fund's Registration Statement and policies and procedures adopted by the Fund's
Board of Directors or the investment adviser;
(h) Other services as may be detailed as an appendix to this Agreement.
In performing all services under this Agreement, Investors Bank shall
act in conformity with Fund's Articles and By-Laws and the 1940 Act, as the same
may be amended from time to time; and the investment objectives, investment
policies and other practices and policies set forth
<PAGE>
in the Fund's Registration Statement, as the same may be amended from time to
time. Notwithstanding any item discussed herein, Investors Bank has no
discretion over the Fund's assets or choice of investments and cannot be held
liable for any problem relating to such investments. The Bank acknowledges that
all of the accounts, records and documents maintained by the Bank pursuant to
this Agreement, on behalf of the Company, are the property of the Company.
4. Fees and Expenses.
(a) For the services to be rendered and the facilities to be furnished
by Investors Bank, as provided for in this Agreement, the Fund will compensate
Investors Bank in accordance with the fee schedule attached hereto. Such fees do
not include out-of-pocket disbursements (as delineated on the fee schedule or
other expenses with the prior approval of the Fund's management) of the
Administrator for which the Administrator shall be entitled to bill separately.
(b) Investors Bank shall not be required to pay any expenses incurred
by the Fund.
5. Limitation of Liability.
(a) Investors Bank, its directors, officers, employees and agents shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the performance of its obligations and
duties under this Agreement, except a loss resulting from willful misfeasance,
bad faith or gross negligence in the performance of such obligations and duties,
or by reason of its reckless disregard thereof. The Fund will indemnify
Investors Bank, its directors, officers, employees and agents against and hold
it and them harmless from any and all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) resulting from any
claim, demand, action or suit not resulting from the willful misfeasance, bad
faith or gross negligence of Investors Bank in the performance of such
obligations and duties or by reason of its reckless disregard thereof.
(b) Investors Bank may apply to the Fund at any time for instructions
and may consult counsel for the Fund, or its own counsel, and with accountants
and other experts with respect to any matter arising in connection with its
duties hereunder, and Investors Bank shall not be liable or accountable for any
action taken or omitted by it in good faith in accordance with such instruction,
or with the opinion of such counsel, accountants, or other experts. Investors
Bank shall be protected in acting upon any document, certificate or instrument
which it reasonably believes to be genuine and to be signed or presented by the
proper person or persons. Investors Bank shall not be held to have notice of any
change of authority of any officers, employees, or agents of the Fund until
receipt of written notice thereof has been received from the Fund.
(c) Neither party to this Agreement shall be liable to the other party
for consequential or punitive damages under any provision of this Agreement or
arising out of any act or failure to act hereunder as contemplated by this
Agreement.
<PAGE>
6. Termination of Agreement.
(a) This Agreement shall become effective on the date hereof and shall
remain in force unless terminated pursuant to the provisions of subsection (b)
of this Section 6, provided however that Section 5 shall survive the termination
of the Agreement.
(b) This Agreement may be terminated at any time without payment of any
penalty, upon 60 days written notice, provided however, that the effective date
of such termination may be postponed to a date not more than one hundred twenty
days (120) from the date of delivery of such notice.
7. Miscellaneous.
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or Investors Bank shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Fund: RREEF Real Estate Securities Advisers, L.P.
650 California Street
Suite 1800
San Francisco, CA 94108
Attention: Kim G. Redding
To Investors Bank: Investors Bank & Trust Company
89 South Street
Boston, MA 02111
Attention: Hank Joyce
(b) This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable without the written consent of the
other party.
(c) This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts.
(d) This Agreement may be executed in any number of counterparts each
of which shall be deemed to be an original and which collectively shall be
deemed to constitute only one instrument.
(e) The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
8. Confidentiality. All books, records, information and data pertaining
to the business of the other party which are exchanged or received pursuant to
the negotiation or the carrying out
<PAGE>
of this Agreement shall remain confidential, and shall not be voluntarily
disclosed to any other person, except as may be required in the performance of
duties hereunder or as otherwise required by law.
9. Use of Name. The Fund shall not use the name of Investors Bank or
any of its affiliates in any prospectus, sales literature or other material
relating to the Fund in a manner not approved by the Bank prior thereto in
writing; provided however, that the approval of the Bank shall not be required
for any use of its name which merely refers in accurate and factual terms to its
appointment hereunder or which is required by the Securities and Exchange
Commission or any state securities authority or any other appropriate
regulatory, governmental or judicial authority; provided further, that in no
event shall such approval be unreasonably withheld or delayed.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed and delivered by their duly authorized officers as of the date
first written above.
RREEF Securities Fund, Inc.
By: /s/ Kim G. Redding
Name:
Title:
ATTEST:
/s/ Carol A. Vogl
INVESTORS BANK & TRUST COMPANY
By: /s/ Henry N. Joyce
Name:
Title: Director
ATTEST:
/s/ J.M. Keenan
Date: May 24, 1995
EXHIBIT 8
CUSTODIAN AGREEMENT
BETWEEN
RREEF SECURITIES FUND, INC.
AND
INVESTORS BANK & TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
1. Bank Appointed Custodian ...............................................1
2. Definitions.............................................................1
2.1 Authorized Person.....................................1
2.2 Security..............................................1
2.3 Portfolio Security....................................1
2.4 Officers' Certificate.................................2
2.5 Book-Entry System.....................................2
2.6 Depository............................................2
2.7 Proper Instructions...................................2
3. Separate Accounts.......................................................2
4. Certification as to Authorized Persons..................................3
5. Custody of Cash.........................................................3
5.1 Purchase of Securities.......................................3
5.2 Redemptions..................................................3
5.3 Distributions and Expenses of Fund...........................3
5.4 Payment in Respect of Securities.............................4
5.5 Repayment of Loans...........................................4
5.6 Repayment of Cash............................................4
5.7 Foreign Exchange Transactions................................4
5.8 Other Authorized Payments....................................4
5.9 Termination..................................................4
6. Securities..............................................................4
6.1 Segregation and Registration.................................4
6.2 Voting and Proxies...........................................5
6.3 Book-Entry System............................................5
6.4 Use of a Depository..........................................6
6.5 Use of Book-Entry System for Commercial Paper................7
6.6 Use of Immobilization Programs.............................. 8
6.7 Eurodollar CDs...............................................8
6.8 Options and Futures Transactions.............................8
(a) Puts and Calls Traded on Securities Exchanges,
NASDAQ or Over-the-Counter.......................8
<PAGE>
Page
(b) Puts, Calls, and Futures Traded
on Commodities Exchanges.........................9
6.9 Segregated Account................................. 9
6.10 Interest Bearing Call or Time Deposits.............11
6.11 Transfer of Securities.............................11
7. Redemptions............................................................13
8. Merger, Dissolution, etc. of Fund......................................13
9. Actions of Bank Without Prior Authorization............................13
10. Collections and Defaults.............................................. 14
11. Maintenance of Records and Accounting Services........................ 14
12. Fund Valuation.........................................................14
13. Concerning the Bank....................................................15
13.1 Performance of Duties;
Standard of Care .................................15
13.2 Agents and Subcustodians with Respect to Property
of the Fund Held in the United States.............16
13.3 Duties of the Bank with Respect to Property
Held Outside of the United States................ 16
13.4 Insurance..........................................19
13.5 Fees and Expenses of Bank........................ 19
13.6 Advances by Bank................................. 20
14. Termination............................................................20
15. Confidentiality........................................................21
16. Notices................................................................21
17. Amendments.............................................................21
18. Parties................................................................21
19. Governing Law..........................................................22
20. Counterparts...........................................................22
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made as of this 24th day of May, 1995, between RREEF SECURITIES
FUND, INC., a Maryland corporation (the "Fund") and INVESTORS BANK & TRUST
COMPANY (the "Bank").
The Fund, an open-end management investment company, desires to place and
maintain all of its portfolio securities and cash in the custody of the Bank.
The Bank has at least the minimum qualifications required by Section 17(f)(1) of
the Investment Company Act of 1940 (the "1940 Act") to act as custodian of the
portfolio securities and cash of the Fund, and has indicated its willingness to
so act, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Fund hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.
2. Definitions. Whenever used herein, the terms listed below will have
the following meaning:
2.1 Authorized Person. Authorized Person will mean any of the persons
duly authorized to give Proper Instructions or otherwise act on behalf of the
Fund by appropriate resolution of its Board of Directors (the "Board"), and set
forth in a certificate as required by Section 4 hereof.
2.2 Security. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933, as amended,
including, without limitation, any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any profit
sharing agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing, and
futures, forward contracts and options thereon.
2.3 Portfolio Security. Portfolio Security will mean any security owned
by the Fund.
<PAGE>
2.4 Officers' Certificate. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Fund.
2.5 Book-Entry System. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.
2.6 depository. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 ("Exchange
Act"), its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor or successors and its nominee
or nominees, specifically identified in a certified copy of a resolution of the
Board.
2.7 Proper Instructions. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person
as shall have been designated in an Officers' Certificate, such instructions to
be given in such form and manner as the Bank and the Fund shall agree upon from
time to time, and (ii) instructions (which may be continuing instructions)
regarding other matters signed or initialed by such one or more persons from
time to time designated in an Officers' Certificate as having been authorized by
the Board. Oral instructions will be considered Proper Instructions if the Bank
reasonably believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Fund shall cause all
oral instructions to be promptly confirmed in writing. The Bank shall act upon
and comply with any subsequent Proper Instruction which modifies a prior
instruction and the sole obligation of the Bank with respect to any follow-up or
confirmatory instruction shall be to make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to report
such discrepancy to the Fund. The Fund shall be responsible, at the Fund's
expense, for taking any action, including any reprocessing, necessary to correct
any such discrepancy or error, and to the extent such action requires the Bank
to act the Fund shall give the Bank specific Proper Instructions as to the
action required. Upon receipt of an Officers' Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Fund, Proper Instructions may include communication effected
directly between electro-mechanical or electronic devices provided that the
Board and the Bank are satisfied that such procedures afford adequate safeguards
for the Fund's assets.
3. Separate Accounts. If the Fund has more than one series or portfolio,
the Bank will segregate the assets of each series or portfolio to which this
Agreement relates into a separate account for each such series or portfolio
containing the assets of such series or portfolio (and all investment earnings
thereon).
<PAGE>
4. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
Board, it being understood that upon the occurrence of any change in the
information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Fund, will sign a new or amended certification setting forth
the change and the new, additional or omitted names or signatures. The Bank will
be entitled to rely and act upon any Officers' Certificate given to it by the
Fund which has been signed by Authorized Persons named in the most recent
certification.
5. Custody of Cash. As custodian for the Fund, the Bank will open and
maintain a separate account or accounts in the name of the Fund or in the name
of the Bank, as Custodian of the Fund, and will deposit to the account of the
Fund all of the cash of the Fund, except for cash held by a subcustodian
appointed pursuant to Section 13.2 hereof, including borrowed funds, delivered
to the Bank, subject only to draft or order by the Bank acting pursuant to the
terms of this Agreement. Upon receipt by the Bank of Proper Instructions (which
may be continuing instructions) or in the case of payments for redemptions and
repurchases of outstanding shares of common stock of the Fund, notification from
the Fund's transfer agent as provided in Section 7, requesting such payment,
designating the payee or the account or accounts to which the Bank will release
funds for deposit, and stating that it is for a purpose permitted under the
terms of this Section 5, specifying the applicable subsection, the Bank will
make payments of cash held for the accounts of the Fund, insofar as funds are
available for that purpose, only as permitted in subsections 5.1-5.9 below.
5.1 Purchase of Securities. Upon the purchase of securities for the
Fund, against contemporaneous receipt of such securities by the Bank or, against
delivery of such securities to the Bank in accordance with generally accepted
settlement practices and customs in the jurisdiction or market in which the
transaction occurs, registered in the name of the Fund or in the name of, or
properly endorsed and in form for transfer to, the Bank, or a nominee of the
Bank, or receipt for the account of the Bank pursuant to the provisions of
Section 6 below, each such payment to be made at the purchase price shown on a
broker's confirmation (or transaction report in the case of Book Entry Paper) of
purchase of the securities received by the Bank before such payment is made, as
confirmed in the Proper Instructions received by the Bank before such payment is
made.
5.2 Redemptions. In such amount as may be necessary for the repurchase
or redemption of common shares of the Fund offered for repurchase or redemption
in accordance with Section 7 of this Agreement.
5.3 Distributions and Expenses of Fund. For the payment on the account
of the Fund of dividends or other distributions to shareholders as may from time
to time be declared by the Board, interest, taxes, management or supervisory
fees, distribution fees, fees of the Bank for its services hereunder and
reimbursement of the expenses and liabilities of the Bank as provided hereunder,
fees of any transfer agent, fees for legal, accounting, and auditing services,
or other operating expenses of the Fund.
<PAGE>
5.4 Payment in Respect of Securities. For payments in connection with
the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Fund held by or to be delivered to the Bank.
5.5 Repayment of Loans. To repay loans of money made to the Fund, but,
in the case of final payment, only upon redelivery to the Bank of any Portfolio
Securities pledged or hypothecated therefor and upon surrender of documents
evidencing the loan;
5.6 Repayment of Cash. To repay the cash delivered to the Fund for the
purpose of collateralizing the obligation to return to the Fund certificates
borrowed from the Fund representing Portfolio Securities, but only upon
redelivery to the Bank of such borrowed certificates.
5.7 Foreign Exchange Transactions. For payments in connection with
foreign exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery which may be entered into by the Bank on behalf of
the Fund upon the receipt of Proper Instructions, such Proper Instructions to
specify the currency broker or banking institution (which may be the Bank, or
any other subcustodian or agent hereunder, acting as principal) with which the
contract or option is made, and the Bank shall have no duty with respect to the
selection of such currency brokers or banking institutions with which the Fund
deals or for their failure to comply with the terms of any contract or option.
5.8 Other Authorized Payments. For other authorized transactions of the
Fund, or other obligations of the Fund incurred for proper Fund purposes;
provided that before making any such payment the Bank will also receive a
certified copy of a resolution of the Board signed by an Authorized Person
(other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Fund, or
specifying the amount of the obligation for which payment is to be made, setting
forth the purpose for which such obligation was incurred and declaring such
purpose to be a proper corporate purpose.
5.9 Termination: upon the termination of this Agreement as hereinafter
set forth pursuant to Section 8 and Section 14 of this Agreement.
6. Securities.
6.1 Segregation and Registration. Except as otherwise provided herein,
and except for securities to be delivered to any subcustodian appointed pursuant
to Section 13.2 hereof, the Bank as custodian, will receive and hold pursuant to
the provisions hereof, in a separate account or accounts and physically
segregated at all times from those of other persons, any and all Portfolio
Securities which may now or hereafter be delivered to it by or for the account
of the Fund. All such Portfolio Securities will be held or disposed of by the
Bank for, and subject at all times to, the instructions of the Fund pursuant to
the terms of this Agreement. Subject to the specific provisions herein relating
to Portfolio Securities that are not physically held by the Bank, the Bank will
register all Portfolio Securities (unless otherwise directed by Proper
Instructions or an Officers' Certificate) in
<PAGE>
the name of a registered nominee of the Bank as defined in the Internal Revenue
Code and any Regulations of the Treasury Department issued thereunder, and will
execute and deliver all such certificates in connection therewith as may be
required by such laws or regulations or under the laws of any state.
The Fund will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee, any Portfolio Securities which
may from time to time be registered in the name of the Fund.
6.2 Voting and Proxies. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or cause to be executed and delivered, to the Fund all notices, proxies
and proxy soliciting materials with respect to such Securities, such proxies to
be executed by the registered holder of such Securities (if registered otherwise
than in the name of the Fund), but without indicating the manner in which such
proxies are to be voted.
6.3 Book-Entry System. Provided (i) the Bank has received a certified
copy of a resolution of the Board specifically approving deposits of Fund assets
in the Book-Entry System, and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not include
any assets of the Bank (or such agent) other than assets held as a fiduciary,
custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with respect to
the Fund's participation in the Book-Entry System through the Bank (or any such
agent) will identify by book entry Portfolio Securities which are included with
other securities deposited in the Account and shall at all times during the
regular business hours of the Bank (or such agent) be open for inspection by
duly authorized officers, employees or agents of the Fund. Where securities are
transferred to the Fund's account, the Bank shall also, by book entry or
otherwise, identify as belonging to the Fund a quantity of securities in
fungible bulk of securities (i) registered in the name of the Bank or its
nominee, or (ii) shown on the Bank's account on the books of the Federal Reserve
Bank;
(c) The Bank (or its agent) shall pay for securities purchased for
the account of the Fund or shall pay cash collateral against the return of
Portfolio Securities loaned by the Fund upon (i) receipt of advice from the
Book-Entry System that such Securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Bank (or its agent) to reflect
such payment and transfer for the account of the Fund. The Bank (or its agent)
shall transfer securities sold or loaned for the account of the Fund upon
<PAGE>
(i) receipt of advice from the Book-Entry System that payment
for securities sold or payment of the initial cash collateral against the
delivery of securities loaned by the Fund has been transferred to the Account;
and
(ii) the making of an entry on the records of the Bank (or its
agent) to reflect such transfer and payment for the account of the Fund. Copies
of all advices from the Book-Entry System of transfers of securities for the
account of the Fund shall identify the Fund, be maintained for the Fund by the
Bank and shall be provided to the Fund at its request. The Bank shall send the
Fund a confirmation, as defined by Rule 17f-4 of the 1940 Act, of any transfers
to or from the account of the Fund;
(d) The Bank will promptly provide the Fund with any report
obtained by the Bank or its agent on the Book-Entry System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Book-Entry System;
(e) The Bank shall be liable to the Fund for any loss or damage to
the Fund resulting from use of the Book-Entry System by reason of any
negligence, willful misfeasance or bad faith of the Bank or any of its agents or
of any of its or their employees or from any reckless disregard by the Bank or
any such agent of its duty to use its best efforts to enforce such rights as it
may have against the Book-Entry System; at the election of the Fund, it shall be
entitled to be subrogated for the Bank in any claim against the Book-Entry
System or any other person which the Bank or its agent may have as a consequence
of any such loss or damage if and to the extent that the Fund has not been made
whole for any loss or damage;
6.4 Use of a Depository. Provided (i) the Bank has received a certified
copy of a resolution of the Board specifically approving deposits in DTC or
other such Depository and (ii) for any subsequent changes to such arrangements
following such approval, the Board has reviewed and approved the arrangement and
has not delivered an Officer's Certificate to the Bank indicating that the Board
has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive, exchange, release,
lend, deliver and otherwise deal with Portfolio Securities including stock
dividends, rights and other items of like nature, and to receive and remit to
the Bank on behalf of the Fund all income and other payments thereon and to take
all steps necessary and proper in connection with the collection thereof;
(b) Registration of Portfolio Securities may be made in the name of any
nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made through the
clearing medium employed by such Depository for transactions of participants
acting through it. Upon any purchase of Portfolio Securities, payment will be
made only upon delivery of the securities to or for the account of the Fund and
the Fund shall pay cash collateral against the return of Portfolio Securities
loaned by the Fund only upon delivery of the Securities to or for the account of
the Fund; and upon any sale of Portfolio Securities, delivery of the Securities
will be made only against payment thereof or, in the
<PAGE>
event Portfolio Securities are loaned, delivery of Securities will be made only
against receipt of the initial cash collateral to or for the account of the
Fund; and
(d) The Bank shall be liable to the Fund for any loss or damage to the
Fund resulting from use of a Depository by reason of negligence, willful
misfeasance or bad faith of the Bank or its employees or from any reckless
disregard by the Bank of its duty to use its best efforts to enforce such rights
as it may have against a Depository. In this connection, the Bank shall use its
best efforts to ensure that:
(i) The Depository obtains replacement of any certificated Portfolio
Security deposited with it in the event such Security is lost, destroyed,
wrongfully taken or otherwise not available to be returned to the Bank upon its
request;
(ii) Any proxy materials received by a Depository with respect to
Portfolio Securities deposited with such Depository are forwarded immediately to
the Bank for prompt transmittal to the Fund;
(iii) Such Depository immediately forwards to the Bank confirmation of
any purchase or sale of Portfolio Securities and of the appropriate book entry
made by such Depository to the Fund's account;
(iv) Such Depository prepares and delivers to the Bank such records
with respect to the performance of the Bank's obligations and duties hereunder
as may be necessary for the Fund to comply with the recordkeeping requirements
of Section 31(a) of the 1940 Act and Rule 31(a) thereunder; and
(v) Such Depository delivers to the Bank and the Fund all internal
accounting control reports, whether or not audited by an independent public
accountant, as well as such other reports as the Fund may reasonably request in
order to verify the Portfolio Securities held by such Depository.
6.5 Use of Book-Entry System for Commercial Paper. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of Proper Instructions and upon receipt of confirmation from an
Issuer (as defined below) that the Fund has purchased such Issuer's Book-entry
Paper, the Bank shall issue and hold in book-entry form, on behalf of the Fund,
commercial paper issued by issuers with whom the Bank has entered into a
book-entry agreement (the "Issuers"). In maintaining its Book-entry Paper
System, the Bank agrees that:
(a) the Bank will maintain all Book-Entry Paper held by the Fund in an
account of the Bank that includes only assets held by it for customers;
(b) the records of the Bank with respect to the Fund's purchase of
Book-entry Paper through the Bank will identify, by book-entry, Commercial Paper
belonging to the Fund which is included in the Book-entry Paper System and shall
at all times during the
<PAGE>
regular business hours of the Bank be open for inspection by duly authorized
officers, employees or agents of the Fund;
(c) the Bank shall pay for Book-Entry Paper purchased for the account
of the Fund upon contemporaneous (i) receipt of advice from the Issuer that such
sale of Book-Entry Paper has been effected, and (ii) the making of an entry on
the records of the Bank to reflect such payment and transfer for the account of
the Fund;
(d) the Bank shall cancel such Book-Entry Paper obligation upon the
maturity thereof upon contemporaneous (i) receipt of advice that payment for
such Book-Entry Paper has been transferred to the Fund, and (ii) the making of
an entry on the records of the Bank to reflect such payment for the account of
the Fund;
(e) the Bank shall transmit to the Fund a transaction journal
confirming each transaction in Book-Entry Paper for the account of the Fund on
the next business day following the transaction; and
(f) the Bank will send to the Fund such reports on its system of
internal accounting control with respect to the Book-Entry Paper System as the
Fund may reasonably request from time to time.
6.6 Use of Immobilization Programs. Provided (i) the Bank has received
a certified copy of a resolution of the Board specifically approving the
maintenance of Portfolio Securities in an immobilization program operated by a
bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and (ii)
for each year following such approval the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.
6.7 Eurodollar CDs. Any Portfolio Securities which are Eurodollar CDs
may be physically held by the European branch of the U.S. banking institution
that is the issuer of such Eurodollar CD (a "European Branch"), provided that
such Securities are identified on the books of the Bank as belonging to the Fund
and that the books of the Bank identify the European Branch holding such
Securities. Notwithstanding any other provision of this Agreement to the
contrary, except as stated in the first sentence of this subsection 6.7, the
Bank shall be under no other duty with respect to such Eurodollar CDs belonging
to the Fund, and shall have no liability to the Fund or its shareholders with
respect to the actions, inactions, whether negligent or otherwise of such
European Branch in connection with such Eurodollar CDs, except for any loss or
damage to the Fund resulting from the Bank's own negligence, willful misfeasance
or bad faith in the performance of its duties hereunder.
6.8 Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.
<PAGE>
1. The Bank shall take action as to put options ("puts") and call
options ("calls") purchased or sold (written) by the Fund regarding escrow or
other arrangements (i) in accordance with the provisions of any agreement
entered into upon receipt of Proper Instructions between the Bank, any
broker-dealer registered under the Exchange Act and a member of the National
Association of Securities Dealers, Inc. (the "NASD"), and, if necessary, the
Fund relating to the compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange, or of any
similar organization or organizations.
2. Unless another agreement requires it to do so, the Bank shall be
under no duty or obligation to see that the Fund has deposited or is maintaining
adequate margin, if required, with any broker in connection with any option, nor
shall the Bank be under duty or obligation to present such option to the broker
for exercise unless it receives Proper Instructions from the Fund. The Bank
shall have no responsibility for the legality of any put or call purchased or
sold on behalf of the Fund, the propriety of any such purchase or sale, or the
adequacy of any collateral delivered to a broker in connection with an option or
deposited to or withdrawn from a Segregated Account (as defined in subsection
6.9 below). The Bank specifically, but not by way of limitation, shall not be
under any duty or obligation to: (i) periodically check or notify the Fund that
the amount of such collateral held by a broker or held in a Segregated Account
is sufficient to protect such broker of the Fund against any loss; (ii) effect
the return of any collateral delivered to a broker; or (iii) advise the Fund
that any option it holds, has or is about to expire. Such duties or obligations
shall be the sole responsibility of the Fund.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
1. The Bank shall take action as to puts, calls and futures contracts
("Futures") purchased or sold by the Fund in accordance with the provisions of
any agreement among the Fund, the Bank and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding account deposits
in connection with transactions by the Fund.
2. The responsibilities and liabilities of the Bank as to Futures, puts
and calls traded on commodities exchanges, any Futures Commission Merchant
account and the Segregated Account shall be limited as set forth in subparagraph
(a)(2) of this Section 6.8 as if such subparagraph referred to Futures
Commission Merchants rather than brokers, and Futures and puts and calls thereon
instead of options.
6.9 Segregated Account. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of the Fund, into which Account or Accounts may be transferred upon
receipt of Proper Instructions cash and/or Portfolio Securities:
(a) in accordance with the provisions of any agreement among the Fund,
the Bank and a broker-dealer registered under the Exchange Act and a member of
the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act,
<PAGE>
relating to compliance with the rules of the Options Clearing Corporation and of
any registered national securities exchange or the Commodity Futures Trading
Commission or any registered Contract Market, or of any similar organizations
regarding escrow or other arrangements in connection with transactions by the
Fund;
(b) for the purpose of segregating cash or securities in connection
with options purchased or written by the Fund or commodity futures purchased or
written by the Fund;
(c) for the deposit of liquid assets, such as cash, U.S. Government
securities or other high grade debt obligations, having a market value (marked
to market on a daily basis) at all times equal to not less than the aggregate
purchase price due on the settlement dates of all the Fund's then outstanding
forward commitment or "when-issued" agreements relating to the purchase of
Portfolio Securities and all the Fund's then outstanding commitments under
reverse repurchase agreements entered into with broker-dealer firms;
(d) for the deposit of any Portfolio Securities which the Fund has
agreed to sell on a forward commitment basis, all in accordance with Investment
Company Act Release No. 10666;
(e) for the purposes of compliance by the Fund with the procedures
required by Investment Company Act Release No. 10666, or any subsequent release
or releases of the Securities and Exchange Commission relating to the
maintenance of Segregated Accounts by registered investment companies;
(f) for other proper corporate purposes, but only, in the case of this
clause (f), upon receipt of, in addition to Proper Instructions, a certified
copy of a resolution of the Board, or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such Segregated Account and declaring
such purposes to be proper corporate purposes.
(g) Assets may be withdrawn from the Segregated Account pursuant to
Proper Instructions only
(i) in accordance with the provisions of any agreements referenced
in (a) or (b) above;
(ii) for sale or delivery to meet the Fund's obligations under
outstanding firm commitment or when-issued agreements for the
purchase of Portfolio Securities and under reverse repurchase agreements;
(iii) for exchange for other liquid assets of equal or greater
value deposited in the Segregated Account;
(iv) to the extent that the Fund's outstanding forward commitment
or when-issued agreements for the purchase of portfolio securities or
reverse repurchase agreements are sold to other parties or the Fund's
obligations
<PAGE>
thereunder are met from assets of the Fund other than those in the
Segregated Account; or
(v) for delivery upon settlement of a forward commitment agreement
for the sale of Portfolio Securities.
6.10 Interest Bearing Call or Time Deposits. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the Fund of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Fund appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the deposit,
if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits shall
be deemed Portfolio Securities of the Fund and the responsibility of the Bank
therefore shall be the same as and no greater than the Bank's responsibility in
respect of other Portfolio Securities of the Fund.
6.11 Transfer of Securities. The Bank will transfer, exchange, deliver
or release Portfolio Securities held by it hereunder, insofar as such Securities
are available for such purpose, provided that before making any transfer,
exchange, delivery or release under this Section the Bank will receive Proper
Instructions requesting such transfer, exchange or delivery stating that it is
for a purpose permitted under the terms of this Section 6.11, specifying the
applicable subsection, or describing the purpose of the transaction with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, only
(a) upon sales of Portfolio Securities for the account of the
Fund, against contemporaneous receipt by the Bank of payment therefor in full,
or, against payment to the Bank in accordance with generally accepted settlement
practices and customs in the jurisdiction or market in which the transaction
occurs, each such payment to be in the amount of the sale price shown in a
broker's confirmation of sale of the Portfolio Securities received by the Bank
before such payment is made, as confirmed in the Proper Instructions received by
the Bank before such payment is made;
(b) in exchange for or upon conversion into other securities alone
or other securities and cash pursuant to any plan of merger, consolidation,
reorganization, share split-up, change in par value, recapitalization or
readjustment or otherwise, upon exercise of subscription, purchase or sale or
other similar rights represented by such Portfolio Securities, or for the
purpose of tendering shares in the event of a tender offer therefor, provided
however that in the event of an offer of exchange, tender offer, or other
exercise of rights requiring the physical tender or delivery of Portfolio
Securities, the Bank shall have no liability for failure to so tender in a
timely manner unless such Proper Instructions are received by the Bank at least
two business days prior to the date required for tender, and unless the Bank (or
its agent or subcustodian hereunder) has actual possession of such Security at
least two business days prior to the date of tender;
(c) upon conversion of Portfolio Securities pursuant to their
terms into other securities;
<PAGE>
(d) for the purpose of redeeming in kind shares of the Fund upon
authorization from the Fund;
(e) in the case of option contracts owned by the Fund, for
presentation to the endorsing broker;
(f) when such Portfolio Securities are called, redeemed or retired
or otherwise become payable;
(g) for the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to the Fund by
any bank, including the Bank; provided, however, that such Portfolio Securities
will be released only upon payment to the Bank for the account of the Fund of
the moneys borrowed, except that in cases where additional collateral is
required to secure a borrowing already made, and such fact is made to appear in
the Proper Instructions, further Portfolio Securities may be released for that
purpose without any such payment. In the event that any such pledged Portfolio
Securities are held by the Bank, they will be so held for the account of the
lender, and after notice to the Fund from the lender in accordance with the
normal procedures of the lender, that an event of deficiency or default on the
loan has occurred, the Bank may deliver such pledged Portfolio Securities to or
for the account of the lender;
(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions received
by the Bank before such payment is made;
(i) for the purpose of delivering securities lent by the Fund to a
bank or broker dealer, but only against receipt in accordance with street
delivery custom except as otherwise provided herein, of adequate collateral as
agreed upon from time to time by the Fund and the Bank, and upon receipt of
payment in connection with any repurchase agreement relating to such securities
entered into by the Fund;
(j) for other authorized transactions of the Fund or for other
proper corporate purposes; provided that before making such transfer, the Bank
will also receive a certified copy of resolutions of the Board, signed by an
authorized officer of the Fund (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Fund or such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made; and
(k) upon termination of this Agreement as hereinafter set forth
pursuant to Section 8 and Section 14 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (e), (f), (g), (h) and (i) securities or cash receivable in exchange
therefor shall be delivered to the Bank.
<PAGE>
7. Redemptions. In the case of payment of assets of the Fund held by
the Bank in connection with redemptions and repurchases by the Fund of
outstanding common shares, the Bank will rely on notification by the Fund's
transfer agent of receipt of a request for redemption and certificates, if
issued, in proper form for redemption before such payment is made. Payment shall
be made in accordance with the Articles and By-laws of the Fund, from assets
available for said purpose.
8. Merger, Dissolution, etc. of Fund. In the case of the following
transactions, not in the ordinary course of business, namely, the merger of the
Fund into or the consolidation of the Fund with another investment company where
the Fund is not the surviving entity, the sale by the Fund of all, or
substantially all, of its assets to another investment company, or the
liquidation or dissolution of the Fund and distribution of its assets, the Bank
will deliver the Portfolio Securities held by it under this Agreement and
disburse cash only upon the order of the Fund set forth in an Officers'
Certificate, accompanied by a certified copy of a resolution of the Board
authorizing any of the foregoing transactions. Upon completion of such delivery
and disbursement and the payment of the fees, disbursements and expenses of the
Bank, this Agreement will terminate.
9. Actions of Bank Without Prior Authorization. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, it will without prior authorization or instruction
of the Fund or the transfer agent:
9.1 Endorse for collection and collect on behalf of and in the
name of the Fund all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Fund and hold for the account of the Fund all income, dividends,
interest and other payments or distribution of cash with respect to the
Portfolio Securities held thereunder;
9.2 Present for payment all coupons and other income items held by
it for the account of the Fund which call for payment upon presentation and hold
the cash received by it upon such payment for the account of the Fund;
9.3 Receive and hold for the account of the Fund all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.
9.4 Execute as agent on behalf of the Fund all necessary ownership
and other certificates and affidavits required by the Internal Revenue Code or
the regulations of the Treasury Department issued thereunder, or by the laws of
any state, now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so and as may be required to obtain payment in respect thereof.
The Bank will execute and deliver such certificates in connection with Portfolio
Securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any state;
<PAGE>
9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it upon
payment for the account of the Fund; and
9.6 Exchange interim receipts or temporary securities for
definitive securities.
10. Collections and Defaults. The Bank will use all reasonable efforts to
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Fund notice actually received by it of any call for redemption,
offer of exchange, right of subscription, reorganization or other proceedings
affecting such Securities. If Portfolio Securities upon which such income is
payable are in default or payment is refused after due demand or presentation,
the Bank will notify the Fund in writing of any default or refusal to pay within
two business days from the day on which it receives knowledge of such default or
refusal. In addition, the Bank will send the Fund a written report once each
month showing any income on any Portfolio Security held by it which is more than
ten days overdue on the date of such report and which has not previously been
reported.
11. Maintenance of Records and Accounting Services. The Bank will maintain
records with respect to transactions for which the Bank is responsible pursuant
to the terms and conditions of this Agreement, and in compliance with the
applicable rules and regulations of the 1940 Act and will furnish the Fund daily
with a statement of condition of the Fund. The Bank will furnish to the Fund at
the end of every month, and at the close of each quarter of the Fund's fiscal
year, a list of the Portfolio Securities and the aggregate amount of cash held
by it for the Fund. The books and records of the Bank pertaining to its actions
under this Agreement and reports by the Bank or its independent accountants
concerning its accounting system, procedures for safeguarding securities and
internal accounting controls will be open to inspection and audit at reasonable
times by officers and agents of or auditors employed by the Fund, and by
regulatory authorities, and will be preserved by the Bank in the manner and in
accordance with the applicable rules and regulations under the 1940 Act.
The Bank shall keep the books of account and render statements or copies
from time to time as reasonably requested by the Treasurer or any executive
officer of the Fund. The Bank acknowledges that all accounts, records and
documents maintained by the Bank pursuant to this Agreement are the property of
the Company.
12. Fund Valuation. The Bank shall compute and, unless otherwise directed
by the Board, determine as of the close of business on the New York Stock
Exchange on each day on which said Exchange is open for unrestricted trading and
as of such other hours, if any, as may be authorized by the Board the net asset
value and the public offering price of a share of capital stock of the Fund,
such determination to be made in accordance with the provisions of the Articles
and By-laws of the Fund and Prospectus and Statement of Additional Information
relating to the Fund, as they may from time to time be amended, and any
applicable resolutions of the Board at the time in force and applicable; and
promptly to notify the Fund, the proper exchange and the NASD or such other
persons as the Fund may request of the results of such computation and
determination. In computing the net asset value hereunder, the Bank may rely in
good faith upon information furnished
<PAGE>
to it by any Authorized Person in respect of (i) the manner of accrual of the
liabilities of the Fund and in respect of liabilities of the Fund not appearing
on its books of account kept by the Bank, (ii) reserves, if any, authorized by
the Board or that no such reserves have been authorized, (iii) the source of the
quotations to be used in computing the net asset value, (iv) the value to be
assigned to any security for which no price quotations are available, and (v)
the method of computation of the public offering price on the basis of the net
asset value of the shares; and the Bank shall not be responsible for any loss
occasioned by such reliance or for any good faith reliance on any quotations
received from a source pursuant to (iii) above.
13. Concerning the Bank.
13.1 Performance of Duties and Standard of Care.
In performing its duties hereunder and any other duties listed on any
Schedule hereto, if any, the Bank will be entitled to receive and act upon the
advice of independent counsel of its own selection, which may be counsel for the
Fund, and will be without liability for any action taken or thing done or
omitted to be done in accordance with this Agreement in good faith in conformity
with such advice. The Bank shall at all times use reasonable care, due diligence
and act in good faith in carrying out its duties under this Agreement. In the
performance of its duties hereunder, the Bank will be protected and not be
liable, and will be indemnified and held harmless for any action taken or
omitted to be taken by it in good faith reliance upon the terms of this
Agreement, any Officers' Certificate, Proper Instructions, resolution of the
Board, telegram, notice, request, certificate or other instrument reasonably
believed by the Bank to be genuine and for any other loss to the Fund except in
the case of its negligence, willful misfeasance or bad faith in the performance
of its duties or reckless disregard of its obligations and duties hereunder.
The Bank will be under no duty or obligation to inquire into and will not
be liable for:
(a) the validity of the issue of any Portfolio Securities
purchased by or for the Fund, the legality of the purchases thereof or the
propriety of the price incurred therefor;
(b) the legality of any sale of any Portfolio Securities by or for
the Fund or the propriety of the amount for which the same are sold;
(c) the legality of an issue or sale of any common shares of the
Fund or the sufficiency of the amount to be received therefor;
(d) the legality of the repurchase of any common shares of the
Fund or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by the Fund or
the legality of the distribution of any Portfolio Securities as payment in kind
of such dividend; and
(f) any property or moneys of the Fund unless and until received
by it, and any such property or moneys delivered or paid by it pursuant to the
terms hereof.
<PAGE>
Moreover, the Bank will not be under any duty or obligation to ascertain
whether any Portfolio Securities at any time delivered to or held by it for the
account of the Fund are such as may properly be held by the Fund under the
provisions of its Articles, By-laws, any federal or state statutes or any rule
or regulation of any governmental agency.
Notwithstanding anything in this Agreement to the contrary, in no event
shall the Bank be liable hereunder or to any third party for any losses or
damages of any kind resulting from acts of God, earthquakes, fires, floods,
storms or other disturbances of nature, epidemics, strikes, riots,
nationalization, expropriation, currency restrictions, acts of war, civil war or
terrorism, insurrection, nuclear fusion, fission or radiation, the interruption,
loss or malfunction of utilities, transportation, or computers (hardware or
software) and computer facilities, the unavailability of energy sources and
other similar happenings or events except as results from the Bank's own
negligence.
Neither party to this Agreement shall be liable to the other party for
special, punitive or consequential damages arising from the provision of
services hereunder, even if the other party has been advised of the possibility
of such damages.
13.2 Agents and Subcustodians with Respect to Property of the Fund Held
in the United States. The Bank may employ agents in the performance of its
duties hereunder and shall be responsible for the acts and omissions of such
agents as if performed by the Bank hereunder.
Upon receipt of Proper Instructions, the Bank may employ subcustodians,
provided that any such subcustodian meets at least the minimum qualifications
required by Section 17(f)(1) of the 1940 Act to act as a custodian of the Fund's
assets with respect to property of the Fund held in the United States. The Bank
shall have no liability to the Fund or any other person by reason of any act or
omission of any subcustodian and the Fund shall indemnify the Bank and hold it
harmless from and against any and all actions, suits and claims, arising
directly or indirectly out of the performance of any subcustodian. Upon request
of the Bank, the Fund shall assume the entire defense of any action, suit, or
claim subject to the foregoing indemnity. The Fund shall pay all fees and
expenses of any subcustodian.
13.3 Duties of the Bank with Respect to Property of the Fund Held
Outside of the United States.
(a) Appointment of Foreign Sub-Custodians. Upon receipt of Proper
Instructions, together with a certified resolution of the Fund's Board of
Trustees, the Bank and the Fund may agree to designate foreign banking
institutions and foreign securities depositories to act as "Selected Foreign
Sub-Custodians" hereunder. Upon receipt of Proper Instructions, the Fund may
instruct the Bank to cease the employment of any one or more such Selected
Foreign Sub-Custodians for maintaining custody of the Fund's assets, and the
Bank shall so cease to employ such sub-custodian as soon as alternate custodial
arrangements have been implemented.
(b) Foreign Securities Depositories. Except as may otherwise be
agreed upon in writing by the Bank and the Fund, assets of the Fund shall be
maintained in foreign
<PAGE>
securities depositories only through arrangements implemented by the foreign
banking institutions serving as Selected Foreign Sub-Custodians pursuant to the
terms hereof. Where possible, such arrangements shall include entry into
agreements containing the provisions set forth in subparagraph (d) hereof. Upon
delivery of Proper Instructions to the Bank, the Fund may authorize the deposit
in Euro-clear, the securities clearance and depository facilities operated by
Morgan Guaranty Trust Company of New York in Brussels, Belgium, of Foreign
Portfolio Securities eligible for deposit therein and to utilize such securities
depository in connection with settlements of purchases and sales of securities
and deliveries and returns of securities, until the Bank is notified to the
contrary pursuant to subparagraph (a) hereunder.
(c) Segregation of Securities. The Bank shall identify on its
books as belonging to the Fund the Foreign Portfolio Securities held by each
Selected Foreign Sub-Custodian. Each agreement pursuant to which the Bank
employs a foreign banking institution shall require that such institution
establish a custody account for the Bank and hold in that account, Foreign
Portfolio Securities and other assets of the Fund, and, in the event that such
institution deposits Foreign Portfolio Securities in a foreign securities
depository, that it shall identify on its books as belonging to the Bank the
securities so deposited.
(d) Agreements with Foreign Banking Institutions. Each of the
agreements pursuant to which a foreign banking institution holds assets of the
Fund (each, a "Foreign Sub-Custodian Agreement") shall be substantially in the
form previously made available to the Fund and shall provide that: (a) the
Fund's assets will not be subject to any right, charge, security interest, lien
or claim of any kind in favor of the foreign banking institution or its
creditors or agent, except a claim of payment for their safe custody or
administration (including, without limitation, any fees or taxes payable upon
transfers or reregistration of securities); (b) beneficial ownership of the
Fund's assets will be freely transferable without the payment of money or value
other than for custody or administration (including, without limitation, any
fees or taxes payable upon transfers or reregistration of securities); (c)
adequate records will be maintained identifying the assets as belonging to Bank;
(d) officers of or auditors employed by, or other representatives of the Bank,
including to the extent permitted under applicable law, the independent public
accountants for the Fund, will be given access to the books and records of the
foreign banking institution relating to its actions under its agreement with the
Bank; and (e) assets of the Fund held by the Selected Foreign Sub-Custodian will
be subject only to the instructions of the Bank or its agents.
(e) Access of Independent Accountants of the Fund. Upon request of
the Fund, the Bank will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of any
foreign banking institution employed as a Selected Foreign Sub-Custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its Foreign Sub-Custodian Agreement.
(f) Reports by Bank. The Bank will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities and other
assets of the Fund
<PAGE>
held by Selected Foreign Sub-Custodians, including but not limited to an
identification of entities having possession of the Foreign Portfolio Securities
and other assets of the Fund.
(g) Transactions in Foreign Custody Account. Transactions with
respect to the assets of the Fund held by a Selected Foreign Sub-Custodian shall
be effected pursuant to Proper Instructions from the Fund to the Bank and shall
be effected in accordance with the applicable Foreign Sub-Custodian Agreement.
If at any time any Foreign Portfolio Securities shall be registered in the name
of the nominee of the Selected Foreign Sub-Custodian, the Fund agrees to hold
any such nominee harmless from any liability by reason of the registration of
such securities in the name of such nominee.
Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for Foreign Portfolio Securities received for the account
of the Fund and delivery of Foreign Portfolio Securities maintained for the
account of the Fund may be effected in accordance with the customary established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such purchaser
or dealer.
In connection with any action to be taken with respect to the
Foreign Portfolio Securities held hereunder, including, without limitation, the
exercise of any voting rights, subscription rights, redemption rights, exchange
rights, conversion rights or tender rights, or any other action in connection
with any other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall promptly transmit to the Fund such
information in connection therewith as is made available to the Bank by the
Foreign Sub-Custodian, and shall promptly forward to the applicable Foreign
Sub-Custodian any instructions, forms or certifications with respect to such
Rights, and any instructions relating to the actions to be taken in connection
therewith, as the Bank shall receive from the Fund pursuant to Proper
Instructions. Notwithstanding the foregoing, the Bank shall have no further duty
or obligation with respect to such Rights, including, without limitation, the
determination of whether the Fund is entitled to participate in such Rights
under applicable U.S. and foreign laws, or the determination of whether any
action proposed to be taken with respect to such Rights by the Fund or by the
applicable Foreign Sub-Custodian will comply with all applicable terms and
conditions of any such Rights or any applicable laws or regulations, or market
practices within the market in which such action is to be taken or omitted.
(h) Liability of Selected Foreign Sub-Custodians. Each Foreign
Sub-Custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Bank and each Fund from and against certain
losses, damages, costs, expenses, liabilities or claims arising out of or in
connection with the institution's performance of such obligations, all as set
forth in the applicable Foreign Sub-Custodian Agreement. The Fund acknowledges
that the Bank, as a participant in Euro-clear, is subject to the Terms and
Conditions Governing the Euro-Clear System, a copy of which has been made
available to the Fund. The Fund acknowledges that pursuant to such Terms and
Conditions, Morgan Guaranty Brussels shall have the sole right to exercise or
assert any and all rights or claims in respect
<PAGE>
of actions or omissions of, or the bankruptcy or insolvency of, any other
depository, clearance system or custodian utilized by Euro-clear in connection
with the Fund's securities and other assets.
(i) Liability of Bank. The Bank shall have no more or less
responsibility or liability on account of the acts or omissions of any Selected
Foreign Sub-Custodian employed hereunder than any such Selected Foreign
Sub-Custodian has to the Bank and, without limiting the foregoing, the Bank
shall not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions, or acts of
war or terrorism, political risk (including, but not limited to, exchange
control restrictions, confiscation, insurrection, civil strife or armed
hostilities) other losses due to Acts of God, nuclear incident or any loss where
the Selected Foreign Sub-Custodian has otherwise exercised reasonable care.
(j) Monitoring Responsibilities. The Bank shall furnish annually
to the Fund, information concerning the Selected Foreign Sub-Custodians employed
hereunder for use by the Fund in evaluating such Selected Foreign Sub-Custodians
to ensure compliance with the requirements of Rule 17f-5 of the Act. In
addition, the Bank will promptly inform the Fund in the event that the Bank is
notified by a Selected Foreign Sub-Custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline below $200
million (U.S. dollars or the equivalent thereof) or that its shareholders'
equity has declined below $200 million (in each case computed in accordance with
generally accepted U.S. accounting principles) or any other capital adequacy
test applicable to it by exemptive order, or if the Bank has actual knowledge of
any material loss of the assets of the Fund held by a Foreign Sub-Custodian.
(k) Tax Law. The Bank shall have no responsibility or liability
for any obligations now or hereafter imposed on the Fund or the Bank as
custodian of the Fund by the tax laws of any jurisdiction, and it shall be the
responsibility of the Fund to notify the Bank of the obligations imposed on the
Fund or the Bank as the custodian of the Fund by the tax law of any non-U.S.
jurisdiction, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Custodian with regard to such tax law
shall be to use reasonable efforts to assist the Fund with respect to any claim
for exemption or refund under the tax law of jurisdictions for which the Fund
has provided such information.
13.4 Insurance. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Fund held by it as it uses
in respect of its own similar property but it need not maintain any special
insurance for the benefit of the Fund.
13.5. Fees and Expenses of Bank. The Fund will pay or reimburse the
Bank from time to time for any transfer taxes payable upon transfer of Portfolio
Securities made hereunder, and for all necessary proper disbursements, expenses
and charges made or incurred by the Bank in the performance of this Agreement
(including any duties listed on any Schedule hereto, if any) including any
indemnities for any loss, liabilities or expense to the Bank as provided above.
For the services rendered by the Bank hereunder, the Fund will pay to the Bank
such compensation or fees at such rate and at such times as shall be agreed upon
in writing by the parties from time to time. The Bank will also be entitled to
<PAGE>
reimbursement by the Fund for all reasonable expenses incurred in conjunction
with termination of this Agreement by the Fund.
13.6 Advances by Bank. The Bank may, in its sole discretion, advance
funds on behalf of the Fund to make any payment permitted by this Agreement upon
receipt of any proper authorization required by this Agreement for such payments
by the Fund. Should such a payment or payments, with advanced funds, result in
an overdraft (due to insufficiencies of the Fund's account with the Bank, or for
any other reason) this Agreement deems any such overdraft or related
indebtedness, a loan made by the Bank to the Fund payable on demand and bearing
interest at the current rate charged by the Bank for such loans unless the Fund
shall provide the Bank with agreed upon compensating balances. The Fund agrees
that the Bank shall have a continuing lien and security interest to the extent
of any overdraft or indebtedness, in and to any property at any time held by it
for the Fund's benefit or in which the Fund has an interest and which is then in
the Bank's possession or control (or in the possession or control of any third
party acting on the Bank's behalf). The Fund authorizes the Bank, in its sole
discretion, at any time to charge any overdraft or indebtedness, together with
interest due thereon against any balance of account standing to the credit of
the Fund on the Bank's books.
14. Termination.
14.1 This Agreement may be terminated at any time without penalty upon
sixty days written notice delivered by either party to the other by means of
registered mail, and upon the expiration of such sixty days this Agreement will
terminate; provided, however, that the effective date of such termination may be
postponed to a date not more than one hundred twenty days from the date of
delivery of such notice by the Fund or the Bank in order to give the Fund an
opportunity to make suitable arrangements for a successor custodian. At any time
after the termination of this Agreement, the Fund will, at its request, have
access to the records of the Bank relating to the performance of its duties as
custodian.
14.2 In the event of the termination of this Agreement, the Bank will
immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Fund. The obligation of the Bank to deliver and transfer over the assets of the
Fund held by it directly to such successor custodian will commence as soon as
such successor is appointed and will continue until completed as aforesaid. If
the Fund does not select a successor custodian within one hundred twenty (120)
days from the date of delivery of notice of termination the Bank may, subject to
the provisions of subsection (14.3), deliver the Portfolio Securities and cash
of the Fund held by the Bank to a bank or trust company of its own selection
which meets the requirements of Section 17(f)(1) of the 1940 Act and has a
reported capital, surplus and undivided profits aggregating not less than
$2,000,000, to be held as the property of the Fund under terms similar to those
on which they were held by the Bank, whereupon such bank or trust company so
selected by the Bank will become the successor custodian of such assets of the
Fund with the same effect as though selected by the Board.
<PAGE>
14.3 Prior to the expiration of one hundred twenty (120) days after
notice of termination has been given, the Fund may furnish the Bank with an
order of the Fund advising that a successor custodian cannot be found willing
and able to act upon reasonable and customary terms and that there has been
submitted to the shareholders of the Fund the question of whether the Fund will
be liquidated or will function without a custodian for the assets of the Fund
held by the Bank. In that event the Bank will deliver the Portfolio Securities
and cash of the Fund held by it, subject as aforesaid, in accordance with one of
such alternatives which may be approved by the requisite vote of shareholders,
upon receipt by the Bank of a copy of the minutes of the meeting of shareholders
at which action was taken, certified by the Fund's Secretary and an opinion of
counsel to the Fund in form and content satisfactory to the Bank.
15. Confidentiality. Both parties hereto agree than any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other party,
except as may be required by applicable law or at the request of a governmental
agency. The parties further agree that a breach of this provision would
irreparably damage the other party and accordingly agree that each of them is
entitled, without bond or other security, to an injunction or injunctions to
prevent breaches of this provision.
16. Notices. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below; namely:
(a) In the case of notices sent to the Fund to:
RREEF Real Estate Securities Advisers, L.P.
650 California Street, Suite 1800
San Francisco, California 94108
Attention: Kim G. Redding
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
Attention: Hank Joyce
or at such other place as such party may from time to time designate in
writing.
17. Amendments. This Agreement may not be altered or amended, except by an
instrument in writing, executed by both parties, and in the case of the Fund,
such alteration or amendment will be authorized and approved by its Board.
18. Parties. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by its
<PAGE>
Board; and provided further that termination proceedings pursuant to
Section 14 hereof will not be deemed to be an assignment within the meaning of
this provision.
19. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
RREEF Securities Fund, Inc.
By: /s/ Kim G. Redding
Name:
Title:
ATTEST:
/s/ Carol A. Vogl
Investors Bank & Trust Company
By: /s/ Henry N. Joyce
Name:
Title: Director
ATTEST:
/s/ J.M. Keenan
DATE: May 24, 1995
EXHIBIT 9
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
RREEF SECURITIES FUND, INC.
AND
INVESTORS BANK & TRUST COMPANY
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT effective as of the 24th day of May, 1995 by and between RREEF
SECURITIES FUND, INC., a corporation organized under the laws of Maryland (the
"Company"), and INVESTORS BANK & TRUST COMPANY, a Massachusetts trust company
(the "Bank").
WITNESSETH:
WHEREAS, the Company desires to appoint the Bank as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and the Bank desires to accept such appointment;
WHEREAS, the Bank is duly registered as a transfer agent as provided in
Section 17A(c) of the Securities Exchange Act of 1934, as amended, (the "1934
Act");
WHEREAS, the Company is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets;
WHEREAS, the Company intends to initially offer shares in one series, RREEF
Real Estate Securities Fund (such series, together with all other series
subsequently established by the Company and made subject to this Agreement in
accordance with Article 17, being herein referred to as the "Fund(s)");
NOW, THEREFORE, in consideration of the mutual covenants herein set forth,
the Company and the Bank agree as follows:
ARTICLE 1. Terms of Appointment; Duties of the Bank
1.01 Subject to the terms and conditions set forth in this Agreement, the
Company on behalf of the Funds, hereby employs and appoints the Bank to act as,
and the Bank agrees to act as, transfer agent for each of the Fund(s)'
authorized and issued shares of beneficial interest ("Shares"), dividend
disbursing agent and agent in connection with any accumulation, open-account or
similar plans provided to the shareholders of the Company ("Shareholders") and
set out in the currently effective prospectus and statement of additional
information, as each may be amended from time to time (the "Prospectus"), of the
Company, including without limitation any periodic investment plan or periodic
withdrawal program.
1.02 The Bank agrees that it will perform the following services:
(a) In connection with procedures established from time to time by
agreement between the Company and the Bank, the Bank shall:
<PAGE>
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation therefor to
the custodian of the Company appointed by the Board of Directors
of the Company (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance, redemption requests and redemption
directions and deliver the appropriate documentation therefor to
the Custodian;
(iv) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions
declared by the Company on behalf of a Fund; and
(vii) Create and maintain all necessary records including those
specified in Article 10 hereof, in accordance with all applicable
laws, rules and regulations, including but not limited to records
required by Section 31(a) of the Investment Company Act of 1940,
as amended (the "1940 Act"), and those records pertaining to the
various functions performed by it hereunder. All records shall be
available for inspection and use by the Company. Where applicable,
such records shall be maintained by the Bank for the periods and
in the places required by Rule 31a-2 under the 1940 Act.
(viii) Make available during regular business hours all records
and other data created and maintained pursuant to this Agreement
for reasonable audit and inspection by the Company, or any person
retained by the Company. Upon reasonable notice by the Company,
the Bank shall make available during regular business hours its
facilities and premises employed in connection with its
performance of this Agreement for reasonable visitation by the
Company, or any person retained by the Company.
(ix) At the expense of and at the request of the Company, the Bank
shall maintain an adequate supply of blank share certificates for
each Fund providing for the issuance of certificates to meet the
Bank's requirements therefor. Such share certificates shall be
properly signed by facsimile. The Company agrees that,
notwithstanding the death, resignation, or removal of any officer
of the Company whose signature appears on such certificates, the
Bank may continue to countersign certificates which bear such
signatures until otherwise directed by the Company. Share
certificates may be issued and accounted for entirely by the Bank
and do not require any third party registrar or other endorsing
party.
(x) Issue replacement share certificates in lieu of certificates
which have been lost, stolen, mutilated or destroyed, without any
further action by the Board of Directors or any officer of the
Company, upon receipt by the Bank of properly executed affidavits
and lost certificate bonds, in form satisfactory to the Bank with
the Company
<PAGE>
and the Bank as obligees under the bond. At the discretion of the
Bank, and at its sole risk, the Bank may issue replacement
certificates without requiring the affidavits and lost certificate
bonds described above and the Bank agrees to indemnify the Company
against any and all losses or claims which may arise by reason of
the issuance of such new certificates in the place of the ones
allegedly lost, stolen or destroyed.
(xi) Record the issuance of Shares of the Company and maintain,
pursuant to Rule 17Ad-10(e) under the 1934 Act, a record of the
total number of Shares of the Company which are authorized, based
upon data provided to it by the Company, and issued and
outstanding. The Bank shall also provide the Company on a regular
basis with the total number of Shares which are authorized and
issued and outstanding and shall have no obligation, when
recording the issuance of Shares, to monitor the issuance of such
Shares or to take cognizance of any laws relating to the issue or
sale of such Shares, which functions shall be the sole
responsibility of the Company.
(b) In addition to and not in lieu of the services set forth in the
above paragraph (a) or in any Schedule hereto, the Bank shall: (i) perform all
of the customary services of a transfer agent, dividend disbursing agent and, as
relevant, agent in connection with accumulation, open-account or similar plans
(including without limitation any periodic investment plan or periodic
withdrawal program); including but not limited to maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxies, receiving and
tabulating proxies, mailing Shareholder reports and prospectuses to current
Shareholders, withholding taxes on all accounts, including nonresident alien
accounts, preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for all purchases and
redemptions of Shares and other confirmable transactions in Shareholder
accounts, responding to Shareholder telephone calls and Shareholder
correspondence, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information; and (ii) provide a system which will
enable the Company to monitor the total number of shares sold in each State. The
Company shall (i) identify to the Bank in writing those transactions and assets
to be treated as exempt from blue sky reporting for each State and (ii) verify
the establishment of transactions for each State on the system prior to
activation and thereafter monitor the daily activity for each State. The
responsibility of the Bank for a Fund's blue sky state registration status is
solely limited to the initial establishment of transactions subject to blue sky
compliance by such Fund(s) and the reporting of such transactions to the Fund(s)
as provided above.
(c) Additionally, the Bank shall utilize a system to identify all share
transactions which involve purchase and redemption orders that are processed at
a time other than the time of the computation of net asset value per share next
computed after receipt of such orders, and shall compute the net effect upon the
Fund(s) of such transactions so identified on a daily and cumulative basis.
ARTICLE 2. Sale of Company Shares
2.01 Whenever the Company shall sell or cause to be sold any Shares of a
Fund, the Company shall deliver or cause to be delivered to the Bank a document
duly specifying: (i) the name of the Fund whose Shares were sold; (ii) the
number of Shares sold, trade date, and price; (iii) the amount of money to be
delivered to the Custodian for the sale of such Shares and specifically
<PAGE>
allocated to such Fund; and (iv) in the case of a new account, a new account
application or sufficient information to establish an account.
2.02 The Bank will, upon receipt by it of a check or other payment
identified by it as an investment in Shares of one of the Funds and drawn or
endorsed to the Bank as agent for, or identified as being for the account of,
one of the Funds, promptly deposit such check or other payment to the
appropriate account postings necessary to reflect the investment. The Bank will
notify the Company, or its designee, and the Custodian of all purchases and
related account adjustments.
2.03 Under procedures as established by mutual agreement between the
Company and the Bank, the Bank shall issue to the purchaser or his authorized
agent such Shares, computed to the nearest three decimal points, as he is
entitled to receive, based on the appropriate net asset value of the Funds'
Shares, determined in accordance with the prospectus and applicable Federal law
or regulation. In issuing Shares to a purchaser or his authorized agent, the
Bank shall be entitled to rely upon the latest directions, if any, previously
received by the Bank from the purchaser or his authorized agent concerning the
delivery of such Shares.
2.04 The Bank shall not be required to issue any Shares of the Company
where it has received a written instruction from the Company or written
notification from any appropriate Federal or State authority that the sale of
the Shares of the Fund(s) in question has been suspended or discontinued, and
the Bank shall be entitled to rely upon such written instructions or written
notification.
2.05 Upon the issuance of any Shares of any Fund(s) in accordance with
foregoing provisions of this Section, the Bank shall not be responsible for the
payment of any original issue or other taxes, if any, required to be paid by the
Company in connection with such issuance.
2.06 The Bank may establish such additional rules and regulations governing
the transfer or registration of Shares as it may deem advisable and consistent
with such rules and regulations generally adopted by transfer agents, or with
the written consent of the Company, any other rules and regulations.
ARTICLE 3. Returned Checks
3.01 In the event that any check or other order for the transfer of money
is returned unpaid for any reason, the Bank will take such steps as the Bank
may, in its discretion, deem appropriate to protect the Company from financial
loss or as the Company or its designee may instruct. Provided that the standard
procedures, as agreed upon from time to time, between the Company and the Bank,
regarding purchases and redemptions of Shares, are adhered to by the Bank, the
Bank shall not be liable for any loss suffered by a Fund as a result of returned
or unpaid purchase or redemption transactions. Legal or other expenses incurred
to collect amounts owed to a Fund as a consequence of returned or unpaid
purchase or redemption transactions shall be an expense of that Fund.
ARTICLE 4. Redemptions
4.01 Shares of any Fund may be redeemed in accordance with the procedures
set forth in the Prospectus of the Company and the Bank will duly process all
redemption requests.
<PAGE>
ARTICLE 5. Transfers and Exchanges
5.01 The Bank is authorized to review and process transfers of Shares of
each Fund, exchanges between Funds on the records of the Funds maintained by the
Bank, and exchanges between the Company and any other entity as may be permitted
by the Prospectus of the Company. If Shares to be transferred are represented by
outstanding certificates, the Bank will, upon surrender to it of the
certificates in proper form for transfer, and upon cancellation thereof,
countersign and issue new certificates for a like number of Shares and deliver
the same. If the Shares to be transferred are not represented by outstanding
certificates, the Bank will, upon an order therefor by or on behalf of the
registered holder thereof in proper form, credit the same to the transferee on
its books. If Shares are to be exchanged for Shares of another Fund, the Bank
will process such exchange in the same manner as a redemption and sale of
Shares, except that it may in its discretion waive requirements for information
and documentation.
ARTICLE 6. Right to Seek Assurances
6.01 The Bank reserves the right to refuse to transfer or redeem Shares
until it is satisfied that the requested transfer or redemption is legally
authorized, and it shall incur no liability for the refusal, in good faith, to
make transfers or redemptions which the Bank, in its judgment, deems improper or
unauthorized, or until it is satisfied that there is no basis for any claims
adverse to such transfer or redemption. The Bank may, in effecting transfers,
rely upon the provisions of the Uniform Act for the Simplification of Fiduciary
Security Transfers or the Uniform Commercial Code, as the same may be amended
from time to time, which in the opinion of legal counsel for the Company or of
its own legal counsel protect it in not requiring certain documents in
connection with the transfer or redemption of Shares of any Fund, and the
Company shall indemnify the Bank for any act done or omitted by it in reliance
upon such laws or opinions of counsel of the Company or of its own counsel.
ARTICLE 7. Distributions
7.01 The Company will promptly notify the Bank of the declaration of any
dividend or distribution. The Company shall furnish to the Bank a resolution of
the Board of Directors of the Company certified by the Secretary (a
"Certificate"): (i) authorizing the declaration of dividends on a specified
periodic basis and authorizing the Bank to rely on oral instructions or a
Certificate specifying the date of the declaration of such dividend or
distribution, the date of payment thereof, the record date as of which
Shareholders entitled to payment shall be determined and the amount payable per
share to Shareholders of record as of the date and the total amount payable to
the Bank on the payment date; or (ii) setting forth the date of the declaration
of any dividend or distribution by a Fund, the date of payment thereof, the
record date as of which Shareholders entitled to payment shall be determined,
and the amount payable per share to the Shareholders of record as of that date
and the total amount payable to the Bank on the payment date.
7.02 The Bank, on behalf of the Company, shall instruct the Custodian to
place in a dividend disbursing account funds equal to the cash amount of any
dividend or distribution to be paid out. The Bank will calculate, prepare and
mail checks to ( at the address as it appears on the records of the Bank), or
(where appropriate) credit such dividend or distribution to the account of, Fund
Shareholders, and maintain and safeguard all underlying records.
<PAGE>
7.03 The Bank will replace lost checks at its discretion and in conformity
with regular business practices.
7.04 The Bank will maintain all records necessary to reflect the crediting
of dividends which are reinvested in Shares of the Company, including without
limitation daily dividends.
7.05 The Bank shall not be liable for any improper payments made in
accordance with a resolution of the Board of Directors of the Company.
7.06 If the Bank shall not receive from the Custodian sufficient cash to
make payment to all Shareholders of the Company as of the record date, the Bank
shall, upon notifying the Company, withhold payment to all Shareholders of
record as of the record date until such sufficient cash is provided to the Bank.
ARTICLE 8. Other Duties
8.01 In addition to the duties expressly provided for herein, the Bank
shall perform such other duties and functions and shall be paid such amounts
therefor as may from time to time be agreed to in writing. The Bank shall at all
times use reasonable care, due diligence and act in good faith in carrying out
its duties under this Agreement.
ARTICLE 9. Taxes
9.01 It is understood that the Bank shall file such appropriate information
returns concerning the payment of dividends and capital gain distributions and
tax withholding with the proper Federal, State and local authorities as are
required by law to be filed by the Company and shall withhold such sums as are
required to be withheld by applicable law.
ARTICLE 10. Books and Records
10.01 The Bank shall maintain confidential records showing for each
Shareholder's account the following: (i) names, addresses and tax identification
numbers; (ii) numbers of Shares held; (iii) historical information regarding the
account of each Shareholder, including dividends paid and date and price of all
transactions on a Shareholder's account; (iv) any stop or restraining order
placed against a Shareholder's account; (v) information with respect to
withholdings; (vi) any capital gain or dividend reinvestment order, plan
application, dividend address and correspondence relating to the current
maintenance of a Shareholder's account; (vii) certificate numbers and
denominations for any Shareholders holding certificates; (viii) any information
required in order for the Bank to perform the calculations contemplated or
required by this Agreement; and (ix) such other information and data as may be
required by applicable law.
10.02 Any records required to be maintained by Rule 31a-1 under the 1940
Act will be preserved for the periods prescribed in Rule 31a-2 under the 1940
Act. Such records may be inspected by the Company, its agents and regulatory
authorities at reasonable times. The Bank may, at its option at any time, and
shall forthwith upon the Company's demand, turn over to the Company and cease to
retain in the Bank's files, records and documents created and maintained by the
Bank in performance of its service or for its protection. At the end of the
six-year retention period, such periods and documents will either be turned over
to the Company, or destroyed in accordance with the Company's authorization. The
Bank acknowledges that all of the accounts,
<PAGE>
records and documents maintained by the Bank pursuant to this Agreement are the
property of the Company.
10.03 Procedures applicable to the services to be performed hereunder may
be established from time to time by agreement between the Fund(s) and the Bank.
The Bank shall have the right to utilize any shareholder accounting and
recordkeeping systems which, in its opinion, qualifies to perform any services
to be performed hereunder. The Bank shall keep records relating to the services
performed hereunder, in the form and manner as it may deem advisable.
ARTICLE 11. Fees and Expenses.
11.01 For performance by the Bank pursuant to this Agreement, the Fund(s)
agree to pay the Bank an annual maintenance fee for each Shareholder account as
set out in the initial fee schedule attached hereto. Such fees and out-of-pocket
expenses and advances identified under Section 11.02 below may be changed from
time to time after the expiration of the Initial Term [1 year] subject to mutual
written agreement between the Fund(s) and the Bank.
11.02 In addition to the fee paid under Section 11.01 above, the Fund(s)
agree to reimburse the Bank for out-of-pocket expenses or advances incurred by
the Bank for the items set out in the fee schedule attached hereto. In addition,
any other expenses incurred by the Bank at the request or with the consent of
the Fund(s) including, without limitation, any equipment or supplies
specifically ordered by the Company or required to be purchased by the Company,
will be reimbursed by the Fund(s).
11.03 The Fund(s) agree to pay all fees and reimbursable expenses within
thirty days following the mailing of the respective billing notice. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to the Bank by the Fund(s) at least seven
(7) days prior to the mailing date of such material.
ARTICLE 12. Representations and Warranties of the Bank
The Bank represents and warrants to the Company that:
12.01 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
12.02 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
12.03 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
12.04 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
ARTICLE 13. Representations and Warranties of the Company
The Company represents and warrants to the Bank that:
<PAGE>
13.01 It is a corporation duly organized and existing and in good standing
under the laws of the State of its incorporation as set forth in the preamble
hereto.
13.02 It is empowered under applicable laws and by its charter documents
and By-Laws to enter into and perform this Agreement.
13.03 All proceedings required by said charter documents and by-laws have
been taken to authorize it to enter into and perform this Agreement.
13.04 It is an open-end investment company registered under the 1940 Act.
13.05 A registration statement on Form N-1A (including a prospectus and
statement of additional information) under the Securities Act of 1933 and the
1940 Act is currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made, with respect
to all Shares of the Company being offered for sale.
13.06 When Shares are hereafter issued in accordance with the terms of the
Prospectus, such Shares shall be validly issued, fully paid and nonassessable by
the Fund(s).
ARTICLE 14. Indemnification
14.01 Except as set forth in subparagraph (f) hereof, the Bank shall not be
responsible for, and the Company shall indemnify and hold the Bank harmless from
and against, any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liability arising out of or attributable to:
(a) All actions taken or omitted to be taken by the Bank or its agent
or subcontractors in good faith in reliance on or use by the Bank or its agents
or subcontractors of information, records and documents which (i) are received
by the Bank or its agents or subcontractors and furnished to it by or on behalf
of the Fund(s), (ii) have been prepared and/or maintained by the Fund(s) or any
other person or firm on behalf of the Fund(s), and (iii) were received by the
Bank or its agents or subcontractors from a prior transfer agent.
(b) Any action taken or omitted to be taken by the Bank in connection
with its appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed.
(c) The Fund(s)' refusal or failure to comply with the terms of this
Agreement, or which arise out of the Funds' lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Fund(s) hereunder.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests, whether written or oral, of the
Fund(s).
(e) The offer or sale of Shares by the Company in violation of any
requirement under the federal securities laws or regulations or the securities
laws or regulations of any State that such Shares be registered in such State or
in violation of any stop order or other determination or ruling by any federal
agency or any State with respect to the offer or sale of such Shares in such
state.
<PAGE>
(f) In addition to any other limitation provided herein, or by law,
indemnification under this Agreement shall not apply to actions or omissions of
the Bank or its directors, officers, employees, agents or subcontractors in
cases of any negligence, willful misconduct, bad faith, reckless disregard of
its duties or their own duties hereunder, knowing violation of law or fraud.
14.02 The Bank shall indemnify and hold the Fund(s) harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributed to any action or failure or
omission to act by the Bank as a result of the Bank's lack of good faith,
negligence, reckless disgregard of duties, willful misconduct, knowing violation
of law or fraud.
14.03 At any time the Bank may apply to any officer of the Company for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the Company for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel except for a
knowing violation of law. The Bank, its agents and subcontractors shall be
protected and indemnified in acting upon any paper or document furnished by or
on behalf of the Fund(s), reasonably believed to be genuine and to have been
signed by the proper person or persons, or upon any instruction, information,
data, records or documents provided the Bank or its agents or subcontractors by
machine readable input, telex, CRT data entry or other similar means authorized
by the Fund(s), and shall not be held to have notice of any change of authority
of any person, until receipt of written notice thereof from the Fund(s). The
Bank, its agents and subcontractors shall also be protected and indemnified in
recognizing stock certificates which are reasonably believed to bear the proper
manual or facsimile signatures of an officer of the Company, and one proper
countersignature of any former transfer agent or registrar, or of a co-transfer
agent or co-registrar.
14.04 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, interruption of
electrical power or other utilities, equipment or transmission failure or damage
reasonably beyond its control, or other causes reasonably beyond its control,
such party shall not be liable to the other for any damages resulting from such
failure to perform or otherwise from such causes.
14.05 Neither party to this Agreement shall be liable to the other party
for consequential or punitive damages under any provision of this Agreement or
arising out of any act or failure to act hereunder as contemplated by this
Agreement.
14.06 In order that the indemnification provisions contained in this
Article 14 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking the indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent, which consent shall not be unreasonably
withheld.
<PAGE>
ARTICLE 15. Covenants of the Company and the Bank
15.01 The Company shall promptly furnish to the Bank the following:
(a) A certified copy of the resolution of the Directors of the Company
authorizing the appointment of the Bank and the execution and delivery of this
Agreement.
(b) A copy of the charter documents and By-Laws of the Company and all
amendments thereto.
(c) Copies of each vote of the Directors designating authorized persons
to give instructions to the Bank, and a Certificate providing specimen
signatures for such authorized persons.
(d) Certificates as to any change in any officer or Director of the
Company.
(e) If applicable a specimen of the certificate of Shares in each Fund
of the Company in the form approved by the Directors, with a Certificate as to
such approval.
(f) If applicable, specimens of all new certificates for Shares,
accompanied by the Directors' resolutions approving such forms.
(g) All account application forms and other documents relating to
shareholder accounts or relating to any plan, program or service offered by the
Company.
(h) A list of all Shareholders of the Fund(s) with the name, address
and tax identification number of each Shareholder, and the number of Shares of
the Fund(s) held by each, certificate numbers and denominations ( if any
certificates have been issued), lists of any account against which stops have
been placed, together with the reasons for said stops, and the number of Shares
redeemed by the Fund(s).
(i) An opinion of counsel for the Company with respect to the validity
of the Shares and the status of such Shares under the Securities Act of 1933.
(j) Copies of the Fund(s) registration statement on Form N-1A as
amended and declared effective by the Securities and Exchange Commission and all
post-effective amendments thereto.
(k) Such other certificates, documents or opinions as may mutually be
deemed necessary or appropriate for the Bank in the proper performance of its
duties.
15.02 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Company for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
15.03 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the 1940 Act and the Rules thereunder, the Bank agrees
that all such records prepared or maintained by the Bank relating to the
services to be performed by the Bank hereunder are the confidential property
<PAGE>
of the Company and will be preserved, maintained and made available in
accordance with such Section and Rules, and will be surrendered to the Company
on and in accordance with its request.
15.04 The Bank and the Company agree that all books, records, information
and data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
15.05 In case of any requests or demands for the inspection of the
Shareholder records of the Company, the Bank will endeavor to notify the Company
and to secure instructions from an authorized officer of the Company as to such
instruction. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
ARTICLE 16. Term of Agreement
16.01 This Agreement shall become effective on the date hereof (the "
Effective Date") and shall continue in effect for twelve months from the
Effective Date ( the "Initial Term") and from year to year thereafter with
respect to each Fund, provided that subsequent to the Initial Term, this
Agreement may be terminated by either party at any time without payment of any
penalty upon sixty (60) days notice, provided, however, that the effective date
of such termination may be postponed to a date not more than one hundred twenty
days from the date of delivery of such notice. In the event such notice is given
by the Company, it shall be accompanied by a resolution of the Board of
Directors, certified by the Secretary, electing to terminate this Agreement and
designating a successor transfer agent.
16.02 Should the Company exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Company. Additionally, the Bank reserves the right to charge for any other
reasonable expenses associated with such termination.
ARTICLE 17. Additional Funds
17.01 In the event that the Company establishes one or more series of
Shares in addition to the initial series with respect to which it desires to
have the Bank render services as transfer agent under the terms hereof, it shall
so notify the Bank in writing, and if the Bank agrees in writing to provide such
services, such series of Shares shall become a Fund hereunder.
ARTICLE 18. Assignment
18.01 Except as provided in Section 18.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
18.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
18.03 The Bank, may without further consent on the part of the Company,
subcontract for the performance of any of the services to be provided hereunder
to third parties, including
<PAGE>
any affiliate of the Bank, provided that the Bank shall remain liable hereunder
for any acts or omissions of any subcontractor as if performed by the Bank.
ARTICLE 19. Amendment
19.01 This Agreement may be amended or modified by a written agreement
executed by both parties.
ARTICLE 20. Massachusetts Law to Apply
20.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
ARTICLE 21. Merger of Agreement and Severability
21.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject hereof
whether oral or written.
21.02 In the event any provision of this Agreement shall be held
unenforceable or invalid for any reason, the remainder of the Agreement shall
remain in full force and effect.
21.03 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall together,
constitute only one instrument.
ARTICLE 22. Notices
22. 01 Any notice or other instrument in writing authorized or required by
this Agreement to be given to either party hereto will be sufficiently given if
addressed to such party and mailed or delivered to it at its office at the
address set forth below:
For the Fund(s): RREEF Real Estate Securities Advisers, L.P.
650 California Street
Suite 1800
San Francisco, California 94108
Attention: Kim G. Redding
For the Bank: Investors Bank & Trust Company
P.O. Box 1537
Boston, Massachusetts 02205-1537
Attention: Hank Joyce
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and the year first above written.
RREEF Securities Fund, Inc.
/s/ Kim G. Redding
Name:
Title:
ATTEST:
/s/ Carol A. Vogl
Investors Bank & Trust Company
/s/ Henry N. Joyce
Name:
Title: Director
ATTEST:
/s/ J.M. Keenan
DATE: May 24, 1995
EXHIBIT 11
INDEPENDENT AUDITORS' CONSENT
We consent to the inclusion in this Post-Effective Amendment No. 1 to the
Registration Statement No. 33-90762 of RREEF Securities Fund, Inc. of our report
dated December 8, 1995 on RREEF Real Estate Securities Fund and to the
references to us under the headings "Financial Highlights" in the Prospectus and
"Legal Counsel and Auditors" in the Statement of Additional Information, which
are part of such Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Boston Massachusetts
January 19, 1996
EXHIBIT 15
RREEF SECURITIES FUND, INC.
DISTRIBUTION EXPENSE PLAN
IN RESPECT TO
RREEF REAL ESTATE SECURITIES FUND
SECTION 1. RREEF Securities Fund, Inc. (the "Company") pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940 (the "Act") may act
as the distributor of the shares of the RREEF Real Estate Securities Fund (the
"Fund") in accordance with the terms of this Distribution Expense Plan (the
"Plan").
SECTION 2. Pursuant to an Investment Advisory Agreement between the
Company and RREEF Real Estate Securities Advisers, L.P. (the "Adviser"), the
Adviser acts as the investment adviser to the Fund and pays the expenses of
promoting and selling the Fund's shares. To the extent that any advisory fees
paid by the Company, with respect to the Fund, pursuant to the Investment
Advisory Agreement may be considered to be indirectly financing any activity or
expense which is primarily intended to result in the sale of Fund shares within
the meaning of the Rule, the payment of such advisory fees is authorized under
this Plan.
SECTION 3. While this Plan is in effect, the selection and nomination
of those directors of the Company who are not "interested persons" of the
Company shall be committed to the discretion of the directors who are not
interested persons then in office.
SECTION 4. While this Plan is in effect, the Adviser shall furnish at
least quarterly to the Board of Directors of the Company, and the Directors
shall review, a written report of amounts expended for the promotion and sale of
the Fund's shares during the last calendar quarter and the purposes for which
such amounts were expended.
SECTION 5. This Plan shall not take effect until it has been approved
by a majority of the Board of Directors of the Company and by a majority of the
Directors who are not interested persons of the Company and have no direct or
indirect financial interest in the operation of the Plan or any agreements
related to the Plan ("Independent Directors"), by votes cast in person at a
meeting called for the purpose of voting on the Plan, and by a vote of a
majority of the outstanding voting securities of the Fund. Upon its effective
date, this Plan shall supersede all prior plans adopted in accordance with Rule
12b-1, with respect to the Fund. This Plan shall continue in effect for so long
as such continuance is specifically approved at least annually by a majority of
the Board of Directors and a majority of the Independent Directors, by votes
cast in person at a meeting called for the purpose of voting on such
continuance. This Plan may be terminated at any time by a vote of a majority of
the Independent Directors or by a vote of a majority of the outstanding voting
securities of the Fund. This Plan may not be amended to provide for any direct
payment by the Company of distribution expenses, or otherwise to materially
increase the amount to be spent by the Company for distribution expenses,
without the approval of a majority of the outstanding voting securities of the
Fund, and all material amendments to the Plan must be approved by a majority of
the Board of Directors and a majority of the Independent Directors, by votes
cast in person at a meeting called for the purpose of voting on such amendment.
SECTION 6. All agreements with any person relating to implementation of
this Plan shall be in writing, and any agreement related to this Plan shall
provide (a) that such agreement may be terminated at any time, without payment
of any penalty, by a vote of a majority of the Independent Directors or by a
vote of a majority of the outstanding voting securities of the Fund, on not more
than sixty days' notice to
<PAGE>
any other party to the agreement, and (b) that such agreement shall terminate
automatically in the event of its assignment.
SECTION 7. The adoption of this Plan and the furnishing of any reports
pursuant to Section 4 shall not constitute any admission that any payments of
investment advisory fees and expenses made by the Company constitute
distribution expenses within the meaning of the Rule, or that any payments of
distribution expenses by the Adviser of the Fund's shares would constitute the
indirect payment of distribution expenses by the Company.
SECTION 8. As used in this Plan, the terms "assignment", "interested
person" and "vote of a majority of the outstanding voting securities" shall have
the respective meanings specified in the Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission.
June 19, 1995
EXHIBIT 16
RREEF REAL ESTATE SECURITIES FUND
Computation of One Year Hypothetical Average Annual Total Return
Form N-1A Part C Item 16
<TABLE>
<CAPTION>
Initial NAV Shares Reinvested Dividend Record Date Ex-Date Rate Reinvest Price
Investment Outstanding Shares Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/94 1,000.00 10.00 100.00
101.99 1.99 20.00 6/29/95 6/30/95 0.20 10.05
12/31/95 1,047.44 10.07 104.02 2.03 20.40 12/30/95 12/31/95 0.20 10.07
</TABLE>
HYPOTHETICAL TOTAL RETURN CALCULATION
P(1+T)^n=ERV
1,000(1+T)^1=1,047.44
T=4.74%
<PAGE>
RREEF REAL ESTATES SECURITIES FUND
HYPOTHETICAL SEC YIELD
FOR THE 30 DAY PERIOD ENDED DECEMBER 31, 1995
SEC YIELD = 2 [((( ( TOTAL INCOME - TOTAL EXPENSES ) ) + 1 ) ^6 ) -1 ]
---------------------------------------------
(AVERAGE SHARES *12/31/95 OFFERING PRICE)
Hypothetical SEC yield = 5.91%
5.91% = 2 [((( (100.95 ) +1 ) ^6 ) -1 ]
-----------------
(102.002 *10.07)
EXHIBIT 19
POWER OF ATTORNEY
Know All People by These presents, that the undersigned, acting on
behalf of RREEF Securities Fund, Inc., a Maryland corporation (the
"Corporation"), hereby appoints Arthur Don, Kim G. Redding, Donald A. King and
Barry H. Braitman and each of them jointly and severally, each with the power of
substitution, his true and lawful attorney-in-fact with authority to execute in
his name and to file with the Securities and Exchange Commission, together with
any exhibitis thereto and other documents therewith, any pre- and post-effective
amendments to the Corporation's Registration Statement on Form N-1A under the
Securities Act of 1933 (Registration No. 33-7699) and/or the Investment Company
Act of 1940 (Registration No. 11-4786), which are necessary or advisable to
enable the Registration Statement to comply with the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, and any rules,
regulations and requirements of the Securities and Exchange Commission in
respect thereof, which amendments may make such other changes in the
Registration Statement as the aforesaid attorney-in-fact executing the same
documents deems appropriate.
Dated this 30th day of June, 1995.
Signature Title
/s/ Kim G. Redding President, Chief Executive
Kim G. Redding Officer and Director
/s/ Gregory L. Melchor Director
Gregory L. Melchor
/s/ Willis K. Polite Director
Willis K. Polite
/s/ Donald A. King Director
Donald A. King
/s/ William Wilson III Director
William Wilson III
/s/ Paula A. Ferkull Chief Financial Officer and
Paula A. Ferkull Chief Accounting Officer
<PAGE>
POWER OF ATTORNEY
Know All People by These presents, that the undersigned, acting on
behalf of RREEF Securities Fund, Inc., a Maryland corporation (the
"Corporation") constitutes and appoints Arthur Don, Kim G. Redding, Donald A.
King and Barry H. Braitman, jointly and severally, the Corporation's
attorneys-in-fact, each with power of substitution, for it in any and all
capacities, to sign any post-effective amendments to the Corporation's
registration statement on Form N-1A under the Securities Act of 1933
(Registration No. 33-7699) and/or the Investment Company Act of 1940
(Registration No. 11-4786), and to file the same, including exhibits and other
documents in connection therewith, with the Securities and Exchange Commission,
and all applicable state regulatory authorities, hereby ratifying and confirming
all that each of said attorneys-in-fact, or his substitutes or substitutes, may
do or cause to be done by virtue hereof.
Dated this 12th day of December, 1995.
RREEF SECURITIES FUND, INC.
By: /s/ Kim G. Redding
-------------------------
Kim G. Redding, President
