SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. __)
X Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
DWS RREEF Real Estate Fund, Inc.
DWS RREEF Real Estate Fund II, Inc.
(Name of Registrants as Specified in Its Charter)
SUSAN L. CICIORA TRUST
ALASKA TRUST COMPANY, TRUSTEE
SUSAN L. CICIORA
RICHARD I. BARR
JOEL W. LOONEY
c/o Stephen C. Miller, Esq.
and Joel L. Terwilliger, Esq.
2344 Spruce Street, Suite A
Boulder, CO 80302
(303)442-2156
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x No fee required
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(3) Per-unit price or other underlying value of transaction computed pursuant to
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Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:______________________________________
(2) Form, Schedule or Registration Statement No.:________________
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(4) Date Filed:__________________________________________________
The entirety of this filing is the content of www.srqsro.com, as amended and
updated.
[GRAPHIC OMITTED]: STOCKHOLDERS TAKING BACK SRQ & SRO
[GRAPHIC OMITTED]: Information regarding your investments in DWS RREEF Real
Estate Fund, Inc. (SRQ) and DWS RREEF Real Estate Fund II, Inc. (SRO).
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IMPORTANT INFORMATION
BEFORE YOU CAN ACCESS THIS WEBSITE OR OPEN THE ABOVE TABS you must agree to the
terms and conditions below. If you agree, check the "I AGREE" box below and then
click the PROCEED Button.
IMPORTANT INFORMATION ABOUT FIRING DEUTSCHE ASSET MANAGEMENT, AN AFFILIATE OF
DEUTSCHE BANK, AND HIRING AWARD WINNING INVESTMENT MANAGEMENT FOR SRQ/SRO
Participant in the Solicitation:
The Susan L. Ciciora Trust (the "Trust") is a participant in the solicitations
of stockholders of DWS RREEF Real Estate Fund, Inc. ("SRQ") and DWS RREEF Real
Estate Fund II, Inc. ("SRO," together with SRQ, the "Funds") in connection with
certain proposals (the "Proposals") outlined in the Trust's preliminary
solicitation materials dated June 8, 2009 (the "Preliminary Proxy Statement")
[LINKED HERE]. As of the date of the filing of the Preliminary Proxy Statement,
the Trust held 2,596,016 shares of common stock of SRQ and 1,915,835 shares of
common stock of SRO, representing approximately 16.5% and 5.1% of the
outstanding shares of SRQ and SRO, respectively. More information regarding
purchases of shares of common stock in SRQ and SRO by the Trust during the last
two years is set forth in the Preliminary Proxy Statement. During that period,
the Trust has not sold any shares of either SRQ or SRO.
Information Concerning the Trust
The Trust is an irrevocable grantor trust domiciled in Alaska and administered
and governed in accordance with Alaska law. The Trust is an estate planning
trust established in 1998 by Susan L. Ciciora, the daughter of Stewart R.
Horejsi, primarily for the benefit of her issue and her brother John S. Horejsi,
and his issue. The Trust is authorized to hold property of any kind including
investments in marketable securities. Stewart R. Horejsi is the father of Susan
L. Ciciora and serves from time to time as an investment advisor to the Trust.
The business address of the Trust is: c/o Alaska Trust Company, 1029 West Third
Avenue, Suite 510, Anchorage, AK 99501-1981, and the business telephone number
of the Trust is (907) 278-6775. The sole trustee of the Trust is Alaska Trust
Company, a state-chartered public trust company organized under the laws of
Alaska. The business address of ATC is 1029 West Third Avenue, Suite 510,
Anchorage, AK 99501-1981.
Additional Information about the Trust's Proposals
This website and the information contained therein relates to Proposals to
effectuate what the Trust believes are positive changes for the stockholders of
the Funds and include, among others, proposals to terminate the current
investment advisers Deutsche Asset Management, Inc. and RREEF America, LLC,
replace the current board of directors (the "Board"), and introduce other
stockholder "friendly" corporate governance changes.
The Trust encourages stockholders of the Funds to read the Preliminary Proxy
Statement [LINKED HERE] before voting their shares. Once the Trust's definitive
Proxy Statement is issued and becomes effective (the "Definitive Proxy
Statement"), the Trust recommends a vote FOR all of the Proposals.
This website is for informational purposes only and does not constitute an offer
to purchase, sell, or exchange any shares of SRQ or SRO, or a solicitation of an
offer to purchase, sell, or exchange, any shares of SRQ or SRO, nor is it a
substitute for the Preliminary Proxy Statement (including any related documents
and as amended and supplemented from time to time) that Trust has filed or may
file with the Securities and Exchange Commission ("SEC") from time to time. The
Preliminary Proxy Statement has not yet become effective; information contained
in the Preliminary Proxy Statement is subject to change and stockholders of the
Funds are encouraged to review the Definitive Joint Proxy Statement prior to
voting their shares in SRQ and/or SRO. This website is not a substitute for the
Preliminary or Definitive Proxy Statements, including any accompanying
solicitation materials, that the Trust has filed or may file with the SEC or any
other documents which the Trust may send to stockholders of the Funds in conn
ection with the Proposals.
The Trust has filed with the SEC the Preliminary Proxy Statement in connection
with the Proposals. Information contained in the Preliminary Proxy Statement is
subject to change and stockholders of the Funds are encouraged to review the
Definitive Proxy Statement prior to voting their shares in SRQ and/or SRO. The
Trust intends to send as soon as practicable the Definitive Proxy Statement to
the stockholders of the Funds seeking proxies to approve the Proposals contained
in the Preliminary Proxy Statement.
Cautionary Note Regarding Forward-Looking Statements
This website and materials including therein may include forward-looking
statements, both with respect to the Trust and the Funds and the economic
outlook in general, that reflect our current views with respect to future events
and financial performance. Statements that include the words "expect," "intend,"
"plan," "believe," "project," "anticipate," "will," "may" and similar statements
of a future or forward-looking nature identify forward-looking statements. All
forward-looking statements address matters that involve risks and uncertainties,
many of which are beyond the Trust's control. Accordingly, there are or will be
important factors that could cause actual results to differ materially from
those indicated in such statements and, therefore, you should not place undue
reliance on any such statements. The Trust believes that these factors include,
but are not limited to, the following: 1) uncertainty as to whether the Trust
will be able to solicit sufficient proxies from fellow stockholders of either SR
Q or SRO in support of the Proposals; 2) uncertainty as to the actual market
price or underlying performance of the Funds' assets that will be realized by
the Funds' stockholders in connection with the Proposals; 3) uncertainty as to
the long-term value of the Funds' issued and outstanding common stock; 4)
unpredictability and severity of catastrophic events; 5) rating agency actions;
6) the Trust's inability to implement its business strategy with respect to its
Proposals; 7) general economic and market conditions (including inflation,
volatility in the credit and capital markets, interest rates and foreign
currency exchange rates); 8) the effect on the Funds' investment portfolios of
changing financial market conditions including inflation, interest rates,
liquidity and other factors; 9) acts of terrorism or outbreak of war; 10)
failure to realize the anticipated benefits of the Proposals, including as a
result of failure or delay in transition of management from Deutsche Asset
Management, Inc. and RREEF A merica, LLC to investment advisers affiliated with
the Trust, 11) potential tax, legal, regulatory, or other significant issues
affecting shares of SRQ and SRO, including without limitation any changes in the
Funds' Subchapter M tax status as registered investment companies, and 12) the
outcome of potential litigation arising from the Proposals, as well as current
Funds' management's response to any of the aforementioned factors.
The foregoing review of important factors should not be construed as exhaustive
and should be read in conjunction with the other cautionary statements that are
included herein and elsewhere, including the risk factors included in the Funds'
Forms N-2, as amended, and various proxy statements and other documents of the
Funds on file with the SEC. Any forward-looking statements made in this website
are qualified by these cautionary statements, and there can be no assurance that
the actual results or developments anticipated by the Trust will be realized or,
even if substantially realized, that they will have the expected consequences
to, or effects on, us or our business or operations. Except as required by law,
we undertake no obligation to update publicly or revise any forward-looking
statement, whether as a result of new information, future developments or
otherwise.
The Trust relies on generally available public information as filed with the
SEC, contained in stockholder reports prepared by the Funds' management, and
other publicly disseminated information as provided from time to time by the
Funds. The Trust makes no representations, guarantees, or warranties with
respect to any statements or other information provided by the Funds, their
agents, management, or otherwise.
All materials not authored by the Trust are used by permission; the Trust does
not warrant or make representations regarding the veracity of any statements
contained in any third-party materials. Materials which are externally linked to
this website [www.srqsro.com] are subject to availability by third parties who
maintain such external links. The Trust makes no representations or warranties
with respect to the material externally linked to this website. MATERIAL
CONTAINED IN THIS WEBSITE MAY BE UPDATED FROM TIME TO TIME AND THE TERMS AND
CONDITIONS AS SET FORTH HEREIN ARE APPLICABLE TO ALL SUCH MATERIALS AS MAY BE
UPDATED FROM TIME TO TIME.
STOCKHOLDERS OF THE FUNDS ARE URGED TO READ THE JOINT PROXY STATEMENT, AND OTHER
DOCUMENTS THAT THE TRUST HAS FILED OR MAY FILE WITH THE SEC IF AND WHEN THEY
BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSALS. All such documents, when filed, are available free of
charge at the SEC's website (www.sec.gov) or by directing a request to the Trust
through Joel L. Terwilliger at (303) 449-0426.
[ ] I agree to the terms and conditions above.
[Proceed]
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WELCOME FELLOW STOCKHOLDERS OF SRQ & SRO
NEW - Click HERE to read the LATEST Stockholder Proposal for OUR funds [LINK]
This Website is dedicated to:
STOCKHOLDERS TAKING BACK SRQ & SRO
WHO? In February 2009, the Susan L. Ciciora Trust submitted a [LINK: SET OF
PROPOSALS] to each of the Boards of Directors (the "Boards") of two closed-end
funds affiliated with DEUTSCHE BANK. The funds are DWS RREEF Real Estate Inc.
(SRQ) and DWS RREEF Real Estate Fund II, Inc. (SRO) (the "Funds"). The proposals
seek, among other things, to nominate a new slate of directors and terminate the
investment advisory contracts between the Funds and their ill-fated advisers,
DEUTSCHE ASSET MANAGEMENT, INC. and RREEF America, LLC.
WHY? Because their performance was APPALLING, actually, MORE THAN APPALLING,
losing 81.9% and 91.6% of net asset value ("NAV") in 2008, eclipsing the dismal
performance of the S&P 500 (-37%) and winning the dubious distinction of being
dead last (SRO) and third from last (SRQ) in the entire universe of
approximately 640 closed-end funds in 2008. It appears Deutsche Asset
Management, Inc. and RREEF America, LLC. are trying to earn this distinction
again in 2009, with SRO and SRQ already posting dismal year-to-date NAV returns
of -26.8% and -10.24%, respectively, for the period ending 4/30/09. As of
4/30/09, SRO is dead last again and SRQ is 601 out of 640.
DID THE BOARDS LISTEN? No. The Trust made its proposals in February and soon
thereafter, rather than providing any substantive response to the Trust's
proposals, the Boards announced that they were going to seek stockholder
permission to liquidate the Funds, thus giving the Boards, Deutsche Asset
Management, Inc. and RREEF America, LLC. a seemingly easy opportunity to sweep
these appalling performances under the rug. Did they think no one would notice?
Moreover, the Boards implemented a set of overzealous anti-takeover measures
which had the effect of taking away one of the primary means by which
stockholders wishing to exit the Fund could get pricing support:
* The Boards opted into a Maryland statute which limited the voting
rights of the Trust and other large stockholders
* The Boards adopted a "poison pill" which is designed to dilute the
Trust's economic interest if it purchases more shares of stock
These anti-takeover measures were clearly in response to the Trust's attempts to
effectuate what we believe are positive changes for all of the Fund's
stockholders.
WHAT HAPPENED? The Boards didn't realize how angry, frustrated and disappointed
stockholders were about losing almost the entirety of their investment in the
Funds. Moreover, because the Boards DON'T have any significant investment in the
Funds, they didn't understand, didn't feel, the extent of stockholders' economic
loss. The Boards apparently thought stockholders would be thrilled to call it
quits and acquiesce to pennies for the hard-earned dollars they'd invested. The
Boards were dead wrong. In the case of SRQ, the Trust took up the stockholders'
standard and battled with management in a six-week proxy contest. In the end,
with the help of like-minded stockholders, the Trust decisively defeated the SRQ
Board's proposals by more than a 2-to-1 vote.
THE FINAL RESULTS FOR SRQ? AGAINST: 5,995,333 and FOR: 2,898,268
THEN WHAT HAPPENED? Nothing. It seems that the Boards have hearing problems
because, after the devastating defeat on both Funds, the Funds announced that,
given the defeat of the liquidation proposals, the Funds would "continue to
exist as a closed-end registered investment company in accordance with its
stated investment objective and policies". Sounds like business as usual --
which none of us can afford.
Also, when the Boards announced their adoption of the anti-takeover measures
above, their press release stated that the measures were "to protect the
interests of stockholders pending stockholder consideration of proposed plans of
liquidation". Given the overwhelming majority by which the "plans of
liquidation" were defeated, the Boards should have terminated the anti-takeover
measures immediately after the special meeting on May 20, 2009. Holding true to
form in their efforts to entrench management, they've done nothing.
STOCKHOLDERS HAVE SPOKEN and have clearly expressed their disdain for the "plans
of liquidation" and present management. It is time to terminate the overzealous
and obstructive anti-takeover measures which serve only to harm stockholders.
Clearly, the stockholders have spoken. 66.5% of SRQ stockholders voting voted
against the Boards' recommendations. But will the Board listen and terminate
Deutsche Asset Management, Inc. and RREEF America, LLC and avoid further losses
to the Funds? So far, they haven't.
A SUMMARY OF JUST HOW BAD THINGS ARE. Together, SRQ and SRO have been two of the
worst of any closed-end fund in the entire closed-end fund universe:
SRO: In the latest ratings by Morningstar(TM) (January 31, 2009), SRO
received 1 of 5 stars for its overall, 3- and 5-year performance history,
as compared with other similarly situated specialty real estate closed-end
funds. There is no excuse for the extraordinarily poor performance of SRO.
For the one-year period ending 12/31/08, SRO had a total return on NAV of
-91.6%. To nearly wipe out the entire value of a fund in one year is
unheard of, even in a market that saw the S&P 500 Index drop by 37% in that
same time frame. Not surprisingly, the market price for SRO has dropped
even more than NAV because the Fund's discount increased - a decline of
93.5% for the year ending 12/31/08. This loss far exceeds any other market
indices for similarly situated funds. In fact, SRO lost more than twice the
percent lost by the S&P Index. As noted in an article published December
16, 2008 on seekingalpha.com, SRO was "the worst performing closed end
fund".
SRQ: In the latest ratings by Morningstar(TM) (December 31, 2008), SRQ
received 1 of 5 stars for its overall, 3- and 5-year performance history,
as compared with other similarly situated specialty real estate closed-end
funds. Like SRO, there is no excuse for the extraordinarily poor
performance. For the one-year period ending 12/31/08, SRQ had a total
return on NAV of -81.9%. To nearly wipe out the entire value of a fund in
one year is unheard of, even in a market that saw the S&P 500 Index drop by
37%. Again, not surprisingly, the market price for SRQ has dropped even
more than NAV because the Fund's discount increased - a decline of 86.4%
for the year ending 12/31/08. This loss far exceeds any other market
indices for similarly situated funds. In fact, the Fund lost more than
twice the percent lost by the S&P Index. As noted in an article published
January 4, 2009, on seekingalpha.com, SRQ was one of the "five worst
performing closed-end funds in 2008".
Having the same investment managers - Deutsche Asset Management, Inc. and RREEF
America, LLC. - for two of the five worst performing funds in 2008 clearly
indicates that it is time for new investment management for the Funds.
We believe that every day that passes that Deutsche Asset Management, Inc. and
RREEF America, LLC continue to manage our Funds is in direct contravention to
what the Boards have implicitly told stockholders - Deutsche Asset Management,
Inc. and RREEF America, LLC are no longer fit to be investment managers.
It is the duty of the Boards to save what little is left in the Funds and
embrace the changes that we the stockholders have supported.
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PRESS RELEASES
Date Title
08.07.2009-SRQ DEUTSCHE ASSET MANAGEMENT, INC. AND BOARD OF DIRECTORS OF DWS
RREEF REAL ESTATE FUND REQUESTED BY SINGLE LARGEST STOCKHOLDER TO
HOLD ANNUAL MEETING OF STOCKHOLDERS PROMPTLY [LINK]
08.07.2009-SRO DEUTSCHE ASSET MANAGEMENT, INC. AND BOARD OF DIRECTORS OF DWS
RREEF REAL ESTATE FUND II REQUESTED BY LARGE STOCKHOLDER TO HOLD
ANNUAL MEETING OF STOCKHOLDERS PROMPTLY [LINK]
7.22.2009-SRQ THE SUSAN L. CICIORA TRUST SUBMITS STOCKHOLDER PROPOSALS TO
MANAGEMENT OF DWS RREEF REAL ESTATE FUND, INC., EXPRESSES CONCERN
REGARDING RELATIONSHIP BETWEEN DEUTSCHE ASSET MANAGEMENT, INC.
AND DEUTSCHE BANK AG [LINK]
7.22.2009-SRO THE SUSAN L. CICIORA TRUST SUBMITS STOCKHOLDER PROPOSALS TO
MANAGEMENT OF DWS RREEF REAL ESTATE FUND II, INC., EXPRESSES
CONCERN REGARDING RELATIONSHIP BETWEEN DEUTSCHE ASSET MANAGEMENT,
INC. AND DEUTSCHE BANK AG [LINK]
6.12.2009 Preemptive Proxy Statement Filed by Susan L. Ciciora Trust
Proposes to Terminate Deutsche Asset Management, Inc. and RREEF
America, LLC and Board of SRQ and SRO.[LINK]
5.11.2009 RiskMetrics Group Recommends Vote Against DWS RREEF Real Estate
Fund, Inc. Liquidation Proposal [LINK]
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[GRAPHIC OMITTED]: STOCKHOLDERS TAKING BACK SRQ & SRO
[GRAPHIC OMITTED]: Information regarding your investments in DWS RREEF Real
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ARTICLES & LITERATURE
Stockholders Request SRQ to Call Annual Meeting Immediately [LINK]
Stockholders Request SRO to Call Annual Meeting Immediately [LINK]
Stockholder proposals for SRQ [LINK]
Stockholder proposals for SRO [LINK]
SRQ and SRO: Voters Have Spoken [LINK] - Seeking Alpha (seekingalpha.com) May
22, 2009 [http://seekingalpha.com/article/139201-srq-and-sro-voters-have-spoken]
SRO, SRQ Update: Becoming More Curious [LINK] - Seeking Alpha
(seekingalpha.com) May 4, 2009
[http://seekingalpha.com/article/134929-sro-srq-update-becoming-more-curious]
The Curious Case of DWS Investments [LINK] - Seeking Alpha (seekingalpha.com)
April 21, 2009
[http://seekingalpha.com/article/131943-the-curious-case-of-dws-investments]
Certain DWS Closed-End Funds Declare Monthly and Quarterly Distributions and
Provide Distribution Update [LINK] - Yahoo Finance (finance.yahoo.com) June 5,
2009
[http://finance.yahoo.com/news/Certain-DWS-ClosedEnd-Funds-bw-15454364.html?.v=1
Feedback from Stockholders
June 2009 - Robert Lust [LINK]
June 2009 - Jamie Q [LINK]
July 2009 - Kathleen W. [LINK]
*Permission to use quotation neither sought nor obtained.
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PROXY MATERIALS
CLICK HERE FOR THE TRUST'S (PRELIMINARY) PROXY MATERIALS SUPPORTING ITS
PROPOSALS TO TAKE BACK SRQ AND SRO [LINK]
(Annual Meeting to be announced)
CLICK HERE FOR THE TRUST'S PROXY MATERIALS OPPOSING MANAGEMENT'S PROPOSAL
TO LIQUIDATE SRQ [LINK]
(Special Meeting Held May 20, 2009)
The information contained in the proxy materials and other associated content
linked above are for informational purposes only and does not constitute an
offer to purchase, sell, or exchange any shares of SRQ or SRO, or a solicitation
of an offer to purchase, sell, or exchange, any shares of SRQ or SRO, nor is it
a substitute for the Joint Proxy Statement filed by the Trust (including any
related documents and as amended and supplemented from time to time) that Trust
has filed or may file with the Securities and Exchange Commission ("SEC") from
time to time. The Joint Proxy Statement has not yet become effective;
information contained in the preliminary Joint Proxy Statement is subject to
change and stockholders of the Funds are encouraged to review the definitive
Joint Proxy Statement prior to voting their shares in SRQ and/or SRO. This
website is not a substitute for the Joint Proxy Statement, including any
accompanying solicitation materials, that the Trust has filed or may file with
the SEC or any other documents which the Trust may send to stockholders of the
Funds in connection with the Trust's Proposals. The Trust has filed with the SEC
a preliminary Joint Proxy Statement in connection with the Proposals.
Information contained in the preliminary Joint Proxy Statement is subject to
change and stockholders of the Funds are encouraged to review the definitive
Joint Proxy Statement prior to voting their shares in SRQ and/or SRO. The Trust
intends to send as soon as practicable a definitive Joint Proxy Statement to the
stockholders of the Funds seeking proxies to approve the Proposals contained in
the Joint Proxy Statement.
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SEC FILINGS
All SRQ Edgar Filings with the SEC [LINK]
[http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001179126&owner=
include&count=40]
All SRO Edgar Filings with the SEC [LINK]
[http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001231160&owner=
include&count=40]
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CONTACT
For more information concerning the Susan L. Ciciora Trust's proposals as
contained in the Joint Proxy Statement, you can:
* EMAIL US with Comments and/or Feedback: info@srqsro.com
* CALL (303) 449-0426 and ask for Joel L. Terwilliger
* VIEW the documents as filed with the Securities and Exchange
Commission by visiting www.sec.gov or clicking [LINK: HERE] for the
Joint Proxy Statement
* SIGN UP for email notices of developments by filling out the form
below
YES! Keep me posted on developments with SRQ and SRO - CLICK HERE TO
RECEIVE Email UPDATES [LINK]
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IMPORTANT INFORMATION PAGE LINKS:
[LINK: LINKED HERE]
[LINK: LINKED HERE]
DWS RREEF REAL ESTATE FUND, INC.
Filed by
SUSAN L. CICIORA TRUST
FORM PREC14A
(Proxy Statement - Contested Solicitations (preliminary))
Filed 06/08/09
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Address 345 PARK AVENUE
NEW YORK, NY 10154-0004
Telephone 212-454-6778
CIK 0001179126
Symbol SRQ
Industry Misc. Financial Services
Sector Financial
Fiscal Year 12/31
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http://pro.edgar-online.com
(C) Copyright 2009, EDGAR Online, Inc. All Rights Reserved
Distribution and use of this document restricted under EDGAR Online, Inc. Terms
of Use.
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant
X Filed by a Party other than the Registrant
Check the appropriate box:
X Preliminary Proxy Statement
Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
DWS RREEF Real Estate Fund, Inc.
DWS RREEF Real Estate Fund II, Inc.
(Name of Registrants as Specified in their Charters)
SUSAN L. CICIORA TRUST
ALASKA TRUST COMPANY, TRUSTEE
SUSAN L. CICIORA
RICHARD I. BARR
JOEL W. LOONEY
c/o Stephen C. Miller, Esq.
and Joel L. Terwilliger, Esq.
2344 Spruce Street, Suite A
Boulder, CO 80302
(303) 442-2156
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required
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SUSAN L. CICIORA TRUST
ALASKA TRUST COMPANY, TRUSTEE
1029 West Third Avenue, Suite 510
Anchorage, AK 99501
Dear Fellow Stockholders of DWS RREEF Real Estate Fund and DWS RREEF Real Estate
Fund II:
The Susan L. Ciciora Trust, Alaska Trust Company, Trustee (the "Trust") is the
largest stockholder of DWS RREEF Real Estate Fund, Inc. ("SRQ") and a
significant stockholder of DWS RREEF Real Estate Fund II, Inc., both Maryland
corporations ("SRO," together with SRQ, the "Funds"). This open letter is
written to ask for your support in the Trust's continuing effort to reform the
Funds' corporate governance practices and make the Funds' boards of directors
more accountable for the benefit of all stockholders. This letter accompanies a
proxy statement and a green proxy card for the 2009 annual meeting of
stockholders of the Funds (the "Annual Meeting") to be held on a date that
remains to be scheduled.
Background
We successfully defeated the ill-fated liquidation proposals by the current
boards of directors of SRQ and SRO (the "Boards"). As a fellow stockholder in
the Funds, the Trust shares in your economic losses as well as your frustration,
anger and disappointment with current management. We have received your phone
calls, faxes, emails and letters voicing support for our proposals to replace
the Boards and investment managers. Now, we the stockholders must join together
again to create better opportunities for our investments going forward.
Defeating the liquidation proposals was only the first step. Now it's time for
us to take action to move the Funds in a more positive direction. Soon, the
Funds will be required to set the date for the Annual Meeting (last year's
meeting was held on June 2, 2008). At the 2009 Annual Meeting, the Trust will
seek to elect to the Funds' boards the three nominees for incumbent board
positions named in the accompanying proxy statement, each having consented to
being named in the proxy statement, and, if elected, to serve as a director. The
Trust will also offer a number of proposals described in detail in the
accompanying proxy statement. The Trust believes its proposals are beneficial to
all the stockholders of the Funds and will set a new and better course for the
Funds. Please read the attached proxy statement carefully as we believe it
outlines appropriate and necessary changes for the future of our Funds.
First and foremost among the Trust's proposals are that the Funds fire the
people who got us into this mess: Deutsche Asset Management, Inc. and RREEF
America, LLC and the current Boards. This collection of "talent" LOST 91.6% and
81.9%, respectively, of SRO and SRQ's net asset value in 2008, eclipsing the
dismal performance of the S&P 500 (-37%) and winning the dubious distinction of
being dead last (SRO) and third from last (SRQ) in the universe of approximately
640 closed-end funds in 2008. It appears they are trying to do it again in 2009,
with SRO and SRQ already posting dismal year-to-date NAV returns of -26.8% and
- -10.24, respectively, for the period ending 4/30/09. SRO is dead last again and
SRQ is 601 out of 640.
Previously, the Trust communicated privately with the Boards, asking them to
immediately terminate the investment managers (Deutsche Asset Management, Inc.
and RREEF America, LLC) and replace members of the Boards. We received NO
response other than the slap-in-the-face proposals to liquidate the Funds and
adoption of overzealous measures designed to prevent large stockholders, such as
the Trust, from voting all their shares and increasing their positions in the
Funds. The Boards have a fiduciary duty to stockholders to make a change, as the
appalling underperformance of the investment managers, Deutsche Asset
Management, Inc. and RREEF America, LLC, clearly demonstrates the need to
terminate their advisory roles.
By advocating the termination and liquidation of the Funds, the Boards
implicitly told stockholders that they have no confidence in Deutsche Asset
Management, Inc. and RREEF America, LLC to continue as advisers! Every day that
passes while these advisers manage our Funds is another example of the Boards
thumbing their noses at stockholders, failing to fulfill their fiduciary duty
and continuing to engage the services of investment managers who have exhibited
no competence as advisers to the Funds.
It is the duty of the Boards to save what little is left in the Funds and
embrace the changes stockholders have supported. During the Fund's campaign to
liquidate SRQ, an independent proxy adviser, RiskMetrics Group stated that it
believes the Trust, through its affiliation with the Boulder-based advisers, may
be able to effectuate change that is "critical to improving the performance of
[SRQ], rather than liquidating." We believe the path to improved performance is
clear: terminate the investment management agreements with Deutsche Asset
Management, Inc. and RREEF America, LLC, hire the Trust's investment managers
for SRQ and replace the members of the Boards. Since SRO is very similar to SRQ,
we believe that the Trust's proposals for SRQ also make sense for SRO and
therefore we have included similar proposals for SRO in this proxy statement.
Why are we making the proposals described in this proxy statement? Because we
can do better. As explained in the accompanying proxy statement, we have been
down this road before and have the performance to prove it. We concluded that
the Boards would not act appropriately unless stockholders send a strong message
that they are dissatisfied with the Funds' corporate governance and investment
management relationships.
Joint Proposals
This proxy statement contains Joint Proposals for SRQ and SRO. This proxy
statement, as well as other proxy materials to be distributed by the Trust, is
available free of charge online at www.srqsro.com. We are asking fellow
stockholders to consider and vote FOR the following proposals for both SRQ and
SRO, all of which are more fully described in the accompanying proxy statement:
1. A proposal to terminate the Investment Management Agreement between
the Funds and Deutsche Asset Management, Inc. ("Proposal 1").
2. A proposal to terminate the Investment Advisory Agreement between
Deutsche Asset Management, Inc. and RREEF America, L.L.C. ("Proposal
2").
3. A proposal that the following nominees ("Trust Nominees") be elected
by the stockholders to the Boards of the Funds, to serve as Class III
directors: Susan L. Ciciora, Richard I. Barr, and Joel W. Looney, who
each has consented to being named in this proxy and, if elected, to
serve as a director ("Proposal 3").
4. A proposal recommending that the Boards change the name of each of the
Funds so that they do not include "DWS" or reference to the DWS family
of funds ("Proposal 4").
5. A proposal recommending that the Boards amend the Funds' respective
charters (each, a "Charter") vesting in the stockholders the power to
amend or adopt the Funds' bylaws (the "Bylaws") by the affirmative
vote of a majority of all votes entitled to be cast on the matter
("Proposal 5").
6. A proposal recommending that the Boards amend the Charters to set the
number of members of each Board to five ("Proposal 6").
7. A proposal recommending that the Boards amend the Charters to
declassify the boards and provide for the annual election of directors
("Proposal 7").
8. A proposal recommending that the Boards amend the Charters to provide
that the secretary of the Fund shall call a special meeting of
stockholders on the written request of stockholders entitled to cast
at least 25% of all votes entitled to be cast at the meeting
("Proposal 8").
9. A proposal recommending that the Boards amend the Bylaws to reduce the
number of directors and declassify the board consistent with the
discussion under Proposals 6 and 7 ("Proposal 9").
10. A proposal recommending that the Boards amend the Bylaws such that
authority to amend the Bylaws is not vested solely in the Boards
("Proposal 10").
11. A proposal recommending that the Boards resolve to negate the
applicability of the Maryland Control Share Acquisition Act such that
the Trust will no longer be subject thereto ("Proposal 11").
12. A proposal recommending that the Boards resolve to terminate the
rights agreements dated April 9, 2009, whereby future purchases of the
Funds' shares by the Trust will trigger a dilutive rights dividend
specifically targeted to dilute only the Trust ("Proposal 12").
13. A proposal recommending that the Boards resolve to negate the
applicability of the Maryland Unsolicited Takeovers Act (Proposal
13").
The Trust and Trust Nominees who are Participants in this proxy solicitation
will propose a resolution to the stockholders of the Funds whereby the
stockholders recommend and request that the Boards of the Funds promptly
initiate and complete the necessary and appropriate processes to implement each
of the above proposals. The Boards have fixed ___________________ as the record
date (the "Record Date") for the determination of stockholders of the respective
Funds entitled to notice of and to vote at the annual meeting and any
postponements or adjournments thereof. Only holders of record of the Funds'
voting securities as of the close of business on the Record Date are entitled to
notice of, and to attend and vote at the annual meeting and any postponements
thereof. Our proxy solicitation advocates several additional initiatives that we
believe will lead to better management of the Funds. These initiatives do not
involve matters that require a stockholder vote because the right to take the
necessary action is vested in the Boards. Consequently, the effect of an
affirmative vote on these initiatives is a non-binding expression of
dissatisfaction with the current corporate governance structure and performance
of the Funds.
THE TRUST URGES YOU TO VOTE FOR
EACH OF THE TRUST NOMINEES AND TO VOTE FOR EACH OF THE PROPOSALS CONTAINED
IN THIS PROXY STATEMENT
You have received a GREEN proxy card representing your votes for shares owned in
either, or both, of SRQ and SRO. Sign, date, and return the enclosed GREEN proxy
card(s) in the postage-paid envelope that is provided. If you received two GREEN
proxy cards, be sure to sign, date, and return both GREEN proxy cards.
WE URGE YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY THE FUNDS. IF YOU HAVE
ALREADY SIGNED ANY PROXY CARD SENT TO YOU BY THE FUNDS YOU MAY REVOKE YOUR PROXY
BY DELIVERING A LATER-DATED GREEN PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE, EXECUTING A VOTE VIA TOUCHTONE TELEPHONE OR THROUGH THE INTERNET IF
APPLICABLE, OR BY VOTING IN PERSON AT THE ANNUAL MEETING. YOU MAY REVOKE A GREEN
PROXY CARD BY DELIVERING A LATER DATED WHITE PROXY CARD TO THE APPLICABLE FUND.
The Trust and the Trust Nominees have no interest in the Funds other than
through the beneficial ownership if any of shares of stock in the Funds as
disclosed herein. I urge you to visit www.srqsro.com to get more information
regarding the Trust's proposals, as well as gain access to other information
from third-party sources.
Best wishes from a fellow stockholder,
Stewart R. Horejsi
Representative for the Susan L. Ciciora Trust
IMPORTANT!
o Regardless of how many shares you own, your vote is very important. Please
sign, date and mail the enclosed GREEN proxy card(s).
o Please vote each GREEN proxy card you receive since each account must be
voted separately. Only your latest dated proxy counts.
o Even if you have sent a white proxy card voting for the Board's
recommendations, you have every legal right to change your vote. You may
revoke that proxy, and vote FOR the Trust's proposals by signing, dating
and mailing the enclosed GREEN proxy card(s) in the enclosed envelope.
o If your shares are registered in your own name, please sign, date and mail
the enclosed GREEN proxy card(s) in the postage-paid envelope provided
today.
o If your shares are held in the name of a brokerage firm or bank nominee,
please sign, date and mail the enclosed GREEN instruction form in the
postage-paid envelope to give your broker or bank specific instructions on
how to vote your shares. Depending upon your broker or custodian, you may
be able to vote either by toll-free telephone or by the Internet. Please
refer to the enclosed voting form for instructions on how to vote
electronically.
If you have any questions on how to vote your shares, please call:
MORROW & CO., LLC
470 West Avenue, 3rd Floor
Stamford, CT 06902
Stockholders Call Toll-Free at: (800) 607-0088
QUESTIONS & ANSWERS REGARDING THE ANNUAL MEETING AND THE TRUST'S PROPOSALS
Question 1: Why is the Trust making these Stockholder Proposals?
Answer: The Susan L. Ciciora Trust (the "Trust") is the largest stockholder
of DWS RREEF Real Estate Fund, Inc. ("SRQ") and a significant stockholder of DWS
RREEF Real Estate Fund II, Inc. ("SRO," together with SRQ, the "Funds"). The
Trust wants to fire the people who got us into this mess, namely Deutsche Asset
Management, Inc. and RREEF America, LLC and the current boards of directors,
whose investment management and oversight has produced appalling losses. This
collection of "talent" LOST 91.6% and 81.9%, respectively, of SRO and SRQ's net
asset value in 2008, eclipsing the dismal performance of the S&P 500 (-37%) and
winning the dubious distinction of being dead last (SRO) and third from last
(SRQ) in the universe of approximately 640 closed-end funds in 2008. That's a
hard act to follow, but it appears that Deutsche Asset Management, Inc. and
RREEF America, LLC are attempting to again sink the Funds to the bottom in 2009
with SRO and SRQ already posting dismal year-to-date NAV returns of -26.8% and
- -10.24, respectively, for the period ending 4/30/09. SRO is dead last again and
SRQ is 601 out of 640. The Trust shares in your economic losses as well as your
frustration, anger, and disappointment with the current investment managers and
boards of directors (the "Boards"). We have received your phone calls, faxes,
emails and letters voicing support for our proposals to replace the Boards and
investment managers. We heard you say, "the sooner the better," and we agree.
Now stockholders must join together to create better opportunities for our
investments going forward. By advocating the Funds' termination and liquidation,
the Boards implicitly told stockholders that they have no confidence in Deutsche
Asset Management, Inc. and RREEF America, LLC to run the Funds! Every day that
passes while these advisers manage our Funds is another example of the Boards
thumbing their noses at stockholders, failing to fulfill their fiduciary duty
and continuing to engage the services of investment managers who have exhibited
no competence as advisers to the Funds.
It is the duty of the Boards to save what little is left in the Funds and
embrace the changes that we the stockholders have supported. During the Fund's
campaign to liquidate SRQ, an independent proxy adviser, RiskMetrics Group
stated that it believes the Trust, through its affiliation with the
Boulder-based advisers, may be able to effectuate change that is "critical to
improving the performance of [SRQ], rather than liquidating." We believe the
path to improved performance is clear: terminate the investment management
agreements with Deutsche Asset Management, Inc. and RREEF America, LLC, hire the
Trust's investment managers for SRQ and SRO and replace the members of the
Boards.
We have provided a set of proposals that require a stockholder vote to approve
and which are discussed at length in this Joint Proxy Statement (the
"Stockholder Proposals"). We urge you to vote FOR the Trust Nominees and for all
of the Stockholder Proposals.
Question 2: How can the Trust make these Stockholder Proposals?
Answer: Like you, the Trust is a stockholder of the Funds. Stockholders are
able to make certain proposals to funds management in accordance with Maryland
state law (where both Funds are incorporated), federal securities laws, and the
Funds' respective Charters and Bylaws (the "Organizational Documents").
Previously, the Trust made timely proposals to the Funds' management in
accordance with the Organizational Documents and did so because the Trust
believes that the Stockholder Proposals benefit all stockholders of the Funds.
Additionally, the Trust has received voluminous feedback from various
stockholders, large and small, that support the various Stockholder Proposals.
Question 3: Why is the Trust sending me a joint proxy statement for both SRQ and
SRO?
Answer: Efficiency and cost savings. Most of the Proposals contained in
this Joint Proxy Statement relate to matters concerning both Funds. Therefore,
it is efficient both in terms of time and money to send a Joint Proxy Statement
to all stockholders of SRQ and SRO. This is the way we operate our businesses -
efficiently and with results in mind. So, you may only have received one GREEN
proxy card for either SRQ or SRO depending on the Fund in which you own shares.
If you own shares in both Funds, you should have received two GREEN proxy cards.
Be sure to vote all GREEN proxy cards that you receive.
If you have any questions, require assistance in voting your GREEN proxy
card(s), or need additional copies of our proxy materials, please contact Morrow
& Co., LLC at the address listed on the back cover of this Joint Proxy Statement
booklet or by phone at 1-800-607-0088.
Question 4: What is the Maryland Control Share Acquisition Act and how does that
affect me as a stockholder?
Answer: On April 9, 2009, the Boards, on behalf of both Funds, elected to
opt-in to the Maryland Control Share Acquisition Act ("MCSAA"). The MCSAA limits
stockholder voting rights in excess of certain thresholds. The Trust believes,
as evidenced by the recent deepening of the Funds' respective discounts, the
MCSAA is harming stockholders who may want to exit the Funds. The Trust and
other significant stockholders are apt to be discouraged from purchasing shares
they cannot vote and thus avoid purchasing shares in the market which would
otherwise provide pricing support for exiting stockholders. Moreover, when the
Funds announced their adoption of the MCSAA, their press release said that the
MCSAA and other obstructive measures were "to protect the interest of
stockholders pending stockholder consideration of proposed plans of liquidation
for each Fund." Given the overwhelming majority by which the "plans of
liquidation" were defeated, the Boards should have terminated the MCSAA
immediately after the special meeting on May 20, 2009. Obviously they didn't.
Stockholders have spoken and have clearly expressed their disdain for the "plans
of liquidation", so it is time to terminate these obstructive measures which
serve only to harm stockholders. We believe that the MCSAA, in conjunction with
the Funds' "poison pills" (see Question 5 below), has fulfilled its stated
purpose and denies stockholders wanting to sell their most likely prospect for a
much needed price support.
Question 5: What is a "poison pill" and how does that affect me as a
stockholder?
Answer: On April 9, 2009, the Boards also implemented so-called "Rights
Agreements" which would trigger dilutive rights dividends if the Trust purchases
additional shares of either Fund. Like the MCSAA discussed above, this "poison
pill" is designed to discourage the Trust from purchasing additional shares and
denies stockholders wanting to sell their most likely prospect for a much needed
price support. As with the MCSAA, the Funds announced that the measure was to
"protect the interest of stockholders pending stockholder consideration of
proposed plans of liquidation for each Fund." As discussed above, stockholders
have spoken and clearly expressed their disdain for the "plans of liquidation",
so it is time to terminate these obstructive measures which serve only to harm
stockholders.
More to the point, "poison pills" are simply wrong. Here's what happens with the
Funds' poison pills: if the Trust buys 0.01% more of either Fund's shares, all
stockholders other than the Trust receive three additional shares at a cost of
$0.01 per share. The Trust receives nothing. This means that, based on the
Trust's holdings in SRQ, the Trust's economic interest in the Fund would be
reduced by almost 70%. The Boards would essentially steal from the Trust and
hand over the "loot" to the non-Trust stockholders. That may not sound like a
bad deal for the non-Trust stockholders. But from the Trust's point of view,
it's robbery and if the Boards have the ethical capacity to rob the Trust,
stockholders should figure they have the ethical capacity to rob the rest of the
stockholders. Is that the kind of board you want representing your interests?
Question 6: What is a "classified board" and why is the Trust recommending
stockholders approve "declassifying" the Board?
Answer: A "classified board," also referred to as a "staggered board,"
consists of members who are elected to separate classes, with each class of
directors serving a staggered three-year term. Each class of directors is
elected in successive terms (i.e., one class is elected in 2009 to serve through
2012, one class is elected in 2010 to serve until 2013, and so on). The purpose
of a classified board is to make any attempt by a stockholder to take control of
the Funds through a proxy contest more difficult. While this classified board
structure may make sense for some funds, and is commonly used by closed-end
funds, it does not make sense in the case of the Funds, as the current Boards
have made, we believe, various decisions on behalf of the Funds that have caused
catastrophic economic losses for the Funds' stockholders. Additionally, the
Boards essentially issued a vote of "no confidence" in the current investment
advisers Deutsche Asset Management, Inc. and RREEF America, LLC by recommending
to stockholders that the Funds liquidate (with such proposal being soundly
defeated). Subsequent to defeat, the Boards issued press releases stating the
Funds will basically conduct business as usual. So, is the Board now telling the
Funds' stockholders that "business as usual" means even more losses for the
Funds? Taken together, the Trust believes that the Boards are "hiding" behind
their staggered structure to avoid meaningful contact with the Funds'
stockholders to their long-term economic detriment.
Further, unlike some funds in which the members of the board have significant
ownership of the companies they oversee, there is none here. The total stock
ownership of the Boards for both Funds is less than 1% of the outstanding
securities. So, why would a Board that has no meaningful stock ownership in the
Funds resist the call for positive change from stockholders who "put their money
where their mouth is"?
Stockholders have spoken, and it's time for the Boards to step aside in favor of
new Boards. The Trust believes that "de-classifying" the Boards is a significant
step toward acknowledging that stockholders should assume management of their
own destiny, not the current Boards.
Question 7: Where can I get more information on the Trust's Proposals?
Answer: Go to www.srqsro.com. It's a valuable source of information to help
you learn more about the background and details of the Stockholder Proposals.
PROXY STATEMENT IN SUPPORT
OF THE
SUSAN L. CICIORA TRUST'S
JOINT PROXY PROPOSALS FOR STOCKHOLDERS OF
DWS RREEF REAL ESTATE FUND, INC.
AND
DWS RREEF REAL ESTATE FUND II, INC.
ANNUAL MEETING OF STOCKHOLDERS
To Our Fellow Stockholders:
The SUSAN L. CICIORA TRUST, Alaska Trust Company, Trustee (the "Trust") is
sending this joint proxy statement and the enclosed GREEN proxy card to holders
of shares of voting securities of DWS RREEF Real Estate Fund, Inc. ("SRQ") and
DWS RREEF Real Estate Fund II, Inc. ("SRO"), both Maryland corporations
(together, the "Funds") in connection with the solicitation of proxies by the
Trust, acting through its Trustee, Alaska Trust Company. THIS PROXY IS NOT
SOLICITED BY EITHER OF THE FUNDS. This proxy statement relates to the Trust's
solicitation of proxies for use at the annual meeting of stockholders of the
Fund to be held on ____, ________, 2009, at _________________________ (the
"Annual Meeting" or "Meeting") and any and all adjournments or postponements
thereof.
The Annual Meeting will be held at __________________________________ New York,
NY 10017. This joint proxy statement and the accompanying GREEN proxy card will
first be sent to stockholders of the Funds on or about _________, 2009.
THE TRUST IS SOLICITING YOUR PROXY TO VOTE FOR THE PROPOSALS LISTED BELOW.
REASONS FOR THIS SOLICITATION
There are many reasons for this solicitation, but chief among them is you - the
stockholder. The Trust is a stockholder just like you; in fact it is the largest
stockholder of SRQ and a significant stockholder of SRO. Our interests are
aligned with yours in that we want the Funds to succeed and, unlike the current
boards of directors (the "Boards"), we are not ready to call it quits. As a
fellow stockholder in the Funds, the Trust shares in your economic losses as
well as your frustration, anger and disappointment with the current investment
managers - Deutsche Asset Management, Inc. and RREEF America, LLC - and the
current Boards. We have properly submitted a set of proposals that require a
stockholder vote to approve and which are discussed at length in this Joint
Proxy Statement and are designed to give all stockholders a meaningful voice in
the future of the Funds (the "Stockholder Proposals") . We urge you to vote FOR
all of the Stockholder Proposals.
The Trust seeks your continued support in our fight to improve the Funds'
governance and accountability of the Boards and investment managers. The Trust
believes that the Boards will not take appropriate action unless stockholders
send a strong message that they are dissatisfied and desire a new and better
management direction that is more responsive to stockholders. Here are some of
the many reasons why you should vote FOR the Trust's Stockholder Proposals.
1. Abysmal Performance. In the latest ratings by Morningstar(TM)
(December 31, 2008), SRQ received the worst possible rating - 1 of 5
stars for its overall, 3- and 5-year performance history - as compared
with other similarly situated specialty real estate closed-end funds.
The Fund's dismal performance is matched only by, you guessed it,
another fund managed by Deutsche Asset Management, Inc. and RREEF
America, LLC, SRO. Both Funds, under common management, received the
same dismal Morningstar(TM) ratings. There is no excuse for the
extraordinarily poor performance of the Funds. The Boards' attempt to
direct stockholders' attention elsewhere by "explaining" that these
losses are due to "unprecedented and intense volatility . . ." etc. is
simply a poor attempt to escape responsibility for the Boards' own
poor oversight and continued engagement of Deutsche Asset Management,
Inc. and RREEF America, LLC, whom they have already implicitly
conceded have failed in their job of managing our money. While the
market has been negative, no other similar fund performed as horribly
as the Funds. Additionally, the Boards' actions in attempting to
liquidate the Funds belies what they say: By advocating the
liquidation of the Funds, the Boards implicitly told stockholders that
they have no confidence in Deutsche Asset Management, Inc. and RREEF
America, LLC.
2. Poor Adviser Oversight by the Board. In February 2009, the Trust
requested that the Boards immediately terminate Deutsche Asset
Management, Inc. and RREEF America, LLC and replace the Board members.
Given the horrible performance of the Funds, the Boards have a
fiduciary duty to make a change, as Deutsche Asset Management, Inc.
and RREEF America, LLC clearly have shown that they are not capable of
managing the Funds. Yet, after the Boards' liquidation proposals
failed by an overwhelming margin, they continued to engage the
services of Deutsche Asset Management, Inc. and RREEF America, LLC.
Quite simply, every day that passes while these advisers manage our
Funds is another example of the Boards thumbing their noses at
stockholders, failing to fulfill their fiduciary duty and continuing
to engage the services of investment managers who have exhibited no
competence as advisers to the Funds.
Where were these Boards when the Funds were losing very nearly all of
their stockholder value and "earning" the bottom-of-the-barrel
Morningstar's(TM) ratings? Also, why are the Boards spending legal
fees and other costs on these restrictive measures when their time
could be better spent addressing the abysmal performance of the Funds
and more efficient ways of fixing the problem? By what we believe is
inept oversight of the Funds, the incumbent Boards have made it
abundantly clear that their interests are not aligned with
stockholders'. Any decisions or recommendations by these Boards should
be scrutinized. We believe the Funds could benefit from new directors
who can reenergize the Boards and put the company on a better path.
3. Valuable Tax Loss Carry-Forwards. The Funds do have substantial hidden
assets - their respective realized and unrealized tax losses. Let us
put them to good use in offsetting future gains in the Funds. The
Funds should not throw away their valuable tax loss carry-forwards.
4. Overzealous Anti-Takeover Measures. On April 9, 2009, the Funds issued
a joint press release disclosing that the Boards had "opted into" a
Maryland statute which purportedly limits the voting rights of certain
stockholders, adopted a "poison pill" which is designed to reduce
certain stockholder voting rights, and adopted bylaw provisions which,
among other things, require an 80% vote of the independent Board
members to approve an advisory agreement for any investment adviser
affiliated with any "greater-than-5% stockholder" (the "Anti-Takeover
Measures"). The Anti-Takeover Measures were clearly in response to the
Trust's attempts to effectuate what we believe are positive changes
for all of the Fund's stockholders. When the Boards announced their
adoption of these measures, their press release stated that the
measures were "to protect the interests of stockholders pending
stockholder consideration of proposed plans of liquidation". Given the
overwhelming majority by which the "plans of liquidation" were
defeated, the Boards should have terminated the Anti-Takeover Measures
immediately after the special meeting on May 20, 2009. Obviously they
didn't. Stockholders have spoken and have clearly expressed their
disdain for the "plans of liquidation", so it is time to terminate
these overzealous and obstructive measures which serve only to harm
stockholders.
The Trust and investment advisory companies working with the Horejsi family (the
"Horejsi Entities") offer what we believe are better options for stockholders,
all of which are discussed in this Joint Proxy Statement. After the precipitous
ride stockholders have taken with these Boards and the current advisers,
stockholders deserve a change. We believe we can offer a positive change and the
Horejsi Entities have the experience and knowledge to bring this about. To do
this, we are asking you to first vote FOR the Stockholder Proposals.
Better Management from the Trust. The Trust, its board nominees as detailed in
the Stockholder Proposals (the "Trust Nominees") and the Horejsi Entities have
been down this road before with positive results. Previously, Horejsi Entities
have assumed control of four other closed-end funds: Boulder Total Return Fund,
Inc. ("BTF"), Boulder Growth & Income Fund, Inc. ("BIF") and The Denali Fund
Inc. ("DNY") (collectively, the "Boulder Funds") which are managed by Horejsi
Entities, and the First Opportunity Fund, Inc. ("FF"), which is managed by an
unaffiliated adviser but administered by a Horejsi Entity. When the Lola Brown
Trust took control of DNY in October, 2007, DNY was leveraged and had an
investment objective and real estate concentration very similar to the Funds.
However, after Horejsi Entities took over management and began transitioning
from DNY's concentrated real estate portfolio beginning in October 2007, despite
the transitioning inefficiencies, for calendar year 2008, DNY returned -24.6% on
NAV, while SRQ returned -81.9% and nearly wiped out all stockholder equity (and
its sister fund SRO returned -91.5%). Although a -24.6% return on NAV is nothing
to boast about, it eclipsed both Funds, and also significantly outperformed the
S&P Index (-37%) and most other closed-end funds. In fact, DNY was ranked #1 in
the Lipper Closed-End Equity Fund Performance Analysis for Real Estate Funds for
the 1-year period ended December 31, 2008 AND the 5-year period ended December
31, 2008. While the Horejsi Entities didn't manage DNY for the full 5 year
period cited by the Lipper award, the Trust believes that the Horejsi Entities
were able to effectuate changes that were critical to earning this distinction.
Another of the Boulder Funds, BIF, also recently ranked #1 in the Lipper
Closed-End Equity Fund Performance Analysis for Core Funds for the 1-year period
ended December 31, 2008 AND the 5-year period ended December 31, 2008. BTF's
total return on net asset value for the 1-year period ended December 31, 2008
was -40%. Past performance does not guarantee future results, but we believe it
stands in stark contrast to the performance of the Funds. Although the
Stockholder Proposals do not propose the Horejsi Entities as new advisers to the
Funds (only the Boards have the authority to do that), once the Trust Nominees
are elected and seated, the Horejsi Entities will make advisory proposals to the
new Boards and, we believe, the Horejsi Entities will be able to roll up their
sleeves and do a much better job with the Funds.
More information is available at www.srqsro.com.
BACKGROUND TO THE SOLICITATION
The Trust is a substantial owner of the Funds' shares, holding a 16.5% equity
position in SRQ and a 5.1% equity position in SRO as of the date of this Joint
Proxy Statement. The Trust has been an active and vocal investor in the Funds
and in February 2009, sent letters to the Funds and their Boards proposing,
among other things, termination of the Funds' investment advisers, a new slate
of directors, better corporate governance standards and other ideas to enhance
stockholder value. None of these proposals were seriously considered by the
Boards; instead, the Boards decided to "call it quits" and advanced proposals to
liquidate the Funds. Fortunately, they failed. Now that the Boards seem to be
floundering in their efforts to oversee the Funds, the Trust decided that it
should bring the substantial experience and skill of the Horejsi Entities to the
table and offer a better alternative to the Fund's stockholders.
Mr. Horejsi, an investment consultant to the Trust, is also the portfolio
manager for Boulder Investment Advisers, LLC ("BIA") and Stewart Investment
Advisers ("SIA"), the co-advisers to the Boulder Funds (the "Boulder Advisers").
Under Mr. Horejsi's and the Boulder Advisers' guidance and within a year of
assuming investment management of BTF, the fund achieved the #1 ranking for year
2000, based on total return, in Lipper's closed-end fund standard category of
"Growth & Income" funds. The Boulder Advisers assumed investment management of
DNY in October, 2007 and similarly to BTF, DNY was recently ranked #1 in the
Lipper Closed-End Equity Fund Performance Analysis for Real Estate Funds for the
1-year period ended December 31, 2008. DNY was also awarded the 5-year period
ended December 31, 2008; while the Boulder Advisers didn't manage DNY for the
full 5 year period cited by this Lipper award, the Trust believes they were
instrumental in continuing the investment performance results that were critical
to earning this distinction. BIF, also under management with the Boulder
Advisers, was recently ranked #1 in the Lipper Closed-End Equity Fund
Performance Analysis for Core Funds for the 1-year period ended December 31,
2008 and the 5-year period ended December 31, 2008.
These rankings within a particular fund category may not be indicative of the
Boulder Funds' standing among equity funds overall. The rankings achieved by the
Boulder Funds do not indicate or provide any assurance that the Funds could
achieve a similar ranking if the Boulder Advisers or any other investment
advisers affiliated with the Horejsi Entities were the adviser to the Funds.
Finally, the Trust advocates and believes that directors who own their fund's
shares and thus have a financial stake in their fund's success will take a more
proactive role in acting as stockholder 'watchdogs' and encouraging exceptional
performance. Notably, the incumbent members of the Boards have no significant
ownership stake in the Funds. See __________ below.
The bottom line for stockholders.
The Trust and the Horejsi Entities put their money where their mouth is. They
own significant positions in the Boulder Funds as well as in the Funds and
clearly are motivated to get the most return they can with each of these funds.
The current Boards have signaled their unwillingness to continue putting their
best efforts into managing the Funds. Neither the members of the Boards nor the
current investment advisers (Deutsche Asset Management, Inc. and RREEF America,
LLC) own significant stakes in either of the Funds, so their interests and
motivations are not aligned with the stockholders'. The Trust and the Horejsi
Entities can't guarantee results, but given our significant investments in the
Funds, our interests are directly aligned with all other stockholders and we are
keenly motivated to do what's best for all stockholders.
SUMMARY OF THE STOCKHOLDER PROPOSALS
The following is a summary of the Stockholder Proposals as put forth by the
Trust and scheduled to be voted upon at the Annual Meeting; some of the
information contained in this Joint Proxy Statement is based upon the
information provided in the Funds' respective materials as filed with the
Securities and Exchange Commission ("SEC") from time to time.
First and foremost, the Trust believes that the horrible performance by Deutsche
Asset Management, Inc. and RREEF America, LLC warrants immediate termination as
permitted under the Investment Company Act of 1940, as amended (the "1940 Act").
Proposals 1 and 2 seek to accomplish this. Second, the serious lack of adviser
oversight by the Boards during 2008 and a lack of meaningful ownership by
members of the Boards highlights that the Boards do not have enough faith in the
Funds' management to warrant investing their own money. We need Board members
whose interests are aligned with stockholders, not members paid by affiliates of
Deutsche Asset Management, Inc. and RREEF America, LLC to manage numerous other
funds among their affiliated group companies. Proposal 3 seeks to elect the
Trust Nominees. Third, the Boards have implemented and support a number of
corporate governance provisions that only serve to entrench the current
management and turn a blind eye toward the horrible performance of Deutsche
Asset Management, Inc. and RREEF America, LLC and the will of the stockholders.
The Trust is asking stockholders to support recommendations to the Boards to
amend or eliminate these provisions in Proposals 5 through 10. Finally, the
Boards adopted extraordinary Anti-Takeover Measures designed specifically to
thwart efforts by the Trust to gain control of the Funds and oust Deutsche Asset
Management, Inc. and RREEF America, LLC because of their horrible performance.
By the Boards' own admission, these measures were intended to be temporary
(i.e., "pending stockholder consideration of proposed plans of liquidation for
each Fund"). Now that the liquidation plan has been soundly defeated, the Boards
should terminate all the Anti-Takeover Measures as advocated by Proposals 11, 12
and 13. The Trust believes that stockholders deserve a better chance for a
positive return on their investment and a more confident outlook for the Funds'
future. The Trust recommends that stockholders vote FOR all the Stockholder
Proposals.
PROPOSALS 1 AND 2
TO APPROVE OR DISAPPROVE TERMINATION OF THE INVESTMENT MANAGEMENT AGREEMENT
BETWEEN THE FUNDS AND DEUTSCHE ASSET MANAGEMENT, INC. AND THE INVESTMENT
ADVISORY AGREEMENT BETWEEN DEUTSCHE ASSET MANAGEMENT AND RREEF AMERICA, LLC
Background of the Proposals. Justification for Proposals 1 and 2 is simple: The
Funds' performance over the past year under Deutsche Asset Management, Inc. and
RREEF America, LLC has been more than appalling. Together, they have been two of
the worst performing of any closed-end or open-end funds in the entire mutual
fund universe.
For SRO, in the latest ratings by Morningstar(TM) (January 31, 2009), SRO
received 1 of 5 stars for its overall, 3- and 5-year performance history, as
compared with other similarly situated specialty real estate closed-end funds.
There is no excuse for the extraordinarily poor performance of SRO. For the
one-year period ending 12/31/08, SRO and SRQ had total returns on net asset
value ("NAV") of -91.6% and -81.9% respectively. To nearly wipe out the entire
value of a fund in one year is unheard of, even in a market that saw the S&P 500
Index drop by 37% in that same time frame. Surprisingly, the market prices for
SRO and SRQ have dropped even more than their NAV because the discount for the
Funds increased - a decline of 93.5% and 86.4%, respectively, for the year
ending 12/31/08. These losses far exceed any other market indices for similarly
situated funds. In fact, both Funds lost more than twice the percent lost by the
S&P Index. As noted in an article published December 16, 2008 on
seekingalpha.com, SRO was "the worst performing closed end fund". And as noted
in an article published January 4, 2009, on seekingalpha.com, SRQ was one of the
"five worst performing closed-end funds in 2008"
Having the same set of investment managers - Deutsche Asset Management, Inc. and
RREEF America, LLC - for two of the five worst performing funds in 2008 clearly
indicates that the Boards should have acted to terminate the advisers long ago.
It is time for new investment management for the Funds.
As a stockholder, the Trust is in the same position as you, and we want to
maximize stockholder value and get out from under the Funds' inadequate managers
Deutsche Asset Management, Inc. and RREEF America, LLC. Although these proposals
do not recommend replacements for Deutsche Asset Management, Inc. and RREEF
America, LLC, such being the responsibility of the Boards, the Boulder Advisers
have a track record of expertise and success in similar situations and, if the
Trust Nominees are elected, the Trust would advocate the Funds' engaging the
Boulder Advisers or other Horejsi Entities as replacement advisers. The Boulder
Advisers co-manage the Boulder Funds. In fact, BIF and DNY received 2008 Lipper
Performance Achievement Certificates in their respective Lipper categories as
follows:
Boulder Growth & Income Fund:
Ranks #1 in the Lipper Closed-End Equity Fund Performance Analysis for Core
Funds for the 1-Year Ended December 31, 2008
Ranks #1 in the Lipper Closed-End Equity Fund Performance Analysis for Core
Funds for the 5-Year Ended December 31, 2008
The Denali Fund:
Ranks #1 in the Lipper Closed-End Equity Fund Performance Analysis for Real
Estate Funds for the 1-Year Ended December 31, 2008
Ranks #1 in the Lipper Closed-End Equity Fund Performance Analysis for Real
Estate Funds for the 5-Year Ended December 31, 2008*
Vote required. Approval of Proposals 1 and 2 for each of the Funds require a
"majority of the outstanding voting securities" of the respective Fund, which
has the same meaning for such phrase as set forth in the 1940 Act, that is, the
affirmative vote of the lesser of (a) 67% or more of the Shares present or
represented by proxy at the Meeting or (b) more than 50% of the outstanding
Shares.
THE TRUST RECOMMENDS THAT STOCKHOLDERS OF SRQ AND SRO, AS APPLICABLE, VOTE "FOR"
PROPOSAL 1.
THE TRUST RECOMMENDS THAT STOCKHOLDERS OF SRQ AND SRO, AS APPLICABLE, VOTE "FOR"
PROPOSAL 2.
PROPOSAL 3
NOMINATE FOR ELECTION BY THE STOCKHOLDERS THE FOLLOWING NOMINEES AS CLASS III
DIRECTORS FOR THE FUNDS: SUSAN L. CICIORA, RICHARD I. BARR, AND JOEL W. LOONEY
Background of the Proposal. On February 5th and February 25th of 2009, the Trust
delivered letters to SRQ and SRO, respectively, notifying the Funds that the
Trust nominates and will seek the election at the annual meeting of the
following nominees (defined above as the "Trust Nominees") to stand for election
and serve terms of three years or until his or her respective successor has been
duly elected and qualifies:
SRQ SRO
---------------------------- ---------------------------
Susan L. Ciciora Class III Director, with a Class III Director, with
term to expire in 2012 a term to expire in 2012
Richard I. Barr Class III Director, with a Class III Director, with
term to expire in 2012 a term to expire in 2012
Joel W. Looney Class III Director, with a Class III Director, with
term to expire in 2012 a term to expire in 2012
Messrs. Barr and Looney and Ms. Ciciora, have experience as board members for
the Boulder Funds and First Opportunity Fund, Inc., four other closed-end funds
like the Funds. In fact, they served as board members for DNY when it underwent
significant and very similar changes as proposed for SRQ and SRO. The Trust has
confidence in these Nominees and believes that they are the right stewards of
the stockholder's investments in the Funds. The above nominees have consented to
serve as Directors if elected at the Meeting for the term as indicated above.
There are no arrangements or understandings between the Funds and the Trust
Nominees; Proposal 3 is submitted in reliance on the Funds' current public
filings with the SEC which indicated that three Class III directors are to be
elected at the Meeting. If the either or both of the Funds determine that more
than three directors will be elected at the Meeting, or that different classes
of directors will be elected at the Meeting, the Trust reserves the right to
nominate and elect additional directors to be so elected. If the designated
nominees decline or otherwise become unavailable for election, however, the
proxy confers discretionary power on the persons named therein to vote in favor
of a substitute nominee or nominees for the Board.
ADDITIONAL INFORMATION
Certain information regarding the incumbent members of the Boards and the
beneficial ownership of each Fund's directors, management and 5% stockholders is
contained in the Funds' respective proxy statements. Information concerning the
date by which proposals of security holders intended to be presented at the next
annual meeting of stockholders of the Funds must be received by each Fund for
inclusion in the Funds' Proxy Statement and form of proxy for that meeting is
also contained in the Funds' respective proxy statements. This information is
expected to be contained in each Fund's public filings. The Trust takes no
responsibility for the accuracy or completeness of information contained in the
Funds' respective public filings.
Information regarding the Trust Nominees for election to the board of directors
of the Funds is set forth below.
- --------------------- ------------------------ -------------------------------------------------------------
Name, Address*, Age Position, Length of Principal Occupation(s) and Other Directorships
Term Served, and Term Held During the Past Five Years**
of Office
- --------------------- ------------------------ -------------------------------------------------------------
Joel W. Looney Current Nominee for Partner (since 1999), Financial Management Group, LLC
Age: 47 SRQ and SRO for a (investment adviser); Director (since 2001), Boulder Total
term to expire at the Return Fund, Inc.; Director (since 2002) and Chairman
2012 Annual Meeting (since 2003), Boulder Growth & Income Fund, Inc.; Director
and Chairman (since 2007) The Denali Fund Inc.
Richard I. Barr Current Nominee for Retired (since 2001); Manager (1963-2001), Advantage Sales
Age: 71 SRQ and SRO for a term and Marketing, Inc. (food and beverage); Director (since
to expire at the 2012 1999) and Chariman (since 2003), Boulder Total Return Fund,
Annual Meeting Inc.; Director (since 2002), Boulder Growth & Income Fund,
Inc.; Director (since 2007), The Denali Fund Inc.
Susan L. Ciciora Current Nominee for Trustee (since 1994), the Brown Trust; Trustee (since
Age: 44 SRQ and SRO for a term 1992), the EH Trust; Director (since 1997), Horejsi
to expire at the 2012 Charitable Foundation, Inc. (private charitable
Annual Meeting. foundation); Director (since 2006), Boulder Growth & Income
Fund, Inc.; Director (since 2001), Boulder Total Return
Fund; Director, (since 2007) The Denali Fund Inc.
<FN>
* The Trust Nominees' respective addresses are c/o 2344 Spruce Street, Suite
A, Boulder, Colorado 80302.
** Unless otherwise noted, each of the Trust Nominees has engaged in the
principal occupation listed in the foregoing table for the past five years.
None of the Trust Nominees is an "interested" person of the Funds, as
defined in Section 2(a) (19) of the Investment Company Act of 1940, as
amended (the "1940 Act")
</FN>
Beneficial ownership of the Trust Nominees. Set forth in the following table is
information regarding the beneficial ownership and dollar range of equity
securities of the Funds beneficially owned by the Trust Nominees for election to
the Board as of the Record Date.
Trust Nominees Dollar Range of Equity Dollar Range of Equity Aggregate Dollar Range of
Securities in SRQ Securities in SRO Equity Securities in All Funds
in the Family of Investment
Companies
- ------------------------------------ --------------------------------- -------------------------------- ----------------------------
Richard I. Barr - - -
Joel W. Looney - - -
Susan L. Ciciora Over $100,000+ Over $100,000++ Over $100,000
<FN>
+ As reflected in a Form 13D filed with the SEC on April 2, 2009, 2,596,016
shares of Common Stock of SRQ, representing approximately 16.52% of SRQ's
outstanding voting securities are owned by the Trustee of the Susan L.
Ciciora Trust, Alaska Trust Company, which has sole voting power and sole
dispositive power with regard to such shares. Ms. Ciciora, is not a
beneficiary of the Trust but may be deemed to have an economic interest in
such shares and thus to hold indirect beneficial ownership, but Ms. Ciciora
disclaims any voting control or dispositive power over such shares and
disclaims any right to acquire any such voting control and dispositive
power over any shares of SRQ.
++ As reflected in a Form 13D filed with the SEC on March 9, 2009, 1,915,835
shares of Common Stock of SRO, representing approximately 5.1% of SRO's
outstanding voting securities are owned by the Trustee of the Susan L.
Ciciora Trust, Alaska Trust Company, which has sole voting power and sole
dispositive power with regard to such shares. Ms. Ciciora, is not a
beneficiary of the Trust but may be deemed to have an economic interest in
such shares and thus to hold indirect beneficial ownership, but Ms. Ciciora
disclaims any voting control or dispositive power over such shares and
disclaims any right to acquire any such voting control and dispositive
power over any shares of SRO.
</FN>
DIRECTOR AND OFFICER COMPENSATION. None of the Trust Nominees have received any
compensation from the Funds.
Vote Required. The election of the Trust Nominees under Proposal 3 requires the
affirmative vote of a majority of the shares of the Fund's common stock and each
series of preferred stock outstanding and entitled to vote thereon, voting
together as a single class.
THE TRUST RECOMMENDS THAT STOCKHOLDERS OF SRQ AND SRO, AS APPLICABLE, VOTE "FOR"
THE ELECTION OF ALL THE TRUST NOMINEES.
PROPOSAL 4
A PROPOSAL RECOMMENDING THAT THE BOARDS CHANGE THE NAME OF EACH OF THE FUNDS
SO THAT IT DOES NOT INCLUDE "DWS" OR REFERENCE TO THE DWS FAMILY OF FUNDS
Background of the Proposal. Feedback from stockholders of both Funds indicates
that the slate of Stockholder Proposals as set forth in this Proxy Statement
should include a "fresh start" with respect to the names of the Funds. Currently
the names of each of the Funds is linked to affiliates of Deutsche Asset
Management, Inc. and RREEF America, LLC. The Funds' performance under these
investment managers over the past year has been more than appalling. Together,
they have been two of the worst performing of any closed-end or open-end funds
in the entire mutual fund universe. Accordingly, the Trust urges the Board to
allow stockholders to express their opinion about Deutsche Asset Management,
Inc. and RREEF America, LLC by renaming the Funds so that neither Fund's name
includes "DWS" or reference to the DWS family of funds.
Vote required. This is a non-binding vote by the stockholders of each Fund to
resolve to recommend the Proposal to the Board for each Fund and as such there
is no vote requirement associated with this Proposal.
THE TRUST RECOMMENDS THAT STOCKHOLDERS OF SRQ AND SRO, AS APPLICABLE, VOTE "FOR"
PROPOSAL 4.
PROPOSAL 5
A PROPOSAL RECOMMENDING THAT THE BOARDS AMEND THE FUNDS' RESPECTIVE CHARTERS
VESTING IN THE STOCKHOLDERS THE POWER TO AMEND OR ADOPT THE BYLAWS BY THE
AFFIRMATIVE VOTE OF A MAJORITY OF ALL VOTES ENTITLED TO BE CAST ON THE MATTER
Background of the Proposal. The Trust believes that all stockholders benefit if
they have better access to and more influence in the Funds' governance. Each of
the Funds' Bylaws contain important policies affecting the day-to-day management
of the Funds, which the Trust believes stockholders should at least have a voice
in establishing. Presently each Fund's Bylaws contain a provision which vests
the authority to adopt, alter or repeal Bylaws solely with the Board.
The Trust believes that the authority to adopt, alter or repeal Bylaws should be
a shared authority between the Board and stockholders. This permits the Board to
be responsive to house-keeping and substantive matters regarding Funds'
operations, while at the same time giving the owners of the Funds the power to
effect changes should they choose to do so. The Trust also believes that when
stockholders "speak" by adopting a Bylaw, their action should not be subject to
being overturned or altered by unilateral action of a Board whose job it is to
serve stockholders. The Trust believes that this Proposal will accommodate the
practicalities of managing the Funds while at the same time protecting an
important right of stockholders. This Proposal would codify in the Charter the
shared authority to make, alter or repeal Bylaws, while at the same time making
it clear that Bylaws that are adopted by stockholders cannot be altered,
repealed or otherwise circumvented without the affirmative approval of
stockholders.
If approved by stockholders, the Boards should cause the Funds' respective
Charters to be amended to add the following provision:
The Bylaws of the Corporation, whether adopted by the Board of Directors or
the stockholders, shall be subject to amendment, alteration or repeal, and
new Bylaws may be made, by either (a) the affirmative vote of a majority of
all the votes entitled to be cast on the matter; or (b) the Board of
Directors; provided, however, that the Board of Directors may not (i) amend
or repeal a Bylaw that allocates solely to stockholders the power to amend
or repeal such Bylaw, or (ii) amend or repeal Bylaws or make new Bylaws
that conflict with or otherwise alter in any material respect the effect of
Bylaws previously adopted by the stockholders.
Vote required. This is a non-binding vote by the stockholders of each Fund to
resolve to recommend the Proposal to the Board of each Fund and as such there is
no vote requirement associated with this Proposal.
THE TRUST RECOMMENDS THAT STOCKHOLDERS OF SRQ AND SRO, AS APPLICABLE, VOTE "FOR"
PROPOSAL 5.
PROPOSAL 6
A PROPOSAL RECOMMENDING THAT THE BOARDS AMEND THE CHARTER TO SET THE NUMBER
OF MEMBERS OF THE BOARD TO FIVE
Background of the Proposal. Company charters often contain provisions that set a
high upper-limit on the number of board seats, permitting the company's board to
increase or decrease the number of board seats in their discretion, subject to
this upper limit. Currently each Fund's Charter sets a lower limit as required
by Maryland General Corporations Law ("MGCL") and the upper limit at twelve,
permitting the Board to increase or decrease its size subject to the upper limit
of twelve. Boards may use such provisions to quickly increase or decrease their
size in an effort to dilute the voting impact of directors - such as those
elected in proxy contests - with views contrary to those of incumbent
management.
The Trust views the ability to manipulate the number of members on the Boards as
unnecessary and ultimately ineffective in thwarting stockholder desires. In
addition, it potentially increases fund expenses and insulates the Boards from
stockholders. Common sense suggests that if the Funds have more Board seats, the
Funds (and thus stockholders) will spend more on Board compensation. The Trust
believes that, because of the relatively narrow business focus of an investment
company such as the Funds, five Directors can adequately and efficiently fulfill
their obligation to oversee the operations of the Funds and their respective
management and act as "watchdogs" for stockholders. The Trust believes that the
best approach is to seek a few highly qualified individuals to fill
directorships and pay them fairly. This way, stockholders get more "bang for the
buck" in their Board and don't pay unnecessary Board expenses.
If approved by stockholders, the Boards should cause the Funds' respective
Charters to be amended to replace existing board size provisions with the
following provision:
The number of directors shall be five.
Vote required. This is a non-binding vote by the stockholders of each Fund to
resolve to recommend the Proposal to the Board of each Fund and as such there is
no vote requirement associated with this Proposal.
THE TRUST RECOMMENDS THAT STOCKHOLDERS OF SRQ AND SRO, AS APPLICABLE, VOTE "FOR"
PROPOSAL 6.
PROPOSAL 7
A PROPOSAL RECOMMENDING THAT THE BOARDS AMEND THE CHARTERS TO DECLASSIFY
THE BOARDS AND PROVIDE FOR ANNUAL ELECTIONS OF DIRECTORS
Background of the Proposal. The election of directors is the primary means for
stockholders to exercise influence over the Funds and their policies. A
"classified board", also referred to as a "staggered board", consists of members
who are elected to separate classes, with each class of directors serving a
staggered three-year term. Each class of directors is elected in successive
terms (i.e., one class is elected in 2009 to serve through 2012, one class is
elected in 2010 to serve until 2013, and so on). The purpose of a classified
board is to make any attempt by a stockholder to take control of the Funds
through a proxy contest more difficult.
While this classified board structure may make sense for some funds, and is
commonly used, it does not make sense in the case of the Funds, as the current
Boards have made, we believe, various decisions on behalf of the Funds that have
caused catastrophic economic losses for stockholders. Additionally, the Boards,
by recommending to stockholders that the Funds be liquidated (with such proposal
being soundly defeated), essentially issued a vote of "no confidence" in the
current investment advisers Deutsche Asset Management, Inc. and RREEF America,
LLC. Subsequent to being soundly defeated, the Boards issued a press release
that states the Funds will basically conduct business as usual. So, are the
Boards now telling the Funds' stockholders that "business as usual" means even
more losses for the Funds under Deutsche Asset Management, Inc. and RREEF
America, LLC? Further, unlike some funds in which the members of the board have
significant ownership of the companies they oversee, there is none here. The
total stock ownership of the Boards for both Funds is less than 1%. So, why
would Boards that have no meaningful stock ownership in the Funds resist the
call for positive change from stockholders who "put their money where their
mouth is"?
The Trust believes that classified boards have the effect of reducing the
accountability of directors to a company's stockholders. A classified board
prevents stockholders from electing all directors on an annual basis and may
discourage proxy contests in which stockholders have an opportunity to vote for
a competing slate of nominees. While classified boards are viewed by some as
increasing the long-term stability and continuity of a board, the Trust believes
that, in the case of the Funds, long-term stability and continuity should result
from the annual election of directors, which provides stockholders with the
opportunity to evaluate director performance, both individually and
collectively, on an annual basis. The Trust believes that the current Boards are
"hiding" behind their staggered structure to avoid meaningful contact with the
Funds' stockholders to their long-term economic detriment.
If approved by stockholders, the Boards should cause the Funds' respective
Charters to be amended to replace the Charters' current classification language
with following provision:
The directors shall be elected at each annual meeting commencing in 2010 or
any special meeting of the stockholders called for the election of
directors except as necessary to fill any vacancies, and each director
elected shall hold office until his or her successor is duly elected and
qualifies, or until his or her earlier resignation, death, or removal.
Vote required. This is a non-binding vote by the stockholders of each Fund to
resolve to recommend the Proposal to the Board of each Fund and as such there is
no vote requirement associated with this Proposal.
THE TRUST RECOMMENDS THAT STOCKHOLDERS OF SRQ AND SRO, AS APPLICABLE, VOTE "FOR"
PROPOSAL 7.
PROPOSAL 8
A PROPOSAL RECOMMENDING THAT THE BOARDS AMEND THE CHARTERS TO PROVIDE THAT THE
SECRETARY OF THE FUND SHALL CALL A SPECIAL MEETING OF STOCKHOLDERS ON THE
WRITTEN REQUEST OF STOCKHOLDERS ENTITLED TO CAST AT LEAST 25% OF ALL VOTES
ENTITLED TO BE CAST AT THE MEETING
Background of the Proposal. Presently, under the Funds' respective Bylaws,
stockholders cannot call a special meeting unless a written request is submitted
by the holders of a majority of outstanding shares entitled to vote at the
meeting. This ownership threshold is an almost impossible hurdle and
unreasonably restricts stockholders' right to call a meeting. This Proposal
would amend the Charters to reduce the percentage ownership level from a
"majority" to 25% of outstanding shares, thus making the potential for a
stockholder or group of stockholders to call a special meeting more realistic
and useful.
If approved by stockholders, the Boards should cause the Funds' respective
Charters to be amended to eliminate the "majority" requirement and to add the
following provision:
The Secretary of the Corporation shall call a special meeting of the
stockholders on the written request of stockholders entitled to cast at
least twenty-five percent (25%) of all the votes entitled to be cast at the
meeting.
Vote required. This is a non-binding vote by the stockholders of each Fund to
resolve to recommend the Proposal to the Board of each Fund and as such there is
no vote requirement associated with this Proposal.
THE TRUST RECOMMENDS THAT STOCKHOLDERS OF SRQ AND SRO, AS APPLICABLE, VOTE "FOR"
PROPOSAL 8.
PROPOSAL 9
A PROPOSAL RECOMMENDING THAT THE BOARDS AMEND THE BYLAWS TO REDUCE THE
NUMBER OF DIRECTORS AND DECLASSIFY THE BOARDS
Background of the Proposal. For the reasons discussed above, the Trust believes
that the Funds' past performance and actions by the current Boards mandate an
overhaul of how the Boards are elected, and the number of directors that should
serve on each Fund's Board.
If approved by stockholders, the Boards should amend the respective Bylaws so as
to conform to the changes as recommended by the stockholders in Proposals 6 and
7 discussed above.
Vote required. This is a non-binding vote by the stockholders of each Fund to
resolve to recommend the Proposal to the Board of each Fund and as such there is
no vote requirement associated with this Proposal.
THE TRUST RECOMMENDS THAT STOCKHOLDERS OF SRQ AND SRO, AS APPLICABLE, VOTE "FOR"
PROPOSAL 9.
PROPOSAL 10
A PROPOSAL RECOMMENDING THAT THE BOARDS AMEND THE BYLAWS SO THAT AUTHORITY
TO AMEND THE BYLAWS IS NOT VESTED SOLELY IN THE BOARD
Background of the Proposal. See discussion under Proposal 5 above.
If approved by stockholders, the Boards should immediately amend the Bylaws to
delete all references which vest authority to amend the Bylaws solely with the
Boards.
Vote required. This is a non-binding vote by the stockholders of each Fund to
resolve to recommend the Proposal to the Board of each Fund and as such there is
no vote requirement associated with this Proposal.
THE TRUST RECOMMENDS THAT STOCKHOLDERS OF SRQ AND SRO, AS APPLICABLE, VOTE "FOR"
PROPOSAL 10.
PROPOSAL 11
A PROPOSAL RECOMMENDING THAT THE BOARDS REPEAL THE APPLICABILITY OF THE
MARYLAND CONTROL SHARE ACQUISITION ACT
On April 9, 2009, the Boards caused the Funds to opt-in to the Maryland Control
Share Acquisition Act ("MCSAA"). The MCSAA limits stockholder voting rights in
excess of certain thresholds. The Trust believes, as evidenced by the recent
deepening of the Funds' respective discounts, that the MCSAA is harming
stockholders who may want to exit the Funds. The Trust and other significant
stockholders are apt to be discouraged from purchasing shares they cannot vote
and thus avoid purchasing shares in the market which would otherwise provide
pricing support for exiting stockholders. Moreover, when the Funds announced
their adoption of the MCSAA, their press release said that the MCSAA and other
obstructive measures were "to protect the interest of stockholders pending
stockholder consideration of proposed plans of liquidation for each Fund." Given
the overwhelming majority by which the "plans of liquidation" were defeated, the
Boards should have terminated the MCSAA immediately after the special meeting on
May 20, 2009. Obviously they didn't. Stockholders have spoken and have clearly
expressed their disdain for the "plans of liquidation", so it is time to
terminate these obstructive measures which serve only to harm stockholders. We
believe that the MCSAA, in conjunction with the Funds' "poison pills" (see
Proposal 12 below), has fulfilled its stated purpose and denies stockholders
wanting to sell their most likely prospect for a much needed price support.
Vote required. This is a non-binding vote by the stockholders of each Fund to
resolve to recommend the Proposal to the Board of each Fund and as such there is
no vote requirement associated with this Proposal.
THE TRUST RECOMMENDS THAT STOCKHOLDERS OF SRQ AND SRO, AS APPLICABLE, VOTE "FOR"
PROPOSAL 11.
PROPOSAL 12
A PROPOSAL RECOMMENDING THAT THE BOARDS TERMINATE THE RIGHTS AGREEMENTS
On April 9, 2009, the Boards implemented so-called "Rights Agreements" which
would trigger dilutive rights dividends if the Trust purchases additional shares
of either Fund. Like the MCSAA discussed in Proposal 11 above, this "poison
pill" is designed to discourage the Trust from purchasing additional shares and
denies stockholders wanting to sell their most likely prospect for a much needed
price support. As with the MCSAA, the Funds announced that the measure was to
"protect the interest of stockholders pending stockholder consideration of
proposed plans of liquidation for each Fund." As discussed in Proposal 11 above,
stockholders have spoken and clearly expressed their disdain for the "plans of
liquidation", so it is time to terminate these obstructive measures which serve
only to harm stockholders.
More to the point, "poison pills" are simply wrong. Here's what happens with the
Funds' poison pills: if the Trust buys 0.01% more of either Fund's shares, all
stockholders other than the Trust receive three additional shares at a cost of
$0.01 per share. The Trust receives nothing. This means that, based on the
Trust's holdings in SRQ, the Trust's economic interest in SRQ would be
immediately reduced by almost 70%. The Boards would essentially steal from the
Trust and hand over the "loot" to the non-Trust stockholders. That may not sound
like a bad deal for the non-Trust stockholders. But from the Trust's point of
view, it's robbery and if the Boards have the unethical capacity to rob the
Trust, stockholders should figure they have the unethical capacity to rob the
rest of the stockholders. Is that the kind of board you want representing your
interests?
Vote required. This is a non-binding vote by the stockholders of each Fund to
resolve to recommend the Proposal to the Board of each Fund and as such there is
no vote requirement associated with this Proposal.
THE TRUST RECOMMENDS THAT STOCKHOLDERS OF SRQ AND SRO, AS APPLICABLE, VOTE "FOR"
PROPOSAL 12.
PROPOSAL 13
A PROPOSAL RECOMMENDING THAT THE BOARDS REPEAL THE APPLICABILITY OF THE
MARYLAND UNSOLICITED TAKEOVERS ACT
Both Funds are subject to the Maryland Unsolicited Takeovers Act, Maryland
General Corporation Law ("MGCL") ss.ss.3-801 through 805 ("MUTA"). Like the
other Anti-Takeover Measures discussed in Proposals 11 and 12 above, MUTA has
the effect of entrenching management and diminishing stockholder influence.
Repeal of MUTA should result in maximizing Board and management accountability
to stockholders.
Vote required. This is a non-binding vote by the stockholders of each Fund to
resolve to recommend the Proposal to the board of directors of each Fund and as
such there is no vote requirement associated with this Proposal.
THE TRUST RECOMMENDS THAT STOCKHOLDERS OF SRQ AND SRO, AS APPLICABLE, VOTE "FOR"
PROPOSAL 13.
PROXY CARDS AND VOTING
If you have returned a proxy card sent to you by the Funds, you have the right
to revoke that proxy and vote FOR any or all of the Trust's Proposals as set
forth in this Proxy Statement by signing, dating, and mailing a later dated
GREEN proxy card in the postage-paid envelope provided. Stockholders also have
the option of authorizing your proxy by touch-tone telephone or through the
internet, as explained on your proxy card.
You will receive a GREEN proxy card to vote the shares of each applicable Fund
in which you hold voting securities, i.e., SRQ or SRO, owned as of the Record
Date. If you own shares in both Funds, you should receive two GREEN proxy cards,
one for each Fund. Be sure to vote both cards.
If you have any questions, require assistance in voting your GREEN proxy card or
need additional copies of our proxy materials, please contact Morrow & Co., LLC
at the address or phone numbers listed below.
Morrow & Co., LLC
470 West Avenue, 3rd Floor
Stamford, CT 06902
Stockholders Call Toll-Free at: (800) 607-0088
Banks and Brokers Call Collect at: (203) 658-9400
Discretionary authority is provided in the proxy sought hereby as to other
business as may properly come before the Annual Meeting of which the Trust is
not aware as of the date of this proxy statement, and matters incident to the
conduct of the Annual Meeting, which discretionary authority will be exercised
in accordance with Rule 14a-4 promulgated by the SEC pursuant to the Securities
Exchange Act of 1934, as amended.
Voting, Quorum
Only stockholders of record of each Fund on ___________, 2009 (the "Record
Date") will be entitled to vote at the Annual Meeting. According to information
contained in the Funds' Proxy Statements, there were [15,715,596.80] shares of
Common Stock and [1,140] shares of preferred shares of SRQ issued and
outstanding as of the Record Date, and _______________ shares of Common Stock
and _________ shares of preferred shares of SRO issued and outstanding as of the
Record Date.
The presence at the Annual Meeting, in person or by proxy, of stockholders
entitled to cast a majority of the votes entitled to be cast at the Annual
Meeting shall be necessary and sufficient to constitute a quorum for the
transaction of business. For purposes of determining the presence of a quorum
for transacting business at the Annual Meeting, abstentions and broker
"non-votes" will be treated as shares that are present at the Annual Meeting.
Broker non-votes are proxies from brokers or nominees when the broker or nominee
has neither received instructions from the beneficial owner or other persons
entitled to vote nor has discretionary power to vote on a particular matter.
Holders of record on the Record Date will be entitled to cast one vote on each
matter for each share of common stock and each series of preferred stock
outstanding and entitled to vote thereon, voting together as a single class. The
election of a director of each Fund requires the affirmative vote of a majority
of the shares of the Fund stock outstanding and entitled to vote in the
election. Abstentions and broker non-votes will have the effect of a "no" vote
on the Proposals. Abstentions and Broker non-votes will be treated as a vote
against the election of a Trust Nominee as a director.
The Trust recommends that stockholders vote FOR the election of the Nominees and
in favor of the Proposals as proposed in the joint Proxy Statement.
Stockholders are urged to forward their voting instructions promptly.
A proxy which is properly executed and returned accompanied by instructions to
withhold authority to vote represents a broker "non-vote" (i.e., shares held by
brokers or nominees as to which (i) instructions have not been received from the
beneficial owners or persons entitled to vote and (ii) the broker or nominee
does not have discretionary voting power on a particular matter). Proxies that
reflect abstentions or broker non-votes will be counted as shares that are
present and entitled to vote on the matter for purposes of determining the
presence of a quorum. Under Maryland law, abstentions and broker non-votes do
not constitute a vote "for" or "against" a matter and will be disregarded in
determining "votes cast" on an issue.
Revocation of Proxies
You may revoke any proxy given in connection with the Annual Meeting (whether
given to the Fund or to the Trust) at any time prior to the voting thereof at
the Annual Meeting by delivering a written revocation of your proxy to the
Secretary of the Fund or with the presiding officer at the Annual Meeting, by
executing and delivering a later dated proxy to the Trust or the Fund or their
solicitation agents, or by voting in person at the Annual Meeting. Attendance at
the Annual Meeting will not in and of itself revoke a proxy.
There is no limit on the number of times that you may revoke your proxy prior to
the Annual Meeting. Only the latest dated, properly signed proxy card will be
counted.
IF YOU HAVE ALREADY SENT A WHITE OR OTHER PROXY CARD TO THE BOARD OF DIRECTORS
OF THE FUNDS, YOU MAY REVOKE THAT PROXY AND VOTE FOR THE TRUST'S PROPOSALS BY
SIGNING, DATING AND MAILING THE ENCLOSED GREEN PROXY CARD(S) IN THE ENVELOPE
PROVIDED. A GREEN PROXY CARD THAT IS RETURNED TO THE TRUST OR ITS AGENT WILL BE
VOTED AS YOU INDICATE THEREON. IF YOU HAVE SIGNED THE GREEN PROXY CARD AND NO
MARKING OR OTHER INDICATION OF YOUR VOTE THEREON IS MADE, YOU WILL BE DEEMED TO
HAVE GIVEN A DIRECTION TO VOTE ALL THE SECURITIES REPRESENTED BY THE GREEN PROXY
CARD FOR THE ELECTION OF THE TRUST NOMINEES AND IN FAVOR OF THE PROPOSALS
DESCRIBED IN THIS PROXY STATEMENT.
INFORMATION CONCERNING THE TRUST
As of the Record Date, the Trust held 2,596,016 shares of Common Stock,
representing approximately 16.5% of the outstanding shares of Common Stock of
SRQ. As of the Record Date, the Trust held 1,915,835 shares of Common Stock,
representing approximately 5.1% of the outstanding shares of Common Stock of
SRO. As of the Record Date, the Trust does not own any shares of Preferred Stock
of SRO or SRQ.
The Trust is an irrevocable grantor trust settled, administered and governed in
accordance with Alaska law, for which Alaska Trust Company ("ATC") is Trustee
and holds sole voting power and dispositive rights as to all securities owned by
the Trust in the Funds. The Trust was established for estate planning purposes
in 1998 by Susan L. Ciciora, the daughter of Stewart R. Horejsi, primarily for
the benefit of her issue, her brother John S. Horejsi, and the Horejsi
Charitable Foundation, a South Dakota non-profit corporation. The Trust is
authorized to hold property of any kind and invests primarily in marketable
securities. Stewart R. Horejsi is the father of Susan L. Ciciora and serves from
time to time as an investment advisor to the Trust. The business address of the
Trust in its state of domicile is: c/o Alaska Trust Company, 1029 West Third
Avenue, Suite 510, Anchorage, AK 99501-1981, and the business telephone number
of the Trust is (907) 278-6775.
Information regarding purchases of shares of Common Stock of SRQ and SRO by the
Trust during the last two years is set forth in Exhibit A attached hereto and
made a part of this joint proxy statement. During that period, the Trust has not
sold any shares of either SRQ or SRO.
ATC is a state-chartered public trust company organized under the laws of Alaska
which is authorized to do business as a public trust company and which
administers various individual, family, and other trusts, including among them
the Trust and other trusts associated with Mr. Horejsi's family. The business
address of ATC is 1029 West Third Avenue, Suite 510, Anchorage, AK 99501-1981.
The stockholders of ATC are Stewart West Indies Trust (98% equity ownership),
one of the Horejsi Entities, and Douglas Blattmachr (2% equity ownership). The
officers and directors of ATC are Mr. Blattmachr (President and Director),
Stephen C. Miller (Vice President and Director), Brandon Cintula (Vice President
and Director), Larry L. Dunlap (Director) and Richard Thwaites
(Secretary/Treasurer and Director). ATC, by way of its role as the trustee of
the Trust, may be deemed to control the Trust and may be deemed to possess
indirect beneficial ownership of shares it owns in its capacity as Trustee, in
addition to its direct beneficial ownership, as Trustee of the Trust. In
addition, by virtue of their position as directors or executive officers of ATC,
certain persons who act in such capacity as directors or officers of ATC may be
deemed to control ATC and therefore indirectly to control the Trust. However,
none of the directors or officers of ATC, acting alone, can vote or exercise
dispositive authority over shares held by the Trust. Accordingly, the directors
and officers of ATC disclaim beneficial ownership of the shares beneficially
owned, directly or indirectly, by the Trust. As a result of his advisory role
with the Trust, Stewart R. Horejsi may be deemed to have indirect beneficial
ownership over the shares directly beneficially owned by the Trust. However, Mr.
Horejsi disclaims beneficial ownership of these shares.
BENEFICIAL OWNERSHIP OF COMMON STOCK HELD BY THE BENEFICIARY OF THE TRUST
The following table sets forth certain information as of the Record Date
regarding the beneficial ownership of shares of Common Stock by each indirect
beneficial owner of shares over which the Trust itself is the record owner and
holds solve voting control and sole dispositive power and where the named
indirect beneficial owner holds more than 5% of the outstanding shares of voting
securities of a Fund (as reflected in Form 13D filings made by the Trust with
the SEC).
------------------------------------------------- -------------------------------------------------
SRQ SRO
- --------------------------- ------------------------------------------------- -------------------------------------------------
- --------------------------- ------------------------ ------------------------ ------------------------ ------------------------
Name and Address Number of Shares Percentage Number of Shares Percentage
Beneficially Owned Beneficially Owned Beneficially Owned Beneficially Owned
- --------------------------- ------------------------ ------------------------ ------------------------ ------------------------
- --------------------------- ------------------------ ------------------------ ------------------------ ------------------------
Susan L. Ciciora Trust
1029 West Third Avenue 2,596,016 16.5% 1,915,835 5.1%
Suite 510
Anchorage, AK 99501
- --------------------------- ------------------------ ------------------------ ------------------------ ------------------------
Certain information regarding the incumbent members of the board of directors of
the Funds and the beneficial ownership of each Fund's directors, management and
5% stockholders is contained in the Funds' respective proxy statements. The
information contained in each Fund's public filings indicates that, as of the
Record Date, the Funds' respective directors and officers together owned less
than 1% of the total outstanding voting securities of each Fund. The Trust takes
no responsibility for the accuracy or completeness of information contained in
the Funds' respective public filings
THE SOLICITATION
The Trust has engaged Morrow & Co., LLC as its proxy solicitation agent for both
SRQ and SRO. Proxies will be solicited by mail and, if necessary to obtain the
requisite stockholder representation, by telephone, personal interview or by
other means. Certain officers, directors or employees of entities related to the
Trust or the Trust's proxy solicitation agent, Morrow & Co., LLC, may solicit
proxies.
Banks, brokerage houses and other custodians, nominees and fiduciaries will be
requested to forward this Proxy Statement and the accompanying GREEN proxy
card(s) to the beneficial owner of shares of Common Stock and/or Preferred Stock
for whom they hold of record and the Trust will reimburse them for their
reasonable out-of-pocket expenses.
The expenses related to this proxy solicitation will be borne by the Trust. The
Trust estimates that the total amount of expenses to be incurred by it in this
proxy solicitation will be approximately $______ for SRQ and $______ for SRO.
Expenses to date have been approximately $______. The Trust will not seek
reimbursement of its proxy related expenses from the Funds.
If you have any questions concerning this proxy solicitation or the procedures
to be followed to execute and deliver a proxy, please contact Morrow & Co., LLC
at the address or phone numbers listed below.
Morrow & Co., LLC
470 West Avenue, 3rd Floor
Stamford, CT 06902
Stockholders Call Toll-Free at: (800) 607-0088
Banks and Brokers Call Collect at: (203) 658-9400
Dated: ________________, 2009
EXHIBIT 1
ALL SECURITIES OF THE FUNDS PURCHASED OR SOLD
WITHIN THE PAST TWO YEARS BY THE TRUST
DWS RREEF Real Estate Income Fund, Inc. ("SRQ")
Except as disclosed in this Proxy Statement, the Trust has no interest,
whether direct or indirect, by security holdings or otherwise, in the
Funds. The following table sets forth certain information with respect to
direct purchases and dispositions of shares of Common Stock of SRQ by the
Trust.
- ------------- ---------- ------------
Date Shares Purchase
Price
- ------------- ---------- ------------
12/31/08 5,000 $1.90
12/31/08 10,000 $1.91
12/31/08 11,107 $1.92
1/2/2009 8,500 $2.11
1/2/2009 21,000 $2.12
1/5/2009 100 $2.06
1/5/2009 8,405 $2.17
1/5/2009 5,000 $2.25
1/5/2009 5,000 $2.23
1/5/2009 5,000 $2.22
1/5/2009 5,000 $2.21
1/5/2009 10,000 $2.20
1/6/2009 5,000 $2.27
1/7/2009 10,000 $2.29
1/7/2009 10,000 $2.36
1/7/2009 20,000 $2.37
1/7/2009 35,000 $2.34
1/7/2009 3,000 $2.31
1/7/2009 2,200 $2.25
1/8/2009 5,200 $2.24
1/8/2009 8,257 $2.20
1/8/2009 5,200 $2.21
1/8/2009 500 $2.22
1/9/2009 5,000 $2.23
1/9/2009 45,000 $2.24
1/9/2009 16,100 $2.25
1/9/2009 9,700 $2.26
1/9/2009 30,103 $2.29
1/9/2009 97 $2.28
1/12/2009 63,200 $2.18
1/12/2009 37,700 $2.17
1/12/2009 10,000 $2.16
1/12/2009 3,485 $2.15
1/13/2009 100 $2.13
1/13/2009 5,600 $2.18
1/13/2009 12,600 $2.19
1/13/2009 5,200 $2.20
1/13/2009 62 $2.17
1/14/2009 3,000 $2.15
1/14/2009 1,000 $2.14
1/14/2009 5,000 $2.12
1/14/2009 6,100 $2.08
1/14/2009 14,200 $2.07
1/14/2009 14,100 $2.09
1/15/2009 24,200 $2.00
1/15/2009 8,000 $1.98
1/15/2009 19,462 $1.90
1/15/2009 3,000 $1.92
1/15/2009 3,400 $1.95
1/15/2009 3,000 $2.03
1/15/2009 1,800 $1.96
1/15/2009 100 $2.01
1/16/2009 300 $1.97
1/16/2009 8,300 $2.09
1/16/2009 6,400 $2.08
1/16/2009 7,000 $2.07
1/16/2009 1,000 $2.15
1/16/2009 300 $2.06
1/16/2009 5,100 $2.17
1/16/2009 1,825 $2.13
1/16/2009 2,000 $2.19
1/16/2009 300 $1.99
1/16/2009 400 $2.14
1/16/2009 2,200 $2.03
1/20/2009 22,000 $2.08
1/20/2009 11,400 $2.09
1/20/2009 2,000 $2.13
1/20/2009 6,000 $2.12
1/20/2009 14,500 $2.11
1/20/2009 2,600 $2.10
1/20/2009 40,000 $2.05
1/21/2009 200 $1.99
1/21/2009 2,000 $2.03
1/21/2009 7,000 $2.05
1/21/2009 18,200 $2.06
1/21/2009 2,500 $2.07
1/21/2009 100 $2.12
1/21/2009 2,500 $2.14
1/22/2009 33,300 $2.12
1/22/2009 5,900 $2.13
1/22/2009 5,700 $2.11
1/22/2009 100 $2.16
1/22/2009 100 $2.18
1/22/2009 1,600 $2.19
1/22/2009 5,000 $2.17
1/22/2009 400 $2.14
1/23/2009 2,100 $2.02
1/23/2009 3,400 $2.10
1/23/2009 2,242 $2.07
1/23/2009 2,800 $2.09
1/23/2009 254 $2.12
1/23/2009 7,300 $2.14
1/26/2009 100 $2.16
1/26/2009 800 $2.18
1/26/2009 2,500 $2.19
1/26/2009 10,000 $2.14
1/26/2009 11,400 $2.13
1/26/2009 1,000 $2.11
1/26/2009 3,300 $2.12
1/26/2009 350 $2.09
1/27/2009 1,300 $2.20
1/27/2009 3,700 $2.16
1/27/2009 13,600 $2.19
1/27/2009 2,500 $2.22
1/27/2009 100 $2.17
1/27/2009 843 $2.15
1/28/2009 8,015 $2.26
1/28/2009 19,071 $2.27
1/28/2009 5,000 $2.17
1/28/2009 1,800 $2.21
1/28/2009 200 $2.22
1/28/2009 3,900 $2.25
1/28/2009 2,000 $2.29
1/28/2009 1,000 $2.28
1/28/2009 9,980 $2.30
1/28/2009 1,900 $2.23
1/28/2009 100 $2.24
1/29/2009 3,490 $2.29
1/29/2009 4,000 $2.31
1/29/2009 17,500 $2.33
1/29/2009 1,300 $2.32
1/29/2009 5,000 $2.30
1/29/2009 5,000 $2.27
1/29/2009 5,000 $2.26
1/30/2009 6,400 $2.20
1/30/2009 2,000 $2.23
1/30/2009 5,000 $2.22
1/30/2009 5,000 $2.21
1/30/2009 5,000 $2.19
1/30/2009 12,001 $2.18
2/2/2009 6,238 $2.05
2/2/2009 7,596 $2.09
2/2/2009 5,572 $2.11
2/2/2009 3,300 $2.12
2/2/2009 8,500 $2.10
2/2/2009 2,500 $2.14
2/2/2009 1,700 $2.06
2/3/2009 114 $2.09
2/3/2009 20,286 $2.12
2/3/2009 2,700 $2.14
2/3/2009 3,000 $2.13
2/4/2009 3,200 $2.17
2/4/2009 5,000 $2.16
2/4/2009 12,000 $2.14
2/4/2009 10,718 $2.13
2/4/2009 4,722 $2.12
2/5/2009 10,000 $2.06
2/5/2009 3,000 $2.00
2/5/2009 2,200 $2.09
2/5/2009 1,200 $2.08
2/5/2009 26,000 $2.07
2/5/2009 7,197 $2.05
2/5/2009 5,300 $1.97
2/5/2009 100 $2.03
2/9/2009 2,500 $2.17
2/9/2009 30,000 $2.16
2/9/2009 1,009 $2.15
2/10/2009 12,100 $2.13
2/10/2009 10,000 $2.12
02/10/09 10,000 $2.11
02/10/09 20,000 $2.10
02/10/09 6,929 $2.09
02/12/09 2,617 $1.89
02/13/09 20,000 $1.88
02/13/09 4,734 $1.87
02/17/09 6,800 $1.67
02/17/09 4,600 $1.69
02/17/09 1,600 $1.70
02/17/09 20,000 $1.71
02/17/09 6,000 $1.68
02/18/09 5,000 $1.64
02/18/09 3,000 $1.60
02/18/09 5,000 $1.58
02/18/09 10,000 $1.57
02/18/09 600 $1.55
02/18/09 2,450 $1.56
02/19/09 5,000 $1.60
02/19/09 9,000 $1.59
02/19/09 10,000 $1.58
02/20/09 8,000 $1.46
02/20/09 5,000 $1.50
02/20/09 300 $1.45
02/20/09 4,176 $1.39
02/20/09 1,211 $1.49
02/23/09 19,300 $1.44
02/23/09 9,636 $1.45
02/23/09 16,600 $1.43
02/24/09 7,000 $1.35
02/24/09 6,000 $1.36
02/24/09 2,400 $1.40
02/24/09 3,000 $1.39
02/24/09 100 $1.44
02/24/09 3,100 $1.33
02/24/09 6,000 $1.47
02/24/09 1,550 $1.34
02/24/09 2,000 $1.46
02/24/09 2,800 $1.41
02/25/09 8,000 $1.44
02/25/09 5,000 $1.55
02/25/09 992 $1.46
02/25/09 300 $1.41
02/25/09 5,000 $1.53
02/26/09 13,300 $1.59
02/26/09 5,674 $1.61
02/26/09 10,842 $1.60
02/26/09 5,200 $1.58
02/26/09 5,000 $1.57
02/26/09 5,000 $1.56
02/26/09 5,000 $1.55
02/26/09 3,100 $1.54
02/26/09 700 $1.52
02/27/09 333 $1.46
02/27/09 3,000 $1.50
02/27/09 4,667 $1.49
02/27/09 5,000 $1.47
03/02/09 6,000 $1.38
03/02/09 15,300 $1.36
03/02/09 5,000 $1.35
03/02/09 2,000 $1.30
03/02/09 1,020 $1.27
03/03/09 15,000 $1.25
03/03/09 14,000 $1.26
03/03/09 7,000 $1.24
03/03/09 4,300 $1.23
03/04/09 6,399 $1.23
03/04/09 241 $1.21
03/04/09 4,000 $1.25
03/04/09 5,000 $1.24
03/05/09 5,000 $1.15
03/06/09 14,700 $0.95
03/06/09 20,800 $0.92
03/06/09 7,000 $0.93
03/06/09 5,000 $0.91
03/06/09 5,000 $0.94
03/09/09 5,000 $0.92
03/09/09 5,000 $0.94
03/09/09 8,000 $0.95
03/09/09 8,000 $0.96
03/10/09 4,298 $1.09
03/11/09 5,500 $1.14
03/11/09 10,000 $1.21
03/11/09 1,800 $1.20
03/11/09 10,100 $1.22
03/11/09 5,000 $1.24
03/11/09 3,100 $1.23
03/11/09 7,500 $1.25
03/11/09 20,600 $1.26
03/12/09 2,000 $1.32
03/12/09 10,000 $1.33
03/12/09 10,000 $1.34
03/12/09 200 $1.30
03/12/09 300 $1.19
03/13/09 2,555 $1.31
03/13/09 4,857 $1.32
03/16/09 5,100 $1.29
03/16/09 10,000 $1.28
03/16/09 940 $1.31
03/16/09 5,000 $1.27
03/17/09 5,000 $1.27
03/17/09 5,000 $1.24
03/17/09 7,700 $1.23
03/17/09 10,000 $1.31
03/17/09 5,500 $1.30
03/18/09 900 $1.35
03/19/09 41,400 $1.63
03/19/09 14,300 $1.62
03/19/09 18,600 $1.64
03/19/09 15,091 $1.61
03/19/09 14,400 $1.65
03/19/09 6,609 $1.60
03/20/09 9,100 $1.52
03/20/09 2,900 $1.53
03/20/09 19,900 $1.57
03/20/09 99,000 $1.56
03/20/09 5,000 $1.55
03/23/09 25,050 $1.54
03/23/09 10,000 $1.50
03/23/09 5,000 $1.52
03/23/09 50 $1.53
03/23/09 42,000 $1.55
03/23/09 3,000 $1.56
03/23/09 14,982 $1.57
03/24/09 200 $1.60
04/02/09 416,112 $1.74
The total amount of funds required by the Trust to purchase the Shares as
reported above was $4,732,770.57. Such funds were provided by the Trust's
cash on hand. Cash requirements for future purchases of the Shares may come
from cash on hand and/or inter-trust advances made through a Revolving
Credit Loan Agreement as previously described in the Trust's Schedule 13D,
as amended, filed, with the SEC on February 5, 2009 and amended on April 3,
2009.
DWS RREEF Real Estate Income Fund II, Inc. ("SRO")
Except as disclosed in this Proxy Statement, the Trust has no interest,
whether direct or indirect, by security holdings or otherwise, in the
Funds. The following table sets forth certain information with respect to
direct purchases and dispositions of shares of Common Stock of SRO by the
Trust.
- ------------- ---------- ------------
Purchase
Date Shares Price
- ------------- ---------- ------------
12/31/08 7,112 $0.63
12/31/08 27,000 $0.65
12/31/08 21,763 $0.64
1/2/2009 9,171 $0.67
1/2/2009 22,530 $0.71
1/2/2009 64,500 $0.72
1/2/2009 40,000 $0.73
1/2/2009 42,000 $0.74
1/2/2009 10,000 $0.75
1/5/2009 22,000 $0.75
1/5/2009 52,000 $0.81
1/5/2009 115,336 $0.82
1/5/2009 18,800 $0.80
1/6/2009 70,000 $0.86
1/6/2009 5,000 $0.83
1/7/2009 33,000 $0.90
1/7/2009 123,700 $0.89
1/7/2009 93,400 $0.88
1/7/2009 2,684 $0.87
1/8/2009 33,700 $0.82
1/8/2009 28,169 $0.84
1/8/2009 2,200 $0.81
1/8/2009 600 $0.83
1/9/2009 20,000 $0.82
1/9/2009 10,000 $0.81
1/9/2009 20,000 $0.83
1/9/2009 21,700 $0.84
1/9/2009 25,000 $0.85
1/9/2009 4,853 $0.80
1/12/2009 10,000 $0.83
1/12/2009 46,400 $0.82
1/12/2009 56,900 $0.81
1/12/2009 75,300 $0.80
1/12/2009 5,050 $0.79
1/13/2009 78,860 $0.80
1/13/2009 29,200 $0.79
1/13/2009 3,031 $0.78
1/14/2009 14,800 $0.78
1/14/2009 60,000 $0.77
1/14/2009 1,995 $0.76
1/15/2009 20,000 $0.68
1/15/2009 10,000 $0.72
1/15/2009 5,000 $0.73
1/16/2009 5,000 $0.76
1/16/2009 51,700 $0.74
1/16/2009 22,066 $0.73
1/20/2009 80,000 $0.76
1/20/2009 105,000 $0.75
1/20/2009 50,000 $0.74
1/21/2009 5,000 $0.68
1/21/2009 10,000 $0.71
1/21/2009 500 $0.69
1/22/2009 28,796 $0.75
1/22/2009 12,973 $0.74
1/22/2009 48,200 $0.76
1/22/2009 10,336 $0.77
1/22/2009 10,000 $0.78
1/22/2009 1,900 $0.73
1/23/2009 13,148 $0.75
1/23/2009 9,700 $0.76
1/23/2009 11,862 $0.77
1/23/2009 5,700 $0.71
1/23/2009 900 $0.74
1/26/2009 20,000 $0.78
1/26/2009 10,000 $0.76
1/26/2009 10,000 $0.77
1/27/2009 100 $0.74
2/25/2009 25,100 $0.40
2/25/2009 5,000 $0.39
The total amount of funds required by the Trust to purchase the Shares as
reported above was $1,502,514.05. Such funds were provided by the Trust's
cash on hand. Cash requirements for future purchases of the Shares may come
from cash on hand and/or inter-trust advances made through a Revolving
Credit Loan Agreement as previously described in the Trust's Schedule 13D
filed with the SEC on March 9, 2009.
If you have any questions, require assistance in voting your GREEN proxy card
or need additional copies of our proxy materials, please contact
Morrow & Co., LLC at the address or phone numbers listed below.
Morrow & Co., LLC
470 West Avenue, 3rd Floor
Stamford, CT 06902
Stockholders Call Toll-Free at: (800) 607-0088
Banks and Brokers Call Collect at: (203) 658-9400
PROXY CARD
THIS PROXY IS SOLICITED IN SUPPORT OF THE SUSAN L. CICIORA TRUST'S
PROPOSALS FOR DWS RREEF REAL ESTATE FUND, INC.
Proxy for the __________, 2009 Annual Meeting of Stockholders of DWS RREEF Real
Estate Fund, Inc.
The undersigned holder of shares of voting securities of DWS RREEF Real Estate
Fund, Inc., a Maryland corporation (the "Fund"), hereby appoints Stephen C.
Miller, Esq., Joel L. Terwilliger, Esq., and Thomas R. Stephens, Esq., or any of
them, as attorneys and proxies for the undersigned, with full powers of
substitution and revocation, to represent the undersigned and to vote on behalf
of the undersigned all shares of Common Stock that the undersigned is entitled
to vote at the Annual Meeting of Stockholders of the Fund to be held at
_____________, _______, 2009 at ___________, and any adjournments or
postponements thereof. The undersigned hereby acknowledges receipt of the
Trust's Proxy Statement and hereby instructs said attorneys and proxies to vote
said shares as indicated hereon. In their discretion, the proxies are authorized
to vote upon such other business as may properly come before the Annual Meeting.
A majority of the proxies present and acting at the Annual Meeting in person or
by substitute (or, if only one shall be so present, than that one) shall have
and may exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
IMPORTANT:
Please indicate your vote by an "X" in the appropriate boxes below. This proxy,
if properly executed, will be voted in the manner directed by the undersigned
stockholder.
Please refer to the Proxy Statement for more details.
The Trust recommends stockholders vote FOR all the Proposals below.
1. A proposal to terminate the Investment Management Agreement between the
Fund and Deutsche Asset Management, Inc. FOR AGAINST ABSTAIN
/---/ /---/ /---/
2. A proposal to terminate the Investment Advisory Agreement between Deutsche
Asset Management, Inc. and RREEF America, L.L.C.
FOR AGAINST ABSTAIN
/---/ /---/ /---/
3. Election of Trust Nominees as board members for Class III directorships of
the Fund, namely Susan L. Ciciora, Richard I. Barr, FOR ALL TRUST WITHHOLD ABSTAIN
and Joel W. Looney (each a "Trust Nominee" and collectively, the NOMINEES AUTHORITY TO
"Trust Nominees"). VOTE FOR ALL
/___/ TRUST NOMINEES /___/
To withhold authority to vote for any individual Trust Nominee(s), write the
name(s) of the Trust Nominee(s) on the line below: /___/
- ----------------------------------------------------------
4. A proposal recommending that the Board change the name of the Fund so that
it does not include "DWS" or reference to the DWS family of funds.
FOR AGAINST ABSTAIN
/___/ /___/ /___/
5. A proposal recommending that the Board amend the Fund's Charter
vesting in the stockholders the power to amend or adopt the Bylaws FOR AGAINST ABSTAIN
by the affirmative vote of a majority of all votes entitled to be
cast on the matter. /___/ /___/ /___/
6. A proposal recommending that the Board amend the Fund's Charter to
set the number of members of the Board to five. FOR AGAINST ABSTAIN
/___/ /___/ /___/
7. A proposal recommending that the Board amend the Fund's Charter to
de-classify the Board and provide for the annual election of FOR AGAINST ABSTAIN
directors.
/___/ /___/ /___/
8. A proposal recommending that the Board amend the Fund's Charter to
provide that the Secretary of the Fund shall call a special meeting FOR AGAINST ABSTAIN
of stockholders on the written request of stockholders
entitled to cast at least 25% of all votes entitled to be cast at the
meeting. /___/ /___/ /___/
9. A proposal recommending that the Board amend the Bylaws to reduce
the number of directors and declassify the Board. FOR AGAINST ABSTAIN
/___/ /___/ /___/
10. A proposal recommending that the Board amend the Bylaws such that
authority to amend the Bylaws is not vested solely in the Board. FOR AGAINST ABSTAIN
/___/ /___/ /___/
11. A proposal recommending that the Board resolve to negate its
opt-in election to be subject to Maryland Control Share Acquisition FOR AGAINST ABSTAIN
Act so that the Fund will no longer be subject to said
Act.
/___/ /___/ /___/
12. A proposal recommending that the Board resolve to terminate the
rights agreements dated April 9, 2009, whereby future purchases of FOR AGAINST ABSTAIN
the Fund's shares by the Trust will trigger a dilutive
rights dividend specifically targeted to dilute only the Trust. /___/ /___/ /___/
13. A proposal recommending that the Board resolve to negate the
applicability of the Maryland Unsolicited Takeover Act ("MUTA"). FOR AGAINST ABSTAIN
/___/ /___/ /___/
The Trust recommends that the stockholders vote FOR the election of all Trust
Nominees and for all Proposals.
IMPORTANT:
Please sign exactly as name appears hereon or on the proxy card previously sent
to you. When shares are held by joint tenants, both should sign. When signing as
an attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by the
President or other duly authorized officer. If a partnership or limited
liability company, please sign in partnership or limited liability company name
by authorized person.
DATE: _____________________ ________________________________
Signature(s)
--------------------------------
Title (if applicable)
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
PROXY CARD
THIS PROXY IS SOLICITED IN SUPPORT OF THE SUSAN L. CICIORA TRUST'S
PROPOSALS FOR DWS RREEF REAL ESTATE FUND II, INC.
Proxy for the __________, 2009 Annual Meeting of Stockholders of DWS RREEF Real
Estate Fund II, Inc.
The undersigned holder of shares of voting securities of DWS RREEF Real Estate
Fund II, Inc., a Maryland corporation (the "Fund"), hereby appoints Stephen C.
Miller, Esq., Joel L. Terwilliger, Esq., and Thomas R. Stephens, Esq., or any of
them, as attorneys and proxies for the undersigned, with full powers of
substitution and revocation, to represent the undersigned and to vote on behalf
of the undersigned all shares of Common Stock that the undersigned is entitled
to vote at the Annual Meeting of Stockholders of the Fund to be held at
______________, _______, 2009 at TIME, and any adjournments or postponements
thereof. The undersigned hereby acknowledges receipt of the Trust's Proxy
Statement and hereby instructs said attorneys and proxies to vote said shares as
indicated hereon. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the Annual Meeting. A majority
of the proxies present and acting at the Annual Meeting in person or by
substitute (or, if only one shall be so present, than that one) shall have and
may exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
IMPORTANT:
Please indicate your vote by an "X" in the appropriate boxes below. This proxy,
if properly executed, will be voted in the manner directed by the undersigned
stockholder.
Please refer to the Proxy Statement for more details.
The Trust recommends stockholders vote FOR all the Proposals below.
1. A proposal to terminate the Investment Management Agreement between
the Fund and Deutsche Asset Management, Inc. FOR AGAINST ABSTAIN
/___/ /___/ /___/
2. A proposal to terminate the Investment Advisory Agreement between
Deutsche Asset Management, Inc. and RREEF America, L.L.C.. FOR AGAINST ABSTAIN
/___/ /___/ /___/
3. Election of Trust Nominees as board members for Class III
directorships of the Fund, namely Susan L. Ciciora, Richard I. Barr, FOR ALL TRUST WITHHOLD ABSTAIN
and Joel W. Looney (each a "Trust Nominee" and collectively, the NOMINEES AUTHORITY TO
"Trust Nominees"). /___/ VOTE FOR ALL /___/
TRUST NOMINEES
To withhold authority to vote for any individual Trust Nominee(s), write the
name(s) of the Trust Nominee(s) on the line below: /___/
- -----------------------------------------------------------
4. A proposal recommending that the Board change the name of the Fund
so that it does not include "DWS" or reference to the DWS family of FOR AGAINST ABSTAIN
funds.
/___/ /___/ /___/
5. A proposal recommending that the Board amend the Fund's Charter
vesting in the stockholders the power to amend or adopt the Bylaws by FOR AGAINST ABSTAIN
the affirmative vote of a majority of all votes entitled
to be cast on the matter. /___/ /___/ /___/
6. A proposal recommending that the Board amend the Fund's Charter to
set the number of members of the Board to five. FOR AGAINST ABSTAIN
/___/ /___/ /___/
7. A proposal recommending that the Board amend the Fund's Charter to
de-classify the Board and provide for the annual election of FOR AGAINST ABSTAIN
directors.
/___/ /___/ /___/
8. A proposal recommending that the Board amend the Fund's Charter to
provide that the Secretary of the Fund shall call a special meeting FOR AGAINST ABSTAIN
of stockholders on the written request of stockholders
entitled to cast at least 25% of all votes entitled to be cast at the
meeting. /___/ /___/ /___/
9. A proposal recommending that the Board amend Article 3.2 of the
Bylaws to reduce the number of directors and declassify the Board. FOR AGAINST ABSTAIN
/___/ /___/ /___/
10. A proposal recommending that the Board amend the Bylaws such that
authority to amend the Bylaws is not vested solely in the Board FOR AGAINST ABSTAIN
/___/ /___/ /___/
11. A proposal recommending that the Board resolve to negate its opt-in
election to be subject to the Maryland Control Share Acquisition Act FOR AGAINST ABSTAIN
so that the Fund will no longer be subject to said Act.
/___/ /___/ /___/
12. A proposal recommending that Board resolve to terminate the rights
agreements dated April 9, 2009, whereby future purchases of the FOR AGAINST ABSTAIN
Fund's shares by the Trust will trigger a dilutive rights dividend
specifically targeted to dilute only the Trust /___/ /___/ /___/
13. A proposal recommending that the Board resolve to negate the
applicability of the Maryland Unsolicited Takeovers Act ("MUTA"). FOR AGAINST ABSTAIN
/___/ /___/ /___/
The Trust recommends that the stockholders vote FOR the election of all Trust
Nominees and for all Proposals.
IMPORTANT:
Please sign exactly as name appears hereon or on the proxy card previously sent
to you. When shares are held by joint tenants, both should sign. When signing as
an attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by the
President or other duly authorized officer. If a partnership or limited
liability company, please sign in partnership or limited liability company name
by authorized person.
DATE: _____________________ ________________________________
Signature(s)
--------------------------------
Title (if applicable)
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
* BIA and SIA assumed management of DNY in October, 2007.
WELCOME PAGE LINKS:
[LINK: NEW - Click HERE to read the LATEST Stockholder Proposal for OUR funds]
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]: STOCKHOLDERS TAKING BACK SRQ & SRO
[GRAPHIC OMITTED]: Information regarding your investments in DWS RREEF Real
Estate Fund, Inc. (SRQ) and DWS RREEF Real Estate Fund II, Inc. (SRO).
Header Navigation Links:
|Welcome||Press Releases||Articles & Literature||Proxy Materials||SEC Filings|
|Contact||Important Information|
- --------------------------------------------------------------------------------
ARTICLES & LITERATURE
Stockholders Request SRQ to Call Annual Meeting Immediately [LINK]
Stockholders Request SRO to Call Annual Meeting Immediately [LINK]
Stockholder proposals for SRQ [LINK]
Stockholder proposals for SRO [LINK]
SRQ and SRO: Voters Have Spoken [LINK] - Seeking Alpha (seekingalpha.com) May
22, 2009 [http://seekingalpha.com/article/139201-srq-and-sro-voters-have-spoken]
SRO, SRQ Update: Becoming More Curious [LINK] - Seeking Alpha
(seekingalpha.com) May 4, 2009
[http://seekingalpha.com/article/134929-sro-srq-update-becoming-more-curious]
The Curious Case of DWS Investments [LINK] - Seeking Alpha (seekingalpha.com)
April 21, 2009
[http://seekingalpha.com/article/131943-the-curious-case-of-dws-investments]
Certain DWS Closed-End Funds Declare Monthly and Quarterly Distributions and
Provide Distribution Update [LINK] - Yahoo Finance (finance.yahoo.com) June 5,
2009
[http://finance.yahoo.com/news/Certain-DWS-ClosedEnd-Funds-bw-15454364.html?.v=1
Feedback from Stockholders
June 2009 - Robert Lust [LINK]
June 2009 - Jamie Q [LINK]
July 2009 - Kathleen W. [LINK]
*Permission to use quotation neither sought nor obtained.
Footer Navigation Links:
Welcome | Press Releases | Articles & Literature | Proxy Materials | SEC Filings
Contact | Important Information
WELCOME PAGE LINKS:
[LINK: SET OF PROPOSALS]
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]: STOCKHOLDERS TAKING BACK SRQ & SRO
[GRAPHIC OMITTED]: Information regarding your investments in DWS RREEF Real
Estate Fund, Inc. (SRQ) and DWS RREEF Real Estate Fund II, Inc. (SRO).
Header Navigation Links:
|Welcome||Press Releases||Articles & Literature||Proxy Materials||SEC Filings|
|Contact||Important Information|
- --------------------------------------------------------------------------------
Susan L. Ciciora Trust Proposal Letters to the Funds
Trust's Proposal Letter to SRQ dated February 5, 2009 [LINK]
Trust's Proposal Letter to SRO dated February 25, 2009 [LINK]
Footer Navigation Links:
Welcome | Press Releases | Articles & Literature | Proxy Materials | SEC Filings
Contact | Important Information
Susan L. Ciciora Trust Proposal Letters to the Funds PAGE LINKS:
[LINK: Trust's Proposal Letter to SRQ dated February 5, 2009]
SUSAN L. CICIORA TRUST
c/o Stephen C. Miller, P.C.
2344 Spruce Street, Suite A
Boulder, Colorado 80302
February 5, 2009
By Federal Express and U.S. Certified Mail
Corporate Secretary, DWS RREEF Real Estate Fund, Inc. (the "Fund")
345 Park Avenue
New York, NY 10154-0004
John Millette
c/o Deutsche Asset Management, Inc.
Two International Place
Boston, Massachusetts 02110
To the Corporate Secretary of the Fund:
Pursuant to the provisions of the Fund's by-laws and organizational documents
and other public documents filed by the Fund with the Securities and Exchange
Commission (the "SEC"), I hereby notify you on behalf of the Susan L. Ciciora
Trust (the "Trust") that, at the Fund's upcoming 2009 annual meeting of
stockholders (the "2009 Stockholders' Meeting"), the Trust intends to nominate
candidates for election as directors of the Fund and introduce certain proposals
(collectively, the "Proposals"). The Proposals conform with the notice
requirements of the Fund's most recent proxy filed with the SEC on May 28, 2008,
and the Fund's bylaws as filed with the SEC on October 28, 2002 (the "2002
Bylaws"). It appears, based on recent proxies, that the Fund may have amended
its bylaws since the 2002 Bylaws. If the bylaws have changed since the 2002
Bylaws, please provide us with a true and correct copy of the current bylaws.
Please note that the personal and other information contained herein and in the
attached exhibits is to be treated as strictly confidential.
The Proposals are as follows:
1. A proposal to terminate the Investment Management Agreement between the
Fund and Deutsche Asset Management, Inc. (the "Investment Manager") (the
"Management Agreement").
2. A proposal to terminate the Investment Advisory Agreement between the
Investment Manager and RREEF America, L.L.C. (the "Investment Adviser") (the
"Advisory Agreement").
DWS RREEF Real Estate Fund, Inc.
February 5, 2009
Page 2
The Investment Manager and Investment Adviser are referred to herein as the
"Managers". Justification for Proposals 1 and 2 above is simple: The Fund's
performance over the past year under the Managers has been more than appalling.
It has been one of the worst of any closed-end or open-end funds in the entire
mutual fund universe. In the latest ratings by Morningstar(TM) (December 31,
2008), SRQ received 1 of 5 stars for its overall, 3-and 5-year performance
history, as compared with other similarly situated specialty real estate
closed-end funds. There is no excuse for the extraordinarily poor performance of
SRQ. For the one-year period ending 12/31/08, SRQ had a total return on net
asset value ("NAV") of -81.9%. To nearly wipe out the entire value of a fund in
one year is unheard of, even in a market that saw the S&P 500 Index drop by 37%.
Surprisingly, the market price for SRQ has dropped even more than NAV because
the discount for the fund increased -a decline of 86.4% for the year ending
12/31/08. This loss far exceeds any other market indices for similarly situated
funds. In fact, the Fund lost more than twice the percent lost by the S&P Index.
As noted in an article published January 4, 2009, on seekingalpha.com, SRQ was
one of the "five worst performing closed-end funds in 2008". SRO, another fund
under the Managers, was also one of these infamous five worst performers and
also received the same dismal Morningstar(TM) ratings as its sister-fund, SRQ.
Having one investment manager for two of the five worst performing funds in 2008
clearly indicates that it is time for new investment management for the Fund.
Notwithstanding the above Proposals 1 and 2, the Trust encourages the Board to
terminate the Management Agreement and Advisory Agreement sooner rather than
later. The Board members have a fiduciary duty to the stockholders to make a
change, as the Managers clearly have shown that they should no longer manage the
Fund. It is the duty of the Board to save what little is left in the Fund and
embrace the changes proposed by the Trust. However, if the Board elects not to
pursue this course of action, the Trust intends to pursue the above Proposals in
a proxy contest.
3. Nominate for election by the stockholders the following nominees as
Class III directors for the Fund: Susan l. Ciciora, Richard I. Barr, and Joel W.
looney (collectively, the "Nominees). Copies of the Nominees' resumes are
attached to this letter and contain all information required under Section 3.3
of the 2002 Bylaws.
4. A proposal recommending that the Board of Directors of the Fund (the
"Board") adopt a resolution repealing the applicability of the Maryland
Unsolicited Takeovers Act, Maryland General Corporation law ("MGCL") ss.ss.3-801
through 805 ("MUTA") such that the Fund will no longer be subject to MUTA. MUTA
has the effect of entrenching management and diminishing stockholder influence.
Repeal of MUTA should result in maximizing Board and management accountability
to stockholders.
DWS RREEF Real Estate Fund, Inc.
February 5, 2009
Page 3
5. A proposal recommending that the Board amend Article 7.1 of the Fund's
bylaws (the "Bylaws") to delete the first sentence of Article 7.1, so that
authority to amend the Bylaws is not vested solely in the Board. See discussion
under Proposal 7 below.
6. A proposal recommending that the Board amend Article 3.2 of the Bylaws
to reduce the number of directors and declassify the Board consistent with the
discussion under Proposals 8 and 9 below.
7. A proposal recommending that the Board amend the Fund's charter (the
"Charter") vesting in the stockholders the power to amend or adopt the Bylaws by
the affirmative vote of a majority of all votes entitled to be cast on the
matter. The Trust believes that all stockholders benefit if they have better
access to and more influence in the Fund's governance. The Fund's Bylaws contain
important policies affecting the day-to-day management of the Fund, which the
Trust believes stockholders should have a voice in establishing. Presently the
Bylaws contain a provision which vests the authority to adopt, alter or repeal
Bylaws solely with the Board. The Trust believes that the authority to adopt,
alter or repeal Bylaws should be a shared authority between the Board and
stockholders. This permits the Board to be responsive to house-keeping and
substantive matters regarding Fund operations, while at the same time giving the
owners of the Fund the power to effect changes should they choose to do so. The
Trust also believes that when stockholders "speak" by adopting a Bylaw, their
action should not be subject to being overturned or altered by unilateral action
of a Board whose job it is to serve stockholders. The Trust believes that this
Proposal will accommodate the practicalities of managing the Fund while at the
same time protecting an important right of stockholders. This Proposal would
codify in the Charter the shared authority to make, alter or repeal Bylaws,
while at the same time making it clear that Bylaws that are adopted by
stockholders cannot be altered, repealed or otherwise circumvented without the
affirmative approval of stockholders. If approved by stockholders, the Charter
will be amended to add the following provision:
The Bylaws of the Corporation, whether adopted by the Board of Directors or
the stockholders, shall be subject to amendment, alteration or repeal, and
new Bylaws may be made, by either (a) the affirmative vote of a majority of
all the votes entitled to be cast on the matter; or (b) the Board of
Directors; provided, however, that the Board of Directors may not (i) amend
or repeal a Bylaw that allocates solely to stockholders the power to amend
or repeal such Bylaw, or (ii) amend or repeal Bylaws or make new Bylaws
that conflict with or otherwise alter in any material respect the effect of
Bylaws previously adopted by the stockholders.
DWS RREEF Real Estate Fund, Inc.
February 5, 2009
Page 4
8. A proposal recommending that the Board amend the Charter to set the
number of members of the Board to five. Company charters often contain
provisions that set a high upper-limit on the number of board seats, permitting
the company's board to increase or decrease the number of board seats in their
discretion, subject to this upper limit. Currently the Charter sets a lower
limit as required by MGCL and the upper limit at twelve, permitting the Board to
increase or decrease its size subject to the upper limit of twelve. Boards may
use such provisions to quickly increase or decrease their size in an effort to
dilute the voting impact of directors - such as those elected in proxy contests
- - with views contrary to those of management. The Trust views the ability to
manipulate the number of members on the Board as unnecessary and ultimately
ineffective in thwarting stockholder desires. In addition, it potentially
increases Fund expenses and insulates the Board from stockholders. Common sense
suggests that if the Fund has more Board seats, the Fund (and thus stockholders)
will spend more on Board compensation. The Trust believes that, because of the
relatively narrow business focus of an investment company such as the Fund, five
Directors can adequately and efficiently fulfill their obligation to oversee the
operations of the Fund and its management and act as "watchdogs" for
stockholders. The Trust believes that the best approach is to seek a few highly
qualified individuals to fill directorships and pay them fairly. This way,
stockholders get more "bang for the buck" in their Board and don't pay
unnecessary Board expenses. If approved by stockholders, the Charter will be
amended to delete the entirety of Article VI(l) and replaced with the following
provision:
The number of directors shall be five.
9. A proposal recommending that the Board amend the Charter to de-classify
the Board and provide for the annual election of directors. The election of
directors is the primary means for stockholders to exercise influence over the
Fund and its policies. The Trust believes that classified boards have the effect
of reducing the accountability of directors to a company's stockholders. A
classified board prevents stockholders from electing all directors on an annual
basis and may discourage proxy contests in which stockholders have an
opportunity to vote for a competing slate of nominees. While classified boards
are viewed by some as increasing the long-term stability and continuity of a
board, the Trust believes that, in the case of the Fund, longterm stability and
continuity should result from the annual election of Directors, which provides
stockholders with the opportunity to evaluate Director performance, both
individually and collectively, on an annual basis. If approved by stockholders,
the Charter will be amended to deleted the entirety of Article VI(2) and
replaced with the following provision:
The directors shall be elected at each annual meeting of the stockholders
commencing in 2009, except as necessary to fill any vacancies, and each
director
DWS RREEF Real Estate Fund, Inc.
February 5, 2009
Page 5
elected shall hold office until his or her successor is duly elected and
qualifies, or until his or her earlier resignation, death, or removal.
10. An proposal recommending that the Board amend the Charter to provide
that the Secretary of the Fund shall call a special meeting of stockholders on
the written request of stockholders entitled to cast at least 25% of all votes
entitled to be cast at the meeting. Presently, under the Fund's Bylaws,
stockholders cannot call a special meeting unless a written request is submitted
by the holders of a majority of outstanding shares entitled to vote at the
meeting. This ownership threshold restricts a stockholder's right to call a
meeting. This Proposal would amend the Charter to reduce the percentage
ownership level from a "majority" to 25% of outstanding shares, thus making the
potential for a stockholder or group of stockholders to call a special meeting
more realistic and useful. If approved by stockholders, the Charter will be
amended with the following provision:
The Secretary of the Corporation shall call a special meeting of the
stockholders on the written request of stockholders entitled to cast at
least twenty-five percent (25%) of all the votes entitled to be cast at the
meeting.
11. A proposal recommending that the Board change the name of the Fund so
that it does not include "DWS" or reference to the DWS family of funds, or
investments in real estate or similar securities.
The Trust represents to the Fund that as of the date of this notice it is a
stockholder of record of 1,063,395 shares of the Fund's common stock (the
"Shares") which represents 6.77% of the Fund's total outstanding and issued
shares. The Trust further represents to the Fund that it intends to be present
at the Meeting to nominate the Nominees to serve as directors of the Fund, to
submit the Proposals as contained herein, and to vote its Shares accordingly
with the nominations and proposals as presented by the Trust. The Trust hereby
represents to the Fund that it intends to continue to own, through the date of
the Meeting, these Shares.
If the Fund determines that more than three Class III directors will be elected
at the 2009 Stockholders' Meeting, or the Board expands the number of available
seats on the Board, the Trust intends to nominate candidates for the additional
Board seats and will provide the Fund with the required information for any
additional nominees.
I am also writing in connection with the Schedule 13D that the Trust filed with
the SEC today (a copy of which is attached hereto). The directors of the Fund
will be asked to take a position with respect to the Proposals. As a
representative of the Fund's largest stockholder, I urge the directors to
support these proposals as they are in the best interests of all stockholders of
the Fund and introduce sound corporate governance principals.
DWS RREEF Real Estate Fund, Inc.
February 5, 2009
Page 6
Only 4 of the 12 members of the Board own shares of the Fund.(1) The fact
that 8 of the 12 of these incumbent directors own no shares suggests little
incentive for the current Board to work diligently toward the future success of
the Fund and its stockholders. Certainly, this lack of meaningful ownership
highlights that the incumbents do not have enough faith in the Fund's management
to warrant investing their own money with the Fund. Accordingly, the Trust
believes that the stockholders of the Fund deserve new advisers to provide a
better chance for a positive return on their investment and a more confident
outlook for the Fund's future. In this regard, we recommend that the Board
consider Boulder Investment Advisers, LLC and Stewart Investment Advisers, both
SEC registered investment advisers who advise the Boulder-based group of
closed-end funds.(2)
If the Board agrees with these Proposals, I invite you to discuss with me
at your earliest convenience how we might mutually affect a smooth and
cost-efficient implementation of the Proposals. Please contact me at in writing
at the address provided above if you have questions. Please fax a copy of any
written response to Stephen C. Miller, Esq. at (303) 245-0420.
Sincerely,
The Susan L. Ciciora Trust
/s/ Stewart R. Horejsi/SK
-------------------------------------------
By: Stewart R. Horejsi, its Financial Advisor
Cc: Board of Directors for the Fund
- ----------------------------------
Footnotes:
(1) Based on information from the Fund's most recent Proxy Statement dated
May 28, 2008.
(2) Boulder Total Return Fund, Boulder Growth & Income Fund and The Denali
Fund.
APPENDIX A
Information provided in support of the Trust's Director-Nominees
The stockholder giving notice is the Susan L. Ciciora Trust (the "Trust"),
an irrevocable grantor trust organized by Susan L. Ciciora for the benefit of
her issue, her brother, John S. Horejsi, and the Horejsi Charitable Foundation.
The Trust is domiciled and administered in Alaska by Alaska Trust Company
("ATC"). The Trust's address is c/o Alaska Trust Company, 1029 West Third
Avenue, Suite 400, Anchorage, AK 99501-1981. The Trust, as of February 5, 2009,
owns 1,063,395 shares of the Common Stock of the Fund. The Trust hereby
represents to the Fund that it intends to continue to own these shares through
the date of the Meeting.
The Trust represents to the Fund that it intends to be present at the 2009
annual stockholders' meeting (the "2009 Meeting") to nominate the
Director-nominees and introduce the other proposals as outlined herein and to
vote its shares accordingly. The Trust's nominees as Class III Directors for the
Fund are as follows:
1. Richard I. Barr, Age: 71
2. Susan L. Ciciora, Age: 44
3. Joel W. Looney, Age: 47
(collectively, the "Nominees").
This notice is submitted in reliance on the Fund's current public filings
with the Securities and Exchange Commission, which indicated that three Class
III directors (one of whom will represent both common stockholders and holders
of preferred shares) will be elected at the Fund's 2009 Meeting. If the Fund
determines that more than three Class III directors will be elected at the 2009
Meeting, the Fund is directed to notify the Trust in writing immediately and we
will provide the Fund with the required information for any additional Directors
to be elected.
The business address for each of these Director-nominees is 2344 Spruce
Street, Suite A, Boulder, Colorado 80302. The residential address for each
person and other pertinent information is contained in the resumes appended to
this Appendix A. Messrs. Barr and Looney and Ms. Ciciora will make themselves
available for interviews or to provide further information as reasonably
requested and related to their respective nominations as a director for the
Fund.
The Nominees are not "interested persons" of the Fund as that term is
defined under the 1940 Act. None of the Nominees intend to seek reimbursement
from the Fund of the expenses of any solicitation of proxies should such person
be elected a Director of the Fund.
Additional Information regarding each Nominee's ownership of shares of the Fund:
Common
Common Shares Total shares
Shares directly beneficially owned,
Name owned owned Common
Richard I. Barr 0 0 0
Susan L. Ciciora+/- 0 0 0
Joel W. Looney 0 0 0
<FN>
+/- The Trust is the direct beneficial owner of 1,063,395 shares or
approximately 6.77% of the 15,715,597 Shares outstanding as of January 26, 2009
as reported in the Trust's Schedule 130 filed with the Securities and Exchange
Commission on February 5, 2009 (the "Schedule 13D") and according to information
contained in the Fund's publicly available reports distributed to stockholders.
</FN>
Preferred
Preferred Shares Total shares
Shares directly beneficially owned,
Name owned owned Preferred
Richard I. Barr 0 0 0
Susan L. Ciciora 0 0 0
Joel W. Looney 0 0 0
Susan L. Ciciora Trust Proposal Letters to the Funds PAGE LINKS:
[LINK: Trust's Proposal Letter to SRO dated February 25, 2009]
SUSAN L. CICIORA TRUST
c/o Stephen C. Miller, P.C.
2344 Spruce Street, Suite A
Boulder, Colorado 80302
February 25, 2009
By Federal Express and U.S. Certified Mail
Corporate Secretary, DWS RREEF Real Estate Fund II, Inc. (the "Fund")
345 Park Avenue
New York, NY 10154-0004
John Millette
Vice President and Secretary
c/o Deutsche Asset Management, Inc.
Two International Place
Boston, Massachusetts 02110
Via Facsimile (239) 945-6244 and Email
Dawn-Marie Driscoll
Chairperson
4909 SW 9th Place
Cape Coral FL 33914
To the Corporate Secretary ofthe Fund:
Pursuant to the provisions of the Fund's by-laws and organizational documents
and other public documents filed by the Fund with the Securities and Exchange
Commission (the "SEC"), I hereby notify you on behalf of the Susan L. Ciciora
Trust (the "Trust") that, at the Fund's upcoming 2009 annual meeting of
stockholders (the "2009 Stockholders' Meeting"), the Trust intends to nominate
candidates for election as directors of the Fund and introduce certain proposals
(collectively, the "Proposals"). The Proposals conform with the notice
requirements of the Fund's most recent proxy filed with the SEC on May 28, 2008,
and the Fund's bylaws as filed with the SEC on July 25, 2003 (the "2003
Bylaws"). In order to ensure that the proposals contained herein are based on
the most recent set of organizational documents for the Fund, please provide us
with a true and correct copy of the current bylaws, including any amendments
thereto. Please note that the personal and other information contained herein
and in the attached exhibits is to be treated as strictly confidential.
The Proposals are as follows:
1. A proposal to terminate the Investment Management Agreement between the
Fund and Deutsche Asset Management, Inc. (the "Investment Manager") (the
"Management Agreement").
DWS RREEF Real Estate Fund II, Inc.
February 25, 2009
Page 2
2. A proposal to terminate the Investment Advisory Agreement between the
Investment Manager and RREEF America, L.L.C. (the "Investment Adviser") (the
"Advisory Agreement").
The Investment Manager and Investment Adviser are referred to herein as the
"Managers". Justification for Proposals 1 and 2 above is simple: The Fund's
performance over the past year under the Managers has been more than appalling.
It has been one of the worst of any c1osedend or open-end funds in the entire
mutual fund universe. In the latest ratings by Morningstar(TM) (January 31,
2009), SRO received 1 of 5 stars for its overall, 3-and 5-year performance
history, as compared with other similarly situated specialty real estate
closed-end funds. There is no excuse for the extraordinarily poor performance of
SRO. For the one-year period ending 12/31/08, SRO had a total return on net
asset value ("NAV") of -91.6%. To nearly wipe out the entire value of a fund in
one year is unheard of, even in a market that saw the S&P 500 Index drop by 37%
in that same time frame. Surprisingly, the market price for SRO has dropped even
more than NAV because the discount for the fund increased -a decline of 93.5%
for the year ending 12/31/08. This loss far exceeds any other market indices for
similarly situated funds. In fact, the Fund lost more than twice the percent
lost by the S&P Index. As noted in an article published December 16, 2008 on
seekingalpha.com, SRO was "the worst performing closed end fund". SRQ, another
fund under the Managers, was one of the infamous five worst performers as named
by seekingalpha.com (in an article published January 4, 2009, SRQ was named one
of the "five worst performing closed-end funds in 2008"). SRQ also received the
same dismal Morningstar(TM) ratings as its sister-fund, SRO. Having one
investment manager for two of the five worst performing funds in 2008 clearly
indicates that it is time for new investment management for the Fund.
Notwithstanding the above Proposals 1 and 2, the Trust encourages the Board to
terminate the Management Agreement and Advisory Agreement sooner rather than
later. The Board members have a fiduciary duty to the stockholders to make a
change, as the Managers clearly have shown that they should no longer manage the
Fund. It is the duty of the Board to save what little is left in the Fund and
embrace the changes proposed by the Trust. However, if the Board elects not to
pursue this course of action, the Trust intends to pursue the above Proposals in
a proxy contest.
3. Nominate for election by the stockholders the following nominees as
Class III directors for the Fund: Susan L. Ciciora, Richard I. Barr, and Joel W.
Looney (collectively, the "Nominees). Copies of the Nominees' resumes are
attached to this letter and contain all information required under Article 2,
ss. 11 of the 2003 Bylaws.
4. A proposal recommending that the Board of Directors of the Fund (the
"Board") amend Article XIII of the Fund's bylaws (the "Bylaws") such that
authority to amend the Bylaws is not vested solely in the Board. See discussion
under Proposal 6 below.
DWS RREEF Real Estate Fund II, Inc.
February 25, 2009
Page 3
5. A proposal recommending that the Board amend Article III, ss. 2 of the
Bylaws to reduce the number of directors and declassify the Board consistent
with the discussion under Proposals 7 and 8 below.
6. A proposal recommending that the Board amend the Fund's charter (the
"Charter") vesting in the stockholders the power to amend or adopt the Bylaws by
the affirmative vote of a majority of all votes entitled to be cast on the
matter. The Trust believes that all stockholders benefit if they have better
access to and more influence in the Fund's governance. The Fund's Bylaws contain
important policies affecting the day-to-day management of the Fund, which the
Trust believes stockholders should have a voice in establishing. Presently the
Bylaws contain a provision which vests the authority to adopt, alter or repeal
Bylaws solely with the Board. The Trust believes that the authority to adopt,
alter or repeal Bylaws should be a shared authority between the Board and
stockholders. This permits the Board to be responsive to house-keeping and
substantive matters regarding Fund operations, while at the same time giving the
owners of the Fund the power to effect changes should they choose to do so. The
Trust also believes that when stockholders "speak" by adopting a Bylaw, their
action should not be subject to being overturned or altered by unilateral action
of a Board whose job it is to serve stockholders. The Trust believes that this
Proposal will accommodate the practicalities of managing the Fund while at the
same time protecting an important right of stockholders. This Proposal would
codify in the Charter the shared authority to make, alter or repeal Bylaws,
while at the same time making it clear that Bylaws that are adopted by
stockholders cannot be altered, repealed or otherwise circumvented without the
affirmative approval of stockholders. If recommended by the Board and approved
by stockholders, the Charter will be amended to add the following provision:
The Bylaws of the Corporation, whether odopted by the Board of Directors or
the stockholders, shall be subject to amendment, alteration or repeal, and
new Bylaws may be made, by either (a) the affirmative vote of a majority of
all the votes entitled to be cast on the matter; or (b) the Board of
Directors; pravided, however, that the Board of Directors may not (i) amend
or repeal a Bylaw that allocates solely to stockholders the power to amend
or repeal such Bylaw, or (ii) amend or repeal Bylaws or make new Bylaws
that conflict with or otherwise alter in any material respect the effect of
Bylaws previously adopted by the stockholders.
7. A proposal recommending that the Board amend the Charter to set the
number of members of the Board to five. Company charters often contain
provisions that set a high uppero o limit on the number of board seats,
permitting the company's board to increase or decrease the number of board seats
in their discretion, subject to this upper limit. Currently the Charter sets a
lower limit as required by MGCL and the upper limit at twelve, permitting the
Board to increase or decrease its size subject to the upper limit of twelve.
Boards may use such provisions to quickly increase or decrease their size in an
effort to dilute the voting impact of directors - such as those elected in proxy
contests - with views contrary to those of
DWS RREEF Real Estate Fund II, Inc.
February 25, 2009
Page 4
management. The Trust views the ability to manipulate the number of members on
the Board as unnecessary and ultimately ineffective in thwarting stockholder
desires. In addition, it potentially increases Fund expenses and insulates the
Board from stockholders. Common sense suggests that if the Fund has more Board
seats, the Fund (and thus stockholders) will spend more on Board compensation.
The Trust believes that, because of the relatively narrow business focus of an
investment company such as the Fund, five Directors can adequately and
efficiently fulfill their obligation to oversee the operations of the Fund and
its management and act as "watchdogs" for stockholders. The Trust believes that
the best approach is to seek a few highly qualified individuals to fill
directorships and pay them fairly. This way, stockholders get more "bang for the
buck" in their Board and don't pay unnecessary Board expenses. If recommended by
the Board and approved by stockholders, the Charter will be amended to delete
the entirety of Article VI(l) and replaced with the following provision:
The number of directors shall be five.
8. A proposal recommending that the Board amend the Charter to declassify
the Board and provide for the annual election of directors. The election of
directors is the primary means for stockholders to exercise influence over the
Fund and its policies. The Trust believes that classified boards have the effect
of reducing the accountability of directors to a company's stockholders. A
classified board prevents stockholders from electing all directors on an annual
basis and may discourage proxy contests in which stockholders have an
opportunity to vote for a competing slate of nominees. While classified boards
are viewed by some as increasing the long-term stability and continuity of a
board, the Trust believes that, in the case of the Fund, long-term stability and
continuity should result from the annual election of Directors, which provides
stockholders with the opportunity to evaluate Director performance, both
individually and collectively, on an annual basis. If recommended by the Board
and approved by stockholders, the Charter will be amended to deleted the
entirety of Article VI(3) and replaced with the following provision:
The directors shall be elected at each annual meeting af the stockholders
commencing in 2009, except as necessary to fill any vacancies, and each
director elected shall hold office until his or her successor is duly
elected and qualifies, or until his or her earlier resignation, death, or
removal.
9. A proposal recommending that the Board amend the Charter to provide that
the Secretary of the Fund shall call a special meeting of stockholders on the
written request of stockholders entitled to cast at least 25% of all votes
entitled to be cast at the meeting. Presently, under the Fund's Bylaws,
stockholders cannot call a special meeting unless a written request is submitted
by the holders of a majority of outstanding shares entitled to vote at the
meeting. This ownership threshold restricts a stockholder's right to call a
meeting. This Proposal would amend the Charter to reduce the percentage
ownership level from a "majority" to 25% of outstanding shares, thus making the
potential for a stockholder or group
DWS RREEF Real Estate Fund II, Inc.
February 25, 2009
Page 5
of stockholders to call a special meeting more realistic and useful. If
recommended by the Board and approved by stockholders, the Charter will be
amended with the following provision:
The Secretary of the Corporation shall call a special meeting of the
stockholders on the written request of stockholders entitled to cast at
least twenty-five percent (25%) of all the votes entitled to be cast at the
meeting.
10. A proposal recommending that the Board amend the Charter to provide
that the Fund no longer be subject to Maryland General Corporation Law ("MGCL")
ss.ss. 3-801 through 805 - the Maryland Unsolicited Takeovers Act ("MUTA") such
that the Fund will no longer be subject to MUTA. MUTA has the effect of
entrenching management and diminishing stockholder influence. Amending the
Charter such that the Fund is no longer subject to MUTA should result in
maximizing Board and management accountability to stockholders. This Proposal
would amend the Charter to "opt out" of the provisions of MUTA by deleting
Article VI(2). If recommended by the Board and approved by stockholders, Article
VI(2) of the Charter will be deleted in its entirety.
11. A proposal recommending that the Board change the name of the Fund so
that it does not include "DWS" or reference to the DWS family of funds, or
investments in real estate or similar securities.
The Trust represents to the Fund that as of the date of this notice it is a
stockholder of record of 1,885,635 shares of the Fund's common stock (the
"Shares") which represents approximately 5% of the Fund's total outstanding and
issued shares. The Trust further represents to the Fund that it intends to be
present at the Meeting to nominate the Nominees to serve as directors of the
Fund, to submit the Proposals as contained herein, and to vote its Shares
accordingly with the nominations and proposals as presented by the Trust. The
Trust hereby represents to the Fund that it intends to continue to own, through
the date of the Meeting, these Shares.
If the Fund determines that more than three Class III directors will be elected
at the 2009 Stockholders' Meeting, or the Board expands the number of available
seats on the Board, the Trust intends to nominate candidates for the additional
Board seats and will provide the Fund with the required information for any
additional nominees.
As a representative of the Fund's largest stockholder, I urge the directors to
support these proposals as they are in the best interests of all stockholders of
the Fund and introduce sound corporate governance principals.
Only 4 of the 12 members of the Board own shares of the Fund; their total
ownership comprises a paltry 3,950 shares among the four members.(1) The fact
that 8 of the 12 of these incumbent directors own no shares, and that the
remaining directors have so little invested suggests little incentive for the
current Board to work diligently toward the future success of
DWS RREEF Real Estate Fund II, Inc.
February 25, 2009
Page 6
the Fund and its stockholders. Certainly, this lack of meaningful ownership
highlights that the incumbents do not have enough faith in the Fund's management
to warrant investing their own money with the Fund. Accordingly, the Trust
believes that the stockholders of the Fund deserve new advisers to provide a
better chance for a positive return on their investment and a more confident
outlook for the Fund's future. In this regard, we recommend that the Board
consider Boulder Investment Advisers, LLC and Stewart Investment Advisers, both
SEC registered investment advisers who advise the Boulder-based group of
closed-end funds.(2)
If the Board agrees with these Proposals, I invite you to discuss with me
at your earliest convenience how we might mutually affect a smooth and
cost-efficient implementation of the Proposals. Please contact me at in writing
at the address provided above if you have questions. Please fax a copy of any
written response to my legal counsel, Stephen C. Miller, Esq. or Joel L.
Terwilliger, Esq. at (303) 245-0420.
Sincerely,
The Susan L. Ciciora Trust
/s/
-------------------------------------------
By: Stephen C. Miller, its attorney in fact
Cc: Board of Directors for the Fund
- ------------------------------------
Footnotes:
(1) Based on information from the Fund's most recent Proxy Statement dated
May 28, 2008.
(2) Boulder Total Return Fund, Boulder Growth & Income Fund and The Denali
Fund.
PRESS RELEASES PAGE LINKS:
[LINK: DEUTSCHE ASSET MANAGEMENT, INC. AND BOARD OF DIRECTORS OF DWS RREEF REAL
ESTATE FUND REQUESTED BY SINGLE LARGEST STOCKHOLDER TO HOLD ANNUAL MEETING OF
STOCKHOLDERS PROMPTLY]
DEUTSCHE ASSET MANAGEMENT, INC. AND BOARD OF DIRECTORS OF DWS RREEF REAL ESTATE
FUND REQUESTED BY SINGLE LARGEST STOCKHOLDER TO HOLD ANNUAL MEETING OF
STOCKHOLDERS PROMPTLY
Boulder, Colo. - (Business Wire) - August 7, 2009 - Deutsche Asset Management,
Inc. and the board of directors of DWS RREEF Real Estate Fund, Inc. (AMEX: SRQ)
were asked by the Susan L. Ciciora Trust today to conduct the annual meeting of
stockholders of SRQ as soon as possible. It has been 13 months since the Fund
held its last annual meeting and over 11 weeks since stockholders defeated the
liquidation proposal. This request is provided by the trust, which is the single
largest stockholder of SRQ and comes on the heels of other stockholders'
communicating to the trust their continued frustration with Deutsche Asset
Management, Inc. and the board of directors' continued delay in holding the
annual meeting of stockholders for their fund.
Stewart Horejsi, spokesperson for the trust, stated that, "The trust continues
to receive inquiries from fellow stockholders of SRQ as to why Deutsche Asset
Management, Inc. and the fund's board of directors continue to delay holding our
meeting of stockholders. In addition to their ongoing frustration with this
needless delay, stockholders have also informed the trust that they are anxious
for change and cannot understand why the fund's board of directors has not acted
in the best interest of the fund's stockholders." He added, "The only action we
have seen from the fund's board of directors are changes to the fund's by-laws
which make it harder for stockholders to submit proposals and otherwise act on
behalf of their own fund. In fact, these changes as enacted by the board of
directors are contrary to the fund's own corporate governance standards on how
it views other funds' corporate governance!"
Mr. Horejsi went on to say that "we have submitted various stockholder proposals
to the fund, which proposals can be read at www.srqsro.com, but have been met
with silence. Stockholders have already defeated the board of directors'
previous attempt to liquidate the fund; why is the board continuing to ignore
the stockholders for proactive, and we believe, positive change?"
The trust is the largest stockholder of SRQ, owning 16.5% of the outstanding
shares. The trust has been an active and vocal investor in the Fund and, on
February 5, 2009 and on subsequent occasions, sent letters to SRQ and its board
of directors proposing, among other things, termination of SRQ's investment
advisers, a new slate of directors, better corporate governance standards and
other ideas to enhance stockholder value. Copies of the letters were filed with
the Securities and Exchange Commission and can be viewed at the trust's website
at www.srqsro.com or on the SEC's website at www.sec.gov. No meaningful response
was provided by the SRQ board with respect to any of these letters and, given
that the board has very little incentive to manage the Fund due to its members'
lack of any ownership, the trust decided that it should bring the substantial
experience and skill of its affiliated registered investment advisers to the
table and offer a better alternative to SRQ's stockholders.
More information can be found at www.srqsro.com.
Contact:
The Susan L. Ciciora Trust
Joel L. Terwilliger
303/442-2156
PRESS RELEASES PAGE LINKS:
[LINK: DEUTSCHE ASSET MANAGEMENT, INC. AND BOARD OF DIRECTORS OF DWS RREEF REAL
ESTATE FUND II REQUESTED BY LARGE STOCKHOLDER TO HOLD ANNUAL MEETING OF
STOCKHOLDERS PROMPTLY]
DEUTSCHE ASSET MANAGEMENT, INC. AND BOARD OF DIRECTORS OF DWS RREEF REAL ESTATE
FUND II REQUESTED BY LARGE STOCKHOLDER TO HOLD ANNUAL MEETING OF STOCKHOLDERS
PROMPTLY
Boulder, Colo. - (Business Wire) - August 7, 2009 - Deutsche Asset Management,
Inc. and the board of directors of DWS RREEF Real Estate Fund II, Inc. (AMEX:
SRO) were asked by the Susan L. Ciciora Trust today to conduct the annual
meeting of stockholders of SRO as soon as possible. It has been 13 months since
the Fund held its last annual meeting and over 11 weeks since stockholders
defeated the liquidation proposal. This request is provided by the trust, which
is one of the largest stockholders of SRO and comes on the heels of other
stockholders' communicating to the trust their continued frustration with
Deutsche Asset Management, Inc. and the board of directors' continued delay in
holding the annual meeting of stockholders for their fund.
Stewart Horejsi, spokesperson for the trust, stated that, "The trust continues
to receive inquiries from fellow stockholders of SRO as to why Deutsche Asset
Management, Inc. and the fund's board of directors continue to delay holding our
meeting of stockholders. In addition to their ongoing frustration with this
needless delay, stockholders have also informed the trust that they are anxious
for change and cannot understand why the fund's board of directors has not acted
in the best interest of the fund's stockholders." He added, "The only action we
have seen from the fund's board of directors are changes to the fund's by-laws
which make it harder for stockholders to submit proposals and otherwise act on
behalf of their own fund. In fact, these changes as enacted by the board of
directors are contrary to the fund's own corporate governance standards on how
it views other funds' corporate governance!"
Mr. Horejsi went on to say that "we have submitted various stockholder proposals
to the fund, which proposals can be read at www.srqsro.com, but have been met
with silence. Stockholders have already defeated the board of directors'
previous attempt to liquidate the fund; why is the board continuing to ignore
the stockholders for proactive, and we believe, positive change?"
The trust is a large stockholder of SRO, owning 5% of the outstanding shares.
The trust has been an active and vocal investor in the Fund and, on February 25,
2009 and on subsequent occasions, sent letters to SRO and its board of directors
proposing, among other things, termination of SRO's investment advisers, a new
slate of directors, better corporate governance standards and other ideas to
enhance stockholder value. Copies of the letters were filed with the Securities
and Exchange Commission and can be viewed at the trust's website at
www.srqsro.com or on the SEC's website at www.sec.gov. No meaningful response
was provided by the SRO board with respect to any of these letters and, given
that the board has very little incentive to manage the Fund due to its members'
lack of any ownership, the trust decided that it should bring the substantial
experience and skill of its affiliated registered investment advisers to the
table and offer a better alternative to SRO's stockholders.
More information can be found at www.srqsro.com.
Contact:
The Susan L. Ciciora Trust
Joel L. Terwilliger
303/442-2156
PRESS RELEASES PAGE LINKS:
[LINK: THE SUSAN L. CICIORA TRUST SUBMITS STOCKHOLDER PROPOSALS TO MANAGEMENT OF
DWS RREEF REAL ESTATE FUND, INC., EXPRESSES CONCERN REGARDING RELATIONSHIP
BETWEEN DEUTSCHE ASSET MANAGEMENT, INC. AND DEUTSCHE BANK AG]
THE SUSAN L. CICIORA TRUST SUBMITS STOCKHOLDER PROPOSALS TO MANAGEMENT OF DWS
RREEF REAL ESTATE FUND, INC., EXPRESSES CONCERN REGARDING RELATIONSHIP BETWEEN
DEUTSCHE ASSET MANAGEMENT, INC. AND DEUTSCHE BANK AG
Boulder, Colo. - (Business Wire) - July 22, 2009 - The Susan L. Ciciora Trust
today resubmitted various stockholder proposals to the management of DWS RREEF
Real Estate Fund, Inc. (AMEX: SRQ). The proposals seek to move SRQ in a
different direction by terminating the current investment managers, Deutsche
Asset Management, Inc. and RREEF America, L.L.C. The proposals also seek to hold
the Board of Directors of SRQ accountable to the stockholders for what the trust
believes are stalling tactics in conducting its annual meeting, including
amendments to SRQ's bylaws which forced the trust, as a stockholder, to resubmit
its proposals.. Further, Stewart Horejsi, a spokesperson for the trust,
expressed concern regarding the relationship between Deutsche Asset Management,
Inc., and Deutsche Bank AG. Deutsche Asset Management, Inc. is the investment
manager for SRQ and a wholly-owned subsidiary of Deutsche Bank AG. Deutsche Bank
AG is reportedly under investigation by German prosecutors for alleged spying
activities on board members and/or activist stockholders.
On April 9, 2009, the Board of SRQ implemented a "Rights Agreement" which would
trigger dilutive rights dividends if the trust purchases additional shares of
SRQ. The trust believes this "poison pill," in conjunction with other
anti-stockholder measures, is designed to discourage the trust from purchasing
additional shares and denies stockholders who may want to sell shares their most
likely prospect for much needed price support. Mr. Horejsi said that "SRQ's
management announced that the poison pill was to "protect the interest of
stockholders pending stockholder consideration of proposed plans of liquidation
for Fund. Stockholders defeated this plan of liquidation on May 20, 2009, so it
is time to terminate these obstructive measures which serve only to harm
stockholders." Mr. Horejsi went on to say that "the trust successfully fought a
proxy fight against management's previous attempt to liquidate. The continued
erosion of stockholder value has gone on long enough! The stockholders have
voted, and many of them have communicated to the trust that they share our
belief that Deutsche Asset Management, Inc. and RREEF America, L.L.C. are simply
no longer fit to manage the fund. Fortunately, it only requires a majority of
the fund's outstanding voting securities to fire these advisers and hire more
competent managers."
Mr. Horejsi added that "the trust has become increasingly alarmed at the motives
of Deutsche Asset Management, Inc. with regard to their stalling tactics. Last
week they amended SRQ's bylaws to make it more difficult for stockholders to
submit their proposals to SRQ's management. Yesterday, I read in The Wall Street
Journal that Deutsche Bank AG `has dismissed two top executives following an
internal investigation into whether [Deutsche Bank AG] conducted surveillance on
a board member and others [including an activist shareholder].' This has
prompted prosecutors in Germany to open an investigation into what else is going
on at Deutsche Bank AG! I am very concerned about what is happening with SRQ and
its management, and I believe that stockholders' attempts to guide SRQ's assets
in a different direction should not be thwarted at every turn. Quite simply, I
have concerns of corporate malfeasance at Deutsche Asset Management, Inc. due to
its ownership by Deutsche Bank AG."
The trust is the largest stockholder of SRQ, owning 16.5% of the outstanding
shares of SRQ. The trust has been an active and vocal investor in the Fund and,
on February 5, 2009, sent a letter to SRQ and its board of directors proposing,
among other things, termination of SRQ's investment advisers, a new slate of
directors, better corporate governance standards and other ideas to enhance
stockholder value. Copies of the letters were filed with the Securities and
Exchange Commission and can be viewed at the trust's website at www.srqsro.com
or on the SEC's website at www.sec.gov. No meaningful response was provided by
the SRQ board and, given that the board has very little incentive to manage the
Fund due to its members' lack of any ownership, the trust decided that it should
bring the substantial experience and skill of its affiliated registered
investment advisers to the table and offer a better alternative to SRQ's
stockholders.
More information can be located at www.srqsro.com.
Contact:
The Susan L. Ciciora Trust
Joel L. Terwilliger
303/442-2156
PRESS RELEASES PAGE LINKS:
[LINK: THE SUSAN L. CICIORA TRUST SUBMITS STOCKHOLDER PROPOSALS TO MANAGEMENT OF
DWS RREEF REAL ESTATE FUND II, INC., EXPRESSES CONCERN REGARDING RELATIONSHIP
BETWEEN DEUTSCHE ASSET MANAGEMENT, INC. AND DEUTSCHE BANK AG]
THE SUSAN L. CICIORA TRUST SUBMITS STOCKHOLDER PROPOSALS TO MANAGEMENT OF DWS
RREEF REAL ESTATE FUND II, INC., EXPRESSES CONCERN REGARDING RELATIONSHIP
BETWEEN DEUTSCHE ASSET MANAGEMENT, INC. AND DEUTSCHE BANK AG
Boulder, Colo. - (Business Wire) - July 22, 2009 - The Susan L. Ciciora Trust
today resubmitted various stockholder proposals to the management of DWS RREEF
Real Estate Fund II, Inc. (AMEX: SRO). The proposals seek to move SRO in a
different direction by terminating the current investment managers, Deutsche
Asset Management, Inc. and RREEF America, L.L.C. The proposals also seek to hold
the Board of Directors of SRO accountable to the stockholders for what the trust
believes are stalling tactics in conducting its annual meeting, including
amendments to SRO's bylaws which forced the trust, as a stockholder, to resubmit
its proposals.. Further, Stewart Horejsi, a spokesperson for the trust,
expressed concern regarding the relationship between Deutsche Asset Management,
Inc., and Deutsche Bank AG. Deutsche Asset Management, Inc. is the investment
manager for SRO and a wholly-owned subsidiary of Deutsche Bank AG. Deutsche Bank
AG is reportedly under investigation by German prosecutors for alleged spying
activities on board members and/or activist stockholders.
On April 9, 2009, the Board of SRO implemented a "Rights Agreement" which would
trigger dilutive rights dividends if the trust purchases additional shares of
SRO. The trust believes this "poison pill," in conjunction with other
anti-stockholder measures, is designed to discourage the trust from purchasing
additional shares and denies stockholders who may want to sell shares their most
likely prospect for much needed price support. Mr. Horejsi said that "SRO's
management announced that the poison pill was to "protect the interest of
stockholders pending stockholder consideration of a proposed plan of liquidation
of the fund. Stockholders defeated this plan of liquidation on May 20, 2009, so
it is time to terminate these obstructive measures which serve only to harm
stockholders." Mr. Horejsi went on to say that "the trust successfully fought a
proxy fight against a sister-fund, SRQ, and defeated management's previous
attempt to liquidate. The continued erosion of stockholder value has gone on
long enough! The stockholders have voted, and many of them have communicated to
the trust that they share our belief that Deutsche Asset Management, Inc. and
RREEF America, L.L.C. are simply no longer fit to manage the fund. Fortunately,
it only requires a majority of the fund's outstanding voting securities to fire
these advisers and hire more competent managers."
Mr. Horejsi added that "the trust has become increasingly alarmed at the motives
of Deutsche Asset Management, Inc. with regard to their stalling tactics. Last
week they amended SRO's bylaws to make it more difficult for stockholders to
submit their proposals to fund management. Yesterday, I read in The Wall Street
Journal that Deutsche Bank AG `has dismissed two top executives following an
internal investigation into whether [Deutsche Bank AG] conducted surveillance on
a board member and others [including an activist shareholder].' This has
prompted prosecutors in Germany to open an investigation into what else is going
on at Deutsche Bank AG! I am very concerned about what is happening with SRO and
its management, and I believe that stockholders' attempts to guide SRO's assets
in a different direction should not be thwarted at every turn. Quite simply, I
have concerns of corporate malfeasance at Deutsche Asset Management, Inc. due to
its ownership by Deutsche Bank AG."
The trust is a large stockholder of SRO, owning approximately 5% of the
outstanding shares of SRO. The trust has been an active and vocal investor in
the Fund and, on February 25, 2009, sent a letter to SRO and its board of
directors proposing, among other things, termination of SRO's investment
advisers, a new slate of directors, and better corporate governance standards
and other ideas to enhance stockholder value. Copies of the letters were filed
with the Securities and Exchange Commission and can be viewed at the trust's
website at www.srqsro.com or on the SEC's website at www.sec.gov. No meaningful
response was provided by the SRO board and, given that the board has very little
incentive to manage the Fund due to its members' lack of any ownership, the
trust decided that it should bring the substantial experience and skill of its
affiliated registered investment advisers to the table and offer a better
alternative to SRO's stockholders.
More information can be located at www.srqsro.com.
Contact:
The Susan L. Ciciora Trust
Joel L. Terwilliger
303/442-2156
PRESS RELEASES PAGE LINKS:
[LINK: Preemptive Proxy Statement Filed by Susan L. Ciciora Trust Proposes to
Terminate Deutsche Asset Management, Inc. and RREEF America, LLC and Board of
SRQ and SRO.
Preemptive Proxy Statement Filed by Susan L. Ciciora Trust Proposes to Terminate
Deutsche Asset Management, Inc. and RREEF America, LLC and Board of SRQ and SRO
Boulder, Colo. - (PR Newswire) - Source: Susan L. Ciciora Trust - June 12, 2009
- - The Susan L. Ciciora Trust announced today that it has filed a preliminary
joint proxy statement with the Securities and Exchange Commission (SEC)
regarding two closed-end investment companies, DWS RREEF Real Estate Inc. (AMEX:
SRQ) and DWS RREEF Real Estate Fund II, Inc. (AMEX: SRO), both managed by
Deutsche Asset Management, Inc. and RREEF America, LLC. The preliminary proxy
statement has been filed in anticipation of the Funds holding their annual
meetings and offers proposals to terminate the advisory contracts between the
Funds and Deutsche Asset Management, Inc. and RREEF America, LLC, replace
members of the board of directors with nominees of the Trust, and institute
various corporate governance measures. As of the date of this press release, the
Funds have not filed their proxy statements for the annual meeting.
The Trust also announced that it has launched a new website www.srqsro.com
dedicated solely to providing the Funds' stockholders with up-to-date
information regarding the Funds and the anticipated proxy contest.
When asked for comment, Stewart R. Horejsi, a spokesperson for the Trust, said
"the website will provide stockholders who are frustrated with the Boards' lack
of responsiveness with up-to-date information about the status of the Trust's
efforts to replace the Boards and existing management". Mr. Horejsi emphasized
that "stockholders spoke loudly in rejecting the Boards' recent proposals to
liquidate the Funds and waste all of the tax loss carry-forwards we have so
painfully earned. Angry and frustrated stockholders soundly defeated the
liquidation proposals with almost 67% of the votes cast voting against
liquidation in SRQ, essentially telling the Boards they have no confidence in
either the Boards' leadership or Deutsche Asset Management, Inc.'s or RREEF
America, LLC's abilities to do anything constructive with the Funds. We have
asked that the Boards set a record date for an annual meeting so that we can get
down to the business of salvaging the Funds, but so far the Boards seem to be
satisfied with delaying the inevitable and leaving Deutsche Asset Management,
Inc. and RREEF America, LLC at the helm of two quickly-sinking ships. Despite
the appalling performance of these Funds in 2008, as of the end of May, they are
still at the very bottom of the barrel for the current year, SRO with a -22.68%
year-to-date return on NAV, and SRQ with a -6.14% return on NAV, ranking 639th
and 618th, respectively, out of the universe of 640 closed-end funds covered by
ETF Connect. It's clear they have not learned from their prior investment and
concentration mistakes." Mr. Horejsi also indicated that, as of the date of this
press release, the Funds have not been responsive to any of the Trust's
proposals, nor have they announced an annual meeting or set a record date or
indicated any intention to do so.
Mr. Horejsi pointed out "other disconcerting news" from June 5, 2009, when the
Funds announced that they will not declare any distributions to common
stockholders in June 2009 because "market conditions have resulted in the Funds
not having sufficient income to pay a distribution."
The Trust is the largest stockholder of SRQ, owning 16.5% of the outstanding
shares, and one of the largest stockholders of SRO, owning 5.1% of the
outstanding shares. The Trust has been an active and vocal investor in the Funds
and, on February 5, 2009 and February 25, 2009, sent letters to SRQ and SRO,
respectively, and their boards of directors proposing, among other things,
termination of the investment advisers (Deutsche Asset Management, Inc. and
RREEF America, LLC), a new slate of directors, and better corporate governance
standards and other ideas to enhance stockholder value. Copies of the letters
are available on the Trust's website at www.srqsro.com or, since they have been
filed with the SEC, can be viewed on its website at www.sec.gov.
Contact:
The Susan L. Ciciora Trust
Joel L. Terwilliger
303/449-0426
PRESS RELEASES PAGE LINKS:
[LINK: RiskMetrics Group Recommends Vote Against DWS RREEF Real Estate Fund,
Inc. Liquidation Proposal]
RISKMETRICS GROUP RECOMMENDS VOTE "AGAINST" DWS RREEF REAL
ESTATE FUND, INC. LIQUIDATION PROPOSAL
Boulder, Colo. - (PR Newswire) - May 11, 2009 - RiskMetrics Group, the world's
largest independent proxy advisory firm, recommends that holders of DWS RREEF
Real Estate Fund, Inc. (NYSE: SRQ) vote "AGAINST" the liquidation proposal (Item
1) at the upcoming special meeting of stockholders to be held May 20, 2009.
The recommendation to vote "Against" SRQ's liquidation proposal was provided by
RiskMetrics Group's Proxy Advisory Services (formerly Institutional Shareholder
Services, or ISS), the global industry leader in providing comprehensive proxy
research to some of the world's largest and most important financial
institutions. RiskMetrics Group covers over 40,000 stockholder meetings every
year and issues recommendations for stockholders on voting their proxies for
various management proposals.
In their review, RiskMetrics concluded that "In view of Horejsi's superior
management of DNY, a similar closed-end real estate fund, RMG believes that the
Trust through its affiliation with Horejsi may be able to effectuate change that
is critical to improving the performance of the Fund, rather than liquidating
the Fund during poor market conditions. What is more, shareholders would have
the opportunity to approve the election of the Trust's board members and
appointment of Horejsi as investment manager of the Fund at subsequent
shareholder meetings. Given that the Fund's NAV has declined substantially in
the last one year, which is reflected in its one-star Morningstar ranking, the
downside risk of not supporting the liquidation proposal seems limited.
Moreover, dissidents stated intention of conducting a proxy contest and
appointing Horejsi as the investment manager, who has a proven track record at
DNY, provides a viable alternative to the liquidation proposal. As such, RMG
does not believe the Fund's liquidation proposal warrants shareholder support.
Vote AGAINST Item 1."*
Stewart R. Horejsi, representative for the Susan L. Ciciora Trust which is
engaged in a proxy fight with SRQ against their liquidation proposal, stated:
"This recommendation by RiskMetrics Group vindicates our position that SRQ's
liquidation proposal is not in the best interests of stockholders. With this
recommendation we are encouraged that stockholders will finally be able to
assert control over their investment in SRQ."
Mr. Horejsi added: "We believe that this recommendation sends a strong signal to
SRQ's board of directors that their management decisions to date have not made
sense; the Trust has received much support from fellow stockholders against the
liquidation proposal and we believe that the board of directors should initiate
a meaningful dialogue with the Trust."
The Trust is the largest stockholder of SRQ, owning 16.5% of the outstanding
shares of SRQ. The Trust has been an active and vocal investor in the Fund and,
on February 5, 2009, sent a letter to SRQ and its board of directors proposing,
among other things, termination of SRQ's investment advisers, a new slate of
directors, and better corporate governance standards and other ideas to enhance
stockholder value. Copies of the letters were filed with the Securities and
Exchange Commission and can be viewed on their website at www.sec.gov. No
meaningful response was provided by the SRQ board of directors and, given that
the board has very little incentive to manage the Fund due to its members' lack
of any ownership, the Trust decided that it should bring the substantial
experience and skill of its affiliated registered investment advisers to the
table and offer a better alternative to SRQ's stockholders.
*Permission to use quotation neither sought nor obtained.
Contact:
The Susan L. Ciciora Trust
Joel L. Terwilliger
303/442-2156
ARTICLES & LITERATURE PAGE LINKS:
[LINK: Stockholders Request SRQ to Call Annual Meeting Immediately]
SUSAN L. CICIORA TRUST
c/o Stephen C. Miller, P.C.
2344 Spruce Street, Suite A
Boulder, Colorado 80302
August 6, 2009
By Federal Express and U.S. Certified Mail
The Board of Directors
DWS RREEF Real Estate Fund, Inc. (the "Fund")
c/o Deutsche Investment Management Americas
345 Park Avenue
New York, NY 10154
With a copy to:
J. Christopher Jackson, Esq.
Deutsche Asset Management, Inc.
280 Park Avenue
New York, NY 10017
To the Board of Directors:
It has been over 13 months since the Fund held its last annual meeting of the
stockholders. This is in direct contravention to Maryland law, the exchange
rules and the Fund's own bylaws, all of which require annual meetings of
stockholders. We believe that time is of the essence as our concern with the
current management misfeasance continues to grow. A recent three-part series of
articles published on Seeking Alpha only heighten our concerns about the Fund's
future and Board's favoritism toward the current advisers. These articles
discuss "the troubles now ailing Deutsche Bank" and recount "how the independent
Directors of those funds, who also govern 118 other funds at DWS, passively
accepted poor performance and trading discounts that meant losses for their
investors." Further, these articles point out that, "when faced with proxy
challenges to their own position and authority, these same Directors responded
vigorously to entrench themselves in office, by altering fund bylaws and
concocting `poison pills,' despite an official policy against such acts when
committed by others." Each Board member should carefully read and take to heart
this well-researched and thoughtful three-part series of articles. They can be
accessed at http://seekingalpha.com/author/gwailo/articles.
When the Fund adopted its antitakeover measures in April, the Board represented
to stockholders that the takeover measures were to protect stockholder interests
"pending stockholder consideration of proposed plans of liquidation". It has
been over 78 days since stockholders defeated the liquidation proposal. The
Board of Directors cannot assume - wrongfully - that it is business as usual
with the Fund. The annual meeting of stockholders must be called immediately.
The Trust intends to bring to a vote the matters properly proposed to the Fund
in letters sent on February 5, 2009, and July 22, 2009.
We have recently made a number of calls to general counsel to the Fund to
discuss these matters without a whisper of response. Nonetheless, we invite any
member of the Board to discuss how we might mutually affect a smooth and
cost-efficient implementation of the proposals. Please contact the undersigned
in writing at the address provided above if you have questions. Please fax a
copy of any written response to my counsel, Stephen C. Miller, Esq. or Joel L.
Terwilliger, Esq. at (303) 245-0420.
Sincerely,
The Susan L. Ciciora Trust
/s/ Stewart R. Horejsi
-------------------------------
By: Stewart R. Horejsi, its Financial Advisor
ARTICLES & LITERATURE PAGE LINKS:
[LINK: Stockholders Request SRO to Call Annual Meeting Immediately]
SUSAN L. CICIORA TRUST
c/o Stephen C. Miller, P.C.
2344 Spruce Street, Suite A
Boulder, Colorado 80302
August 6, 2009
By Federal Express and U.S. Certified Mail
The Board of Directors
DWS RREEF Real Estate Fund II, Inc. (the "Fund")
c/o Deutsche Investment Management Americas
345 Park Avenue
New York, NY 10154
With a copy to:
J. Christopher Jackson, Esq.
Deutsche Asset Management, Inc.
280 Park Avenue
New York, NY 10017
To the Board of Directors:
It has been over 13 months since the Fund held its last annual meeting of the
stockholders. This is in direct contravention to Maryland law, the exchange
rules and the Fund's own bylaws, all of which require annual meetings of
stockholders. We believe that time is of the essence as our concern with the
current management misfeasance continues to grow. A recent three-part series of
articles published on Seeking Alpha only heighten our concerns about the Fund's
future and Board's favoritism toward the current advisers. These articles
discuss "the troubles now ailing Deutsche Bank" and recount "how the independent
Directors of those funds, who also govern 118 other funds at DWS, passively
accepted poor performance and trading discounts that meant losses for their
investors." Further, these articles point out that, "when faced with proxy
challenges to their own position and authority, these same Directors responded
vigorously to entrench themselves in office, by altering fund bylaws and
concocting `poison pills,' despite an official policy against such acts when
committed by others." Each Board member should carefully read and take to heart
this well-researched and thoughtful three-part series of articles. They can be
accessed at http://seekingalpha.com/author/gwailo/articles.
When the Fund adopted its antitakeover measures in April, the Board represented
to stockholders that the takeover measures were to protect stockholder interests
"pending stockholder consideration of proposed plans of liquidation". It has
been over 78 days since stockholders defeated the liquidation proposal. The
Board of Directors cannot assume - wrongfully - that it is business as usual
with the Fund. The annual meeting of stockholders must be called immediately.
The Trust intends to bring to a vote the matters properly proposed to the Fund
in letters sent on February 25, 2009, and July 22, 2009.
We have recently made a number of calls to general counsel to the Fund to
discuss these matters without a whisper of response. Nonetheless, we invite any
member of the Board to discuss how we might mutually affect a smooth and
cost-efficient implementation of the proposals. Please contact the undersigned
in writing at the address provided above if you have questions. Please fax a
copy of any written response to my counsel, Stephen C. Miller, Esq. or Joel L.
Terwilliger, Esq. at (303) 245-0420.
Sincerely,
The Susan L. Ciciora Trust
/s/ Stewart R. Horejsi
-------------------------------
By: Stewart R. Horejsi, its Financial Advisor
ARTICLES & LITERATURE PAGE LINKS:
[LINK: Stockholder proposals for SRQ]
SUSAN L. CICIORA TRUST
c/o Stephen C. Miller, P.C.
2344 Spruce Street, Suite A
Boulder, Colorado 80302
July 22, 2009
By Federal Express and U.S. Certified Mail
John Millette, Corporate Secretary
DWS RREEF Real Estate Fund, Inc. (the "Fund")
c/o Deutsche Investment Management Americas
345 Park Avenue
New York, NY 10154
J. Christopher Jackson, Esq.
Deutsche Asset Management, Inc.
280 Park Avenue
New York, NY 10017
To the Corporate Secretary of the Fund:
The continued erosion of stockholder value in the Fund has gone on long enough!
The stockholders have voted, and many of them have communicated to the Trust
that they share our belief that Deutsche Asset Management, Inc. and RREEF
America, L.L.C. are simply no longer fit to manage our assets. Fortunately, it
only requires a majority of the outstanding voting securities of the Fund (as
defined in the Investment Company Act of 1940, as amended (the "1940 Act")) to
fire these advisers and hire more competent managers.
Further, the Trust has become increasingly alarmed at the motives of Deutsche
Asset Management, Inc. with regard to their stalling tactics. Last week they
amended the Fund's bylaws to make it more difficult for stockholders to submit
their proposals to Fund's management. Today, an article appeared in The Wall
Street Journal that reported that Deutsche Bank AG "has dismissed two top
executives following an internal investigation into whether [Deutsche Bank AG]
conducted surveillance on a board member and others [including an activist
shareholder]." This has prompted prosecutors in Germany to open an investigation
into what else is going on at Deutsche Bank AG! According to the Fund's proxy
materials, Deutsche Asset Management, Inc., the investment manager for the Fund,
is a wholly-owned subsidiary of Deutsche Bank AG. We are very concerned about
what is happening with our Fund and the Fund's management, and believe that
stockholders' attempts to guide our assets in a different direction should not
be thwarted at every turn.
Accordingly, and pursuant to the provisions of the Fund's by-laws and
organizational documents and other public documents filed by the Fund with the
Securities and Exchange Commission (the "SEC"), I hereby notify you on behalf of
the Susan L. Ciciora Trust (the "Trust") that, at the Fund's upcoming 2009
annual meeting of stockholders (the "2009 Stockholders' Meeting"), the Trust
intends to nominate candidates for election as directors of the Fund and
introduce certain proposals (collectively, the "Proposals"). The Proposals
conform to the notice requirements of the Fund's most recent proxy filed with
the SEC on May 28, 2008, and the Fund's bylaws as filed with the SEC on October
28, 2002, and as amended (the "2002 Bylaws"). It also conforms to the bylaw
amendments filed in the Fund's 8K on July 15, 2009. The Trust requests that the
Fund provide a true and correct copy of the current bylaws and as they may be
amended from time to time.
The Proposals are as follows:
1. A proposal to terminate the Investment Management Agreement between the
Fund and Deutsche Asset Management, Inc. (the "Investment Manager") (the
"Management Agreement").
2. A proposal to terminate the Investment Advisory Agreement between the
Investment Manager and RREEF America, L.L.C. (the "Investment Adviser") (the
"Advisory Agreement").
The Investment Manager and Investment Adviser are referred to herein as the
"Managers". Justification for Proposals 1 and 2 above is simple: The Fund's
performance over the past year under the Managers has been more than appalling.
It has been one of the worst of any closed-end or open-end funds in the entire
mutual fund universe. In the latest ratings by Morningstar(TM) (December 31,
2008), SRQ received 1 of 5 stars for its overall, 3- and 5-year performance
history, as compared with other similarly situated specialty real estate
closed-end funds. There is no excuse for the extraordinarily poor performance of
the Fund. For the one-year period ending 12/31/08, the Fund had a total return
on net asset value ("NAV") of -81.9%. To nearly wipe out the entire value of a
fund in one year is unheard of, even in a market that saw the S&P 500 Index drop
by 37%. Surprisingly, the market price for the Fund has dropped even more than
NAV because the discount for the Fund increased - a decline of 86.4% for the
year ending 12/31/08. This loss far exceeds any other market indices for
similarly situated funds. In fact, the Fund lost more than twice the percent
lost by the S&P Index. As noted in an article published January 4, 2009, on
seekingalpha.com, the Fund was one of the "five worst performing closed-end
funds in 2008". SRO, another fund under the Managers, was also one of these
infamous five worst performers and also received the same dismal Morningstar(TM)
ratings as its sister-fund. Having one investment manager for two of the five
worst performing funds in 2008 clearly indicates that it is time for new
investment management for the Fund.
Further, the Trust is concerned about the relationship between Deutsche Asset
Management, Inc., the investment manager for the Fund, which is part of the
United States asset management activities of Deutsche Bank AG and which is
purportedly under investigation by prosecutors in Frankfurt, Germany. We do not
want our Fund's assets or management "tainted" by this relationship between
Deutsche Asset Management, Inc. and Deutsche Bank AG. Additionally, we are
concerned that these spying activities may not be limited and could possibly
include other activist stockholders, including the Trust. You are hereby
notified that, on behalf of the Trust, I intend to seek assurances from current
management that such activities do not include stockholders of funds under
management by Deutsche Asset Management, Inc., including the Fund.
Notwithstanding the above Proposals 1 and 2, the Trust encourages the Board of
Directors of the Fund (the "Board") to terminate the Management Agreement and
Advisory Agreement sooner rather than later. The Board members have a fiduciary
duty to the stockholders to make a change, as the Managers clearly have shown
that they should no longer manage the Fund. It is the duty of the Board to save
what little is left in the Fund and embrace the changes proposed by the Trust.
However, if the Board elects not to pursue this course of action, the Trust
intends to pursue the above Proposals in a proxy contest.
3. Nominate for election by the stockholders the following nominees as
Class III directors for the Fund: Susan L. Ciciora, Richard I. Barr, and Joel W.
Looney (collectively, the "Nominees). Copies of the Nominees' resumes are
attached to this letter and contain all information required under Section 3.3
of the 2002 Bylaws.
4. A proposal recommending that the Board adopt a resolution repealing the
applicability of the Maryland Unsolicited Takeovers Act, Maryland General
Corporation Law ("MGCL") ss.ss.3-801 through 805 ("MUTA") such that the Fund
will no longer be subject to MUTA. MUTA has the effect of entrenching management
and diminishing stockholder influence. Repeal of MUTA should result in
maximizing Board and management accountability to stockholders.
5. A proposal recommending that the Board amend Article 7.1 of the Fund's
bylaws (the "Bylaws") to delete the first sentence of Article 7.1, so that
authority to amend the Bylaws is not vested solely in the Board. See discussion
under Proposal 7 below.
6. A proposal recommending that the Board amend Article 3.2 of the Bylaws
to reduce the number of directors and declassify the Board consistent with the
discussion under Proposals 8 and 9 below.
7. A proposal recommending that the Board amend the Fund's charter (the
"Charter"), vesting in the stockholders the power to amend or adopt the Bylaws
by the affirmative vote of a majority of all votes entitled to be cast on the
matter. The Trust believes that all stockholders benefit if they have better
access to and more influence in the Fund's governance. The Fund's Bylaws contain
important policies affecting the day-to-day management of the Fund, which the
Trust believes stockholders should have a voice in establishing. Presently the
Bylaws contain a provision which vests the authority to adopt, alter or repeal
Bylaws solely with the Board. The Trust believes that the authority to adopt,
alter or repeal Bylaws should be a shared authority between the Board and
stockholders. This permits the Board to be responsive to house-
keeping and substantive matters regarding Fund operations, while at the same
time giving the owners of the Fund the power to effect changes should they
choose to do so. The Trust also believes that when stockholders "speak" by
adopting a Bylaw, their action should not be subject to being overturned or
altered by unilateral action of a Board whose job it is to serve stockholders.
The Trust believes that this Proposal will accommodate the practicalities of
managing the Fund while at the same time protecting an important right of
stockholders. This Proposal would codify in the Charter the shared authority to
make, alter or repeal Bylaws, while at the same time making it clear that Bylaws
that are adopted by stockholders cannot be altered, repealed or otherwise
circumvented without the affirmative approval of stockholders. If approved by
stockholders, the Charter will be amended to add the following provision:
The Bylaws of the Corporation, whether adopted by the Board of Directors or
the stockholders, shall be subject to amendment, alteration or repeal, and
new Bylaws may be made, by either (a) the affirmative vote of a majority of
all the votes entitled to be cast on the matter; or (b) the Board of
Directors; provided, however, that the Board of Directors may not (i) amend
or repeal a Bylaw that allocates solely to stockholders the power to amend
or repeal such Bylaw, or (ii) amend or repeal Bylaws or make new Bylaws
that conflict with or otherwise alter in any material respect the effect of
Bylaws previously adopted by the stockholders.
8. A proposal recommending that the Board amend the Charter to set the
number of members of the Board to five. Company charters often contain
provisions that set a high upper-limit on the number of board seats, permitting
the company's board to increase or decrease the number of board seats in their
discretion, subject to this upper limit. Currently the Charter sets a lower
limit as required by MGCL and the upper limit at twelve, permitting the Board to
increase or decrease its size subject to the upper limit. Boards may use such
provisions to quickly increase or decrease their size in an effort to dilute the
voting impact of directors - such as those elected in proxy contests - with
views contrary to those of management. The Trust views the ability to manipulate
the number of members on the Board as unnecessary and ultimately ineffective in
thwarting stockholder desires. In addition, it potentially increases Fund
expenses and insulates the Board from stockholders. Common sense suggests that
if the Fund has more Board seats, the Fund (and thus stockholders) will spend
more on Board compensation. The Trust believes that, because of the relatively
narrow business focus of an investment company such as the Fund, five Directors
can adequately and efficiently fulfill their obligation to oversee the
operations of the Fund and its management and act as "watchdogs" for
stockholders. The Trust believes that the best approach is to seek a few highly
qualified individuals to fill directorships and pay them fairly. This way,
stockholders get more "bang for the buck" in their Board and don't pay
unnecessary Board expenses. If approved by stockholders, the Charter will be
amended to delete the entirety of Article VI(1) and replaced with the following
provision:
The number of directors shall be five.
9. A proposal recommending that the Board amend the Charter to de-classify
the Board and provide for the annual election of directors. The election of
directors is the primary means for stockholders to exercise influence over the
Fund and its policies. The Trust believes that classified boards have the effect
of reducing the accountability of directors to a company's stockholders. A
classified board prevents stockholders from electing all directors on an annual
basis and may discourage proxy contests in which stockholders have an
opportunity to vote for a competing slate of nominees. While classified boards
are viewed by some as increasing the long-term stability and continuity of a
board, the Trust believes that, in the case of the Fund, long-term stability and
continuity should result from the annual election of Directors, which provides
stockholders with the opportunity to evaluate Director performance, both
individually and collectively, on an annual basis. If approved by stockholders,
the Charter will be amended to deleted the entirety of Article VI(2) and
replaced with the following provision:
The directors shall be elected at each annual meeting of the stockholders
commencing in 2010, except as necessary to fill any vacancies, and each
director elected shall hold office until his or her successor is duly
elected and qualifies, or until his or her earlier resignation, death, or
removal.
10. A proposal recommending that the Board amend the Charter to provide
that the Secretary of the Fund shall call a special meeting of stockholders on
the written request of stockholders entitled to cast at least 25% of all votes
entitled to be cast at the meeting. Presently, under the Fund's Bylaws,
stockholders cannot call a special meeting unless a written request is submitted
by the holders of a majority of outstanding shares entitled to vote at the
meeting. This ownership threshold restricts a stockholder's right to call a
meeting. This Proposal would amend the Charter to reduce the percentage
ownership level from a "majority" to 25% of outstanding shares, thus making the
potential for a stockholder or group of stockholders to call a special meeting
more realistic and useful. If approved by stockholders, the Charter will be
amended with the following provision:
The Secretary of the Corporation shall call a special meeting of the
stockholders on the written request of stockholders entitled to cast at
least twenty-five percent (25%) of all the votes entitled to be cast at the
meeting.
11. A proposal recommending that the Board change the name of the Fund so
that it does not include "DWS" or reference to the DWS family of funds, or
investments in real estate or similar securities. Further, we want to remove any
association of the Fund with Deutsche Asset Management, Inc. and Deutsche Bank
AG due to our concerns of corporate malfeasance.
12. A proposal recommending that the Board resolve to negate the
applicability of the Maryland Control Share Acquisition Act (the "MCSAA") such
that the Trust will no longer be subject thereto. The MCSAA limits stockholder
voting rights in excess of certain thresholds. The Trust believes, as evidenced
by the recent deepening of the Fund's discount, that the MCSAA is harming
stockholders who may want to exit the Fund. The Trust and other significant
stockholders are apt to be discouraged from purchasing shares they cannot vote
and thus avoid purchasing shares in the market which would otherwise provide
pricing support for exiting stockholders. Moreover, when the Fund announced its
adoption of the MCSAA, its press release said that the MCSAA and other
obstructive measures were "to protect the interest of stockholders pending
stockholder consideration of proposed plans of liquidation for [the] Fund."
Given the fact that the "plan of liquidation" was defeated, the Board should
have terminated the MCSAA immediately after the special meeting on May 20, 2009.
Obviously they didn't. Stockholders have spoken and have clearly expressed their
disdain for the "plan of liquidation," so it is time to terminate these
obstructive measures which serve only to harm stockholders. We believe that the
MCSAA, in conjunction with the Fund's "poison pill", denies stockholders wanting
to sell shares and erodes any prospect for much needed price support.
13. A proposal recommending that the Board resolve to terminate the rights
agreement dated April 9, 2009 and as may be amended from time to time (the
"poison pill"), whereby future purchases of the Fund's shares by the Trust will
trigger a dilutive rights dividend specifically targeted to dilute only the
Trust. On April 9, 2009, the Board implemented a so-called "Rights Agreement"
which would trigger dilutive rights dividends if the Trust purchases additional
shares of the Fund. Like the MCSAA discussed above, this "poison pill" is
designed to discourage the Trust from purchasing additional shares and denies
stockholders wanting to sell their most likely prospect for a much needed price
support. As with the MCSAA, the Fund announced that the measure was to "protect
the interest of stockholders pending stockholder consideration of proposed plans
of liquidation for [the] Fund." As discussed above, stockholders have spoken and
clearly rejected the "plan of liquidation", so it is time to terminate these
obstructive measures which serve only to harm stockholders.
More to the point, "poison pills" are simply wrong. Here's what happens with the
Fund's poison pills: if the Trust buys 0.01% more of the Fund's shares, all
stockholders other than the Trust receive three additional shares at a cost of
$0.01 per share. The Trust receives nothing. This means that, based on the
Trust's holdings in the Fund, the Trust's economic interest would be reduced by
almost 70%. We believe that the Board would essentially steal from the Trust and
hand over the "loot" to the non-Trust stockholders. That may not sound like a
bad deal for the non-Trust stockholders. But from the Trust's point of view,
it's robbery and if the Board has the ethical capacity to rob the Trust,
stockholders should figure it has the ethical capacity to rob the rest of the
stockholders of the Fund.
The Trust believes this is fundamentally wrong of the Board and is not
indicative of the type of Board that the stockholders can trust.
The Trust represents to the Fund that as of the date of this notice it is a
stockholder of record of 2,596,016 shares of the Fund's common stock (the
"Shares") which represents 16.5% of the Fund's total outstanding and issued
shares. The Trust further represents to the Fund that it intends to be present
at the Meeting to nominate the Nominees to serve as directors of the Fund, to
submit the Proposals as contained herein, and to vote its Shares accordingly
with the nominations and proposals as presented by the Trust. The Trust hereby
represents to the Fund that it intends to continue to own, through the date of
the Meeting, these Shares.
If the Fund determines that more than three Class III directors will be elected
at the 2009 Stockholders' Meeting, or the Board expands the number of available
seats on the Board, the Trust intends to nominate candidates for the additional
Board seats and will provide the Fund with the required information for any
additional nominees.
The directors of the Fund will be asked to take a position with respect to the
Proposals. As a representative of the Fund's largest stockholder, I urge the
directors to support these proposals as they are in the best interests of all
stockholders of the Fund and introduce sound corporate governance principals.
Only 4 of the 12 members of the Board own shares of the Fund.(1) The fact that 8
of the 12 of these incumbent directors own no shares and did not share in the
extraordinary loss experienced by other stockholders suggests little empathy by
or incentive for the current Board to work diligently toward the future success
of the Fund and its stockholders. Certainly, this lack of meaningful ownership
highlights that the incumbents do not have enough faith in the Fund's management
to warrant investing their own money with the Fund. Accordingly, the Trust
believes that the stockholders of the Fund deserve new advisers to provide a
better chance for a positive return on their investment and a more confident
outlook for the Fund's future. In this regard, we recommend that the Board
consider Boulder Investment Advisers, LLC and Stewart Investment Advisers, both
SEC registered investment advisers who advise the Boulder-based group of
closed-end funds.(2)
If the Board agrees with these Proposals, I invite you to discuss with me at
your earliest convenience how we might mutually affect a smooth and
cost-efficient implementation of the Proposals. Please contact me at in writing
at the address provided above if you have questions. Please fax a copy of any
written response to my counsel, Stephen C. Miller, Esq. or Joel L. Terwilliger,
Esq. at (303) 245-0420.
Sincerely,
The Susan L. Ciciora Trust
/s/ Stewart R. Horejsi
-------------------------------
By: Stewart R. Horejsi, its Financial Advisor
Cc: Board of Directors of the Fund
Footnotes:
(1) Based on information from the Fund's most recent Proxy Statement dated
May 28, 2008.
(2) Boulder Total Return Fund, Boulder Growth & Income Fund and The Denali
Fund.
ARTICLES & LITERATURE PAGE LINKS:
[LINK: Stockholder proposals for SRO]
SUSAN L. CICIORA TRUST
c/o Stephen C. Miller, P.C.
2344 Spruce Street, Suite A
Boulder, Colorado 80302
July 22, 2009
By Federal Express and U.S. Certified Mail
John Millette, Corporate Secretary
DWS RREEF Real Estate Fund II, Inc. (the "Fund")
c/o Deutsche Investment Management Americas
345 Park Avenue
New York, NY 10154-0004
J. Christopher Jackson, Esq.
c/o Deutsche Asset Management, Inc.
280 Park Avenue
New York, NY 10017
To the Corporate Secretary of the Fund:
The continued erosion of stockholder value in the Fund has gone on long enough!
The stockholders have voted, and many of them have communicated to the Trust
that they share our belief that Deutsche Asset Management, Inc. and RREEF
America, L.L.C. are simply no longer fit to manage our assets. Fortunately, it
only requires a majority of the outstanding voting securities of the Fund (as
defined in the Investment Company Act of 1940, as amended (the "1940 Act")) to
fire these advisers and hire more competent managers.
Further, the Trust has become increasingly alarmed at the motives of Deutsche
Asset Management, Inc. with regard to their stalling tactics. Last week they
amended the Fund's bylaws to make it more difficult for stockholders to submit
their proposals to Fund's management. Today, an article appeared in The Wall
Street Journal that reported that Deutsche Bank AG "has dismissed two top
executives following an internal investigation into whether [Deutsche Bank AG]
conducted surveillance on a board member and others [including an activist
shareholder]." This has prompted prosecutors in Germany to open an investigation
into what else is going on at Deutsche Bank AG! According to the Fund's proxy
materials, Deutsche Asset Management, Inc., the investment manager for the Fund,
is a wholly-owned subsidiary of Deutsche Bank AG. We are very concerned about
what is happening with our Fund and the Fund's management, and believe that
stockholders' attempts to guide our assets in a different direction should not
be thwarted at every turn.
Accordingly, and pursuant to the provisions of the Fund's by-laws and
organizational documents and other public documents filed by the Fund with the
Securities and Exchange Commission (the "SEC"), I hereby notify you on behalf of
the Susan L. Ciciora Trust (the "Trust") that, at the Fund's upcoming 2009
annual meeting of stockholders (the "2009 Stockholders' Meeting"), the Trust
intends to nominate candidates for election as directors of the Fund and
introduce certain proposals (collectively, the "Proposals"). The Proposals
conform to the notice requirements of the Fund's most recent proxy filed with
the SEC on May 28, 2008, and the Fund's bylaws as filed with the SEC on July 25,
2003, and as amended (the "2003 Bylaws"). It also conforms to the bylaw
amendments filed in the Fund's 8K on July 15, 2009. The Trust requests that the
Fund provide a true and correct copy of the current bylaws and as they may be
amended from time to time.
The Proposals are as follows:
1. A proposal to terminate the Investment Management Agreement between the
Fund and Deutsche Asset Management, Inc. (the "Investment Manager") (the
"Management Agreement").
2. A proposal to terminate the Investment Advisory Agreement between the
Investment Manager and RREEF America, L.L.C. (the "Investment Adviser") (the
"Advisory Agreement").
The Investment Manager and Investment Adviser are referred to herein as the
"Managers". Justification for Proposals 1 and 2 above is simple: The Fund's
performance over the past year under the Managers has been more than appalling.
It has been one of the worst of any closed-end or open-end fund in the entire
mutual fund universe. In the latest ratings by Morningstar(TM) (January 31,
2009), the Fund received 1 of 5 stars for its overall, 3- and 5-year performance
history, as compared with other similarly situated specialty real estate
closed-end funds. There is no excuse for the extraordinarily poor performance of
the Fund. For the one-year period ending 12/31/08, the Fund had a total return
on net asset value ("NAV") of -91.6%. To nearly wipe out the entire value of a
fund in one year is unheard of, even in a market that saw the S&P 500 Index drop
by 37% in that same time frame. Surprisingly, the market price for the Fund has
dropped even more than NAV because the discount for the Fund increased - a
decline of 93.5% for the year ending 12/31/08. This loss far exceeds any other
market indices for similarly situated funds. In fact, the Fund lost more than
twice the percent lost by the S&P Index. As noted in an article published
December 16, 2008 on seekingalpha.com, SRO was "the worst performing closed end
fund". SRQ, another fund under the Managers, was one of the infamous five worst
performers as named by seekingalpha.com (in an article published January 4,
2009, SRQ was named one of the "five worst performing closed-end funds in
2008"). SRQ also received the same dismal Morningstar(TM) ratings as its
sister-fund. Having one investment manager for two of the five worst performing
funds in 2008 clearly indicates that it is time for new investment management
for the Fund.
Further, the Trust is concerned about the relationship between Deutsche Asset
Management, Inc., the investment manager for the Fund, which is part of the
United States asset management activities of Deutsche Bank AG and which is
purportedly under investigation by prosecutors in Frankfurt, Germany. We do not
want our Fund's assets or management "tainted" by this relationship between
Deutsche Asset Management, Inc. and Deutsche Bank AG. Additionally, we are
concerned that these spying activities may not be limited and could possibly
include other activist stockholders, including the Trust. You are hereby
notified that, on behalf of the Trust, I intend to seek assurances from current
management that such activities do not include stockholders of funds under
management by Deutsche Asset Management, Inc., including the Fund.
Notwithstanding the above Proposals 1 and 2, the Trust encourages the Board of
Directors of the Fund (the "Board") to terminate the Management Agreement and
Advisory Agreement sooner rather than later. The Board members have a fiduciary
duty to the stockholders to make a change, as the Managers clearly have shown
that they should no longer manage the Fund. It is the duty of the Board to save
what little is left in the Fund and embrace the changes proposed by the Trust.
However, if the Board elects not to pursue this course of action, the Trust
intends to pursue the above Proposals in a proxy contest.
3. Nominate for election by the stockholders the following nominees as
Class III directors for the Fund: Susan L. Ciciora, Richard I. Barr, and Joel W.
Looney (collectively, the "Nominees). Copies of the Nominees' resumes are
attached to this letter and contain all information required under Article II,
ss. 11 of the 2003 Bylaws.
4. A proposal recommending that the Board amend Article XIII of the Fund's
bylaws (the "Bylaws") such that authority to amend the Bylaws is not vested
solely in the Board. See discussion under Proposal 6 below.
5. A proposal recommending that the Board amend Article III, ss. 2 of the
Bylaws to reduce the number of directors and declassify the Board consistent
with the discussion under Proposals 7 and 8 below.
6. A proposal recommending that the Board amend the Fund's charter (the
"Charter"), vesting in the stockholders the power to amend or adopt the Bylaws
by the affirmative vote of a majority of all votes entitled to be cast on the
matter. The Trust believes that all stockholders benefit if they have better
access to and more influence in the Fund's governance. The Fund's Bylaws contain
important policies affecting the day-to-day management of the Fund, which the
Trust believes stockholders should have a voice in establishing. Presently the
Bylaws contain a provision which vests the authority to adopt, alter or repeal
Bylaws solely with the Board. The Trust believes that the authority to adopt,
alter or repeal Bylaws should be a shared authority between the Board and
stockholders. This permits the Board to be responsive to house-keeping and
substantive matters regarding Fund operations, while at the same time giving the
owners of the Fund the power to effect changes should they choose to do so. The
Trust also believes that when stockholders "speak" by adopting a Bylaw, their
action should not be subject to being overturned or altered by unilateral action
of a Board whose job it is to serve stockholders. The Trust believes that this
Proposal will accommodate the practicalities of managing the Fund while at the
same time protecting an important right of stockholders. This Proposal would
codify in the Charter the shared authority to make, alter or repeal Bylaws,
while at the same time making it clear that Bylaws that are adopted by
stockholders cannot be altered, repealed or otherwise circumvented without the
affirmative approval of stockholders. If recommended by the Board and approved
by stockholders, the Charter will be amended to add the following provision:
The Bylaws of the Corporation, whether adopted by the Board of Directors or
the stockholders, shall be subject to amendment, alteration or repeal, and
new Bylaws may be made, by either (a) the affirmative vote of a majority of
all the votes entitled to be cast on the matter; or (b) the Board of
Directors; provided, however, that the Board of Directors may not (i) amend
or repeal a Bylaw that allocates solely to stockholders the power to amend
or repeal such Bylaw, or (ii) amend or repeal Bylaws or make new Bylaws
that conflict with or otherwise alter in any material respect the effect of
Bylaws previously adopted by the stockholders.
7. A proposal recommending that the Board amend the Charter to set the
number of members of the Board to five. Company charters often contain
provisions that set a high upper-limit on the number of board seats, permitting
the company's board to increase or decrease the number of board seats in their
discretion, subject to this upper limit. Currently the Charter sets a lower
limit as required by MGCL and the upper limit at twelve, permitting the Board to
increase or decrease its size subject to the upper limit. Boards may use such
provisions to quickly increase or decrease their size in an effort to dilute the
voting impact of directors - such as those elected in proxy contests - with
views contrary to those of management. The Trust views the ability to manipulate
the number of members on the Board as unnecessary and ultimately ineffective in
thwarting stockholder desires. In addition, it potentially increases Fund
expenses and insulates the Board from stockholders. Common sense suggests that
if the Fund has more Board seats, the Fund (and thus stockholders) will spend
more on Board compensation. The Trust believes that, because of the relatively
narrow business focus of an investment company such as the Fund, five Directors
can adequately and efficiently fulfill their obligation to oversee the
operations of the Fund and its management and act as "watchdogs" for
stockholders. The Trust believes that the best approach is to seek a few highly
qualified individuals to fill directorships and pay them fairly. This way,
stockholders get more "bang for the buck" in their Board and don't pay
unnecessary Board expenses. If recommended by the Board and approved by
stockholders, the Charter will be amended to delete the entirety of Article
VI(1) and replaced with the following provision:
The number of directors shall be five.
8. A proposal recommending that the Board amend the Charter to de-classify
the Board and provide for the annual election of directors. The election of
directors is the primary means for stockholders to exercise influence over the
Fund and its policies. The Trust believes that classified boards have the effect
of reducing the accountability of directors to a company's stockholders. A
classified board prevents stockholders from electing all directors on an annual
basis and may discourage proxy contests in which stockholders have an
opportunity to vote for a competing slate of nominees. While classified boards
are viewed by some as increasing the long-term stability and continuity of a
board, the Trust believes that, in the case of the Fund, long-term stability and
continuity should result from the annual election of Directors, which provides
stockholders with the opportunity to evaluate Director performance, both
individually and collectively, on an annual basis. If recommended by the Board
and approved by stockholders, the Charter will be amended to deleted the
entirety of Article VI(3) and replaced with the following provision:
The directors shall be elected at each annual meeting of the stockholders
commencing in 2010, except as necessary to fill any vacancies, and each
director elected shall hold office until his or her successor is duly
elected and qualifies, or until his or her earlier resignation, death, or
removal.
9. A proposal recommending that the Board amend the Charter to provide that
the Secretary of the Fund shall call a special meeting of stockholders on the
written request of stockholders entitled to cast at least 25% of all votes
entitled to be cast at the meeting. Presently, under the Fund's Bylaws,
stockholders cannot call a special meeting unless a written request is submitted
by the holders of a majority of outstanding shares entitled to vote at the
meeting. This ownership threshold restricts a stockholder's right to call a
meeting. This Proposal would amend the Charter to reduce the percentage
ownership level from a "majority" to 25% of outstanding shares, thus making the
potential for a stockholder or group of stockholders to call a special meeting
more realistic and useful. If recommended by the Board and approved by
stockholders, the Charter will be amended with the following provision:
The Secretary of the Corporation shall call a special meeting of the
stockholders on the written request of stockholders entitled to cast at
least twenty-five percent (25%) of all the votes entitled to be cast at the
meeting.
10. A proposal recommending that the Board amend the Charter to provide
that the Fund no longer be subject to Maryland General Corporation Law ("MGCL")
ss.ss. 3-801 through 805 - the Maryland Unsolicited Takeovers Act ("MUTA") such
that the Fund will no longer be subject to MUTA. MUTA has the effect of
entrenching management and diminishing stockholder influence. Amending the
Charter such that the Fund is no longer subject to MUTA should result in
maximizing Board and management accountability to stockholders. This Proposal
would amend the Charter to "opt out" of the provisions of MUTA by deleting
Article VI(2). If recommended by the Board and approved by stockholders, Article
VI(2) of the Charter will be deleted in its entirety.
11. A proposal recommending that the Board change the name of the Fund so
that it does not include "DWS" or reference to the DWS family of funds, or
investments in real estate or similar securities. Further, we want to remove any
association of the Fund with Deutsche Asset Management, Inc. and Deutsche Bank
AG due to our concerns of corporate malfeasance.
12. A proposal recommending that the Board resolve to negate the
applicability of the Maryland Control Share Acquisition Act (the "MCSAA") such
that the Trust will no longer be subject thereto. The MCSAA limits stockholder
voting rights in excess of certain thresholds. The Trust believes, as evidenced
by the recent deepening of the Fund's discount, that the MCSAA is harming
stockholders who may want to exit the Fund. The Trust and other significant
stockholders are apt to be discouraged from purchasing shares they cannot vote
and thus avoid purchasing shares in the market which would otherwise provide
pricing support for exiting stockholders. Moreover, when the Fund announced its
adoption of the MCSAA, its press release said that the MCSAA and other
obstructive measures were "to protect the interest of stockholders pending
stockholder consideration of proposed plans of liquidation for [the] Fund."
Given the fact that the "plan of liquidation" was defeated, the Board should
have terminated the MCSAA immediately after the special meeting on May 20, 2009.
Obviously they didn't. Stockholders have spoken and have clearly expressed their
disdain for the "plan of liquidation," so it is time to terminate these
obstructive measures which serve only to harm stockholders. We believe that the
MCSAA, in conjunction with the Fund's "poison pill", denies stockholders wanting
to sell shares and erodes any prospect for much needed price support.
13. A proposal recommending that the Board resolve to terminate the rights
agreement dated April 9, 2009 and as may be amended from time to time (the
"poison pill"), whereby future purchases of the Fund's shares by the Trust will
trigger a dilutive rights dividend specifically targeted to dilute only the
Trust. On April 9, 2009, the Board implemented a so-called "Rights Agreement"
which would trigger dilutive rights dividends if the Trust purchases additional
shares of the Fund. Like the MCSAA discussed above, this "poison pill" is
designed to discourage the Trust from purchasing additional shares and denies
stockholders wanting to sell their most likely prospect for a much needed price
support. As with the MCSAA, the Fund announced that the measure was to "protect
the interest of stockholders pending stockholder consideration of proposed plans
of liquidation for [the] Fund." As discussed above, stockholders have spoken and
clearly rejected the "plan of liquidation", so it is time to terminate these
obstructive measures which serve only to harm stockholders.
More to the point, "poison pills" are simply wrong. Here's what happens with the
Fund's poison pills: if the Trust buys 0.01% more of the Fund's shares, all
stockholders other than the Trust receive three additional shares at a cost of
$0.01 per share. The Trust receives nothing. This means that, based on the
Trust's holdings in the Fund, the Trust's economic interest would be reduced by
almost 70%. We believe that the Board would essentially steal from the Trust and
hand over the "loot" to the non-Trust stockholders. That may not sound like a
bad deal for the non-Trust stockholders. But from the Trust's point of view,
it's robbery and if the Board has the ethical capacity to rob the Trust,
stockholders should figure it has the ethical capacity to rob the rest of the
stockholders of the Fund. The Trust believes this is fundamentally wrong of the
Board and is not indicative of the type of Board that the stockholders can
trust.
The Trust represents to the Fund that as of the date of this notice it is a
stockholder of record of 1,915,835 shares of the Fund's common stock (the
"Shares") which represents approximately 5% of the Fund's total outstanding and
issued shares. The Trust further represents to the Fund that it intends to be
present at the Meeting to nominate the Nominees to serve as directors of the
Fund, to submit the Proposals as contained herein, and to vote its Shares
accordingly with the nominations and proposals as presented by the Trust. The
Trust hereby represents to the Fund that it intends to continue to own, through
the date of the Meeting, these Shares.
If the Fund determines that more than three Class III directors will be elected
at the 2009 Stockholders' Meeting, or the Board expands the number of available
seats on the Board, the Trust intends to nominate candidates for the additional
Board seats and will provide the Fund with the required information for any
additional nominees.
As a representative of the Fund's largest stockholder, I urge the directors to
support these proposals as they are in the best interests of all stockholders of
the Fund and introduce sound corporate governance principals.
Only 4 of the 12 members of the Board own shares of the Fund; their total
ownership comprises a paltry 3,950 shares among the four members.(1) The fact
that 8 of the 12 of these incumbent directors own no shares, and that the
remaining directors have so little invested suggests little incentive for the
current Board to work diligently toward the future success of the Fund and its
stockholders. Certainly, this lack of meaningful ownership highlights that the
incumbents do not have enough faith in the Fund's management to warrant
investing their own money with the Fund. Accordingly, the Trust believes that
the stockholders of the Fund deserve new advisers to provide a better chance for
a positive return on their investment and a more confident outlook for the
Fund's future. In this regard, we recommend that the Board consider Boulder
Investment Advisers, LLC and Stewart Investment Advisers, both SEC registered
investment advisers who advise the Boulder-based group of closed-end funds.(2)
If the Board agrees with these Proposals, I invite you to discuss with me at
your earliest convenience how we might mutually affect a smooth and
cost-efficient implementation of the Proposals. Please contact me at in writing
at the address provided above if you have questions. Please fax a copy of any
written response to my legal counsel, Stephen C. Miller, Esq. or Joel L.
Terwilliger, Esq. at (303) 245-0420.
Sincerely,
The Susan L. Ciciora Trust
/s/ Stewart R. Horejsi
-------------------------------
By: Stewart R. Horejsi, its Financial Advisor
Cc: Board of Directors of the Fund
Footnotes:
(1) Based on information from the Fund's most recent Proxy Statement dated
May 28, 2008.
(2) Boulder Total Return Fund, Boulder Growth & Income Fund and The Denali
Fund.
ARTICLES & LITERATURE PAGE LINKS:
[LINK: June 2009 - Robert Lust]
Robert Lust
11260 Aspen Glen Dr.
Boynton Beach, Fl. 33437
June 12,2009
Susan L. Ciciora Trust
c/o Stephen Miller
2344 Spruce St.
Boulder, Colorado 80302
Dear Sir:
I am an unhappy owner of 1500 shares of SRO.
On April 28, 2009 I wrote to the Board of SRO. I accused them of being crooks
- -likened them to Bernie Madoff -that is money invested -money almost completely
lost.
I accused them of failing to preserve the financial assets which were entrusted
to them.
I copied the letter and sent it to the SEC.
In the letter I requested the SEC do the following:
- thoroughly investigate their activities.
- to have all directors fees returned to the fund.
- to make claims against their insurance carriers
- to have all administrative fees and consulting fees returned to the
fund
- to ban for life every director -in this or any other fund
- to ban DWS for life from ownership of this or any other fund
- to investigate all underwriters to determine if their fees should be
returned to the fund
- and finally to indict every director for fraud
On May 12, 2009 the SEC responded saying that my complaint was being taken very
seriously and was being referred to the appropriate people within the SEC.
Thank you for setting up the new website. My only suggestion is that you add an
email address for someone like myself to contact you.
Yours truly,
/s/ Robert Lust
Robert Lust
ARTICLES & LITERATURE PAGE LINKS:
[LINK: June 2009 - Jamie Q]
Jaime Q., M.D.
Texas
Stewart R. Horejsi
Boulder, CO
Thank you for your letter about DWS RREEF R.S. Fund.
You give me hope and will support your efforts.
Thank you again.
Very truly yours,
Jaime Q., M.D.
ARTICLES & LITERATURE PAGE LINKS:
[LINK: July 2009 - Kathleen W.]
Stewart R. Horejsi
Susan L. Ciciora Trust
2344 Spruce Street, Suite A
Boulder, CO 80302
Dear Mr. Horejsi:
Thank you for your Information Sheet containing the "Urgent Message to DWS RREEF
Real Estate Fund Holders" dated April 10, 2009. I was pleased to receive it
since it confirmed many of my thoughts about the Proposal to liquidate the fund.
Having been beaten this far down, I'd prefer to hold the shares and see what
fate awaits us once the current real estate cycle turns.
I have voted "Against" the Funds proposal via the electronic service Proxyvote.
I hope that other shareholders will join together to defeat the proposal.
Thank you for your efforts to take the lead on this matter. Hopefully we will
succeed.
Very truly yours,
Kathleen W.
PROXY MATERIALS PAGE LINKS:
[LINK: CLICK HERE FOR THE TRUST'S (PRELIMINARY) PROXY MATERIALS SUPPORTING ITS
PROPOSALS TO TAKE BACK SRQ AND SRO]
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]: STOCKHOLDERS TAKING BACK SRQ & SRO
[GRAPHIC OMITTED]: Information regarding your investments in DWS RREEF Real
Estate Fund, Inc. (SRQ) and DWS RREEF Real Estate Fund II, Inc. (SRO).
Header Navigation Links:
|Welcome||Press Releases||Articles & Literature||Proxy Materials||SEC Filings|
|Contact||Important Information|
- --------------------------------------------------------------------------------
TRUST'S PROXY MATERIALS SUPPORTING ITS PROPOSALS TO TAKE BACK SRQ AND SRO
(Annual Meeting to be Announced)
1. The Trust's Joint Proxy Statement (PREC14A) in Support of its
Stockholder Proposals for SRQ and SRO [LINK]
[Note to EDGAR readers: * SEE "IMPORTANT INFORMATION PAGE LINK" ABOVE
TO VIEW (PREC14A)]
2. Response to Funds' Critique of Trust's Preliminary Proxy [LINK]
3. COMING SOON - More definitive proxy materials as filed from time to
time with the SEC
Footer Navigation Links:
Welcome | Press Releases | Articles & Literature | Proxy Materials | SEC Filings
Contact | Important Information
TRUST'S PROXY MATERIALS SUPPORTING ITS PROPOSALS TO TAKE BACK SRQ AND SRO
PAGE LINKS:
[LINK: Response to Funds' Critique of Trust's Preliminary Proxy]
Dear fellow stockholders of SRQ and SRO:
It's time to fire Deutsche Bank's affiliated advisers, Deutsche Asset
Management, Inc. and RREEF America, LLC. We believe they continue to waste
stockholders' money - our money - by fighting our proposals rather than working
efficiently to move our investments in a different direction.
The Susan L. Ciciora Trust, a large stockholder in both SRQ and SRO, received
communications from the funds' legal counsel regarding the Trust's recent
preliminary proxy statement. We believe the claims they made are without merit
and are examples of how current management for SRQ/SRO is wasting time and
stockholders' money fighting our proposals. We think it's important for
stockholders to know how current management is spending stockholders' money
fighting the Trust's proposals. Thus, we are making our correspondence available
to you, and you can make your own determination. You deserve to know what
current management is doing and how the Trust is responding to, we believe,
expensive delaying tactics.
The Trust believes that the Deutsche Bank affiliated advisers, Deutsche Asset
Management, Inc. and RREEF America, LLC, should be terminated immediately, and
that management should introduce other stockholder "friendly" corporate
governance changes. It's time to call the annual meeting of stockholders so that
we can stand together and bring about change!
Best regards from a fellow stockholder,
Stewart R. Horejsi
Representative for the Susan L. Ciciora Trust
Susan L. Ciciora Trust
2344 Spruce Street, Suite A
Boulder, Colorado 80302
c/o Stephen C. Miller, Esq. or Joel L. Terwilliger, Esq.
(303) 442-2156
June 23, 2009
VIA EDGAR AND OVERNIGHT COURIER
U.S. Securities & Exchange Commission
John Grzeskiewicz, Esq.
Division of Investment Management
100 F Street, N.E.
Washington, DC 20549
RE: Preliminary Proxy Statement of DWS RREEF Real Estate Fund, Inc. and DWS
RREEF Real Estate Fund II, Inc. [accession numbers 0001099343-09-000078 and
0001099343-09-000079] - (collectively, the "Funds")(the "Preliminary
Proxy")
Dear Mr. Grzeskiewicz:
Thank you for your time the other day regarding the Susan L. Ciciora Trust's
(the "Trust") preliminary proxy as filed on June 6, 2009. This letter is in
response to the remarks of Ropes & Gray, the Funds' legal counsel, contained in
a letter dated June 15, 2009 regarding the Preliminary Proxy (the "Funds'
Letter").
By way of introduction, the Trust disagrees with the assertions in the Funds'
Letter that the Trust's Preliminary Proxy contains statements which are
"materially misleading" or omitted. First and foremost, the general tenor of the
Funds' Letter overlooks a key point: the Preliminary Proxy is just that, a
preliminary proxy. Accordingly, any assertion by fund counsel that material
information required per Schedule 14A was omitted by the Trust is premature. The
Trust notes that the accusatory tenor of the letter mischaracterizes omissions
as "materially misleading", which omissions are actually self-evident
placeholder "blanks" contained in a preliminary proxy with respect to record
date, scheduling of the Funds' 2009 annual meeting, and other disclosures that
should have already been dealt with by the Funds.
Thus, it bears repeating that the context of the Trust's filing is that of a
contesting proxy which presupposes that the Funds will not wholly fail to take
action to issue notice of a 2009 annual meeting and distribute their own proxy
statement to stockholders containing the required information. When the Funds do
so, then the Trust may rely upon and incorporate this information where
necessary in a definitive and subsequently disseminated contesting proxy
statement. Accordingly, any assertion by fund counsel that material information
required per Schedule 14A was omitted by the Trust is premature and in disregard
of the fact that the Funds are the expected and proper source of the omitted
information.
Set forth below are the Trust's responses to the Funds' Letter. The remarks made
by fund counsel are reproduced in bold text, and are followed by the Trust's
responses. The responses are provided via a general statement followed by a
specific response to each specific remark in the order in which the remarks were
set out in numbered paragraphs in the Funds' Letter and are numbered
correspondingly. Unless otherwise noted in this letter, the Trust believes the
information supplied in its response has addressed the remarks of fund counsel
and is solely responsible for that information.
Response to the Remarks of the Funds -Preliminary Proxy filed by the Trust
Paragraph Number 1 of the Funds' Letter asserts:
The Trust's proxy statement omits information required to be included therein.
The Trust's proxy statement omits material information required by Schedule 14A
and is, therefore, not compliant with Rule 14a-3(a), including the record date,
the date of the annual meetings and information related to beneficial ownership
(the current table is not as of a recent date and is inaccurate). While the
Trust may omit certain information under Rule 14a-5(c) to the extent it is
included in the Funds' proxy statements, in the past the Staff has taken the
position that it would be inappropriate for a shareholder to rely on Rule
14a-5(c) until the issuer distributes its proxy statement. We believe that it
would not be consistent with the rules of the Commission for the Trust to
solicit proxies until it is able to include all required information or rely on
Rule 14a-5(c) therefor.
The Trust's response:
As explained in the introductory comments above, the Trust confirms that it has
omitted certain disclosures required by applicable law(1) in anticipation of
relying on Rule 14a-5(c) with respect to information expected to be (and
typically) included in proxy statements.
The Trust does not intend to disseminate its definitive proxy prior to the
filing and distribution of the Funds' proxy statement for the 2009 annual
meeting. Any determination by the Trust to disseminate its proxy statement prior
to the distribution of the Funds' proxy statement would be made in the context
of the Funds' failure to distribute the required information to shareholders and
with express understanding that the Trust would be required to undertake to
furnish all required disclosures.
In regard to self-evident omissions to disclose record date, time and place of
the annual meeting and similar matters, this again highlights the failure of the
Funds thus far to provide any required disclosures in any proxy statement. This
common predicament of activist shareholders is typically addressed by leaving
blanks in the preliminary proxy that can be filled in when the registrant makes
the information available to its security holders.
Certainly, blanks in a preliminary contested proxy are to be expected - that's
why it is preliminary - and the Trust presumes that fund counsel understands the
distinction between a preliminary and a definitive proxy statement. When the
Funds undertake their obligations to set a record date and provide other
material information to the stockholders, the Trust will respond accordingly.
Paragraph Number 2 of the Funds' Letter asserts:
The Trust's proxy statement fails to identify all "participants" in the
solicitation as required by Item 4(a)(2) of Schedule 14A. Item 4(a)(2) of
Schedule 14A requires that all "participants" (as defined in Instruction 3
thereto) in the solicitation be named in the proxy statement and information
with respect thereto provided. It appears that, at a minimum, Mr. [Stewart]
Horejsi is a participant in the solicitation and has not been properly named or
described in the Trust's proxy statement. It is possible that the various
investment advisors affiliated with Mr. Horejsi may also be participants.
The Trust's response:
The Preliminary Proxy includes all "participants" as defined and as required to
be identified as such by the instructions for Schedule 14A. The term
"participant" is defined in Instruction 3 to Item 4 of Schedule 14A and includes
nominees for directors as deemed participants. All nominees are included in the
Preliminary Proxy.
Investment advisors and key personnel are not "participants" solely as a result
of status. As stated in the instructions, the terms "participant" and
"participant in a solicitation" do not include:
(iii) any person employed by a participant in the capacity of attorney,
accountant, or advertising, public relations or financial adviser, and
whose activities are limited to the duties required to be performed in the
course of such employment;
(iv) any person regularly employed as an officer or employee of the
registrant or any of its subsidiaries who is not otherwise a participant
(emphasis added). Further, where a person acts in a financial adviser capacity,
i.e., "whose activities are limited to the duties required to be performed in
the course of such employment," such person would not be deemed a participant in
the proxy solicitation. Mr. Horejsi is a financial advisor to the Trust and as
such clearly falls within the precepts of (iii) and/or (iv) above. The Trust is
an irrevocable private family trust established by Susan L. Ciciora (the
daughter of Mr. Horejsi) for the benefit of her issue and her brother and his
issue. Mr. Stewart Horejsi is not a trustee of or beneficiary under the Trust
and has no beneficial interest in shares of the Funds.
In conclusion, this assertion is without merit.
Paragraph Number 3 of the Funds' Letter asserts:
The Trust's proxy statement cites the Lipper ranking of The Denali Fund within
the performance analysis category for real estate funds, but fails to disclose
that subsequent to Mr. Horejsi's taking control of that fund it has been removed
from the real estate category. The Trust repeatedly reports that The Denali Fund
"Ranks #1 in the Lipper Closed End Equity Fund Performance Analysis for Real
Estate Funds" for the one and five-year period ended December 31, 2008. However,
the Trust fails to disclose that effective June 8, 2009, Lipper has subsequently
removed The Denali Fund from the real estate category and reclassified it into
the "Core Funds" category in view of changes to the portfolio holdings of The
Denali Fund made by Mr. Horejsi subsequent to his taking control of that fund.
The Trust's response:
The following are indisputable facts: The Denali Fund ("DNY") indeed won the
Lipper Performance Achievement Certificates as stated in the Preliminary Proxy
for the one and five year periods ending December 31, 2008, and the Trust
correctly stated the category for which it won the Lipper awards. Lipper bases
its awards on past performance for specified periods of time, i.e., for the one
and five year periods ending December 31, 2008, and uses classifications deemed
appropriate by Lipper. Awards for past performance are not qualified by
prospective classification change down the road.
DNY was only very recently reclassified by Lipper into their "Core Funds"
category due to recent changes to DNY's portfolio holdings. However, Lipper's
recent reclassification comes after the time period for which DNY won the awards
and has no bearing on the Lipper awards themselves, since the reclassification
occurred subsequent to DNY's receipt of the awards.
Further, the suggestion by fund counsel that DNY was "removed" from the real
estate category to the core funds category is misleading. Never having won a
Lipper award, the Funds are likely not familiar with this distinction and how
the award is designated based on performance over a specified period of time,
i.e., for the one and five year periods ending December 31, 2008. Accordingly,
the Trust suggests that fund counsel contact Lipper to learn more about how
Lipper classifies closed-end funds and designates award winners such as DNY.
In conclusion, this assertion is without merit.
Paragraph Number 4 of the Funds' Letter asserts:
The Trust's proxy statement misrepresents the results of the special meetings to
vote upon a liquidation proposal for each Fund. The Trust's proxy statement
repeatedly states that the Funds' liquidation proposals were "soundly defeated"
at the Funds' recent special meetings. He also states that the liquidation
proposals were defeated by an "overwhelming majority" of the shareholders. Both
of these statements are misleading. As publicly announced by SRO, the
liquidation proposal received over twice as many votes "for" as it did "against"
votes. SRO did not receive the required vote of a majority of the outstanding
shares in order to carry the proposal. In SRQ, of the unaffiliated shares voted
(excluding shares voted by Mr. Horejsi), the liquidation proposal received
approximately 54% of the votes cast "against" and 46% "for," hardly an
"overwhelming" majority.
The Trust's response:
Fund counsel did not show the actual voting numbers, presumably since they do
not support their assertions in #4. Here are the numbers for SRQ:
FOR management's proposal AGAINST management's proposal Abstain
------------------------------------ -------------------------------------- -------
2,898,268 5,995,333 123,457
For SRQ, the board of director's proposal to liquidate was defeated by a more
than a 2 - 1 vote tally. This is clearly a "soundly defeated" proposal for which
an "overwhelming majority" of stockholders who voted voted "against". By parsing
numbers (i.e., excluding shares voted by the Trust), fund counsel suggests that
the Trust's shares should not count (which is consistent with the Funds'
treatment of the Trust notwithstanding its status as a significant stockholder
in the Funds) in the overall vote tally. Thus, for SRQ, this assertion by the
Funds is without merit. It should also be noted that fund counsel uses the
nomenclature "he" when referring to the proponent of the Preliminary Proxy.
Ostensibly this is a reference to Mr. Horejsi and the Trust clarifies again that
it is the Trust, not Mr. Horejsi, setting forth the proposals in the Proxy
Statement.
Regarding SRO, if the intention of fund counsel is to convey that the actual
voting tally for SRO was unable to garner sufficient stockholder approval to
pass the liquidation proposal, the Trust will accommodate this disclosure
objective. As such, we believe the language is not "materially misleading".
Paragraph Number 5 of the Funds' Letter asserts:
The Trust's proxy statement contains numerous statements that impugn the
character, integrity and personal reputation of the Funds' directors, as well as
making charges of illegal or immoral conduct in violation of Rule 14a-9(b). Rule
14a-9(b) prohibits misleading statements that impugn the character, integrity
and personal reputation of the Funds' directors, as well as making charges of
illegal or immoral conduct of other parties without factual foundation. The
Trust's proxy statement contains many such statements. For example, the proxy
statement contains the following statement: "if the Boards have the unethical
capacity to rob the Trust, stockholders should figure they have the unethical
capacity to rob the rest of the stockholders." It also states: "The Trust
believes that the current Boards are 'hiding' behind their staggered structure
to avoid meaningful contact with the Funds' stockholders to their long-term
detriment." There is no factual support for these statements.
The Trust's response:
Fund counsel is using incomplete and out of context quotes to make an incorrect
substantive point. The use of partial quotes does not correctly convey the
context of these statements. The Board of a well-run investment company with
sound corporate governance would never be referred to as "having the capacity to
rob" a major stakeholder. It is our view that the investment advisors selected
and retained by the Funds' Boards are complacent about operational
under-performance, and the Trust holds the Boards accountable for these
failings. As detailed in the Preliminary Proxy, on virtually every major metric
of financial performance, the Funds have performed dismally.
The Trust's statements are noted as its view and opinion. For example, the
incompletely quoted phrase "if the Boards have the unethical capacity to rob the
Trust, stockholders should figure they have the unethical capacity to rob the
rest of the stockholders" is clearly qualified at the beginning of the statement
in which it appears and which reads, "But from the Trust's point of view, it's
robbery..." and placed in context at the end of the statement which reads, "Is
that the kind of board you want representing your interests?" This clearly is an
expression of opinion by the Trust regarding the Funds' poison pill and Maryland
Control Shares Acquisition Act opt-in.
Moreover, Rule 14a-9 addresses negative statements regarding character or
conduct that are misleading because factually unsupported. We do not believe any
statements lack factual support, but will rephrase the content to ensure no
ambiguity that the views are opinion and consider other descriptive terms with
narrower ordinary meaning,
In conclusion, this assertion is without merit.
Paragraph Number 6 of the Funds' Letter asserts:
The Trust's proxy statement cites blog entries as articles and fails to identify
the author thereof. The Trust's proxy statement cites blog postings on
www.seekingalpha.com as articles and does not cite the author thereof in
violation of Rule 14a-12(c)(2).
The Trust's response:
Fund counsel failed to cite a single example of a blog entry contained in
Preliminary Proxy which does not contain a reference to the original author.
Accordingly, this assertion is unfounded.
Paragraph Number 7 of the Funds' Letter asserts:
The Trust repeatedly states that there is "no vote requirement associated" with
its precatory proposals. In order for a precatory proposal to be adopted as a
recommendation by the stockholders, it must receive an affirmative majority of
the votes present and entitled to vote on the matters.
The Trust's response:
Fund counsel did not specify which proposals by the Trust are "precatory"; the
Trust presumes that they understand Proposals 1, 2, and 3 are not precatory
proposals and do in fact specify the required vote for the binding effect of
these proposals (which binding effect is within the authority of the Funds'
stockholders).
In regard to the remaining Proposals 4 - 13, the Funds' respective boards of
directors may decline to include them in the Funds' own proxy under 14a-8(i)(1)
as such a precatory proposal(s) is the not proper subject for any legally
binding action by stockholders, as the Trust acknowledges here(2). However, the
Trust is not seeking to include Proposals 4 - 13 in the Funds' proxy, but rather
in its own proxy. Additionally, the Trust states that "there is no vote
requirement associated with" these proposals because they are non-binding and
concern matters currently vested exclusively in the board of directors for each
Fund.
Thus, whether the final vote tally on any of Proposals 4 - 13 is 40%, 50%, or
even 90% of those stockholders present and eligible to vote makes no difference
as to the legal effect of the vote on these Proposals 4 - 13. They do not
involve matters that require a binding stockholder vote because the right to
take the necessary action is vested in the board of directors for each of the
Funds. Consequently, the effect of an affirmative vote on these initiatives is a
non-binding referendum (as correctly portrayed in the Preliminary Proxy) to
express dissatisfaction with the current corporate governance structure and
performance of the Funds.
The Trust firmly believes that precatory proposals have played a vital role in
fostering effective and constructive communication between stockholders and the
funds they own. Courts in many states have specifically affirmed the legality of
precatory proposals. See, for example, Auer v. Dressel, 306 N.Y. 427, 432 (N.Y.
1954) (holding that stockholder proposal where stockholders expressed approval
of former president's conduct, and demanded that directors place the former
president back in office was proper under state law). In fact, in a series of
roundtable discussions, the SEC acknowledged that stockholder proposals
submitted through Rule 14a-8 have been a source of significant progress in
corporate governance, as many of the prevailing "best practices" were first
introduced through so-called precatory proposals. See comments, Securities and
Exchange Commission, 17 CFR PART 240, [Release No. 34-56160; IC-27913; File No.
S7-16-07.
The Trust believes that stockholders of the Funds have the right to communicate
with the boards of directors regarding their oversight and governance of the
Funds, and submits Proposals 4 - 13 in furtherance of communicating to the board
of directors ongoing dissatisfaction with their job performance. The response by
fund counsel with respect to these non-binding proposals - attempting to "kick
them out" of the Preliminary Proxy - is simply illustrative of the
non-responsiveness of the board of directors to legitimate stockholders'
concerns.
If fund counsel is suggesting that the board of directors will agree to abide by
the stockholders' approval of these precatory proposals (4 - 13) then the Trust
may amend the Preliminary Proxy such that these proposals, if approved by an
affirmative majority of the votes present and entitled to vote on the matters,
are binding in full force and effect on the Funds and their respective boards of
directors.
I appreciate your time and consideration in this matter, and am available at
your convenience if you have any questions. I remain,
Yours truly
/s/ Joel L. Terwilliger
Joel L. Terwilliger, Esq.
2344 Spruce Street Suite A
Boulder, CO 80302
With copies to: Vincent Di Stefano, Esq. - Securities and Exchange Commission
David A. Fine, Esq.
John W. Gerstmayr, Esq.
J. Christopher Jackson, Esq.
Rita Rubin, Esq.
James Wall, Esq.
Footnotes:
(1) E.g., among other things, information concerning the compensation of the
Funds' executive officers, an analysis of cumulative total returns on an
investment in the Funds' shares during the past five years and the procedures
for submitting proposals for inclusion in the Funds' proxy statement at the 2010
annual meeting,
(2) A precatory proposal is an advisory suggestion that directors are not
legally bound to enforce. This type of proposal is usually phrased in the form
of a request.
ROPES &GRAY LLP
ONE INTERNATIONAL PLACE
BOSTON, MA 02110-2624
WWW.ROPESGRAY.COM
June 15,2009
David A. Fine
617-951-7473 617-
235-0030 fax
David.fine@ropesgray.com
BY EDGAR & FEDERAL EXPRESS
U.S. Securities and Exchange Commission
100 F Street, NE Washington, DC 20549
Attn: Vincent DeStefano
Re: Preliminary Proxy Statement ofDWS RREEF Real Estate Fund, Inc. (Registration
No. 81121172) and DWS RREEF Real Estate Fund II, Inc. (Registration No.
811-21340)
Dear Mr. DeStefano:
On behalf ofour clients, DWS RREEF Real Estate Fund, Inc. ("SRQ") and DWS RREEF
Real Estate Fund II, Inc. ("SRO") (SRQ and SRO together, the "Funds"), we are
writing to bring to the Staffs attention what we believe are material
misstatements and omissions contained in the preliminary proxy statement filed
on June 8, 2009 (the "proxy statement") by Susan L. Ciciora Trust (the "Trust")
with respect to the yet to be determined annual meetings of stockholders ofthe
Funds. The Funds believe that absent corrections to certain statements made in
these proxy materials, the Trust's proxy statement is materially misleading to
the Funds' stockholders in violation of Rule 14a 9. These concerns are set forth
below. We wish to note that the Trust repeats many ofthese same statements on
its soliciting website, www.srgsro.com.
1. The Trust's proxy statement omits information required to be included
therein. The Trust's proxy statement omits material information required by
Schedule 14A and is, therefore, not compliant with Rule 14a-3(a), including
the record date, the date ofthe annual meetings and information related to
beneficial ownership (the current table is not as of a recent date and is
inaccurate). While the Trust may omit certain information under Rule
14a-5(c) to the extent it is included in the Funds' proxy statements, in
the past the Staffhas taken the position that it would be inappropriate for
a shareholder to rely on Rule 14a-5(c) until the issuer distributes its
proxy statement. We believe that it would not be consistent with the rules
of the Commission for the Trust to solicit proxies until it is able to
include all required information or rely on Rule 14a-5(c) therefor.
2. The Trust's proxy statement fails to identify all "participants" in the
solicitation as required by Item 4(a)(2) of Schedule 14A. Item 4(a)(2) of
Schedule 14A requires that all "participants" (as defined in Instruction 3
thereto) in the solicitation be named in the proxy
ROPES & GRAY LLP
Securities and Exchange Commission -2 -June 15,2009
statement and information with respect thereto provided. It appears that,
at a minimum, Mr. Horejsi is a participant in the solicitation and has not
been properly named or described in the Trust's proxy statement. It is
possible that the various investment advisors affiliated with Mr. Horejsi
may also be participants.
3. The Trust's proxy statement cites the Lipper ranking of The Denali Fund
within the performance analysis category for real estate funds, but fails
to disclose that subsequent to Mr. Horejsi's taking control of that fund it
has been removed from the real estate category. The Trust repeatedly
reports that The Denali Fund "Ranks #1 in the Lipper ClosedEnd Equity Fund
Performance Analysis for Real Estate Funds" for the one and five-year
period ended December 31, 2008. However, the Trust fails to disclose that
effective June 8, 2009, Lipper has subsequently removed The Denali Fund
from the real estate category and reclassified it into the "Core Funds"
category in view of changes to the portfolio holdings ofThe Denali Fund
made by Mr. Horejsi subsequent to his taking control ofthat fund.
4. The Trust's proxy statement misrepresents the results of the special
meetings to vote upon a liquidation proposal for each Fund. The Trust's
proxy statement repeatedly states that the Funds' liquidation proposals
were "soundly defeated" at the Funds' recent special meetings. He also
states that the liquidation proposals were defeated by an "overwhelming
majority" of the shareholders. Both ofthese statements are misleading. As
publicly announced by SRO, the liquidation proposal received over twice as
many votes "for" as it did "against" votes. SRO did not receive the
required vote of a majority ofthe outstanding shares in order to carry the
proposal. In SRQ, ofthe unaffiliated shares voted (excluding shares vote by
Mr. Horejsi), the liquidation proposal received approximately 54% ofthe
votes cast "against" and 46% "for," hardly an "overwhelming" majority.
5. The Trust's proxy statement contains numerous statements that impugn the
character, integrity and personal reputation of the Funds' directors, as
well as making charges of illegal or immoral conduct in violation of Rule
14a-9(b). Rule 14a-9(b) prohibits misleading statements that impugn the
character, integrity and personal reputation ofthe Funds' directors, as
well as making charges ofillegal or immoral conduct of other parties
without factual foundation. The Trust's proxy statement contains many such
statements. For example, the proxy statement contains the following
statement: "ifthe Boards have the unethical capacity to rob the Trust,
stockholders should figure they have the unethical capacity to rob the rest
ofthe stockholders." It also states: "The Trust believes that the current
Boards are 'hiding' behind their staggered structure to avoid meaningful
contact with the Funds' stockholders to their long-term detriment." There
is no factual support for these statements.
6. The Trust's proxy statement cites blog entries as articles and fails to
identify the author thereof. The Trust's proxy statement cites blog
postings on www.seekingalpha.com as articles and does not cite the author
thereofin violation ofRule 14a-12(c)(2).
ROPES & GRAY LLP
Securities and Exchange Commission -3 - June 15,2009
7. The Trust repeatedly states that there is "no vote requirement
associated" with its precatory proposals. In order for a precatory proposal
to be adopted as a recommendation by the stockholders, it must receive an
affirmative majority ofthe votes present and entitled to vote on the
matters.
We urge the Staff to consider carefully the issues and concerns raised and
require the Trust to (i) make appropriate corrections, and (ii) caution the
Trust about soliciting with an incomplete proxy statement that does not meet the
requirements ofthe Commission's rules. If you have any questions or comments on
this letter, please contact the undersigned at (617) 951-7473.
cc: Joel Terwilliger, Esq. John
W. Gerstmayr, Esq.
J. Christopher Jackson, Esq.
Rita Rubin, Esq. James Wall,
Esq.
PROXY MATERIALS PAGE LINKS:
[LINK: CLICK HERE FOR THE TRUST'S PROXY MATERIALS OPPOSING MANAGEMENT'S PROPOSAL
TO LIQUIDATE SRQ]
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[GRAPHIC OMITTED]: STOCKHOLDERS TAKING BACK SRQ & SRO
[GRAPHIC OMITTED]: Information regarding your investments in DWS RREEF Real
Estate Fund, Inc. (SRQ) and DWS RREEF Real Estate Fund II, Inc. (SRO).
Header Navigation Links:
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|Contact||Important Information|
- --------------------------------------------------------------------------------
PROXY MATERIALS OPPOSING MANAGEMENT'S PROPOSAL TO LIQUIDATE SRQ (Special Meeting
Held May 20, 2009)
1. The Trust's Stop, Look and Listen Letter [LINK]
2. The Trust's Proxy Statement in Opposition to Solicitation by Board of
Directors of SRQ [LINK]
3. The Trust's Letter to SRQ Stockholders and an independent article
entitled "The Curious Case of DWS Investments" [LINK]
4. The Trust's Letter to SRQ Stockholders [LINK]
5. Press Release: RiskMetrics Group Recommends Vote "AGAINST" SRQ
Liquidation Proposal [LINK]
6. We Won! The Trust's Thank You letter as Filed with the SEC [LINK]
Footer Navigation Links:
Welcome | Press Releases | Articles & Literature | Proxy Materials | SEC Filings
Contact | Important Information
PROXY MATERIALS OPPOSING MANAGEMENT'S PROPOSAL TO LIQUIDATE SRQ PAGE LINKS
[LINK: The Trust's Stop, Look and Listen Letter]
SUSAN L. CICIORA TRUST
2344 Spruce Street, Suite A
Boulder, CO 80302
April 10, 2009
URGENT MESSAGE TO DWS RREEF REAL ESTATE FUND HOLDERS
Dear Fellow Stockholder:
On March 18, 2009, the DWS RREEF Real Estate Fund, Inc. (the "Fund"), formerly
known as the Scudder RREEF Real Estate Fund, announced its intention to
liquidate and dissolve the Fund. The Susan L. Ciciora Trust (the "Trust") is the
largest stockholder of the Fund and is OPPOSED to the Fund's proposal to
liquidate itself and dissolve. The Trust currently owns more than 16% of the
Fund's outstanding shares and will be voting AGAINST the liquidation. The Trust
and investment advisory companies working with the family of Stewart R. Horejsi
(the "Horejsi Entities") have years of experience in the closed-end fund
business - both investing in and managing - and believe that we can effect a
positive change in the Fund.
Soon you will receive proxy materials asking you to vote on the Fund's
liquidation proposal. We will be actively OPPOSING the Fund's liquidation and
will vote our shares AGAINST this bad idea.
We believe the Fund's miserable performance, especially as compared with its
peers, is not only due to bad market forces, but also due to exceptionally bad
management, exceptionally bad investment decisions and a complacent board of
directors.
If the liquidation proposal is defeated, we intend to present a slate of what we
deem highly qualified nominees to replace the current board of directors at the
next Annual Meeting.
Here are the reasons we OPPOSE liquidation:
1. We believe it is foolish to just throw away the Fund's valuable tax loss
carry-forwards. Liquidating the Fund means substantial hidden assets - the
Fund's realized and unrealized tax losses - are lost, instead of being put
to good use in offsetting future gains if the Fund stays in operation.
2. We believe that board members recommended by the Trust can do a better job
of overseeing the Fund and watching out for stockholders, and other
advisers can do a better job of managing the Fund's assets.
3. The liquidation plan calls for an income tax "set aside", meaning that
stockholders won't receive full payment for the liquidated value of their
shares until 2010, if at all. This is the result of yet another costly (but
entirely foreseeable and avoidable) mistake by management which
significantly and adversely impacts stockholders' value.
4. The frictional costs associated with liquidating, winding down and
dissolving the Fund are apt to be high and will be borne directly by
stockholders. We want to avoid these unnecessary costs.
5. By what we believe is their inept oversight of the Fund, the incumbent
board members have made it abundantly clear that their interests are not
aligned with stockholders. Thus, any recommendation by this board should be
scrutinized. Not one of the board members has a significant stake in the
Fund, so no board member took the financial hit that many stockholders
took.
6. Liquidation would require redeeming all of the Fund's leverage. Leverage is
an important asset of the Fund, especially today with auction market rates
at historic lows and the market close to the bottom - potentially a perfect
opportunity for leveraged investing. We want to preserve this important
investment tool.
7. Liquidation necessarily forces arbitrary selling at a very low point in the
market. Buying good deals in this low market seems much more appropriate.
Good buys benefit long-term stockholders for many years because there are
no taxable consequences on gains inside the Fund.
We have filed a preliminary proxy statement with the SEC in connection with the
Trust's solicitation of proxies to vote against the liquidation. The preliminary
proxy statement contains important information, including additional information
about the Trust and the Horejsi Entities and the views of the Trust. You should
read the preliminary proxy statement in its entirety. It can be obtained at no
charge on the SEC's web site at (http://www.sec.gov). In the near future we will
be sending you our final proxy statement which will further elaborate on why we
believe that defeating the liquidation proposal is the best way to maximize
value at the Fund.
Sincerely,
Stewart R. Horejsi, on behalf of The Susan L. Ciciora Trust
PROXY MATERIALS OPPOSING MANAGEMENT'S PROPOSAL TO LIQUIDATE SRQ PAGE LINKS
[LINK: The Trust's Proxy Statement in Opposition to Solicitation by Board of
Directors of SRQ]
SUSAN L. CICIORA TRUST
1029 West Third Avenue, Suite 510
Anchorage, AK 99501
Dear Fellow Stockholder:
This letter is on behalf of the SUSAN L. CICIORA TRUST (the "Trust"). The Trust
is the largest stockholder of DWS RREEF Real Estate Fund, Inc. (the "Fund") and
is OPPOSED to the Fund's proposal to liquidate itself and dissolve. The
accompanying proxy statement provides details of the Trust's opposition.
We urge all stockholders to vote AGAINST this bad idea.
The Fund's board of directors (the "Board") wants you to vote for the
liquidation at a special meeting on May 20, 2009. Their rationale is:
Over the course of the past year, due to unprecedented and intense
volatility in the real estate market and increased investor fears and
reactions related to the worldwide credit crunch, real estate closed-end
funds, in general, and the Fund, in particular, suffered substantial
declines in assets.
We believe this statement is disingenuous and misleading and should lead
stockholders to question the sincerity of the Board's recommendation. The Fund
has experienced an unprecedented loss far greater than any of its peers. The
Fund's failure was not simply a consequence of the "unprecedented . . . market"
as the statement suggests, but rather the combination of the market,
exceptionally bad management, exceptionally bad investment decisions and a
complacent board of directors. The blame for our loss should be placed squarely
where it belongs - on Fund management and the Board. For the Board to simply
"call it quits" and ask stockholders to take an additional hit is unfair and
shortsighted and only compounds the errors already made.
Here are the reasons stockholders should vote AGAINST liquidation:
1. We believe it is foolish to just throw away the Fund's valuable tax
loss carry-forwards. Liquidating the Fund means substantial hidden
assets - the Fund's realized and unrealized tax losses - are lost,
instead of being put to good use in offsetting future gains if the
Fund stays in operation. Unless stockholders vote AGAINST the
liquidation plan, the tax benefits will be forever lost.
2. Board members recommended by the Trust can do a better job of
overseeing the Fund and watching out for stockholders, and other
advisers can do a better job of managing the Fund's assets. However,
stockholders must vote AGAINST the liquidation so that the Fund can
continue operations, thus giving the Trust's nominees the opportunity
to take over the Board and management of the Fund.
3. The liquidation plan calls for potential corporate tax payments on
liquidation proceeds, meaning that stockholders may not receive full
payment for the liquidated value of their shares because Fund's
management may have failed to qualify the Fund as a regulated
investment company. This is the result of yet another costly (but
entirely foreseeable and avoidable) mistake by management which
significantly and adversely impacts stockholder value.
4. The frictional costs associated with liquidating, winding down and
dissolving the Fund are apt to be high and will be borne directly by
stockholders. Stockholders must vote AGAINST the liquidation to avoid
these unnecessary costs.
5. By what we believe is their inept oversight of the Fund, the incumbent
Board members have made it abundantly clear that their interests are
not aligned with stockholders'. Thus, any recommendation by this Board
should be scrutinized. Not one member of the Board has a significant
stake in the Fund, so no Board member took the financial hit that many
stockholders took.
6. Liquidation would require redeeming all of the Fund's leverage.
Leverage is an important asset of the Fund, especially today with
auction market rates at historic lows and the market close to the
bottom - potentially a perfect opportunity for leveraged investing.
Stockholders must vote AGAINST the liquidation to preserve this
important investment tool.
7. Liquidation necessarily forces arbitrary selling at a very low point
in the market. Buying the good deals in this low market seems much
more appropriate. Good buys benefit long-term stockholders for many
years because there are no taxable consequences on gains inside the
Fund.
8. On April 9, 2009, the Fund issued a press release disclosing that the
Board had "opted into" a Maryland statute which purportedly limits the
voting rights of certain stockholders, adopted a "poison pill" which
is designed to reduce certain stockholder voting rights, and adopted
by-law provisions which, among other things, requires an 80% vote of
the independent Board members to approve an advisory agreement for any
investment adviser affiliated with any "5% stockholder". The measures
are clearly in response to the Trust's attempts to effectuate what we
believe are positive changes for all of the Fund's stockholders. If
the Board of the Fund, as the press release states, "approved certain
measures to enhance its ability to protect the interests of
stockholders pending stockholder consideration of proposed plans of
liquidation" then why are they are making it even more difficult for
the stockholders to effect positive change? Where was the Board when
the Fund was losing very nearly all of its stockholder value and
"earning" Morningstar's(TM) rating of 1 of 5 stars for its overall, 3-
and 5-year performance history - as compared with other similarly
situated specialty real estate closed-end funds? Also, why is the
Board spending legal fees and other costs on these restrictive
measures when their time could be better spent addressing the abysmal
performance of the Fund and more efficient ways of fixing the problem?
We can do better. As explained in the accompanying proxy statement, we have been
down this road before and have the performance to prove it.
Please vote AGAINST liquidation. Sign, date, and return the enclosed GREEN proxy
card in the postage-paid envelope that is provided.
Sincerely,
Stewart R. Horejsi
IMPORTANT!
o Regardless of how many shares you own, your vote is very important. Please
sign, date and mail the enclosed GREEN proxy card.
o Please vote each GREEN proxy card you receive since each account must be
voted separately. Only your latest dated proxy counts.
o Even if you have sent a white proxy card voting for the liquidation, you
have every legal right to change your vote. You may revoke that proxy, and
vote AGAINST the liquidation by signing, dating and mailing the enclosed
GREEN proxy card in the enclosed envelope.
o If your shares are registered in your own name, please sign, date and mail
the enclosed GREEN proxy card in the postage-paid envelope provided today.
o If your shares are held in the name of a brokerage firm or bank nominee,
please sign, date and mail the enclosed GREEN instruction form in the
postage-paid envelope to give your broker or bank specific instructions on
how to vote your shares. Depending upon your broker or custodian, you may
be able to vote either by toll-free telephone or by the Internet. Please
refer to the enclosed voting form for instructions on how to vote
electronically.
If you have any questions on
how to vote your shares, please call:
MORROW & CO., LLC
470 West Avenue, 3rd Floor
Stamford, CT 06902
Stockholders Call Toll-Free at: (800) 607-0088
PROXY STATEMENT IN OPPOSITION
TO
THE SOLICITATION BY THE BOARD OF DIRECTORS
OF
DWS RREEF REAL ESTATE FUND, INC.
SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 20, 2009
To Our Fellow Stockholders:
The SUSAN L. CICIORA TRUST (the "Trust") is sending this proxy statement and the
enclosed GREEN proxy card to holders of shares of common stock of DWS RREEF Real
Estate Fund, Inc., a Maryland corporation (the "Fund"). This proxy is not
solicited by the Fund. This proxy statement relates to the Trust's solicitation
of proxies for use at the Special Meeting of Stockholders of the Fund (the
"Special Meeting") scheduled to be held on Wednesday, May 20, 2009 at 10:00
a.m., Eastern Time, and any and all adjournments or postponements thereof.
The Special Meeting will be held at the New York Marriott East Side, 525
Lexington Avenue, New York, NY 10017. This proxy statement and the accompanying
GREEN proxy card will first be sent to Fund stockholders on or about April 22,
2009.
The Fund has scheduled the following matter for a vote at the Special Meeting:
Plan of Liquidation and Dissolution (the "Plan") adopted by the Board of
Directors of the Fund (the "Board").
THE TRUST IS SOLICITING YOUR PROXY TO VOTE AGAINST THE PLAN.
REASONS FOR THIS SOLICITATION
There are several reasons for this solicitation, and all center on the premise
that the Trust believes the Fund's stockholders have lost enough value and faith
in present management such that the Plan does not provide any long-term benefit
to the stockholders:
1. The Fund should not throw away the Fund's valuable tax loss
carry-forwards. Liquidating the Fund means substantial hidden assets -
the Fund's realized and unrealized tax losses - are lost, instead of
being put to good use in offsetting future gains if the Fund stays in
operation.
2. Board members recommended by the Trust can do a better job of
overseeing the Fund and watching out for stockholders, and other
advisers of the Trust can do a better job of managing the Fund's
assets.
3. The Plan calls for potential corporate tax payments on liquidation
proceeds, meaning that stockholders may not receive full payment for
the liquidated value of their shares because Fund's management may
have failed to qualify the Fund as a regulated investment company.
This is the result of yet another costly (but entirely foreseeable and
avoidable) mistake by management which significantly and adversely
impacts stockholder value.
4. The frictional costs associated with liquidating, winding down and
dissolving the Fund are apt to be high and will be borne directly by
stockholders.
5. By what we believe is inept oversight of the Fund, the incumbent Board
members have made it abundantly clear that their interests are not
aligned with stockholders'. Thus, any recommendation by this Board
should be scrutinized.
6. Liquidation would require redeeming all of the Fund's leverage, an
important asset of the Fund, especially today with auction market
rates at historic lows and the market close to the bottom -
potentially a perfect opportunity for leveraged investing.
7. Liquidation necessarily forces arbitrary selling at a very low point
in the market. Buying the good deals in this low market seems much
more appropriate.
8. On April 9, 2009, the Fund issued a press release disclosing that the
Board had "opted into" a Maryland statute which purportedly limits the
voting rights of certain stockholders, adopted a "poison pill" which
is designed to reduce certain stockholder voting rights, and adopted
by-law provisions which, among other things, requires an 80% vote of
the independent Board members to approve an advisory agreement for any
investment adviser affiliated with any "5% stockholder". The measures
are clearly in response to the Trust's attempts to effectuate what we
believe are positive changes for all of the Fund's stockholders. If
the Board of the Fund, as the press release states, "approved certain
measures to enhance its ability to protect the interests of
stockholders pending stockholder consideration of proposed plans of
liquidation" then why are they are making it even more difficult for
the stockholders to effect positive change? Where was the Board when
the Fund was losing very nearly all of its stockholder value and
"earning" Morningstar's(TM) rating of 1 of 5 stars for its overall, 3-
and 5-year performance history - as compared with other similarly
situated specialty real estate closed-end funds? Also, why is the
Board spending legal fees and other costs on these restrictive
measures when their time could be better spent addressing the abysmal
performance of the Fund and more efficient ways of fixing the problem?
We believe that the Board and the Fund's current investment advisers are simply
throwing their hands up and calling it quits without exploring other solutions
for stockholders that might have more meaningful and potentially better
long-term benefits. The Trust and companies working with the Horejsi family (the
"Horejsi Entities") offer what we believe are better options for stockholders,
all of which are discussed in this proxy statement and in the accompanying
letter from the Trust's representative, Stewart R. Horejsi. After the
precipitous ride the Fund's stockholders have taken with the current advisers,
stockholders deserve a change. We believe we can offer a positive change and the
Horejsi Entities have the experience and knowledge to bring this about. To do
this, we are asking you to first vote AGAINST the Plan. If stockholders reject
the Plan, the Trust will offer proposals for the Fund that are similar to the
proposals implemented for the other closed-end funds managed by the Horejsi
Entities. Following are more details of why stockholders should vote AGAINST the
Plan.
Abysmal Performance. In the latest ratings by Morningstar(TM) (December 31,
2008), the Fund received the worst possible rating - 1 of 5 stars for its
overall, 3- and 5-year performance history - as compared with other similarly
situated specialty real estate closed-end funds. The Fund's dismal performance
is matched only by DWS RREEF REAL ESTATE FUND II, INC. ("SRO"), which is under
common management with our Fund and received the same dismal Morningstar(TM)
ratings as the Fund. There is no excuse for the extraordinarily poor performance
of the Fund. The Board's attempt to direct stockholders' attention elsewhere by
"explaining" that these losses are due to "unprecedented and intense volatility
.. . ." etc. is simply a poor attempt to escape responsibility for the Board's
own poor oversight. While the market has been negative, no other similar fund
performed as poorly as the Fund.
Better Management from the Trust. The Trust, its Board nominees, and the Horejsi
Entities have been down this road before with positive results. Previously,
Horejsi Entities have assumed control of four other closed-end funds: Boulder
Total Return Fund, Inc. ("BTF"), Boulder Growth & Income Fund, Inc. ("BIF") and
The Denali Fund Inc. ("DNY") (collectively, the "Boulder Funds") which are
managed by Horejsi Entities, and the First Opportunity Fund, Inc. ("FF"), which
is managed by an unaffiliated adviser but administered by a Horejsi Entity. When
the Lola Brown Trust took control of DNY in October, 2007, DNY was leveraged and
had an investment objective very similar to the Fund. However, after new
advisers took over management and began transitioning from DNY's concentrated
real estate portfolio beginning in October 2007, despite the transitioning
inefficiencies, for calendar year 2008, DNY returned -24.6% on NAV, while the
Fund returned -81.9% and nearly wiped out all stockholder equity (and its sister
fund SRO returned -91.5%). Although a -24.6% return on NAV is nothing to boast
about, it eclipsed both the Fund and SRO, and also significantly outperformed
the S&P Index (-37%) and most other closed-end funds. In fact, DNY was ranked #1
in the Lipper Closed-End Equity Fund Performance Analysis for Real Estate Funds
for the 1-year period ended December 31, 2008 AND the 5-year period ended
December 31, 2008. While the Horejsi Entities didn't manage DNY for the full 5
year period cited by the Lipper award, the Trust believes that the Horejsi
Entities were able to effectuate management changes that were critical to
earning this distinction. Another of the Boulder Funds, BIF, also recently
ranked #1 in the Lipper Closed-End Equity Fund Performance Analysis for Core
Funds for the 1-year period ended December 31, 2008 AND the 5-year period ended
December 31, 2008. BTF's total return on net asset value for the 1-year period
ended December 31, 2008 was -40%. This performance does not guarantee future
results, but we believe it stands in stark contrast to the performance of the
Fund. We believe the Horejsi Entities can roll up their sleeves and do a much
better job with the Fund.
Capital Loss Carry-Forward. Why throw away a valuable asset of the Fund? If the
Plan is approved, it would result in stockholders losing valuable hidden assets
- - the Fund's substantial tax loss carry-forwards which, according to information
contained in the Fund's Proxy Statement, are estimated to be in excess of $178
million. Moreover, the sale of assets of the Fund under the Plan would force
realization of currently unrealized loss positions which would further increase
the capital loss carry-forwards that could be used to offset future capital
gains under better investment management. With smart management, the Fund's
extensive capital loss carry-forwards and unrealized losses could be used to
enhance stockholder value by allowing the Fund to accumulate capital gains
inside the Fund without any taxable impact on stockholders (e.g., year-end
capital gains distributions which include a tax bill), thus minimizing the
overall negative tax effect on long-term stockholders. At this point, the tax
loss carry-forwards are potentially the most important asset left in the Fund.
Liquidating the Fund would add insult to injury by wiping out this important
asset.
Liquidation Forces Arbitrary Selling. Any plan of liquidation necessarily forces
arbitrary selling. This means that assets that have been unfairly beaten down
but have significant upside will be sold at a very low point in the market.
Liquidating the Fund in a horrible market like we have today is like getting a
margin call and having to sell your good assets at bargain basement prices.
Again, this Board's recommendation to liquidate in this horrible selling
environment should raise stockholders' doubt about the Board's status as
watchdog for stockholders. Buying the good deals in this low market and waiting
for the market to normalize seems much more appropriate and is more aligned with
long-term stockholder interests.
Preserving the Fund's Leverage. The Plan would require redeeming the Fund's
preferred stock or leverage. Leverage is an important asset of the Fund,
especially today with auction rates at historic lows and the market close to the
bottom - potentially a perfect opportunity for leveraged investing. If the
preferred stock is redeemed or otherwise liquidated as would be required under
the Plan, the sunk cost paid by the Fund to issue the leverage would be wasted.
Moreover, the Fund would be forced to sell assets purchased with the leverage at
a low point in the market, the opposite of the buy-low-sell-high prime directive
of investing. Also, even though the leverage amplified the Fund's losses on the
way down, if there are eventual gains on assets held by the Fund under new
management, the current use of leverage will serve to amplify these gains.
Potential Corporate Tax Liability. The Fund's current management may have failed
to qualify the Fund as a regulated investment company, meaning stockholders are
ultimately responsible for paying corporate-level taxes! According to the Fund's
preliminary and definitive proxy statements filed with the SEC on March 20 and
April 7, 2009, "there is a risk that the Fund would not qualify as a regulated
investment company for the taxable period beginning January 1, 2009 [and the
Fund] would be subject to tax at corporate rates on its taxable income for the
taxable period beginning January 1, 2009." What this means is that the value of
the stockholders' liquidated assets, if any, under the Plan would be further
reduced because the Fund would have a corporate tax liability, something that
closed-end funds normally do not incur. Who pays this corporate tax liability?
Ultimately we do, the Fund's stockholders. So, as part of the Plan, the Fund's
management has to determine what those tax liabilities may be and possibly delay
the date that liquidation proceeds are distributed to stockholders. Accordingly,
such liquidation proceeds may be reduced by the amount of the potential tax
liability. At that time, any amounts left over in this reserve account will be
distributed to the stockholders.
The Unknown Costs of Liquidation. The costs associated with the Plan are paid by
the stockholders and further erode asset value. There are certain frictional
costs associated with liquidating, winding down and dissolving a closed-end fund
that would not otherwise be incurred if the Fund remained intact (e.g., trading
fees and commissions, legal and accounting fees, administrative fees, filing
fees, and so on). These "costs and expenses" come from Fund assets, further
eroding stockholder value. Additionally, if the Plan is approved, the Fund would
be forced to sell its assets, redeem its preferred shares (leverage), and do all
this in unfavorable market conditions while at the same time paying the
potential corporate tax penalty discussed above. Simply put, "calling it quits"
is an easy (although costly) way out. We think that with some effort and better
investment management, we can turn this Fund around and bring value back to the
stockholders. That's why stockholders should vote AGAINST the Plan.
BACKGROUND TO THE SOLICITATION
The Trust is a substantial owner of the Fund's shares, holding a 16.5% equity
position as of the date of this proxy statement. The Trust has been an active
and vocal investor in the Fund and on February 5, 2009 sent a letter to the Fund
and Board proposing, among other things, termination of the Fund's investment
advisers, a new slate of directors, and better corporate governance standards
and other ideas to enhance stockholder value. A copy of the letter is attached
to this proxy statement at Exhibit 2. It appears that none of these proposals
were seriously considered by the Board; instead, the Board has decided to "call
it quits" and liquidate the Fund. Given that the Board has very little incentive
to manage the Fund due to its members' lack of any ownership, the Trust decided
that it should bring the substantial experience and skill of the Horejsi
Entities to the table and offer a better alternative to the Fund's stockholders.
The Trust and the Horejsi Entities have substantial investments in four other
closed-end mutual funds: the Boulder Funds (as defined above), which are managed
by Horejsi Entities, and FF, which is managed by an unaffiliated adviser, but
administered by a Horejsi Entity.
Mr. Horejsi, an investment consultant to the Trust, is also the portfolio
manager for Boulder Investment Advisers, LLC ("BIA") and Stewart Investment
Advisers ("SIA"), the co-advisers to the Boulder Funds. Under Mr. Horejsi's
guidance and within a year of assuming investment management of BTF, the fund
achieved the #1 ranking for year 2000, based on total return, in Lipper's
closed-end fund standard category of "Growth & Income" funds. BIA and SIA
assumed investment management of DNY in October, 2007 and similarly to BTF, DNY
was recently ranked #1 in the Lipper Closed-End Equity Fund Performance Analysis
for Real Estate Funds for the 1-year period ended December 31, 2008. DNY was
also awarded the 5-year period ended December 31, 2008; while BIA and SIA didn't
manage DNY for the full 5 year period cited by this Lipper award, the Trust
believes they were instrumental in continuing the investment performance results
that were critical to earning this distinction. BIF, also under management with
BIA and SIA, was recently ranked #1 in the Lipper Closed-End Equity Fund
Performance Analysis for Core Funds for the 1-year period ended December 31,
2008 and the 5-year period ended December 31, 2008.
These rankings within a particular fund category may not be indicative of the
Boulder Funds' standing among equity funds overall. The rankings achieved by the
Boulder Funds do not indicate or provide any assurance that the Fund could
achieve a similar ranking if BIA, SIA or any other investment advisers
affiliated with the Horejsi Entities were the adviser to the Fund.
Finally, the Trust advocates and believes that directors who own their fund's
shares and thus have a financial stake in their fund's success will take a more
proactive role in acting as stockholder 'watchdogs' and encouraging exceptional
performance.
SUMMARY OF PROPOSAL
The following is a summary of the Plan scheduled to be voted upon at the Special
Meeting and is based upon the information provided in the Fund's definitive
proxy statement filed with the SEC on April 7, 2009 (the "Proxy Statement").
The Fund's net assets (i.e., assets attributable to common stock) have decreased
in such a substantial manner that the Board determined that continued operation
of the Fund as a stand-alone, leveraged closed-end fund is no longer viable.
Thus, the Board recommended to stockholders the Plan (as defined above). If the
Plan is approved by the stockholders, the outstanding preferred shares (i.e.,
leverage) will be redeemed, the Fund's assets sold, potential corporate tax
liabilities paid (out of stockholders' proceeds) based on the Fund potentially
failing to meet its obligations as a regulated investment company ("RIC") under
Subchapter M of the Internal Revenue Code. Accordingly, if approved, the Fund's
stockholders will receive - after all costs and expenses of the Plan are paid
out of assets of the Fund - the market value for the Fund's assets at the time
of their sale shortly following approval of the Plan, less tax amounts if the
Fund fails its qualification as a RIC. Assets distributed to the Fund's
stockholders will be secondary to the holders of the Fund's preferred stock who
receive payment of the liquidation preference of their shares, plus accrued and
unpaid dividends, if any.
All of the information in this proxy statement about the Plan is based upon
information in the Proxy Statement and the Trust cannot confirm the accuracy or
completeness of the information or advise stockholders whether this information
may change.
If the Plan is defeated, the Trust does not know what action the Board will
take. We hope that they will reconsider the various corporate governance,
investment management and other proposals that the Trust previously submitted to
the Board. These proposals are similar to proposals submitted to, and adopted
by, the previous management of DNY, which is a similar type of closed-end fund
to the Fund. If the Plan is defeated, the Trust is likely to propose that the
Board consider appointing investment advisers affiliated with the Horejsi
Entities as advisers to the Fund.
The Trust recommends that stockholders vote AGAINST the proposed Plan for the
reasons stated in the section entitled "Reasons For This Solicitation," and in
the accompanying letter from the Trust.
PROXY CARDS AND VOTING
If you have returned a proxy card sent to you by the Fund, you have the right to
revoke that proxy and vote AGAINST the Plan by signing, dating, and mailing a
later dated GREEN proxy card in the postage-paid envelope provided. Stockholders
also have the option of authorizing your proxy by touch-tone telephone or
through the internet, as explained on your proxy card. If you have any
questions, require assistance in voting your GREEN proxy card or need additional
copies of our proxy materials, please contact Morrow & Co., LLC at the address
or phone numbers listed below.
Morrow & Co., LLC
470 West Avenue, 3rd Floor
Stamford, CT 06902
Stockholders Call Toll-Free at: (800) 607-0088
Banks and Brokers Call Collect at: (203) 658-9400
Discretionary authority is provided in the proxy sought hereby as to other
business as may properly come before the Special Meeting of which the Trust is
not aware as of the date of this proxy statement, and matters incident to the
conduct of the Special Meeting, which discretionary authority will be exercised
in accordance with Rule 14a-4 promulgated by the SEC pursuant to the Securities
Exchange Act of 1934, as amended.
Voting, Quorum
Only stockholders of record on March 27, 2009 (the "Record Date") will be
entitled to vote at the Special Meeting. According to information contained in
the Proxy Statement, there were 15,715,596.80 shares of Common Stock and 1,140
shares of preferred shares issued and outstanding as of the Record Date.
Approval of the liquidation and dissolution of the Fund pursuant to the Plan
requires the affirmative vote of a majority of the Fund's common stock and
preferred stock outstanding, voting together as a single class. The presence at
the Special Meeting, in person or by proxy, of stockholders entitled to cast a
majority of the votes entitled to be cast at the Special Meeting shall be
necessary and sufficient to constitute a quorum for the transaction of business.
For purposes of determining the presence of a quorum for transacting business at
the Special Meeting, abstentions and broker "non-votes" will be treated as
shares that are present at the Special Meeting. Broker non-votes are proxies
from brokers or nominees when the broker or nominee has neither received
instructions from the beneficial owner or other persons entitled to vote nor has
discretionary power to vote on a particular matter. Holders of record on the
Record Date will be entitled to cast one vote on each matter for each share of
Common Stock held by them. Shares of Common Stock do not have cumulative voting
rights. The Trust recommends that stockholders vote AGAINST the Plan as proposed
in the Proxy Statement.
Stockholders are urged to forward their voting instructions promptly.
Abstentions and broker non-votes will have the effect of a "no" vote on the
Plan. A proxy which is properly executed and returned accompanied by
instructions to withhold authority to vote represents a broker "non-vote" (i.e.,
shares held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote and (ii) the
broker or nominee does not have discretionary voting power on a particular
matter). Proxies that reflect abstentions or broker non-votes will be counted as
shares that are present and entitled to vote on the matter for purposes of
determining the presence of a quorum. Under Maryland law, abstentions and broker
non-votes do not constitute a vote "for" or "against" a matter and will be
disregarded in determining "votes cast" on an issue.
Revocation of Proxies
You may revoke any proxy given in connection with the Special Meeting (whether
given to the Fund or to the Trust) at any time prior to the voting thereof at
the Special Meeting by delivering a written revocation of your proxy to the
Secretary of the Fund or with the presiding officer at the Special Meeting, by
executing and delivering a later dated proxy to the Trust or the Fund or their
solicitation agents, or by voting in person at the Special Meeting. Attendance
at the Special Meeting will not in and of itself revoke a proxy.
There is no limit on the number of times that you may revoke your proxy prior to
the Special Meeting. Only the latest dated, properly signed proxy card will be
counted.
IF YOU HAVE ALREADY SENT A PROXY CARD TO THE BOARD OF DIRECTORS OF THE FUND, YOU
MAY REVOKE THAT PROXY AND VOTE AGAINST THE PLAN BY SIGNING, DATING AND MAILING
THE ENCLOSED GREEN PROXY CARD IN THE ENVELOPE PROVIDED. A GREEN PROXY CARD THAT
IS RETURNED TO THE TRUST OR ITS AGENT WILL BE VOTED AS YOU INDICATE THEREON. IF
A GREEN PROXY CARD IS RETURNED WITHOUT A VOTE INDICATED THEREON, IT WILL BE
VOTED AGAINST THE PLAN.
INFORMATION CONCERNING THE TRUST
As of the Record Date, the Trust held 2,596,016 shares of Common Stock,
representing approximately 16.5% of the outstanding shares of the Fund. The
Trust is an irrevocable grantor trust domiciled in Alaska and administered and
governed in accordance with Alaska law. The Trust is an estate planning trust
established in 1998 by Susan L. Ciciora, the daughter of Stewart R. Horejsi,
primarily for the benefit of her issue, her brother John S. Horejsi, and the
Horejsi Charitable Foundation, a South Dakota non-profit corporation. The Trust
is authorized to hold property of any kind and invests primarily in marketable
securities. Stewart R. Horejsi is the father of Susan L. Ciciora and serves from
time to time as an investment advisor to the Trust. The business address of the
Trust is: c/o Alaska Trust Company, 1029 West Third Avenue, Suite 510,
Anchorage, AK 99501-1981, and the business telephone number of the Trust is
(907) 278-6775. The trustee of the Trust is Alaska Trust Company ("ATC").
Information regarding purchases of shares of Common Stock by the Trust during
the last two years is set forth on Exhibit 1 attached hereto. During that
period, the Trust has not sold any shares of the Fund.
ATC is a state-chartered public trust company organized under the laws of Alaska
which is authorized to do business as a public trust company and which
administers various individual, family, and other trusts, including among them
the Trust and other trusts associated with Mr. Horejsi's family. The business
address of ATC is 1029 West Third Avenue, Suite 510, Anchorage, AK 99501-1981.
The stockholders of ATC are Stewart West Indies Trust (98% equity ownership),
one of the Horejsi Entities, and Douglas Blattmachr (2% equity ownership). ATC,
by way of its role as the trustee of the Trust, may be deemed to control the
Trust and may be deemed to possess indirect beneficial ownership of the shares
held by the Trust. In addition, by virtue of their position as directors or
executive officers of ATC, certain persons who act in such capacity as directors
or officers of ATC may be deemed to control ATC and therefore indirectly to
control the Trust. However, none of the directors or officers of ATC, acting
alone, can vote or exercise dispositive authority over shares held by the Trust.
Accordingly, the directors and officers of ATC disclaim beneficial ownership of
the shares beneficially owned, directly or indirectly, by the Trust. As a result
of his advisory role with the Trust, Stewart R. Horejsi may be deemed to have
indirect beneficial ownership over the shares directly beneficially owned by the
Trust. However, Mr. Horejsi disclaims beneficial ownership of these shares.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of the Record Date
regarding the beneficial ownership of shares of Common Stock by (i) each
beneficial owner of more than 5% of the outstanding shares of Common Stock
(based upon information contained in filings with the SEC), (ii) the current
executive officers and directors of the Fund (based on publicly filed
information by the Fund), and (iii) all directors and executive officers as a
group.
Common Stock
Beneficially
Name and Address Position with the Fund Owned Percent
---------------- ---------------------- ----- -------
Susan L. Ciciora Trust --- 2,596,016 16.5%
1029 West Third Avenue,
Suite 510, Anchorage, AK 99501
According to information contained in the Fund's Proxy Statement, as of the
Record Date, the Fund's Directors and officers together owned less than 1% of
the outstanding capital stock of the Fund.
THE SOLICITATION
Proxies will be solicited by mail and, if necessary to obtain the requisite
stockholder representation, by telephone, personal interview or by other means.
Certain officers, directors or employees of entities related to the Trust or the
Trust's proxy solicitation agent, Morrow & Co., LLC, may solicit proxies.
Banks, brokerage houses and other custodians, nominees and fiduciaries will be
requested to forward this Proxy Statement and the accompanying GREEN proxy card
to the beneficial owner of shares of Common Stock for whom they hold of record
and the Trust will reimburse them for their reasonable out-of-pocket expenses.
The expenses related to this proxy solicitation will be borne by the Trust. The
Trust estimates that the total amount of expenses to be incurred by it in this
proxy solicitation will be approximately $55,000. Expenses to date have been
approximately $18,500. The Trust will not seek reimbursement of its proxy
related expenses from the Fund.
If you have any questions concerning this proxy solicitation or the procedures
to be followed to execute and deliver a proxy, please contact Morrow & Co., LLC
at the address or phone numbers listed below.
Morrow & Co., LLC
470 West Avenue, 3rd Floor
Stamford, CT 06902
Stockholders Call Toll-Free at: (800) 607-0088
Banks and Brokers Call Collect at: (203) 658-9400
Dated: April 21, 2009
EXHIBIT 1
ALL SECURITIES OF THE FUND PURCHASED OR SOLD
WITHIN THE PAST TWO YEARS BY THE TRUST
Except as disclosed in this Proxy Statement, the Trust has no interest, whether
direct or indirect, by security holdings or otherwise, in the Fund. The
following table sets forth certain information with respect to direct purchases
of shares of Common Stock by the Trust.
- ------------- ---------- ------------
Purchase
Date Shares Price
- ------------- ---------- ------------
- ------------- ---------- ------------
12/31/08 5,000 $1.90
12/31/08 10,000 $1.91
12/31/08 11,107 $1.92
1/2/2009 8,500 $2.11
1/2/2009 21,000 $2.12
1/5/2009 100 $2.06
1/5/2009 8,405 $2.17
1/5/2009 5,000 $2.25
1/5/2009 5,000 $2.23
1/5/2009 5,000 $2.22
1/5/2009 5,000 $2.21
1/5/2009 10,000 $2.20
1/6/2009 5,000 $2.27
1/7/2009 10,000 $2.29
1/7/2009 10,000 $2.36
1/7/2009 20,000 $2.37
1/7/2009 35,000 $2.34
1/7/2009 3,000 $2.31
1/7/2009 2,200 $2.25
1/8/2009 5,200 $2.24
1/8/2009 8,257 $2.20
1/8/2009 5,200 $2.21
1/8/2009 500 $2.22
1/9/2009 5,000 $2.23
1/9/2009 45,000 $2.24
1/9/2009 16,100 $2.25
1/9/2009 9,700 $2.26
1/9/2009 30,103 $2.29
1/9/2009 97 $2.28
1/12/2009 63,200 $2.18
1/12/2009 37,700 $2.17
1/12/2009 10,000 $2.16
1/12/2009 3,485 $2.15
1/13/2009 100 $2.13
1/13/2009 5,600 $2.18
1/13/2009 12,600 $2.19
1/13/2009 5,200 $2.20
1/13/2009 62 $2.17
1/14/2009 3,000 $2.15
1/14/2009 1,000 $2.14
1/14/2009 5,000 $2.12
1/14/2009 6,100 $2.08
1/14/2009 14,200 $2.07
1/14/2009 14,100 $2.09
1/15/2009 24,200 $2.00
1/15/2009 8,000 $1.98
1/15/2009 19,462 $1.90
1/15/2009 3,000 $1.92
1/15/2009 3,400 $1.95
1/15/2009 3,000 $2.03
1/15/2009 1,800 $1.96
1/15/2009 100 $2.01
1/16/2009 300 $1.97
1/16/2009 8,300 $2.09
1/16/2009 6,400 $2.08
1/16/2009 7,000 $2.07
1/16/2009 1,000 $2.15
1/16/2009 300 $2.06
1/16/2009 5,100 $2.17
1/16/2009 1,825 $2.13
1/16/2009 2,000 $2.19
1/16/2009 300 $1.99
1/16/2009 400 $2.14
1/16/2009 2,200 $2.03
1/20/2009 22,000 $2.08
1/20/2009 11,400 $2.09
1/20/2009 2,000 $2.13
1/20/2009 6,000 $2.12
1/20/2009 14,500 $2.11
1/20/2009 2,600 $2.10
1/20/2009 40,000 $2.05
1/21/2009 200 $1.99
1/21/2009 2,000 $2.03
1/21/2009 7,000 $2.05
1/21/2009 18,200 $2.06
1/21/2009 2,500 $2.07
1/21/2009 100 $2.12
1/21/2009 2,500 $2.14
1/22/2009 33,300 $2.12
1/22/2009 5,900 $2.13
1/22/2009 5,700 $2.11
1/22/2009 100 $2.16
1/22/2009 100 $2.18
1/22/2009 1,600 $2.19
1/22/2009 5,000 $2.17
1/22/2009 400 $2.14
1/23/2009 2,100 $2.02
1/23/2009 3,400 $2.10
1/23/2009 2,242 $2.07
1/23/2009 2,800 $2.09
1/23/2009 254 $2.12
1/23/2009 7,300 $2.14
1/26/2009 100 $2.16
1/26/2009 800 $2.18
1/26/2009 2,500 $2.19
1/26/2009 10,000 $2.14
1/26/2009 11,400 $2.13
1/26/2009 1,000 $2.11
1/26/2009 3,300 $2.12
1/26/2009 350 $2.09
1/27/2009 1,300 $2.20
1/27/2009 3,700 $2.16
1/27/2009 13,600 $2.19
1/27/2009 2,500 $2.22
1/27/2009 100 $2.17
1/27/2009 843 $2.15
1/28/2009 8,015 $2.26
1/28/2009 19,071 $2.27
1/28/2009 5,000 $2.17
1/28/2009 1,800 $2.21
1/28/2009 200 $2.22
1/28/2009 3,900 $2.25
1/28/2009 2,000 $2.29
1/28/2009 1,000 $2.28
1/28/2009 9,980 $2.30
1/28/2009 1,900 $2.23
1/28/2009 100 $2.24
1/29/2009 3,490 $2.29
1/29/2009 4,000 $2.31
1/29/2009 17,500 $2.33
1/29/2009 1,300 $2.32
1/29/2009 5,000 $2.30
1/29/2009 5,000 $2.27
1/29/2009 5,000 $2.26
1/30/2009 6,400 $2.20
1/30/2009 2,000 $2.23
1/30/2009 5,000 $2.22
1/30/2009 5,000 $2.21
1/30/2009 5,000 $2.19
1/30/2009 12,001 $2.18
2/2/2009 6,238 $2.05
2/2/2009 7,596 $2.09
2/2/2009 5,572 $2.11
2/2/2009 3,300 $2.12
2/2/2009 8,500 $2.10
2/2/2009 2,500 $2.14
2/2/2009 1,700 $2.06
2/3/2009 114 $2.09
2/3/2009 20,286 $2.12
2/3/2009 2,700 $2.14
2/3/2009 3,000 $2.13
2/4/2009 3,200 $2.17
2/4/2009 5,000 $2.16
2/4/2009 12,000 $2.14
2/4/2009 10,718 $2.13
2/4/2009 4,722 $2.12
2/5/2009 10,000 $2.06
2/5/2009 3,000 $2.00
2/5/2009 2,200 $2.09
2/5/2009 1,200 $2.08
2/5/2009 26,000 $2.07
2/5/2009 7,197 $2.05
2/5/2009 5,300 $1.97
2/5/2009 100 $2.03
2/9/2009 2,500 $2.17
2/9/2009 30,000 $2.16
2/9/2009 1,009 $2.15
2/10/2009 12,100 $2.13
2/10/2009 10,000 $2.12
02/10/09 10,000 $2.11
02/10/09 20,000 $2.10
02/10/09 6,929 $2.09
02/12/09 2,617 $1.89
02/13/09 20,000 $1.88
02/13/09 4,734 $1.87
02/17/09 6,800 $1.67
02/17/09 4,600 $1.69
02/17/09 1,600 $1.70
02/17/09 20,000 $1.71
02/17/09 6,000 $1.68
02/18/09 5,000 $1.64
02/18/09 3,000 $1.60
02/18/09 5,000 $1.58
02/18/09 10,000 $1.57
02/18/09 600 $1.55
02/18/09 2,450 $1.56
02/19/09 5,000 $1.60
02/19/09 9,000 $1.59
02/19/09 10,000 $1.58
02/20/09 8,000 $1.46
02/20/09 5,000 $1.50
02/20/09 300 $1.45
02/20/09 4,176 $1.39
02/20/09 1,211 $1.49
02/23/09 19,300 $1.44
02/23/09 9,636 $1.45
02/23/09 16,600 $1.43
02/24/09 7,000 $1.35
02/24/09 6,000 $1.36
02/24/09 2,400 $1.40
02/24/09 3,000 $1.39
02/24/09 100 $1.44
02/24/09 3,100 $1.33
02/24/09 6,000 $1.47
02/24/09 1,550 $1.34
02/24/09 2,000 $1.46
02/24/09 2,800 $1.41
02/25/09 8,000 $1.44
02/25/09 5,000 $1.55
02/25/09 992 $1.46
02/25/09 300 $1.41
02/25/09 5,000 $1.53
02/26/09 13,300 $1.59
02/26/09 5,674 $1.61
02/26/09 10,842 $1.60
02/26/09 5,200 $1.58
02/26/09 5,000 $1.57
02/26/09 5,000 $1.56
02/26/09 5,000 $1.55
02/26/09 3,100 $1.54
02/26/09 700 $1.52
02/27/09 333 $1.46
02/27/09 3,000 $1.50
02/27/09 4,667 $1.49
02/27/09 5,000 $1.47
03/02/09 6,000 $1.38
03/02/09 15,300 $1.36
03/02/09 5,000 $1.35
03/02/09 2,000 $1.30
03/02/09 1,020 $1.27
03/03/09 15,000 $1.25
03/03/09 14,000 $1.26
03/03/09 7,000 $1.24
03/03/09 4,300 $1.23
03/04/09 6,399 $1.23
03/04/09 241 $1.21
03/04/09 4,000 $1.25
03/04/09 5,000 $1.24
03/05/09 5,000 $1.15
03/06/09 14,700 $0.95
03/06/09 20,800 $0.92
03/06/09 7,000 $0.93
03/06/09 5,000 $0.91
03/06/09 5,000 $0.94
03/09/09 5,000 $0.92
03/09/09 5,000 $0.94
03/09/09 8,000 $0.95
03/09/09 8,000 $0.96
03/10/09 4,298 $1.09
03/11/09 5,500 $1.14
03/11/09 10,000 $1.21
03/11/09 1,800 $1.20
03/11/09 10,100 $1.22
03/11/09 5,000 $1.24
03/11/09 3,100 $1.23
03/11/09 7,500 $1.25
03/11/09 20,600 $1.26
03/12/09 2,000 $1.32
03/12/09 10,000 $1.33
03/12/09 10,000 $1.34
03/12/09 200 $1.30
03/12/09 300 $1.19
03/13/09 2,555 $1.31
03/13/09 4,857 $1.32
03/16/09 5,100 $1.29
03/16/09 10,000 $1.28
03/16/09 940 $1.31
03/16/09 5,000 $1.27
03/17/09 5,000 $1.27
03/17/09 5,000 $1.24
03/17/09 7,700 $1.23
03/17/09 10,000 $1.31
03/17/09 5,500 $1.30
03/18/09 900 $1.35
03/19/09 41,400 $1.63
03/19/09 14,300 $1.62
03/19/09 18,600 $1.64
03/19/09 15,091 $1.61
03/19/09 14,400 $1.65
03/19/09 6,609 $1.60
03/20/09 9,100 $1.52
03/20/09 2,900 $1.53
03/20/09 19,900 $1.57
03/20/09 99,000 $1.56
03/20/09 5,000 $1.55
03/23/09 25,050 $1.54
03/23/09 10,000 $1.50
03/23/09 5,000 $1.52
03/23/09 50 $1.53
03/23/09 42,000 $1.55
03/23/09 3,000 $1.56
03/23/09 14,982 $1.57
03/24/09 200 $1.60
04/02/09 416,112 $1.74
The total amount of funds required by the Trust to purchase the Shares as
reported above was $4,732,770.57. Such funds were provided by the Trust's cash
on hand. Cash requirements for future purchases of the Shares may come from cash
on hand and/or inter-trust advances made through a Revolving Credit Loan
Agreement as previously described in the Trust's Schedule 13D filed with the SEC
on February 5, 2009 and amended on April 3, 2009.
EXHIBIT 2
SUSAN L. CICIORA TRUST
c/o Stephen C. Miller, P.C.
2344 Spruce Street, Suite A
Boulder, Colorado 80302
February 5, 2009
By Federal Express and U.S. Certified Mail
Corporate Secretary, DWS RREEF Real Estate Fund, Inc. (the "Fund")
345 Park Avenue
New York, NY 10154-0004
John Millette
c/o Deutsche Asset Management, Inc.
Two International Place
Boston, Massachusetts 02110
To the Corporate Secretary of the Fund:
Pursuant to the provisions of the Fund's by-laws and organizational documents
and other public documents filed by the Fund with the Securities and Exchange
Commission (the "SEC"), I hereby notify you on behalf of the Susan L. Ciciora
Trust (the "Trust") that, at the Fund's upcoming 2009 annual meeting of
stockholders (the "2009 Stockholders' Meeting"), the Trust intends to nominate
candidates for election as directors of the Fund and introduce certain proposals
(collectively, the "Proposals"). The Proposals conform with the notice
requirements of the Fund's most recent proxy filed with the SEC on May 28, 2008,
and the Fund's bylaws as filed with the SEC on October 28, 2002 (the "2002
Bylaws"). It appears, based on recent proxies, that the Fund may have amended
its bylaws since the 2002 Bylaws. If the bylaws have changed since the 2002
Bylaws, please provide us with a true and correct copy of the current bylaws.
Please note that the personal and other information contained herein and in the
attached exhibits is to be treated as strictly confidential.
The Proposals are as follows:
1. A proposal to terminate the Investment Management Agreement between the
Fund and Deutsche Asset Management, Inc. (the "Investment Manager") (the
"Management Agreement").
2. A proposal to terminate the Investment Advisory Agreement between the
Investment Manager and RREEF America, L.L.C. (the "Investment Adviser") (the
"Advisory Agreement").
The Investment Manager and Investment Adviser are referred to herein as the
"Managers". Justification for Proposals 1 and 2 above is simple: The Fund's
performance over the past year under the Managers has been more than appalling.
It has been one of the worst of any closed-end or open-end funds in the entire
mutual fund universe. In the latest ratings by Morningstar(TM) (December 31,
2008), SRQ received 1 of 5 stars for its overall, 3- and 5-year performance
history, as compared with other similarly situated specialty real estate
closed-end funds. There is no excuse for the extraordinarily poor performance of
SRQ. For the one-year period ending 12/31/08, SRQ had a total return on net
asset value ("NAV") of -81.9%. To nearly wipe out the entire value of a fund in
one year is unheard of, even in a market that saw the S&P 500 Index drop by 37%.
Surprisingly, the market price for SRQ has dropped even more than NAV because
the discount for the fund increased - a decline of 86.4% for the year ending
12/31/08. This loss far exceeds any other market indices for similarly situated
funds. In fact, the Fund lost more than twice the percent lost by the S&P Index.
As noted in an article published January 4, 2009, on seekingalpha.com, SRQ was
one of the "five worst performing closed-end funds in 2008". SRO, another fund
under the Managers, was also one of these infamous five worst performers and
also received the same dismal Morningstar(TM) ratings as its sister-fund, SRQ.
Having one investment manager for two of the five worst performing funds in 2008
clearly indicates that it is time for new investment management for the Fund.
Notwithstanding the above Proposals 1 and 2, the Trust encourages the Board to
terminate the Management Agreement and Advisory Agreement sooner rather than
later. The Board members have a fiduciary duty to the stockholders to make a
change, as the Managers clearly have shown that they should no longer manage the
Fund. It is the duty of the Board to save what little is left in the Fund and
embrace the changes proposed by the Trust. However, if the Board elects not to
pursue this course of action, the Trust intends to pursue the above Proposals in
a proxy contest.
3. Nominate for election by the stockholders the following nominees as
Class III directors for the Fund: Susan L. Ciciora, Richard I. Barr, and Joel W.
Looney (collectively, the "Nominees). Copies of the Nominees' resumes are
attached to this letter and contain all information required under Section 3.3
of the 2002 Bylaws.
4. A proposal recommending that the Board of Directors of the Fund (the
"Board") adopt a resolution repealing the applicability of the Maryland
Unsolicited Takeovers Act, Maryland General Corporation Law ("MGCL") ss.ss.3-801
through 805 ("MUTA") such that the Fund will no longer be subject to MUTA. MUTA
has the effect of entrenching management and diminishing stockholder influence.
Repeal of MUTA should result in maximizing Board and management accountability
to stockholders.
5. A proposal recommending that the Board amend Article 7.1 of the Fund's
bylaws (the "Bylaws") to delete the first sentence of Article 7.1, so that
authority to amend the Bylaws is not vested solely in the Board. See discussion
under Proposal 7 below.
6. A proposal recommending that the Board amend Article 3.2 of the Bylaws
to reduce the number of directors and declassify the Board consistent with the
discussion under Proposals 8 and 9 below.
7. A proposal recommending that the Board amend the Fund's charter (the
"Charter") vesting in the stockholders the power to amend or adopt the Bylaws by
the affirmative vote of a majority of all votes entitled to be cast on the
matter. The Trust believes that all stockholders benefit if they have better
access to and more influence in the Fund's governance. The Fund's Bylaws contain
important policies affecting the day-to-day management of the Fund, which the
Trust believes stockholders should have a voice in establishing. Presently the
Bylaws contain a provision which vests the authority to adopt, alter or repeal
Bylaws solely with the Board. The Trust believes that the authority to adopt,
alter or repeal Bylaws should be a shared authority between the Board and
stockholders. This permits the Board to be responsive to house-keeping and
substantive matters regarding Fund operations, while at the same time giving the
owners of the Fund the power to effect changes should they choose to do so. The
Trust also believes that when stockholders "speak" by adopting a Bylaw, their
action should not be subject to being overturned or altered by unilateral action
of a Board whose job it is to serve stockholders. The Trust believes that this
Proposal will accommodate the practicalities of managing the Fund while at the
same time protecting an important right of stockholders. This Proposal would
codify in the Charter the shared authority to make, alter or repeal Bylaws,
while at the same time making it clear that Bylaws that are adopted by
stockholders cannot be altered, repealed or otherwise circumvented without the
affirmative approval of stockholders. If approved by stockholders, the Charter
will be amended to add the following provision:
The Bylaws of the Corporation, whether adopted by the Board of Directors or
the stockholders, shall be subject to amendment, alteration or repeal, and
new Bylaws may be made, by either (a) the affirmative vote of a majority of
all the votes entitled to be cast on the matter; or (b) the Board of
Directors; provided, however, that the Board of Directors may not (i) amend
or repeal a Bylaw that allocates solely to stockholders the power to amend
or repeal such Bylaw, or (ii) amend or repeal Bylaws or make new Bylaws
that conflict with or otherwise alter in any material respect the effect of
Bylaws previously adopted by the stockholders.
8. A proposal recommending that the Board amend the Charter to set the
number of members of the Board to five. Company charters often contain
provisions that set a high upper-limit on the number of board seats, permitting
the company's board to increase or decrease the number of board seats in their
discretion, subject to this upper limit. Currently the Charter sets a lower
limit as required by MGCL and the upper limit at twelve, permitting the Board to
increase or decrease its size subject to the upper limit of twelve. Boards may
use such provisions to quickly increase or decrease their size in an effort to
dilute the voting impact of directors - such as those elected in proxy contests
- - with views contrary to those of management. The Trust views the ability to
manipulate the number of members on the Board as unnecessary and ultimately
ineffective in thwarting stockholder desires. In addition, it potentially
increases Fund expenses and insulates the Board from stockholders. Common sense
suggests that if the Fund has more Board seats, the Fund (and thus stockholders)
will spend more on Board compensation. The Trust believes that, because of the
relatively narrow business focus of an investment company such as the Fund, five
Directors can adequately and efficiently fulfill their obligation to oversee the
operations of the Fund and its management and act as "watchdogs" for
stockholders. The Trust believes that the best approach is to seek a few highly
qualified individuals to fill directorships and pay them fairly. This way,
stockholders get more "bang for the buck" in their Board and don't pay
unnecessary Board expenses. If approved by stockholders, the Charter will be
amended to delete the entirety of Article VI(1) and replaced with the following
provision:
The number of directors shall be five.
9. A proposal recommending that the Board amend the Charter to de-classify
the Board and provide for the annual election of directors. The election of
directors is the primary means for stockholders to exercise influence over the
Fund and its policies. The Trust believes that classified boards have the effect
of reducing the accountability of directors to a company's stockholders. A
classified board prevents stockholders from electing all directors on an annual
basis and may discourage proxy contests in which stockholders have an
opportunity to vote for a competing slate of nominees. While classified boards
are viewed by some as increasing the long-term stability and continuity of a
board, the Trust believes that, in the case of the Fund, long-term stability and
continuity should result from the annual election of Directors, which provides
stockholders with the opportunity to evaluate Director performance, both
individually and collectively, on an annual basis. If approved by stockholders,
the Charter will be amended to deleted the entirety of Article VI(2) and
replaced with the following provision:
The directors shall be elected at each annual meeting of the stockholders
commencing in 2009, except as necessary to fill any vacancies, and each
director elected shall hold office until his or her successor is duly
elected and qualifies, or until his or her earlier resignation, death, or
removal.
10. A proposal recommending that the Board amend the Charter to provide
that the Secretary of the Fund shall call a special meeting of stockholders on
the written request of stockholders entitled to cast at least 25% of all votes
entitled to be cast at the meeting. Presently, under the Fund's Bylaws,
stockholders cannot call a special meeting unless a written request is submitted
by the holders of a majority of outstanding shares entitled to vote at the
meeting. This ownership threshold restricts a stockholder's right to call a
meeting. This Proposal would amend the Charter to reduce the percentage
ownership level from a "majority" to 25% of outstanding shares, thus making the
potential for a stockholder or group of stockholders to call a special meeting
more realistic and useful. If approved by stockholders, the Charter will be
amended with the following provision:
The Secretary of the Corporation shall call a special meeting of the
stockholders on the written request of stockholders entitled to cast at
least twenty-five percent (25%) of all the votes entitled to be cast at the
meeting.
11. A proposal recommending that the Board change the name of the Fund so
that it does not include "DWS" or reference to the DWS family of funds, or
investments in real estate or similar securities.
The Trust represents to the Fund that as of the date of this notice it is a
stockholder of record of 1,063,395 shares of the Fund's common stock (the
"Shares") which represents 6.77% of the Fund's total outstanding and issued
shares. The Trust further represents to the Fund that it intends to be present
at the Meeting to nominate the Nominees to serve as directors of the Fund, to
submit the Proposals as contained herein, and to vote its Shares accordingly
with the nominations and proposals as presented by the Trust. The Trust hereby
represents to the Fund that it intends to continue to own, through the date of
the Meeting, these Shares.
If the Fund determines that more than three Class III directors will be elected
at the 2009 Stockholders' Meeting, or the Board expands the number of available
seats on the Board, the Trust intends to nominate candidates for the additional
Board seats and will provide the Fund with the required information for any
additional nominees.
I am also writing in connection with the Schedule 13D that the Trust filed with
the SEC today (a copy of which is attached hereto). The directors of the Fund
will be asked to take a position with respect to the Proposals. As a
representative of the Fund's largest stockholder, I urge the directors to
support these proposals as they are in the best interests of all stockholders of
the Fund and introduce sound corporate governance principals.
Only 4 of the 12 members of the Board own shares of the Fund.(1) The fact
that 8 of the 12 of these incumbent directors own no shares suggests little
incentive for the current Board to work diligently toward the future success of
the Fund and its stockholders. Certainly, this lack of meaningful ownership
highlights that the incumbents do not have enough faith in the Fund's management
to warrant investing their own money with the Fund. Accordingly, the Trust
believes that the stockholders of the Fund deserve new advisers to provide a
better chance for a positive return on their investment and a more confident
outlook for the Fund's future. In this regard, we recommend that the Board
consider Boulder Investment Advisers, LLC and Stewart Investment Advisers, both
SEC registered investment advisers who advise the Boulder-based group of
closed-end funds.(2)
If the Board agrees with these Proposals, I invite you to discuss with me
at your earliest convenience how we might mutually affect a smooth and
cost-efficient implementation of the Proposals. Please contact me at in writing
at the address provided above if you have questions. Please fax a copy of any
written response to my counsel, Stephen C. Miller, Esq. at (303) 245-0420.
Sincerely,
The Susan L. Ciciora Trust
-------------------------------
By: Stewart R. Horejsi, its Financial Advisor
Cc: Board of Directors for the Fund
- -------------------------------------
Footnotes:
1 Based on information form the Fund's most recent Proxy Statement dated May
28, 2008.
2 Boulder Total Return Fund, Boulder Growth & Income Fund and The Denali
Fund.
If you have any questions, require assistance in voting your GREEN proxy card
or need additional copies of our proxy materials, please contact
Morrow & Co., LLC at the address or phone numbers listed below.
Morrow & Co., LLC
470 West Avenue, 3rd Floor
Stamford, CT 06902
Stockholders Call Toll-Free at: (800) 607-0088
Banks and Brokers Call Collect at: (203) 658-9400
PROXY MATERIALS OPPOSING MANAGEMENT'S PROPOSAL TO LIQUIDATE SRQ PAGE LINKS
[LINK: The Trust's Letter to SRQ Stockholders and an independent article
entitled "The Curious Case of DWS Investments"]
SUSAN L. CICIORA TRUST
c/o Stephen C. Miller, P.C.
2344 Spruce Street, Suite A
Boulder, CO 80302
May 6, 2009
Fellow Stockholders of DWS RREEF Real Estate Fund, Inc. ("SRQ")
Dear Fellow Stockholder:
Vote AGAINST the plan of liquidation. It's the last chance for people like
us to keep the board of directors that got us into this mess from losing even
more of our money at SRQ in an effort to bury their mistakes.
If the board gets its way and liquidates our fund, we all will lose the
huge tax loss carry-forwards in SRQ that we stockholders have so painfully
"earned." In fact, the tax loss carry-forward is the most meaningful asset that
we stockholders have left in SRQ. Why are these directors willing to waste our
tax loss carry-forward? The Board is unlike you and us, in that they have
virtually no money invested in our fund and have nothing to lose by recommending
another wrong decision. They just want to bury their past mistakes as quickly as
possible, even if it wastes more of our assets. The table below shows the
current interest each director has in our fund.
DOLLAR VALUE OF SHARE
DIRECTOR SRQ SHARES OWNED(1) OWNERSHIP AS OF 5/4/09
=============================== ========================== ==============================
John W. Ballantine 0 $0
Henry P. Becton, Jr. 900 $1,971
Dawn-Marie Driscoll 200 $438
Keith R. Fox 0 $0
Paul K. Freeman 0 $0
Kenneth C. Froewiss 500 $1,095
Richard J. Herring 900 $1,971
William McClayton 0 $0
Rebecca W. Rimel 0 $0
Alex Schwarzer 0 $0
William N. Searcy, Jr. 0 $0
Jean Gleason Stromberg 0 $0
Robert H. Wadsworth 0 $0
Given this, it's no wonder the current directors don't care about what
happens to SRQ. However, this is not the case for the rest of us. As the largest
stockholder of SRQ, owning 16.5% of the fund, we are AGAINST their plan of
liquidation. We are in the same position as you, and we want to maximize
stockholder value and get out from under SRQ's inadequate management. That's why
we OPPOSE their bad plan to liquidate SRQ.
In addition, we have a track record of expertise and success in similar
situations. In the past, other trusts that I advise have successfully acquired
control of other closed-end investment companies, including Boulder Growth &
Income Fund, Inc. (NYSE:BIF) and The Denali Fund Inc. (NYSE:DNY). BIF and DNY
just received 2008 Lipper Performance Achievement Certificates in their
respective Lipper categories as follows:
Boulder Growth & Income Fund:
Ranks #1 in the Lipper Closed-End Equity Fund Performance Analysis for Core
Funds for the 1-Year Ended December 31, 2008;
Ranks #1 in the Lipper Closed-End Equity Fund Performance Analysis for Core
Funds for the 5-Year Ended December 31, 2008.
The Denali Fund:
Ranks #1 in the Lipper Closed-End Equity Fund Performance Analysis for Real
Estate Funds for the 1-Year Ended December 31, 2008;
Ranks #1 in the Lipper Closed-End Equity Fund Performance Analysis for Real
Estate Funds for the 5-Year Ended December 31, 2008*.
I am not alone in voicing frustration and concern for our investments in
SRQ. Many other stockholders have called or sent letters to us to voice their
support for our proposals and their frustration with the current board of
directors. I have attached an article from a retired accounting professor,
Harvard Law School graduate and fellow stockholder who shares our frustration
and I invite you to read his attached article. As stated in the attached
article, it appears that they are "trying desperately to bury their mistakes."
We agree, and we think that they are trying to do it at the expense of us
stockholders.
Who can you trust? The board of directors who got us into this mess and
have almost no ownership, or the largest stockholder who is in the same boat as
you, with a proven track record of managing closed-end funds that have won
prestigious Lipper Awards?
Give us a chance to earn enough to increase the NAV of the Fund $178
million tax free by using up the current tax loss carry-forwards. Vote AGAINST
liquidation!
Only your last vote counts. Even if you have already voted "for" their plan
of liquidation, you can still change your vote to "AGAINST" by voting again
using the proxy you received earlier, or:
To vote by telephone, call toll-free: 1-800-454-8683
To vote by internet, go to www.proxyvote.com
Whether you vote by telephone or internet, use your 12 digit Control Number
as shown on the right side of your proxy card. If you cannot locate your proxy
card, call 1-800-662-5200 for assistance.
If you have questions why the Trust is AGAINST the plan of liquidation,
please contact Joel Terwilliger immediately at (303) 442-2156. Best wishes from
a fellow stockholder.
Yours truly,
Stewart R. Horejsi
Representative for the Susan L. Ciciora Trust
The Susan L. Ciciora Trust (the "Trust") has filed a proxy statement in
connection with the 2009 special meeting of DWS RREEF Real Estate Fund
stockholders. Stockholders are strongly advised to read the Trust's proxy
statement and the accompanying GREEN proxy card, as they contain important
information, including information relating to the participants in such proxy
solicitation. Stockholders can obtain this proxy statement, any amendments or
supplements to the proxy statement and other documents filed by the Trust with
the Securities and Exchange Commission (SEC) for free at the internet website
maintained by the SEC at www.sec.gov.
- -----------------------------
Footnotes:
(1) According to the most recent public filings available via EDGAR.
* My colleagues and I assumed management of DNY in October 2007.
The Curious Case of DWS Investments
Seekingalpha.com
April 21, 2009 - Investment managers at Deutsche Bank's DWS mutual fund complex
are trying desperately to bury their mistakes. And no wonder. Under their
guidance, the DWS RREEF Real Estate Fund II (closed-end fund ticker "SRO") lost
91.6% of its value in the fourth quarter of 2008, incinerating about $340
million of investor equity, while its smaller twin fund I ("SRQ"), down only
82%, burned through another $200 million. These losses may have set some new
record for the rapid destruction of shareholder value by professional asset
managers, and they earned both funds a solid 1-star ("worst") rating.
Now both funds have asked their shareholders to approve plans for liquidation:
the remaining assets are to be sold, the proceeds distributed, and the funds
will cease to exist. SRO and SRQ will only remain as fading, painful memories
for their unhappy investors. [Disclosure: The author is a retired accounting
professor who bought 500 shares of SRQ for an IRA account back in July 2004. The
shares are now worth about 1/10th of what they had cost.]
But an unlikely hero has come to the rescue. The liquidation plans emerged from
a Board of Directors meeting on March 11, shortly after SEC filings by one
Stewart Horejsi had announced the purchase of about 7% of SRQ and 5% of SRO.
Horejsi, a wealthy activist investor who has wrested control over several other
closed-end funds in recent years, proposed to terminate DWS/Deutsche Bank's
contract to manage SRO and SRQ, "in order to save what little is left", and
intimated his willingness to engage in a proxy fight for control.
Since that time Horejsi has continued to accumulate shares (at latest count,
16.5% of SRQ), and he has come out in vehement opposition to the liquidation
plan, calling it a dumb idea coming from "exceptionally bad management" and a
complacent board of directors.
The DWS fund managers have responded vigorously. In order to keep Horejsi from
blocking their plan to liquidate the funds, they have caused the funds to adopt
"poison pill" defenses, to alter bylaws so as to allow arbitrary adjournments of
shareholder meetings, and to rule out the selection of a new manager affiliated
with a shareholder (i.e. Horejsi) unless 80% of the Directors approve.
These moves would be understandable if this were a typical proxy fight, with
incumbents seeking to maintain the corporate entity and preserve control, but
here the managers are fighting to keep control of the funds in order to
obliterate them.
Why bother? Why is DWS so intent on having SRO and SRQ commit corporate
hara-kiri that it feeds them poison pills to use in case anyone tries to rescue
them? Why gin up the lawyers and the proxy tele-marketers, at shareholder
expense, just to provide a quick death and burial for these unlamented funds.
It can't be due to concern for the reputation of the folks involved. Like
superstar athletes on steroids, portfolio managers John Robertson, Jerry
Ehlinger, John Vojticek and Asad Kazim have set records that will not be easily
forgotten. Even in the market turmoil of late 2008, when the Vanguard REIT Index
ETF (VNQ) was down by 39%, losing more than 90% of investors' capital in less
than 3 months is the sort of accomplishment that should dissuade any
conscientious investment firm from ever allowing any of them near any position
of fiduciary responsibility, ever.
What other motive, then, can DWS have for insisting that SRO and SRQ put to
sleep? Why should DWS care whether the books and records of the funds get
recycled into pulp or fall into unfriendly hands? And just how does one manage
to lose $200 million or $340 million in a few weeks, entirely through legitimate
asset management, without any trace of Ponzi-like dishonesty and under a legal
regime that demands full disclosure?
The proxy statement blames the losses on "unprecedented and intense volatility
in the real estate market and increased investor fears and reactions related to
the worldwide credit crunch". As SRQ's annual report put it:
The fund underperformed its benchmark and peer group by a wide margin
mainly because of the fund's large leverage position, which badly hurt
performance when investors began selling real estate assets
indiscriminately during the early part of the fourth quarter as the
worldwide credit crunch intensified.
Very true, as far as it goes. Both funds leveraged common stock with auction
rate preferred. SRQ entered the 4th quarter with net assets of about $400
million: $160mm preferred (at face and redemption value) leaving $240mm net
equity for the 15.7 million common shares, with a net asset value of $15.32 per
share. SRO was a bit more leveraged: $730 million net assets backing $350mm in
preferred shares, leaving $380mm for the 38 million common shares, or about
$10.04 per share.
October was a devastating month, with VNQ (the REIT index ETF) falling over 31%,
and November compounded the cruelty with an additional 23% drop. For geared
funds like SRO and SRQ, such losses fall disproportionately on the common equity
holders. The Investment Company Act of 1940 requires at least $1 of common stock
net equity for every $1 of preferred. When net assets decline, this means that
some preferred shares must be redeemed in order to restore the ratio, but this
in turn requires funds to sell their holdings into a collapsing market in order
to raise enough cash for redemption. SRO started the 4th quarter with roughly
$668mm worth of investments and $53mm cash, but by the end of October it had
only $231mm worth of investments left after raising an additional $201mm cash in
preparation for a preferred stock buyback.
Going from $668mm to $231mm + $201mm implies a loss of $236mm, which fell
entirely on the common shares, and is the main reason why net asset value
crashed from $10.04/share to $3.61/share during the month. [Note: a loss of
$236mm out of $668mm is a 35% decline overall, which is in line with VNQ's -31%
for October. It meant a 64% decline for the common shares -- but that's
leverage.]
However, a close look at the financial statement numbers suggests there's more
to the story than just leveraged bad luck. Footnote A to each fund's Annual
Report for 2008 says,
The Fund may enter into interest rate swap transactions to reduce the
interest rate risk inherent in the Fund's underlying investments and issued
preferred shares.
In fact, SRO entered the 4th quarter with five open interest rate swaps for a
notional total of $437,500,000, under which it agreed to pay counterparty banks
- -- primarily the United Bank of Switzerland (UBS) -- fixed rate interest at at
4% per annum, while receiving in exchange variable interest at the LIBOR rate.
One swap had a 2008 end date, but the others extended as long as ten years. At
the start of the 4th quarter SRO had an unrealized gain of about $2mm on these
swaps, and by October 31st they were off by just $700K.
After October, though, the LIBOR interest rate fell dramatically, so the value
of the cash flows SRO was to receive became much less than that of the fixed
payments under the swaps. By year-end, four of the swap contracts had been wound
up, at a realized loss of $20,604,055, and the remaining contract was under
water by $12,929,062. SRO's swaps do not seem well matched to its portfolio or
to its scheduled redemption of preferred shares. They look more like an interest
rate speculation than the risk-reducing hedge described in the footnotes.
This speculation cost the common shareholders about $33 million during the 4th
quarter -- almost as much as the $34 million of asset value that still remained
for the common shares at year-end. The results at SRQ were not quite as bad:
$11.3 million in swap losses were realized during the 4th quarter and the
year-end position was only about $6 million under water, while SRQ still had $44
million in net equity remaining for the common shareholders.
The tax law says, in effect, that investment companies should invest in
investments. Companies like SRO and SRQ are exempt from corporate income tax if
at least 90% of their gross income consists of dividends, interest, securities
lending, gains from selling stock, securities or currencies, and suchlike. (Tax
Code Sec. 851(b)(2).) It seems, however, that DWS wanted to juice up the results
for SRO and SRQ by having them buy into a privately held health resort, Canyon
Ranch Holdings, LLC.
The problem is that part of the gross income from such a business shows up on
the tax return of its owners, even if the net result is a loss, and this sort of
income is potentially poisonous for the 90% test.
Indeed, SRO's liquidation proxy projects that the unlucky fund will fail to
qualify as an investment company for year 2009, and Federal corporate taxes will
have to be paid on this year's income before the balance can be distributed to
the shareholders. [For SRQ it's still a close question.] Nor did Canyon Ranch
fare well as an investment. SRO put $21,600,000 into it back in January, 2005.
On September 30, 2008 it was on the books at $18,003,815. SRO's books show it
was written down to $14 million in October, down to $4 million in November, and
down to just $1,814,400 at year-end. It disappeared from the balance sheet
entirely by the end of February 2009 -- whether by sale or write-off is not
known. The 4th quarter loss on Canyon Ranch was $16.2 million, compared to
ending equity of $34 million.
SRQ had a similar experience: Canyon Ranch went from a carrying value of $4.8
million at 9/30/08 to just $484,000 by year-end.
Canyon Ranch was not the only write-off. Both funds also owned preferred shares
in hotel companies that had recently been taken private through leveraged
buyouts. At the start of the 4th quarter, SRO valued its shares in Eagle
Hospitality Properties at $3,586,700 and its shares in W2007 Grace Acquisitions
I at $4,223,625. By year-end these interests had both been written down by more
than 99%, leaving Eagle at $34,820 and W2007 Grace at $37,980.
One wonders if these illiquid shares still have any value at all, and how any
rights that may exist can be enforced if SRO itself ceases to exist. For SRQ the
story is the same: the value of its investment in these two companies fell from
$7.1 million on September 30th to roughly $65,000 by year-end.
It's hard to know, though, whether to take these values seriously, because it's
not clear whether DWS and SRO took them seriously. The "fair value" accounting
rules say that funds like SRO should disclose how they value their holdings: are
the numbers based on market prices (Level 1), other observable inputs (Level 2),
or "significant unobservable inputs" (Level 3)? SRO's semiannual report showed
Level 3 investments on June 30, 2008 were $39,041,135, which is the total of the
values then assigned to Canyon Ranch, Eagle, W2007 Grace and a Rule144A
investment in Hatteras Financial Corp. The year-end audited financials indicate
that Hatteras had been transferred out of Level 3, leaving only $1,887,200 after
write-downs as the remaining value of Canyon Ranch, Eagle and W2007 Grace.
However, the 3rd quarter schedule of holdings (issued between the other two
reports, and certified, as usual, by the CEO and the CFO) shows Level 3 at
$27,621,355, which equals the values then assigned to Canyon Ranch, Eagle and
Hatteras. Something is missing. The investment schedule shows W2007 Grace being
carried at $4,223,625, but it's not in the Level 3 total. SRO says that nothing
was transferred into or out of Level 3 during the quarter, yet W2007 Grace was
there on June 30, not there on September 30, and back there again on December
31. What kind of accounting magic is this? Maybe DWS employs double-entry
gremlins or bookkeeping imps. And maybe those sprites also know whether the net
asset values that SRO was reporting to the public in late November and early
December did or did not include the $21 million loss that the fund had incurred
on those interest rate swaps.
So where were the independent Directors of SRO and SRQ, the twelve "watchdogs"
who are supposed to be looking out for shareholder interests? Four of them
actually owned fund shares, though in nominal amounts. At DWS, however, a single
consolidated board of directors is responsible for overseeing all of the
closed-end and open-end funds in the DWS complex, so each Director of SRO and
SRQ sits simultaneously on the Board of 131 or so other funds. A three hour
board meeting, not counting coffee breaks, would allow about 81 seconds for
discussing the affairs of any particular fund. And considering that each
"independent" director collected upwards of $189,000 a year for their services
to the DWS fund complex, it could be that the watchdogs didn't bark because they
were too busy chewing.
As the Delaware Supreme Court said long ago about compliant Directors: "Whether
they were supine merely, or for sufficient reasons entirely subservient it is
not profitable to inquire. It is sufficient to say... that theirs is an
unenviable position whether testifying for or against the appellants." Guth v.
Loft, 5 A. 2d 503, 512 (Del. 1939.)
Coming from portfolio managers, excuses aren't much consolation for investors.
Apologies would be nice, and compensation nicer still. But as the folks at DWS
know: "dead funds tell no tales."
Disclosure: I still own the 500 shares of SRQ bought in happier times.
Contributor: Contrarius
This article can be located at the following link:
http://seekingalpha.com/article/131943-the-curious-case-of-dws-investments
(C) Copyright, 2009 by the author; all rights reserved by the author. Used by
permission.
PROXY MATERIALS OPPOSING MANAGEMENT'S PROPOSAL TO LIQUIDATE SRQ PAGE LINKS
[LINK: The Trust's Letter to SRQ Stockholders]
SUSAN L. CICIORA TRUST
c/o Stephen C. Miller, P.C.
2344 Spruce Street, Suite A
Boulder, CO 80302
May 11, 2009
Fellow Stockholders of DWS RREEF Real Estate Fund, Inc. ("SRQ")
Dear Fellow Stockholder:
Vote AGAINST the plan of liquidation. We believe that SRQ's board of
directors is using "anti-shareholder tactics" - at shareholder expense - to
ramrod their liquidation proposal past us, the shareholders. Recently, a leading
independent analyst publication, The Investor's Guide to Closed-End Funds,
pointed out in its May 2009 issue that:
>> SRQ's board of directors' tactics include potentially capping shareholder
voting rights and adopting a "poison pill" rights plan; these types of
tactics as previously used by another closed-end fund was "widely
criticized" because they used fund assets "to finance the fight."
>> "What puzzles us most is management's motivation to fight [the Trust] so
hard. Management is devoting significant legal and proxy expense to fight
[the Trust], but if they win, the ultimate outcome gives them no future
benefit[.]"
>> If the liquidation proposal were voted down by shareholders and the Trust
took over management of the fund, "the fund would retain its large capital
gains loss carry forwards [estimated at $178 million] to offset future
gains."
>> Another fund, European Warrant Fund, avoided liquidating its assets for
partly the same reason, to avoid losing valuable capital gains loss carry
forwards.
As a fellow shareholder, I am appalled that SRQ's board of directors is
spending shareholders' money - our money - to finance their fight. Let me
restate this point - the board of directors is using OUR money to pay for THEIR
fight!!
Many other shareholders have sent letters, called, or emailed supporting
our position.
Vote AGAINST liquidation!
Only your last vote counts. Even if you have already voted "for" their plan
of liquidation, you can still change your vote to "AGAINST" by voting again
using the proxy you received earlier, or:
To vote by telephone, call toll-free: 1-800-454-8683
To vote by internet, go to www.proxyvote.com
Whether you vote by telephone or internet, use your 12 digit Control Number
as shown on the right side of your proxy card. If you cannot locate your proxy
card, call 1-800-662-5200 for assistance.
If you have questions why the Trust is AGAINST the plan of liquidation,
please contact Joel Terwilliger immediately at (303) 442-2156. Best wishes from
a fellow stockholder.
Yours truly,
Stewart R. Horejsi
Representative for the Susan L. Ciciora Trust
The Investor's Guide to Closed-End Funds is a leading and objective independent
analyst publication published by Thomas J. Herzfeld Advisers, Inc.; all rights
reserved. Thomas J. Herzfeld Advisers, Inc. serves as an independent consulting
firm to closed-end funds and has previously provided independent consulting work
to the Boulder Growth & Income Fund, Inc.
PROXY MATERIALS OPPOSING MANAGEMENT'S PROPOSAL TO LIQUIDATE SRQ PAGE LINKS
[LINK: Press Release: Riskmetrics Group Recommends Vote "AGAINST" SRQ
Liquidation Proposal]
[Note to Edgar readers: * SEE LINK ABOVE: [RiskMetrics Group Recommends
Vote Against DWS RREEF Real Estate Fund, Inc. Liquidation Proposal]
PROXY MATERIALS OPPOSING MANAGEMENT'S PROPOSAL TO LIQUIDATE SRQ PAGE LINKS
[LINK: We Won! The Trust's Thank You letter as Filed with the SEC]
SUSAN L. CICIORA TRUST
c/o Stephen C. Miller, P.C.
2344 Spruce Street, Suite A, Boulder, CO 80302
June 2, 2009
Fellow Stockholders of DWS RREEF Real Estate Fund, Inc. ("SRQ"):
The Stockholders Have Spoken, But is the Board Listening?
Thanks to your vote against SRQ's ill-fated liquidation proposal, we soundly
defeated management's attempt to liquidate our fund by more than a 2-to-1 vote.
Unlike SRQ's investment managers Deutsche Asset Management, Inc. and RREEF
America, LLC, we aren't ready to call it quits.
The final results? AGAINST: 5,995,333 and FOR: 2,898,268
Clearly, the stockholders have spoken. 66.5% of those voting voted against the
Board's recommendation. But will the Board listen and terminate Deutsche Asset
Management, Inc. and RREEF America, LLC and avoid further losses to SRQ?
The Trust has communicated with the Board recommending termination of Deutsche
Asset Management, Inc. and RREEF America, LLC immediately and replacement of
members of the Board. It is the Board's fiduciary duty to make a change, as
Deutsche Asset Management, Inc. and RREEF America, LLC clearly have shown that
they are no longer fit to manage SRQ.
By recommending liquidation of SRQ, the Board essentially told stockholders that
they have no confidence in Deutsche Asset Management, Inc. and RREEF America,
LLC to run our fund! Every day that passes during which Deutsche Asset
Management, Inc. and RREEF America, LLC continue to manage SRQ is in direct
contravention to what the Board told stockholders.
The Board has a duty to save what little is left in SRQ and embrace the changes
that stockholders supported. An independent adviser, RiskMetrics Group, stated
that it believed the Trust, through its affiliations with the Boulder-based
advisers, may be able to "effectuate change that is critical to improving the
performance of [SRQ], rather than liquidating."* Stockholders have voted, an
independent adviser has weighed in, and the conclusion is overwhelming:
terminate the investment management agreement with Deutsche Asset Management,
Inc. and RREEF America, LLC, hire the Trust's investment managers, and replace
the current Board with directors who have greater confidence in the Fund's
future.
It's Time to Take the Steps Necessary to Rebuild SRQ
Now it's time for us to take back SRQ. The Trust heard you speak - emails,
letters, phone calls, faxes, and so on all have a similar message - replace the
advisers and current members of the Board with new members nominated by the
Trust. You also voiced frustration and anger at the Board's decision to adopt a
poison pill plan and other impediments that by their design could thwart the
will of stockholders and are an affront to basic standards of good corporate
governance. The Trust appreciates your support and has submitted various
proposals to the Board to give us - the stockholders - what we want; a new
direction in SRQ. However, the Board has not responded and continues to ignore
the overwhelming voice of stockholders.
We hope the Board does the right thing and responds positively to our proposals.
However, if the Board elects not to pursue this course of action, the Trust
intends to pursue these and other stockholder-supported proposals in a proxy
contest at the upcoming annual meeting.
Soon, you will receive materials from the Trust, seeking your support for
various proposals which we believe will be beneficial for SRQ and its
stockholders. Please read those materials carefully as they directly impact the
future of SRQ. Together, we can do it again. Together we can get this fund back
on the road to recovery. We invite your participation and comments at
WWW.SRQSRO.COM, a soon-to-be-active web-blog-site dedicated solely to taking
back SRQ.
Best wishes from a fellow stockholder. Yours truly,
Stewart R. Horejsi
Representative for the Susan L. Ciciora Trust
The Susan L. Ciciora Trust (the "Trust") will soon file a preliminary joint
proxy statement in connection with the 2009 annual meeting of DWS RREEF Real
Estate Fund and DWS RREEF Real Estate Fund II stockholders. Stockholders are
strongly advised to read the Trust's joint proxy statement and the accompanying
GREEN proxy card, as they will contain important information, including
information relating to the participants in such joint proxy solicitation.
Stockholders can obtain this joint proxy statement, any amendments or
supplements to the proxy statement and other documents filed by the Trust with
the Securities and Exchange Commission (SEC) for free at the internet website
maintained by the SEC at www.sec.gov.
Stockholders will also be able to access more information regarding taking back
our investments in SRQ by going to www.SRQSRO.com.
*Permission to use quotation neither sought nor obtained.
CONTACT PAGE LINKS:
[LINK: HERE]
[Note to EDGAR readers: * SEE "IMPORTANT INFORMATION PAGE LINK" ABOVE TO
VIEW (PREC14A)]
CONTACT PAGE LINKS:
[LINK: CLICK HERE TO RECEIVE Email UPDATES]
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The Susan L. Ciciora Trust, its agents and assigns (the Trust), do not disclose,
rent, or sell your email address or any other information we may receive to any
third party, unless you specifically request it.. By providing the information
above you agree to receive periodic emails from the Trust regarding information
the Trust believes is relevant to stockholders of SRQ and SRO. The Trust
maintains these email records of individuals who contact us in case it needs to
contact you later or provide further information to you in the future.