-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SFukWMHbLJFt4AJ5i2CVSoDqLY0pfT2CrTIDbX4kUxlyrrsbObnmkj9oeu6zjApP tGyv5/wg3s3PIvNURgw0vA== 0000912057-00-009271.txt : 20000307 0000912057-00-009271.hdr.sgml : 20000307 ACCESSION NUMBER: 0000912057-00-009271 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RCM CAPITAL FUNDS INC /MD/ CENTRAL INDEX KEY: 0000310619 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 942564439 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-02913 FILM NUMBER: 558935 BUSINESS ADDRESS: STREET 1: FOUR EMBARCADERO CTR STREET 2: STE 2900 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4159545474 MAIL ADDRESS: STREET 1: FOUR EMBARCADERO CENTER CITY: SAN FRANCISCO STATE: CA ZIP: 94111 FORMER COMPANY: FORMER CONFORMED NAME: RCM CAPITAL FUNDS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: RCM GROWTH EQUITY FUND INC DATE OF NAME CHANGE: 19920126 N-30D 1 N-30D Dresdner RCM Global Funds DECEMBER 31, 1999 Annual Report
[Dresdner Logo] February 22, 2000 Dear Shareholder: We are pleased to present the Dresdner RCM Global Funds' Annual Shareholder Report for the 12 months ended December 31, 1999. By any measure, 1999 was a spectacular year for Dresdner RCM Global Funds (the "Funds"), as nearly every mutual fund outperformed its benchmark, in some cases by a wide margin. The driving force behind the Funds' superior results was a willingness to boldly embrace technology and telecommunications stocks throughout the world as the Internet and wireless communications generate tremendous investment opportunities. Although these sectors remain overweighted, Dresdner RCM Global Investors LLC, the Funds' investment manager, continues to use a bottom-up analysis of company fundamentals, combined with a careful assessment of projected earnings growth to select companies that offer the best potential for achieving their business goals. To be sure, 1999 was an excellent year for equities in the major markets of the world. In the U.S., the S&P 500 Index and the NASDAQ set records, as the economy continued to enjoy the longest period of uninterrupted prosperity in US history. In Japan, the stock market began to snap back from a decade-long slump, as cultural changes favoring shareholder value began to take place. Even in Europe, where the Euro steadily weakened throughout the year, investors began to enjoy improved returns in the second half of the year as economic growth improved. In identifying possible investments, Dresdner RCM, in cooperation with its worldwide affiliates, draws on the expertise of nearly 200 investment professionals, primarily securities analysts and portfolio managers. In addition to having traditional finance credentials, many also have advanced degrees or industry experience in the areas of the market that they cover such as engineering or medicine. The Funds also draw from Grassroots-SM- Research, a unique adjunct to traditional research efforts, which uncovers and confirms marketplace demand for key products and services. Inside, you will find discussions of each mutual fund by Dresdner RCM Global Fund portfolio managers. In comprehensive detail, relevant market conditions, the factors affecting the Funds' performance, the investment strategies employed in response to last year's economic and market conditions as well as the outlook for 2000 is reviewed and discussed. Each report also includes performance summaries, lists of holdings and portfolio weightings as of December 31, 1999. We are extremely proud of the performance of our mutual funds this past year, and thank you for your continued confidence in the Dresdner RCM Global Funds. If you would like more information on a specific fund, or if you have any questions about the material in this report, please call us at 1-800-726-7240 or visit us at www.DRCMFunds.com. Sincerely, /s/ DeWitt F. Bowman /s/ Theodore J. Coburn DeWitt F. Bowman Theodore J. Coburn Chairman Chairman Dresdner RCM Global Funds, Inc. Dresdner RCM Investment Funds Inc. Dresdner RCM Capital Funds, Inc.
Dresdner RCM Large Cap Growth Fund Management's Performance Review Surging technology and telecommunications stocks and superior stock selection helped the Dresdner RCM Large Cap Growth Fund to significantly outperform the S&P 500 Index for the second year in a row. For the year ended December 31, 1999, the Fund posted total returns of 44.84% and 44.46% for Class I and Class N shares, respectively. In comparison, the Fund's benchmark, the S&P 500 Index, returned 21.04% for the year. MARKET REVIEW As 1999 began, large cap growth stocks were favored in the uncertain global economic environment. After central banks lowered interest rates around the world, global economies began to improve. Investors switched their attention to economically sensitive stocks and a powerful, though short-lived, rally in value stocks occurred in the second quarter. However, the rally ended as the Federal Reserve Board shifted to a tightening stance and began raising short term interest rates to slow the economy and prevent a return of inflation. Long- term interest rates, sensitive to inflation expectations, began a sustained upward climb. As the year progressed, stocks were caught in a tug-of-war between higher interest rates and stronger earnings. Prices for most stocks remained locked in a relatively tight range. Technology stocks, however, distinguished themselves through their outstanding growth prospects and were accorded ever-higher prices. In late October, U.S. economic reports suggesting solid growth coupled with low inflation sent stock prices skyrocketing. The Fed, still concerned about the strength of the U.S. economy, raised short-term interest rates for the third time. Investors ignored the higher rates and focused on strong third-quarter profits, seeking companies with exciting growth stories. Money poured into technology and telecommunications stocks, many of which doubled in price in the fourth quarter, as investors worried less about Y2K and once again became enamored with companies (large and small) with some connection to the Internet. FACTORS AFFECTING PERFORMANCE Dresdner RCM Global Investors LLC ("Dresdner RCM"), the Fund's investment manager, continued to emphasize Internet, Internet infrastructure, wireless and communication infrastructure stocks, with many posting substantial gains. Technology and telecommunications services stocks represented 46.6% of the portfolio at year-end, substantially more than the S&P 500 Index. Underweightings to other sectors, particularly in interest-sensitive stocks such as financial services, also served the Fund well as these categories generally performed poorly. EMC and Cisco Systems, two of the Fund's larger holdings, each more than doubled in price in 1999, as they continued their dominance of data storage systems and Internet infrastructure, respectively. As of December 31, 1999, the Fund also maintained a combined weighting of over 4% in AOL and Yahoo!, companies with early and established franchises on the Internet and greater than expected E-commerce during the year. In telecommunication services, the Fund had significant commitments in Nextel Communications, QUALCOMM and JDS Uniphase. While telecom companies active in long-distance communications were generally weak, wireless-service and equipment companies, such as these three, were much stronger. QUALCOMM soared over 2600% on strong subscriber growth, driving higher-than-expected royalties and chip sales. Additionally, as investors recognized wireless as an eventual platform for Internet access, QUALCOMM's CDMA technology was recognized as the leader in that market. As companies race to provide greater bandwidth, JDS Uniphase has become the recognized leader in the fiber optics components industry for telecommunications and cable TV. Shares of JDS Uniphase rose 830% during the year. Meanwhile, strong subscriber penetration and new wireless data services drove Nextel's stock gains of 337% for the year. Biotechnology was also strong in 1999, with PE Biosystems, a leading supplier of instrumentation for genetic, protein and drug discovery research, up 172% for the year. However, the Fund was penalized for its overweight in pharmaceutical stocks, which performed less favorably due to the potential for Medicare expansion to cover prescription drugs. This was more than offset by positive stock selection aided by Grassroots-SM- Research. Consumer non-durables, including the Fund's holdings of Coke and Gillette, also performed poorly for most of the year as a number of consumer products Page 2 Dresdner RCM Large Cap Growth Fund Management's Performance Review companies announced lower expectations for revenue growth. Although their fundamentals didn't materially improve, the stocks strengthened in the fourth quarter as investors were attracted to their low relative valuations as well as the exposure to improving global markets. A disappointing holding in the Fund was Tyco International which declined dramatically when the company's method of accounting for acquisitions was questioned. However, we believe the company's fundamentals remain strong as its assortment of businesses, including medical products, security systems and electronics continue to generate strong cash flow. The stock remains a holding in the Fund. OUTLOOK Although valuations in technology and telecommunications stocks are quite high, we believe that their growth prospects compared to the rest of the economy are substantially better. Therefore, the Fund is likely to remain overweighted in these groups but will likely trim some positions into the new year. Pharmaceutical stocks are likely to remain flat during the Congressional debate over Medicare coverage, while the growth prospects for consumer non-durables have improved marginally. Meanwhile, interest rates are likely to continue to rise as the Federal Reserve Board attempts to slow the economy. Investors will likely favor companies than can still show profit growth in a rising interest rate environment. Page 3 Dresdner RCM Large Cap Growth Fund Total Return Index Comparison(b) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
$10,000 INVESTMENT (12/31/96 - 12/31/99)(C)(D)(E) CLASS I SHARES S&P 500 STOCK INDEX(A) 12/96 $10,000 $10,000 1/97 $10,640 $10,625 2/97 $10,570 $10,708 3/97 $9,920 $10,268 4/97 $10,490 $10,881 5/97 $11,300 $11,544 6/97 $11,880 $12,061 7/97 $13,020 $13,021 8/97 $12,210 $12,292 9/97 $13,230 $12,965 10/97 $12,930 $12,532 11/97 $13,140 $13,113 12/97 $13,199 $13,338 1/98 $13,599 $13,486 2/98 $14,647 $14,458 3/98 $15,337 $15,199 4/98 $15,737 $15,352 5/98 $15,263 $15,088 6/98 $16,190 $15,701 7/98 $16,232 $15,533 8/98 $13,515 $13,287 9/98 $14,716 $14,139 10/98 $15,737 $15,288 11/98 $16,864 $16,215 12/98 $19,020 $17,148 1/99 $20,470 $17,865 2/99 $19,728 $17,310 3/99 $21,460 $18,002 4/99 $21,118 $18,699 5/99 $20,305 $18,257 6/99 $21,837 $19,271 7/99 $21,330 $18,670 8/99 $21,613 $18,577 9/99 $21,425 $18,068 10/99 $22,850 $19,211 11/99 $24,265 $19,601 12/99 $27,549 $20,756
PERFORMANCE(b) DECEMBER 31, 1999
CUMULATIVE SINCE SINCE LARGE CAP GROWTH FUND 1 YEAR 3 YEARS INCEPTION INCEPTION Class I Average Annual Total Return(c) 44.84% 40.18% 40.18% 175.49% Class N Average Annual Total Return(d) 44.46% 40.06% 40.06% 174.77% S&P 500 Stock Index Average Annual Total Return(a) 21.04% 27.56% 27.56% 107.56%
The data above represents past performance of the Fund and may not indicate future performance. The investment return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. - -------------------------------- (a) The Standard & Poor's 500 Stock Index is a capitalization-weighted index of 500 stocks that attempts to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing major industries. (b) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (c) Class I shares commenced operations on December 31, 1996. (d) Class N shares were first issued on March 2, 1999, and pay Rule 12b-1 fees. Class N returns through December 31, 1998 are based on Class I returns and reflect Rule 12b-1 fees. (e) The value of a $10,000 investment for Class N is $27,477 for the period from 12/31/96 - 12/31/99. The performance of the Class N shares is lower than Class I shares due to the effects of 12b-1 fees. Page 4 Dresdner RCM Large Cap Growth Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS CONSUMER NON-DURABLES SECTOR 14.3% BEVERAGE/TOBACCO 2.8% 2,000 US Anheuser-Busch Companies Inc. $ 141,750 2,500 US Coca Cola Co. 145,625 4,500 US Coca Cola Enterprises Inc. 90,562 3,000 US Philip Morris Co. Inc. 69,563 ----------- 447,500 ----------- HOUSEHOLD/RELATED NON-DURABLES 3.5% 4,000 US Colgate Palmolive Co. 260,000 1,800 US Gillette Co. 74,138 2,000 US Procter & Gamble Co. 219,125 ----------- 553,263 ----------- LEISURE TIME PRODUCTS/SERVICES 1.8% 1,800 US Carnival Corp. 86,063 5,000 US McDonalds Corp. 201,562 ----------- 287,625 ----------- RETAIL TRADE 6.2% 3,000 US Circuit City Stores Inc. 135,188 1,600 US Costco Cos. Inc. * 146,000 1,100 US Dayton Hudson Corp. 80,781 2,250 US Home Depot Inc. 154,266 2,500 US Nike Inc. (Class B) 123,906 2,500 US Safeway Inc. * 88,906 3,500 US Wal-Mart Stores Inc. 241,937 ----------- 970,984 ----------- CYCLICAL/CAPITAL GOODS SECTOR 11.0% AEROSPACE/DEFENSE 2.1% 1,400 US General Dynamics Corp. 73,850 2,812 US Honeywell International Inc. 162,217 1,500 US United Technologies Corp. 97,500 ----------- 333,567 ----------- ELECTRICAL EQUIPMENT 4.0% 4,100 US General Electric Co. 634,475 INDUSTRIAL EQUIPMENT 3.3% 13,400 BH Tyco International Ltd. 520,925
The accompanying notes are an integral part of the financial statements. Page 5 Dresdner RCM Large Cap Growth Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) RAW/BASIC MATERIALS 1.6% 3,000 US Alcoa Inc. $ 249,000 ENERGY SECTOR 3.8% ENERGY 3.8% 1,000 US Chevron Corp. 86,625 5,000 US Conoco. Inc. (Class A) 123,750 6,000 US Enron Corp. 266,250 2,000 US Schlumberger Ltd. 112,500 387 US Transocean Sedco Forex Inc. 13,037 ----------- 602,162 ----------- HEALTH CARE SECTOR 14.6% DRUGS AND HOSPITAL SUPPLIES 14.6% 8,800 US Amgen Inc. * 528,550 2,500 US Bristol-Myers Squibb Co. 160,469 3,500 US Eli Lilly & Co. 232,750 850 US Genentech Inc. * 114,325 1,200 US Guidant Corp. * 56,400 1,200 US Johnson & Johnson 111,750 1,300 US Merck & Co. Inc. 87,181 2,400 US PE Biosystems Group 288,750 8,000 US Pfizer Inc. 259,500 1,100 US Pharmacia & Upjohn Inc. 49,500 900 US Sepracor Inc. * 89,269 4,000 US Warner Lambert Co. 327,750 ----------- 2,306,194 ----------- INTEREST-SENSITIVE SECTOR 7.3% BANKING 3.6% 4,000 US Bank of New York Inc. 160,000 6,000 US Citigroup Inc. 333,375 2,000 US Wells Fargo Co. 80,875 ----------- 574,250 ----------- GENERAL FINANCE 1.2% 4,000 US Federal Home Loan Mortgage Corp. 188,250 INSURANCE 2.5% 3,700 US American International Group Inc. 400,062
The accompanying notes are an integral part of the financial statements. Page 6 Dresdner RCM Large Cap Growth Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) TECHNOLOGY SECTOR 36.9% COMPUTERS/OFFICE EQUIPMENT 5.5% 1,500 US Dell Computer Corp. * $ 76,500 4,600 US E M C Corp. * 502,550 720 US Hewlett-Packard Co. 82,035 2,000 US International Business Machines 216,000 ----------- 877,085 ----------- ELECTRONICS/NEW TECHNOLOGY 22.5% 7,500 US Cisco Systems Inc. * 803,437 2,600 US Intel Corp. 214,013 1,830 US JDS Uniphase Corp. * 295,202 2,500 US Lucent Technologies Inc. 187,031 2,000 US Motorola Inc. 294,500 3,500 FI Nokia Corp. (ADR) 665,000 1,100 CA Nortel Networks Corp. 111,100 3,460 US QUALCOMM Inc. * 609,393 1,600 FR STMicroelectronics N.V. (NY Registered Shares) 242,300 3,000 US Xilinx Inc. * 136,406 ----------- 3,558,382 ----------- TECHNOLOGY SERVICES 8.9% 2,400 US America Online Inc. * 181,050 6,400 US Microsoft Corp. * 747,200 1,100 US Yahoo Inc. * 475,956 ----------- 1,404,206 ----------- TELEMEDIA/SERVICES SECTOR 9.7% COMMUNICATION SERVICES 7.1% 4,200 US GTE Corp. 296,362 9,150 US MCI WorldCom Inc. * 485,522 1,900 US Nextel Communications Inc. * 195,938 3,000 US SBC Communications Inc. 146,250 ----------- 1,124,072 ----------- MEDIA 2.6% 3,000 US Clear Channel Communications * 267,750 2,000 US Time Warner Inc. 144,875 ----------- 412,625 ----------- TOTAL EQUITY INVESTMENTS (COST $11,167,621) 97.6% 15,444,627 -----------
The accompanying notes are an integral part of the financial statements. Page 7 Dresdner RCM Large Cap Growth Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 3.3% 262,546 US SSgA Money Market Fund $ 262,546 262,546 US SSgA U.S. Government Money Market Fund 262,546 ----------- TOTAL SHORT-TERM INVESTMENTS (COST $525,092) 3.3% 525,092 ----------- TOTAL INVESTMENTS (COST $11,692,713)** 100.9% 15,969,719 OTHER ASSETS LESS LIABILITIES (0.9)% (145,258) ----------- NET ASSETS 100.0% $15,824,461 ===========
- -------------------------------- * Non-income producing security ADR American Depository Receipt Tax Information: ** For Federal income tax purposes, cost is $11,745,741 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $4,571,554 Unrealized depreciation (347,576) --------- Net unrealized appreciation $4,223,978 =========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at December 31, 1999 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Bermuda BH 3.3% 3.3% Canada CA 0.7% 0.7% Finland FI 4.2% 4.2% France FR 1.5% 1.5% United States US 87.9% 2.4% 90.3% ------ ------ ----- Total 97.6% 2.4% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 8 Dresdner RCM Biotechnology Fund Management's Performance Review An early entry into genomics stocks just prior to their enthusiastic discovery by Wall Street drove the Dresdner RCM Global Biotechnology Fund's performance during 1999. For the year ended December 31, 1999, the Fund achieved a total return of 111.39%, nearly equal to its benchmark, the AMEX Biotechnology Index, which returned 111.44%. MARKET REVIEW During the year, the Dresdner RCM Biotechnology Fund concentrated on two themes: therapeutic biotechnology (companies that develop new drugs) and genomics (biotech companies that specialize in information behind the genetic basis of disease and physiology). Biotechnology and genomics share a common trait with the dot.com companies: unlimited and unquantifiable potential. Even though the biotechnology sector nearly doubled in the second half of 1999, an argument can be made that the stocks are still inexpensive. For instance, Amgen, which markets two drugs, has a current market value of $63 billion. In comparison, Millennium Pharmaceuticals, which is believed to have the potential to generate many more products, has a market value of approximately $5 billion. This ten-fold difference in absolute market value suggests the extent of the opportunity. As the presidential election cycle heats up, the pharmaceutical industry is serving as a target for politicians. Congress has been debating the expansion of Medicare to cover prescription drugs, and the health care industry continues to be an issue in the presidential primaries. While the large cap pharmaceutical companies are particularly vulnerable to potential action in Washington, D.C., the biotechnology and genomics companies produce niche products that would likely not be affected by legislation. FACTORS AFFECTING PERFORMANCE At the end of 1999, the Fund no longer owned large capitalization pharmaceutical companies, primarily because of the impact of the Medicare issue. The largest capitalization holdings included Amgen and Genentech, two core holdings of the Fund. Amgen's performance has historically been driven by Epogen, the company's flagship product which generates red blood cell growth. However, by mid-year, Amgen shifted from a mature company into a development stage investment story with several new drugs treating prostate cancer, rheumatoid arthritis, certain psychiatric illnesses and a kidney disorder. Dresdner RCM used its Grassroots-SM- Research division to survey a select group of kidney doctors and asked them how new guidelines from the National Kidney Foundation regarding red blood cells would affect their utilitization of Amgen's new therapy. The survey found that utilization was going to be significantly higher than Wall Street anticipated. As a result, Dresdner RCM was able to anticipate upside surprises in Amgen's financial performance. In addition, Amgen is anticipating FDA approval of an improved version of Epogen early in 2000. Another excellent performer during the year was Genentech, a company that was spun off by Roche Holdings in July. According to Dresdner RCM's valuation analyses, the stock appeared inexpensive based on the earnings potential of Herceptin (their breast cancer drug), Rituxin (for lymphoma), as well as other products for heart attack and asthma victims. A New England Journal of Medicine editorial said that Genentech's asthma drug was the first major step in 40 years that has been taken to treat the disease. We believe that Dresdner RCM has a major advantage over many other investment firms in the field of biotechnology research. The Fund's portfolio managers have advanced degrees in medicine as well as extensive financial training, which helps them to analyze new products and services from the biotechnology sectors. For instance, that background helped them understand the investment merits of QLT Phototherapeutics, which has developed treatment that helps ophthalmologists successfully treat macular degeneration, a disease affecting 2.5 million people in which retinal degradation leads to blindness. Using photodynamic therapy, which utilizes light-activated drugs, the ophthalmologist treats the disease by shining a specific frequency of light into the eye. Other noteworthy therapeutic biotechnology companies held by the portfolio during the year included IDEC Pharmaceuticals, which collaborated with Genentech to produce Rituxin, and Medimmune, which manufactures Synegis, a drug that treats a virus often contracted by premature babies. A recent study linked Page 9 Dresdner RCM Biotechnology Fund Management's Performance Review this virus in infants to the development of childhood asthma. If the study's findings become conclusive, then the use of Synegis would be vastly expanded. In the genomics area, Maxygen uses its proprietary technologies to mimic the natural process of evolution, bringing together advances in molecular biology and classical breeding. The company went public at $16 in mid-December, ending the year at $71. The Fund also has significant positions in Abgenix and Medarex, companies that produce monoclonal antibodies, which are essentially very targeted therapies against a variety of diseases. Affymetrix is recognized as a worldwide leader in the field of DNA chip technology. The company intends to establish its GeneChip system as the platform of choice for acquiring, analyzing and managing complex genetic information to improve diagnosis, monitoring and treatment of disease. OUTLOOK Among the most attractive investments, in Dresdner RCM's view, continue to be genomics companies, which it believes are likely to enjoy enormous price- earnings multiple expansion based on their potential discoveries. It is likely that the world of gene therapy will garner expanded news coverage later this year when a company may actually succeed in cloning a human gene. In biotechnology, Dresdner RCM believes these companies will likely get more attention from investors as large capitalization pharmaceutical stocks continue to sell off. The Financial Accounting Standards Board's elimination of the pooling method of accounting for mergers effective 2001 was originally feared to be a negative because of its dilution of earnings. The alternative method, purchase accounting, requires the acquirer to write off goodwill -- the excess purchase price over tangible assets -- over a period of years. Genentech has led the way in using purchase accounting to account for all of its acquisitions, causing the company to report accounting losses but positive cash flow. Using Genentech as an example, biotechnology investors seem to be more comfortable with the purchase accounting methodology, properly focusing on cash flow and a company's potential growth rather than accounting earnings. Therefore, the FASB rule change will likely have little impact on the Fund. Page 10 Dresdner RCM Biotechnology Fund Total Return Index Comparison(d) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
$10,000 INVESTMENT (12/30/97 - 12/31/99)(E) CLASS N SHARES NASDAQ BIOTECH INDEX (B) RUSSELL 2000 INDEX (C) 12/31/1997 $10,000 $10,175 $10,071 1/31/1998 $10,260 $10,140 $9,912 2/28/1998 $10,490 $10,572 $10,644 3/31/1998 $10,590 $11,363 $11,083 4/30/1998 $10,470 $11,107 $11,144 5/31/1998 $10,350 $10,719 $10,543 6/30/1998 $10,040 $10,649 $10,565 7/31/1998 $10,110 $10,971 $9,710 8/30/1998 $7,930 $8,560 $7,824 9/30/1998 $9,110 $10,692 $8,437 10/31/1998 $9,880 $11,585 $8,781 11/30/1998 $10,560 $11,987 $9,241 12/31/1998 $11,776 $14,681 $9,813 1/31/1999 $12,383 $16,183 $9,943 2/28/1999 $11,776 $15,235 $9,138 3/31/1999 $11,518 $16,728 $9,281 4/30/1999 $11,261 $15,261 $10,112 5/31/1999 $11,436 $16,436 $10,260 6/30/1999 $12,795 $17,029 $10,724 7/31/1999 $13,289 $19,230 $10,430 8/31/1999 $15,049 $21,097 $10,044 9/30/1999 $15,049 $19,789 $10,046 10/31/1999 $15,605 $20,125 $10,087 11/30/1999 $17,416 $22,730 $10,689 12/31/1999 $24,893 $29,611 $11,899 $10,000 INVESTMENT (12/30/97 - 12/31/99)(E) AMEX BIOTECH INDEX (A) 12/31/1997 $10,042 1/31/1998 $9,734 2/28/1998 $9,936 3/31/1998 $10,791 4/30/1998 $10,830 5/31/1998 $9,971 6/30/1998 $9,079 7/31/1998 $8,531 8/30/1998 $6,462 9/30/1998 $8,618 10/31/1998 $10,146 11/30/1998 $10,116 12/31/1998 $11,446 1/31/1999 $12,147 2/28/1999 $10,931 3/31/1999 $11,558 4/30/1999 $11,817 5/31/1999 $12,434 6/30/1999 $13,252 7/31/1999 $15,487 8/31/1999 $16,619 9/30/1999 $15,626 10/31/1999 $16,245 11/30/1999 $17,812 12/31/1999 $24,196
PERFORMANCE(D) DECEMBER 31, 1999
CUMULATIVE SINCE SINCE BIOTECHNOLOGY FUND 1 YEAR INCEPTION INCEPTION Class N Average Annual Total Return(e) 111.39% 57.68% 148.93% NASDAQ Biotech Index Average Annual Total Return(b) 101.67% 71.95% 196.11% Russell 2000 Index Average Annual Total Return(c) 21.26% 9.07% 18.99% AMEX Biotech Index Average Annual Total Return(a) 111.44% 55.46% 141.96%
The data above represents past performance of the Fund and may not indicate future performance. The investment return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. - -------------------------------- (a) The American Stock Exchange Biotechnology Index is an equal-dollar weighted index that attempts to measure the performance of a cross section of companies in the biotechnology industry that are primarily involved in the use of biological processes to develop products or provide services. This Index was developed with a base level of 200 stocks as of October 18, 1991. (b) The NASDAQ Biotechnology Index is a capitalization-weighted index that attempts to measure the performance of all NASDAQ stocks in the biotechnology sector. This Index was developed with a base value of 200 stocks as of November 1, 1993. (c) The Russell 2000 Index is composed of the 2,000 smallest securities in the Russell 3000 Index, which is composed of the 3,000 largest U.S. companies based on market capitalization and represents approximately 98% of the investable U.S. equity market. (d) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (e) The Class N shares began operations on December 30, 1997. Page 11 Dresdner RCM Biotechnology Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS DRUGS AND HOSPITAL SUPPLIES 80.3% 3,400 US Abgenix Inc. * $ 450,500 2,400 US Affymetrix Inc. * 407,250 15,200 US Amgen Inc. * 912,950 19,000 US BioCryst Pharmaceuticals Inc. * 560,500 2,200 US Biogen Inc. * 185,900 8,000 US Enzon Inc. * 347,000 7,300 US Genentech Inc. * 981,850 7,300 US Genzyme General Corp. * 328,500 8,000 US Guidant Corp. * 376,000 2,500 US Human Genome Sciences Inc. * 381,563 6,568 US IDEC Pharmaceuticals Corp. * 645,306 18,300 US ILEX Oncology Inc. * 441,488 8,000 US Incyte Pharmacuticals Inc. * 480,000 12,100 US Inhale Therapeutic Systems Inc. * 515,006 10,000 US Maxygen Inc. * 710,000 16,500 US Medarex Inc. * 614,625 4,000 US Millennium Pharmaceuticals Inc. * 488,000 2,500 US PE Biosystems Group 300,781 10,100 US Protein Design Labs Inc. * 707,000 12,000 CA QLT PhotoTherapeutics Inc. * 705,000 2,000 US Sepracor Inc. * 198,375 35,200 US Titan Pharmaceuticals Inc. * 668,800 15,300 US Vertex Pharmaceuticals Inc. * 535,500 ----------- 11,941,894 ----------- HEALTH CARE SERVICES 4.4% 31,200 US MedicaLogic Inc. * 655,200 ----------- TOTAL EQUITY INVESTMENTS (COST $8,671,880) 84.7% 12,597,094 ----------- SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 9.1% 674,084 US SSgA Money Market Fund 674,084 674,083 US SSgA U.S. Government Money Market Fund 674,083 ----------- TOTAL SHORT-TERM INVESTMENTS (COST $1,348,167) 9.1% 1,348,167 ----------- TOTAL INVESTMENTS (COST $10,020,047)** 93.8% 13,945,261 OTHER ASSETS LESS LIABILITIES 6.2% 924,836 ----------- NET ASSETS 100.0% $14,870,097 ===========
- -------------------------------- * Non-income producing security The accompanying notes are an integral part of the financial statements. Page 12 Dresdner RCM Biotechnology Fund Portfolio of Investments December 31, 1999 Tax Information: ** For Federal income tax purposes, cost is $10,085,799 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $3,966,009 Unrealized depreciation (106,547) ---------- Net unrealized appreciation $3,859,462 ==========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at December 31, 1999 categorized by country:
% OF NET ASSETS ------------------------------ COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ----------------------------------------------------------------------- Canada CA 4.7% 4.7% United States US 80.0% 15.3% 95.3% ------ ------- ----- Total 84.7% 15.3% 100.0% ====== ======= =====
The accompanying notes are an integral part of the financial statements. Page 13 Dresdner RCM Tax Managed Growth Fund Management's Performance Review A continuing focus on telecommunications, the Internet and biotechnology propelled the Dresdner RCM Tax Managed Growth Fund to return more than double the performance of its benchmark. For the year ended December 31, 1999, the Fund posted total returns of 52.44% and 52.04% for Class I and Class N shares, respectively. In comparison, the S&P 500 Index returned 21.04%. These results reflect pre-tax data, and do not take into account the relative tax efficiencies of the Fund. MARKET REVIEW The stock market came on strong during the fourth quarter of 1999, generating most of the gains for the year and making 1999 the fifth straight year in which the S&P 500 Index rose by more than 20%. Strong advances in corporate profits and benign inflation news continued to send stocks higher, despite rising interest rates. Improving economic performance in Europe and Japan was a welcome sign to American exporters, and actually caused many international stock markets to outperform the S&P 500 Index. The dominance of large cap over smaller cap stocks diminished during most of 1999, as investors began to appreciate the valuation advantages offered by smaller companies. Instead of a focus on market capitalization, the market was completely dominated by gains in technology and telecommunications, making the recent advance increasingly narrow. Interest-sensitive areas such as finance had a difficult time performing. Even energy, with oil prices more than doubling, produced modest returns. Pharmaceutical stocks were weighted down by presidential politics, and international consumer products companies continued to struggle, offering the Fund's management team the opportunity to harvest tax losses. FACTORS AFFECTING PERFORMANCE Since the fourth quarter of 1999 was extremely strong for technology, the Fund benefited greatly from summer purchases of QUALCOMM, which rose 272% during the quarter, JDS Uniphase, which was up 183%, and Yahoo!, which rose 141%. QUALCOMM's technology for wireless communications has become the global standard, while JDS Uniphase is benefiting from its role as a leading supplier to companies building Internet infrastructure. Yahoo! has outperformed Wall Street analyst expectations for growth in revenues and earnings. Dresdner RCM used its Grassroots-SM- Research division to confirm Winstar Communications, which provides wireless data and voice transmission, as an excellent investment opportunity, and to gauge its preparedness for Y2K. The stock rose 93% in the fourth quarter. In the health care sector, biotechnology companies such as Amgen, Genentech and Inhale Technologies performed very well. In contrast, the large pharmaceutical companies continued to struggle as Congress debated the expansion of Medicare to cover prescription drugs. Biotechnology companies are considered less vulnerable to potential legislation partly because they tend to focus on niche markets unlikely to be affected by price controls. For example, Inhale Technologies has patented a device allowing diabetics -- who comprise all ages, not just Medicare recipients -- to inhale rather than inject insulin. Dresdner RCM believes that consumer non-durables companies such as Coca-Cola and Nike are likely to benefit from the improving global economic picture. However, their stock prices have not yet responded. Coca-Cola was trimmed during the fourth quarter, helping the Fund realize a tax loss. The stock was repurchased 55 days later after the company reported improved performance and announced a management shakeup. The Fund's positions in Nike and Tyco International were also trimmed in the fourth quarter, primarily to realize tax losses. Because income tax ramifications of any trade are a major consideration for this Fund, Dresdner RCM routinely performs a "break-even" analysis to determine whether a stock with large gains should be sold if it means incurring a heavy tax burden. Although a company's investment merits outweigh tax considerations, the portfolio may continue to hold shares if Dresdner RCM remains confident in the company's strategy over the long term. In addition, stocks selling below cost may be trimmed to generate tax losses in one year and then be repurchased 31 days later to avoid IRS wash-sale rules. As a result of these strategies, the portfolio is relatively concentrated, with investments in 46 companies as of December 31, 1999. Page 14 Dresdner RCM Tax Managed Growth Fund Management's Performance Review OUTLOOK Dresdner RCM's management team expects to continue to give particular focus to companies that are building Internet infrastructure, and thus expanding the ability of businesses and individuals to use the Internet efficiently. A new holding, NTT DoCoMo, summarizes four prevailing themes in the portfolio: the search globally for quality growth companies, the Japanese recovery, wireless communications and wireless access to the Internet. The Fund also expects to continue its emphasis on health care companies, since they are prolifically developing products that have a ready market with America's aging population. Although congressional debate over the expansion of Medicare is likely to be spirited during this election season, it could also create an opportunity to buy pharmaceutical stocks at bargain prices. The U.S. economy continues to exceed expectations, driven by consumer confidence and the wealth effect created by the record-setting stock market. As a result, the Federal Reserve Board is likely to raise short-term interest rates to keep inflation at bay. So far, continued growth in corporate profits has enabled the market to withstand rising interest rates, a trend Dresdner RCM believes cannot continue indefinitely. Meanwhile, Asia and other global economies continue to recover, which is a positive development for holdings with significant international operations. Page 15 Dresdner RCM Tax Managed Growth Fund Total Return Index Comparison(b) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
$10,000 INVESTMENT (12/31/98 - 12/31/99)(C)(D)(E) CLASS I SHARES S&P 500 STOCK INDEX (A) 12/31/1998 $10,000 $10,000 1/31/1999 $10,790 $10,418 2/28/1999 $10,510 $10,094 3/31/1999 $11,610 $10,498 4/30/1999 $11,500 $10,904 5/31/1999 $11,130 $10,647 6/30/1999 $12,130 $11,238 7/31/1999 $11,780 $10,887 8/31/1999 $11,860 $10,833 9/30/1999 $11,550 $10,536 10/31/1999 $12,240 $11,203 11/30/1999 $13,070 $11,430 12/31/1999 $15,244 $12,104
PERFORMANCE(b) DECEMBER 31, 1999
CUMULATIVE SINCE SINCE TAX MANAGED GROWTH FUND 1 YEAR INCEPTION INCEPTION Class I Average Annual Total Return(c) 52.44% 52.44% 52.44% Class N Average Annual Total Return(d) 52.04% 52.04% 52.04% S&P 500 Stock Index Average Annual Total Return(a) 21.04% 21.04% 21.04%
The data above represents past performance of the Fund and may not indicate future performance. The investment return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. - -------------------------------- (a) The Standard & Poor's 500 Stock Index is a capitalization-weighted index of 500 stocks that attempts to measure performance of the board domestic economy through changes in the aggregate market value of 500 stocks representing major industries. (b) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (c) The Class I shares commenced operations on December 31, 1998. (d) The Class N shares commenced operations on February 12, 1999. Prior to February 12, 1999, figures reflect Class I performance. (e) The value of a $10,000 investment for Class N is $15,204 for the period from 12/31/98 - 12/31/99. The performance of the Class N shares is lower than Class I shares due to the effects of 12b-1 fees. Page 16 Dresdner RCM Tax Managed Growth Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS CONSUMER NON-DURABLES SECTOR 15.7% BEVERAGE/TOBACCO 1.3% 500 US Coca Cola Co. $ 29,125 HOUSEHOLD/RELATED NON-DURABLES 4.3% 1,150 US Estee Lauder Cos. Inc. (Class A) 58,003 1,000 US Scotts Co. (Class A) * 40,250 ---------- 98,253 ---------- LEISURE TIME PRODUCTS/SERVICES 3.9% 500 US Harley Davidson Inc. 32,031 1,400 US McDonalds Corp. 56,438 ---------- 88,469 ---------- RETAIL TRADE 6.2% 550 US Costco Cos. Inc. * 50,187 500 US Kohl's Corp. * 36,094 250 US Nike Inc. (Class B) 12,391 1,400 US Walgreen Co. 40,950 ---------- 139,622 ---------- CYCLICAL/CAPITAL GOODS SECTOR 7.1% ELECTRICAL EQUIPMENT 4.0% 575 US General Electric Co. 88,981 INDUSTRIAL EQUIPMENT 1.9% 1,100 BH Tyco International Ltd. 42,763 TRANSPORTATION SERVICES 1.2% 400 US United Parcel Service Inc. (Class B) 27,600 ENERGY SECTOR 3.1% ENERGY 3.1% 600 US Enron Corp. 26,625 1,100 US Weatherford International Inc. 43,931 ---------- 70,556 ---------- HEALTH CARE SECTOR 16.1% DRUGS AND HOSPITAL SUPPLIES 14.7% 1,400 US Amgen Inc. * 84,087 700 US Bristol-Myers Squibb Co. 44,931 700 US Eli Lilly & Co. 46,550 150 US Genentech Inc. * 20,175 250 US Guidant Corp. * 11,750 350 US Inhale Therapeutic Systems Inc. * 14,897 300 US Johnson & Johnson 27,938 600 US Pfizer Inc. 19,463 750 US Warner Lambert Co. 61,453 ---------- 331,244 ----------
The accompanying notes are an integral part of the financial statements. Page 17 Dresdner RCM Tax Managed Growth Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) HEALTH CARE SERVICES 1.4% 400 US CareInsite Inc. * $ 32,200 INTEREST-SENSITIVE SECTOR 3.7% GENERAL FINANCE 0.7% 450 US Charles Schwab Corp. 17,269 INSURANCE 3.0% 400 US American International Group Inc. 43,250 250 US Marsh & McLennan Cos. Inc. 23,922 ---------- 67,172 ---------- TECHNOLOGY SECTOR 32.2% COMPUTERS/OFFICE EQUIPMENT 3.0% 600 US Hewlett-Packard Co. 68,362 ELECTRONICS/NEW TECHNOLOGY 19.0% 1,050 US Cisco Systems Inc. * 112,481 550 US Intel Corp. 45,272 300 US JDS Uniphase Corp. * 48,394 800 FI Nokia Corp. (ADR) 152,000 400 US QUALCOMM Inc. * 70,450 ---------- 428,597 ---------- TECHNOLOGY SERVICES 10.2% 900 US Microsoft Corp. * 105,075 250 US Oracle Corp. * 28,016 150 US VERITAS Software Corp. * 21,469 175 US Yahoo Inc. * 75,720 ---------- 230,280 ---------- TELEMEDIA/SERVICES SECTOR 18.9% BUSINESS SERVICES 2.8% 1,400 US Pittway Corp. (Class A) 62,737 COMMUNICATION SERVICES 12.2% 600 US Global TeleSystems Group Inc. * 20,775 1,425 US MCI WorldCom Inc. * 75,614 300 DE NTT Mobile Communications Network Inc. (ADR) 59,700 1,000 US Qwest Communications International Inc. * 43,000 1,000 UK Vodafone AirTouch PLC (ADR) 49,500 350 US WinStar Communications Inc. * 26,338 ---------- 274,927 ----------
The accompanying notes are an integral part of the financial statements. Page 18 Dresdner RCM Tax Managed Growth Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) MEDIA 3.9% 500 US Clear Channel Communications * $ 44,625 600 US Time Warner Inc. 43,462 ---------- 88,087 ---------- TOTAL EQUITY INVESTMENTS (COST $1,571,052) 96.8% 2,186,244 ---------- SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 1.0% 11,074 US SSgA Money Market Fund 11,074 11,075 US SSgA U.S. Government Money Market Fund 11,075 ---------- TOTAL SHORT-TERM INVESTMENTS (COST $22,149) 1.0% 22,149 ---------- TOTAL INVESTMENTS (COST $1,593,201)** 97.8% 2,208,393 OTHER ASSETS LESS LIABILITIES 2.2% 49,949 ---------- NET ASSETS 100.0% $2,258,342 ==========
- -------------------------------- * Non-income producing security ADR American Depository Receipt Tax Information: ** For Federal income tax purposes, cost is $1,597,644 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $635,428 Unrealized depreciation (24,679) -------- Net unrealized appreciation $610,749 ========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at December 31, 1999 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Bermuda BH 1.9% 1.9% Finland FI 6.7% 6.7% Germany DE 2.7% 2.7% United Kingdom UK 2.2% 2.2% United States US 83.3% 3.2% 86.5% ------ ------ ----- Total 96.8% 3.2% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 19 Dresdner RCM Global Small Cap Fund Management's Performance Review A focus on bottom-up research and the foresight to invest early in Japanese technology companies helped boost the Dresdner RCM Global Small Cap Fund to triple-digit returns in 1999. For the year ended December 31, 1999, the Fund achieved total returns of 104.63% and 104.06% for the Class I and Class N shares, respectively. In comparison, the Fund's benchmark, the Salomon Smith Barney Extended Market Index, produced a modest return of 17.27%. For the two and three year annualized periods, the Fund's performance ranked it first among its peer group of 39 and 31 global small-cap funds, respectively as reported by Lipper Analytical Inc. MARKET REVIEW In 1999, small-cap stocks began to perform better throughout the world, although at different times and to varying degrees. The small cap market in Japan bottomed in late 1998, and sustained the strongest performance, with the JASDAQ Index up more than 200% in 1999. The U.S. small cap sector, which had been in a bear market during 1998, began to perform better in the second quarter of 1999, as investors finally took note of the valuation disparity between small-cap and large-cap stocks. In Europe, the formation of Euroland in 1999 has favored large-cap stocks as investors placed a priority on liquidity, although European small-cap stocks began to show some life at the end of the year as the currency stabilized. FACTORS AFFECTING PERFORMANCE Two primary factors helped the Fund remain the number one Lipper fund in its category for the third year in a row. First, Dresdner RCM has embraced technology regardless of market cap size or geographical location, recognizing the power of the Internet as a long-term global phenomenon, not just a speculative bubble. Exciting technology companies dot the global landscape, including BackWeb Technologies, an Israeli company that has developed a method to enhance the breadth and quality of e-mail; Allaire Corp., a U.S. concern that helps clients adapt their information systems to the Internet; and Baltimore Technologies, a U.K.-based company that specializes in Internet security. Dresdner RCM's Grassroots-SM- Research division confirmed the superiority of Baltimore Technologies' products as well as the fact that companies need systems that allow them to protect their data as well as to secure Internet transactions. At year-end 1999, about half of the Dresdner RCM Global Small Cap Fund portfolio was invested in the technology sector around the world, about three times the benchmark weighting. Another reason for the Fund's strong performance is that Dresdner RCM was early in recognizing the small cap rally in Japan. In many cases, these stocks appreciated as much as 500% during 1999. A positive factor of the Fund, was management's willingness to allow very successful companies whose shares are in high demand, to remain in the portfolio during the powerful rally, even though they no longer fit market capitalization constraints. To be sure, there were non-tech success stories in the portfolio as well. Those include Charles Voegele Holding AG, a Swiss retailer, ELMOS Semiconductor AG, a supplier to the automobile industry, Inhale Therapeutics, a U.S. biotechnology company that has developed new ways to deliver drug therapies, Danubius Hotel and Spa Resort, one of Hungary's leading hotel chains, and Giordano International, a Hong Kong-based clothing retailer that has seen profits soar as the Asian economies recovered. Although the companies in the Fund are scattered throughout the world, Dresdner RCM believes that it is critical to meet with management before making an investment. In Denmark, H Lundbeck A/S, which specializes in manufacturing anti-depressants including top-selling Cipramil, was perceived as risky by some investors because it lacked a diversified portfolio of products. However, an in-person meeting confirmed that the company remains tightly focused from a marketing and R&D standpoint on its core competency, namely drugs that alleviate mental illness. Often, Dresdner RCM invests in companies that are discovered as a result of the firm's analytical work in another market capitalization segment. The firm's analysts are organized by sector, and they are encouraged to find opportunities anywhere in the world within their sector, regardess of market capitalization. For instance, the investment in Elcoteq Network, a subcontractor to Nokia that manufactures millions of phones each year for the giant Page 20 Dresdner RCM Global Small Cap Fund Management's Performance Review wireless communications company, arose from such research, and highlights the advantages inherent in a firm with global resources such as Dresdner RCM. OUTLOOK Dresdner RCM remains positive on global small-cap stocks, particularly in Japan where small companies are helping to lead that country out of a decade- long recession. In the U.S., small cap companies could be the primary engine of growth in an economy that may be slowed by the Federal Reserve Board. In Europe, weakness in the currency appears to have ended, but small caps are still challenged by the desire of fund managers to own large blue chip names. Finally, the Y2K cloud over emerging markets may have been replaced by investor concerns over rising interest rates. Regardless of the macroeconomic environment, Dresdner RCM will continue to invest in high-quality small cap growth stocks using bottom-up analysis, a formula that has produced consistent results. Page 21 Dresdner RCM Global Small Cap Fund Total Return Index Comparison(c) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
$10,000 INVESTMENT (12/31/96 - 12/31/99)(D)(E)(F) SALOMON EMI (A) MSCI WORLD SMALL CAP (B) CLASS I SHARES 12/31/96 10,000 10,000 10,000 1/31/97 10,290 10,021 10,061 2/28/97 10,010 10,005 10,043 3/31/97 9,410 9,665 9,608 4/30/97 9,320 9,620 9,402 5/31/97 10,730 10,370 10,309 6/30/97 11,750 10,689 10,627 7/31/97 12,280 10,978 10,768 8/31/97 12,320 10,846 10,491 9/30/97 13,260 11,313 10,757 10/31/97 12,440 10,838 10,193 11/30/97 12,410 10,645 9,723 12/31/97 12,548 10,647 9,431 1/31/98 12,446 10,711 9,613 2/28/98 13,827 11,501 10,449 3/31/98 15,071 11,980 10,739 4/30/98 15,705 12,039 10,810 5/31/98 15,388 11,799 10,536 6/30/98 15,784 11,645 10,270 7/31/98 15,524 11,152 9,784 8/31/98 12,197 9,366 8,160 9/30/98 12,096 9,589 8,143 10/31/98 12,707 10,162 8,717 11/30/98 14,144 10,599 9,183 12/31/98 14,968 11,084 9,376 1/31/99 15,101 11,023 9,383 2/28/99 14,049 10,528 8,960 3/31/99 14,375 10,756 9,284 4/30/99 15,065 11,461 9,990 5/31/99 15,065 11,393 9,869 6/30/99 17,134 11,854 10,413 7/31/99 17,461 11,868 10,664 8/31/99 18,018 11,724 10,704 9/30/99 18,586 11,553 10,673 10/31/99 19,736 11,692 10,538 11/30/99 25,471 12,212 10,986 12/31/99 30,630 13,001 11,753
PERFORMANCE(c) DECEMBER 31, 1999
CUMULATIVE SINCE SINCE GLOBAL SMALL CAP FUND 1 YEAR 3 YEARS INCEPTION INCEPTION Class I Average Annual Total Return(d) 104.63% 45.23% 45.23% 206.30% Class N Average Annual Total Return(e) 104.06% 45.09% 45.09% 205.45% Salomon EMI Average Annual Total Return(a) 17.27% 9.14% 9.14% 30.01% MSCI World Small Cap Average Annual Total Return(b) 25.38% 5.53% 5.53% 17.53%
The data above represents past performance of the Fund and may not indicate future performance. The investment return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. - -------------------------------- (a) The Salomon Brothers Extended Market Index ("EMI") is a component of the Salomon Brothers Broad Market Index ("BMI") which includes listed shares of 5,409 companies with total available market capitalizations of at least the local equivalent of US$100 million on the last business day of May each year. The BMI consists of two components: the Primary Market Index ("PMI") is the large capitalization stock component and the EMI is the small capitalization stock component. The PMI universe is defined as those stocks falling within the top 80% of the cumulative available capital level in each country. The EMI includes the bottom 20% of the cumulative available capital level in each country. (b) The Morgan Stanley Capital International ("MSCI") World Global Small Cap Index is a market capitalization weighted index composed of companies representative of the market structure of 22 developed market countries in North America, Europe, and the Asia/Pacific region. The Index is created by selecting companies within the market capitalization range of US$200 - $800 million. The Index aims to represent 40% of the Small Cap universe within each country by capturing 40% of each industry. The Index is calculated without dividends, with net or with gross dividends reinvested, in both U.S. Dollars and local currencies. (c) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (d) Returns through December 31, 1998 reflect Rule 12b-1 fees. On that date, all Fund shares were redesignated as Class I shares, which do not pay Rule 12b-1 fees. Performance results for periods after December 31, 1998 will not reflect Rule 12b-1 fees. (e) Class N shares were first issued on March 10, 1999, and pay Rule 12b-1 fees. Class N returns through December 31, 1998 are based on Class I returns and reflect Rule 12b-1 fees. (f) The value of a $10,000 investment for Class N is $30,545 for the period from 12/31/96 - 12/31/99. The performance of the Class N shares is lower than Class I shares due to the effects of 12b-1 fees. Page 22 Dresdner RCM Global Small Cap Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS CONSUMER DURABLES SECTOR 0.6% AUTOMOTIVE RELATED 0.6% 40,800 IT Magneti Marelli * $ 155,768 CONSUMER NON-DURABLES SECTOR 7.8% BEVERAGE/TOBACCO 0.5% 6,200 FR Remy Cointreau S.A. * 139,401 FOOD/FOOD PROCESSING 2.3% 6,240 JP Hokuto Corp. 335,103 4,000 JP Q'sai Co. Ltd. 250,416 ------------ 585,519 ------------ LEISURE TIME PRODUCTS/SERVICES 0.6% 7,700 HG Danubius Hotel and Spa Rt. * 140,080 RETAIL TRADE 4.4% 1,400 CH Charles Voegele Holding AG * 251,476 150,000 HK Giordano International Ltd. 154,371 6,000 JP Homac Corp. 167,270 6,500 US InterTAN Inc. * 169,812 19,300 US Trans World Entertainment Corp. * 202,650 4,600 US Tweeter Home Entertainment Group Inc. * 163,300 ------------ 1,108,879 ------------ CYCLICAL/CAPITAL GOODS SECTOR 5.5% CHEMICALS/TEXTILES 1.9% 4,000 JP Taiyo Ink Manufacturing Co. Ltd. 469,529 INDUSTRIAL EQUIPMENT 2.6% 7,200 DE Steag Hamatech AG * 261,105 8,800 NO Tomra Systems ASA 149,460 1,460 DK Vesta Wind Systems A/S * 259,025 ------------ 669,590 ------------ RAW/BASIC MATERIALS 1.0% 11,900 SE Granges AB 248,500 ENERGY SECTOR 2.2% ENERGY 2.2% 10,200 US BJ Services Co. * 426,487 8,900 US National-Oilwell Inc. * 139,619 ------------ 566,106 ------------
The accompanying notes are an integral part of the financial statements. Page 23 Dresdner RCM Global Small Cap Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) HEALTH CARE SECTOR 6.5% DRUGS AND HOSPITAL SUPPLIES 4.5% 7,800 DK H Lundbeck A/S $ 311,626 6,000 US Inhale Therapeutic Systems Inc. * 255,375 2,400 US Invitrogen Corp. * 144,000 3,000 JP Japan Medical Dynamic Marketing Inc. 140,859 4,200 UK Shire Pharmaceuticals Group PLC (ADR) * 122,325 9,700 US Titan Pharmaceuticals Inc. * 184,300 ------------ 1,158,485 ------------ HEALTH CARE SERVICES 2.0% 4,800 US eBenX Inc. * 217,200 13,600 US MedicaLogic Inc. * 285,600 ------------ 502,800 ------------ INTEREST-SENSITIVE SECTOR 2.5% GENERAL FINANCE 1.5% 14,000 JP Japan Asia Investment Co. Ltd. 230,070 5,000 JP Mycal Card Inc. 158,955 ------------ 389,025 ------------ INSURANCE 1.0% 9,900 US InsWeb Corp. * 253,069 TECHNOLOGY SECTOR 52.8% COMPUTERS/OFFICE EQUIPMENT 3.7% 2,700 US DSP Group Inc. * 251,100 6,000 US Pinnacle Systems Inc. * 244,125 4,000 JP Yamada Denki Co. Ltd. 434,315 ------------ 929,540 ------------ ELECTRONICS/NEW TECHNOLOGY 16.1% 11,200 US Advanced Energy Industries Inc. * 551,600 1,400 DE Aixtron AG 197,158 3,600 US Carrier Access Corp. * 242,325 20,500 US Cypress Semiconductor Corp. * 663,688 14,700 US Digital Microwave Corp. * 344,531 8,200 FI Elcoteq Network (Class A) 125,556 6,700 DE ELMOS Semiconductor AG (144A) * 276,719 4,100 UK Filtronic PLC 139,026 5,500 US GlobeSpan Inc. * 358,188 20,200 FI JOT Automation Group Oyj 188,223 6,000 JP Moritex Corp. 293,456 12,400 FI Perlos Oyj * 437,190 1,800 JP Tokyo Seimitsu Co. Ltd. 290,521 ------------ 4,108,181 ------------
The accompanying notes are an integral part of the financial statements. Page 24 Dresdner RCM Global Small Cap Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) TECHNOLOGY SERVICES 33.0% 7,500 US Actuate Corp. * $ 321,562 4,800 US Allaire Corp. * 702,300 4,200 JP ARGOTECHNOS 21 Corp. 266,223 3,300 US Art Technology Group Inc. * 422,812 4,510 JP Aucnet Inc. 270,432 7,200 UK Autonomy Corp. PLC * 349,200 6,000 IS BackWeb Technologies Ltd. * 252,750 3,100 UK Baltimore Technologies PLC (ADR) * 272,800 3,600 US BindView Development Corp. * 178,875 15,900 CA Chapters Online Inc. (144A) * 219,980 1,280 CH Distefora Holding AG * 311,117 6,600 US Exchange Applications Inc. * 368,775 1,650 CH Fantastic Corp. (144A) * 312,480 2,400 SE Framtidsfabriken AB 434,824 2,400 DE Freenet.de AG * 265,457 6,900 SE Icon Medialab International AB * 240,282 800 IN Infosys Technologies Ltd. (ADR) 264,000 1,900 JP Internet Initiative Japan Inc. (ADR) * 184,656 4,200 US Mission Critical Software Inc. * 294,000 1,900 JP Nippon System Development 276,925 2,200 SG Pacific Internet Ltd. * 103,263 4,100 UK Psion PLC 172,127 15,900 UK Sports Internet Group PLC * 177,149 1,700 JP Trans Cosmos Inc. 725,032 2,500 JP Trend Micro Inc. 630,930 7,100 US TSI International Software Ltd. * 402,037 ------------ 8,419,988 ------------ TELEMEDIA/SERVICES SECTOR 17.9% BUSINESS SERVICES 5.4% 800 FR Altran Technologies S.A. 483,528 1,200 DE I-D Media AG * 74,342 14,400 SE Mandator AB 215,153 14,000 US Telescan Inc. * 345,625 24,800 NL Vedior N.V. 254,819 ------------ 1,373,467 ------------ COMMUNICATION SERVICES 8.7% 22,700 US Allied Riser Communications Corp. * 469,606 1,800 US High Speed Access Corp. * 31,725 14,200 US Intermedia Communications of Florida Inc. * 551,137 14,500 IS Partner Communications Co. Ltd. (ADR) * 375,188 4,600 US SoftNet Systems Inc. * 115,575 8,300 NL Versatel Telecom International N.V. * 292,635 9,500 US Z-Tel Technologies Inc. * 383,563 ------------ 2,219,429 ------------
The accompanying notes are an integral part of the financial statements. Page 25 Dresdner RCM Global Small Cap Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) MEDIA 3.8% 1,800 DE EM.TV & Merchandising AG $ 116,047 4,600 US Entercom Communications Corp. * 303,600 10,400 UK NDS Group PLC (ADR) * 317,200 17,100 US Tickets.com Inc. * 244,744 ------------ 981,591 ------------ TOTAL EQUITY INVESTMENTS (COST $18,044,379) 95.8% 24,418,947 ------------ SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 3.5% 448,503 US SSgA Money Market Fund 448,503 448,503 US SSgA U.S. Government Money Market Fund 448,503 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $897,006) 3.5% 897,006 ------------ TOTAL INVESTMENTS (COST $18,941,385)** 99.3% 25,315,953 OTHER ASSETS LESS LIABILITIES 0.7% 187,273 ------------ NET ASSETS 100.0% $ 25,503,226 ============
- -------------------------------- * Non-income producing security ADR American Depository Receipt 144A Security is purchased pursuant to Rule 144A of the Securities Act of 1933 and may be resold only to qualified institutional buyers. The accompanying notes are an integral part of the financial statements. Page 26 Dresdner RCM Global Small Cap Fund Portfolio of Investments December 31, 1999 Tax Information: ** For Federal income tax purposes, cost is $19,053,757 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $6,535,092 Unrealized depreciation (272,896) ---------- Net unrealized appreciation $6,262,196 ==========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at December 31, 1999 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Canada CA 0.9% 0.9% Denmark DK 2.2% 2.2% Finland FI 2.9% 2.9% France FR 2.4% 2.4% Germany DE 4.7% 4.7% Hong Kong HK 0.6% 0.6% Hungary HG 0.6% 0.6% India IN 1.0% 1.0% Israel IS 2.5% 2.5% Italy IT 0.6% 0.6% Japan JP 20.1% 20.1% Netherlands NL 2.2% 2.2% Norway NO 0.6% 0.6% Singapore SG 0.4% 0.4% Sweden SE 4.5% 4.5% Switzerland CH 3.4% 3.4% United Kingdom UK 6.1% 6.1% United States US 40.1% 4.2% 44.3% ------ ------ ----- Total 95.8% 4.2% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 27 Dresdner RCM Global Technology Fund Management's Performance Review An explosive fourth quarter capped a stunning year for technology-related stocks throughout the world, leaving virtually all other industries and sectors far behind. For the year ended December 31, 1999, the Dresdner RCM Global Technology Fund achieved total returns of 182.95% and 182.58% for the Class I and Class N shares, respectively. By comparison, the Lipper Science & Technology Index, the Fund's benchmark, returned 113.90% while the broad-based S&P 500 Index rose 21.04%. MARKET REVIEW In the past three decades, Dresdner RCM has witnessed a variety of different market environments for technology, including many years when technology was out of favor. However, the Fund's portfolio managers viewed the 1999 market environment for technology as one of the brightest. Dresdner RCM believes this is because the Internet has proven to be the most profound change in the economy since the industrial revolution. The demand for wireless communications around the world continues to soar, particularly as global economies improve, while the capacity for semiconductors to compress data into smaller and smaller microchips has increased 100-fold in recent years. This confluence of Internet, communications and microchip power increasingly occurred in 1999. To reach the Internet's vast potential requires unprecedented connectivity bandwidth, which has not kept up with demand. Companies that can provide this bandwidth, through technologies such as fiber-optical networking, have enormous profit potential. A tremendous amount of equipment will be needed to handle that additional traffic, as well as semiconductor chips and storage capability, not to mention software for Web design or security for e-commerce transactions. The companies that can satisfy these demands will do well. Companies in more traditional industries such as advertising, broadcasting and financial services have also directly benefited from the tremendous growth in this new environment. To be sure, unprecedented opportunity has been met with unprecedented valuations. Stocks that sell at price-earnings ratios above 100 no longer raise many eyebrows. At the same time, baby boom investors see retirement over the horizon, and many believe that investing in technology is a way to achieve their financial goals. This demand is helping to drive up valuations, despite 1999's rising interest rate environment -- typically a negative for non-dividend paying long-duration assets such as technology stocks. FACTORS AFFECTING PERFORMANCE A number of holdings in the portfolio experienced fantastic appreciation during 1999. JDS Uniphase, the largest optical networking component company in the world, has developed laser technology and packaging that plays an important role in the telecommunications industry's ability to increase the capacity of traffic carried over fiber-optic networks. QUALCOMM, the leader in digital wireless technology, soared on acknowledgement of its market leadership. Strong subscriber growth, higher-than-expected chip sales, higher than expected royalties, and divestiture of its handset business all contributed to the stock's appreciation. Additionally, as investors recognized wireless as an eventual platform for Internet access, QUALCOMM'S Code Division Multiple Access (CDMA) technology was recognized as the leader in that market. The Fund's international exposure peaked in the third quarter and declined as the year drew to a close, primarily due to a decision to sell a number of holdings in Japan where it was believed that valuations had become overextended. However, technology continues to be the primary driver in the restructuring of the Japanese economy. Indeed, technology exposure outside the U.S. will continue to be a significant theme of the Fund. Both these points are illustrated by Yahoo! Japan, one of the first Internet portals in Japan, which is catching the Internet wave in that country in its infancy. The company continues to be an exciting story in terms of management's ability to learn from the U.S. experience with Internet commerce, retailing and advertising. Overall Dresdner RCM was able to successfully navigate the ups and downs of the domestic Internet sector during the year by being positioned in high growth companies. Examples of these types of companies are Exodus Communications, an Internet-hosting provider; Page 28 Dresdner RCM Global Technology Fund Management's Performance Review and Freeserve, a U.K.-based portal company that provides free Internet access and a variety of U.K.-focused content. Within the computer memory storage management group, companies such as EMC, Network Appliance and VERITAS Software performed very well, all beneficiaries of the explosion in data traffic and the reduction in disk drive prices. Considering the Fund's performance in 1999, there were some disappointments. In a few instances, the Fund sold stocks too soon due to valuation concerns, only to watch them continue to appreciate. Another example of a disappointment in the portfolio was Tyco International, which underperformed as a result of questions surrounding the company's method of accounting for acquisitions. Yet, the company generates tremendous cash flow from strong business lines, and demonstrates solid fundamentals. OUTLOOK While technology stocks continue to offer significant growth potential, they are trading at unprecedented valuations, a concern the Fund's portfolio managers struggle with every day. Fundamentals, rather than fear or exuberance, will continue to drive Dresdner RCM's investment decisions. In the search to uncover leading companies with great franchises positioned anywhere in the world, management will continue to stress the successful themes identified in the second half of 1999, including optical networking, storage management, wireless communications and Internet infrastructure. Page 29 Dresdner RCM Global Technology Fund Total Return Index Comparison(c) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
$10,000 INVESTMENT (12/27/95-12/31/99) (D)(E)(F) CLASS I SHARES S&P 500 LIPPER SCIENCE STOCK INDEX(A) & TECHNOLOGY FUND INDEX(B) 12/95 $10,000 $10,000 $10,000 12/95 $10,040 $9,952 $10,023 1/96 $10,370 $9,897 $10,364 2/96 $10,660 $10,314 $10,460 3/96 $10,620 $9,857 $10,561 4/96 $11,580 $10,840 $10,717 5/96 $11,930 $11,098 $10,993 6/96 $11,380 $10,332 $11,035 7/96 $10,270 $9,565 $10,547 8/96 $10,770 $10,055 $10,770 9/96 $11,870 $10,987 $11,376 10/96 $11,700 $10,822 $11,690 11/96 $12,770 $11,837 $12,573 12/96 $12,692 $11,626 $12,324 1/97 $13,689 $12,542 $13,095 2/97 $12,359 $11,408 $13,197 3/97 $11,564 $10,549 $12,654 4/97 $11,715 $11,007 $13,410 5/97 $13,447 $12,317 $14,226 6/97 $13,860 $12,432 $14,864 7/97 $15,694 $14,157 $16,047 8/97 $15,764 $14,245 $15,148 9/97 $17,094 $14,849 $15,978 10/97 $15,986 $13,279 $15,445 11/97 $15,754 $13,166 $16,160 12/97 $16,129 $12,537 $12,578 1/98 $15,976 $12,759 $12,801 2/98 $17,837 $14,277 $14,324 3/98 $18,838 $14,394 $14,442 4/98 $20,452 $15,012 $15,061 5/98 $19,227 $13,911 $13,957 6/98 $21,065 $14,727 $14,775 7/98 $20,441 $14,588 $14,636 8/98 $17,095 $11,850 $11,889 9/98 $17,790 $13,248 $13,292 10/98 $19,463 $14,259 $14,306 11/98 $22,055 $15,858 $15,910 12/98 $25,891 $18,423 $18,484 1/99 $29,859 $22,018 $20,877 2/99 $26,956 $21,333 $18,698 3/99 $30,210 $22,186 $20,603 4/99 $31,807 $23,045 $20,861 5/99 $30,634 $22,501 $20,831 6/99 $34,166 $23,750 $23,538 7/99 $34,765 $23,009 $23,530 8/99 $37,103 $22,894 $24,825 9/99 $40,043 $22,267 $25,162 10/99 $46,141 $23,676 $27,812 11/99 $56,565 $24,157 $31,936 12/99 $73,499 $25,580 $39,537
PERFORMANCE(c) DECEMBER 31, 1999
CUMULATIVE SINCE SINCE GLOBAL TECHNOLOGY FUND 1 YEAR 3 YEARS INCEPTION INCEPTION Class I Average Annual Total Return(d) 182.95% 79.58% 64.43% 634.99% Class N Average Annual Total Return(e) 182.58% 79.50% 64.38% 634.06% Lipper Science & Technology Fund Index Average Annual Total Return(b) 113.90% 50.22% 40.88% 295.37% S&P 500 Stock Index Average Annual Total Return(a) 21.04% 27.56% 26.39% 155.80%
The data above represents past performance of the Fund and may not indicate future performance. The investment return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. - -------------------------------- (a) The Standard & Poor's 500 Stock Index is a capitalization-weighted index of 500 stocks that attempts to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing major industries. (b) The Lipper Science & Technology Fund Index is an equally weighted index of the 10 largest U.S. science and technology mutual funds. (c) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (d) The Class I shares commenced operations on December 27, 1995. (e) Class N shares were first issued on January 20, 1999, and pay Rule 12b-1 fees, Class N returns through December 31, 1998 are based on Class I returns, and would have been lower if Rule 12b-1 fees had been paid. (f) The value of a $10,000 investment for Class N is $73,406 for the period from 12/27/95 - 12/31/99. The performance of the Class N shares is lower than Class I shares due to the effects of 12b-1 fees. Page 30 Dresdner RCM Global Technology Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS CYCLICAL/CAPITAL GOODS SECTOR 1.6% INDUSTRIAL EQUIPMENT 1.6% 111,600 BH Tyco International Ltd. $ 4,338,450 INTEREST-SENSITIVE SECTOR 1.3% INSURANCE 1.3% 144,000 US InsWeb Corp. * 3,681,000 TECHNOLOGY SECTOR 87.0% COMPUTERS/OFFICE EQUIPMENT 4.5% 22,000 US Comverse Technology Inc. * 3,184,500 34,000 US E M C Corp. * 3,714,500 75,800 JP NEC Corp. 1,805,468 48,000 US Network Appliance Inc. * 3,987,000 ------------ 12,691,468 ------------ ELECTRONICS/NEW TECHNOLOGY 38.6% 23,600 US Applied Materials Inc. * 2,989,825 24,000 NL ASM Lithography Holding N.V. (ADR) * 2,730,000 10,000 US Brocade Communications Systems Inc. * 1,770,000 68,900 US Carrier Access Corp. * 4,637,831 23,000 US CellPoint Inc. * 1,081,000 54,000 US CIENA Corp. * 3,105,000 20,500 US Cisco Systems Inc. * 2,196,062 20,000 US Corning Inc. 2,578,750 32,000 US E-Tek Dynamics Inc. * 4,308,000 36,000 DE Epcos AG (ADR) * 2,688,750 36,000 SE Ericsson (LM) Telefonaktiebolaget (ADR) 2,364,750 33,000 US Finisar Corp. * 2,965,875 263,400 JP Furukawa Electric Co. Ltd. 3,993,642 80,000 US GlobeSpan Inc. * 5,210,000 80,000 US JDS Uniphase Corp. * 12,905,000 8,100 US Juniper Networks Inc. * 2,754,000 32,000 US KLA-Tencor Corp. * 3,564,000 15,000 US Lucent Technologies Inc. 1,122,188 56,000 US Maxim Integrated Products Inc. * 2,642,500 50,000 US Microchip Technology Inc. * 3,421,875 28,000 JP Moritex Corp. 1,369,461 31,000 US Motorola Inc. 4,564,750 30,000 FI Nokia Corp. (ADR) 5,700,000 46,000 CA Nortel Networks Corp. 4,646,000 7,800 US Optical Coating Laboratory Inc. 2,308,800 43,400 US QUALCOMM Inc. * 7,643,825 20,000 US SDL Inc. * 4,360,000 14,400 FR STMicroelectronics N.V. (NY Registered Shares) 2,180,700
The accompanying notes are an integral part of the financial statements. Page 31 Dresdner RCM Global Technology Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) ELECTRONICS/NEW TECHNOLOGY (CONTINUED) 68,000 US Vitesse Semiconductor Corp. * $ 3,565,750 60,000 US Xilinx Inc. * 2,728,125 ------------ 108,096,459 ------------ TECHNOLOGY SERVICES 43.9% 56,900 IS Aladdin Knowledge Systems * 967,300 21,700 US Amazon.com Inc. * 1,651,913 45,000 US America Online Inc. * 3,394,687 32,000 US Art Technology Group Inc. * 4,100,000 38,000 UK Baltimore Technologies PLC * 3,129,289 71,000 US BEA Systems Inc. * 4,965,562 44,000 US BMC Software Inc. * 3,517,250 44,000 IS Check Point Software Technologies Ltd. * 8,745,000 33,000 UK CMG PLC 2,420,742 52,000 US Critical Path Inc. * 4,907,500 7,520 US DoubleClick Inc. * 1,903,030 14,000 US E.piphany Inc. * 3,123,750 25,000 US eBay Inc. * 3,129,687 26,000 US Electronic Arts Inc. * 2,184,000 40,000 US Exodus Communications Inc. * 3,552,500 15,200 SE Framtidsfabriken AB 2,753,882 6,700 US FreeMarkets Inc. * 2,286,794 56,000 UK Freeserve PLC (ADR) * 5,152,000 16,400 US I2 Technologies Inc. * 3,198,000 4,200 SE Information Highway AB * 696,706 60,030 US Intuit * 3,598,048 62,000 US Knight/Trimark Group Inc. (Class A) * 2,852,000 68,400 UK Logica PLC * 1,767,128 18,280 US Macromedia Inc. * 1,336,725 21,000 US Mercury Interactive Corp. * 2,266,688 14,550 US Microsoft Corp. * 1,698,713 19,000 US Mission Critical Software Inc. * 1,330,000 24,000 US Network Solutions Inc. * 5,221,500 22,000 US Peregrine Systems Inc. * 1,852,125 14,200 US RealNetworks Inc. * 1,708,438 37,000 US Siebel Systems Inc. * 3,108,000 10 JP Softbank Corp. 9,567 28,000 FR Transiciel S.A. 3,381,874 56,700 US USWeb Corp. * 2,519,606 20,000 US VeriSign Inc. * 3,818,750 48,000 US VERITAS Software Corp. * 6,870,000
The accompanying notes are an integral part of the financial statements. Page 32 Dresdner RCM Global Technology Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) TECHNOLOGY SERVICES (CONTINUED) 8 JP Yahoo (Japan) Inc. * $ 7,152,500 15,600 US Yahoo Inc. * 6,749,925 ------------ 123,021,179 ------------ TELEMEDIA/SERVICES SECTOR 2.3% BUSINESS SERVICES 1.0% 4,400 FR Altran Technologies S.A. 2,659,403 COMMUNICATION SERVICES 1.3% 7,200 DE Mannesmann AG 1,737,074 19,600 US Nextel Communications Inc. * 2,021,250 ------------ 3,758,324 ------------ TOTAL EQUITY INVESTMENTS (COST $151,623,953) 92.2% 258,246,283 ------------ SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 6.9% 9,695,035 US SSgA Money Market Fund 9,695,035 9,695,035 US SSgA U.S. Government Money Market Fund 9,695,035 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $19,390,070) 6.9% 19,390,070 ------------ TOTAL INVESTMENTS (COST $171,014,023) ** 99.1% 277,636,353 OTHER ASSETS LESS LIABILITIES 0.9% 2,590,197 ------------ NET ASSETS 100.0% $280,226,550 ============
- -------------------------------- * Non-income producing security ADR American Depository Receipt The accompanying notes are an integral part of the financial statements. Page 33 Dresdner RCM Global Technology Fund Portfolio of Investments December 31, 1999 Tax Information: ** For Federal income tax purposes, cost is $171,721,618 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $107,750,545 Unrealized depreciation (1,835,810) ------------ Net unrealized appreciation $105,914,735 ============
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at December 31, 1999 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Bermuda BH 1.6% 1.6% Canada CA 1.7% 1.7% Finland FI 2.0% 2.0% France FR 2.9% 2.9% Germany DE 1.6% 1.6% Israel IS 3.5% 3.5% Japan JP 5.1% 5.1% Netherlands NL 1.0% 1.0% Sweden SE 2.1% 2.1% United Kingdom UK 4.5% 4.5% United States US 66.2% 7.8% 74.0% ------ ------ ----- Total 92.2% 7.8% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 34 Dresdner RCM Global Health Care Fund Management's Performance Review A reduced emphasis on pharmaceutical stocks and an increased focus on biotechnology companies specializing in therapeutics and genomics energized the Dresdner RCM Global Health Care Fund toward the end of 1999. For the year ended December 31, 1999, the Dresdner RCM Global Health Care Fund returned 28.74%, significantly outperforming its benchmark, the Russell Midcap Health Care Index, which returned -13.48%. MARKET REVIEW The most exciting part of biotechnology today is the genomics sector -- biotech companies that specialize in the information behind genetics. To illustrate its potential, consider the usual method of diagnosing and treating breast cancer. A woman typically sees a doctor after discovering a lump on her breast. Under the best-case scenario, she enters the health care system and the cancer is removed. In all likelihood, she was genetically programmed to develop cancer ever since birth. Current diagnostic techniques are finding the disease very late, making it difficult to treat successfully. The potential of genomics is to discern the general susceptibility that people have to certain diseases, and develop treatments early in life. While the major pharmaceutical companies are vulnerable to congressional action on Medicare, the therapeutic biotechnology companies are more insulated. One reason is that biotech companies typically have more drugs in development than they have on the market. If the federal government acts as anticipated, drugs currently available on the market would have to be re-priced downward, whereas research in the pipeline could be shifted away from targeted products. In addition, biotechnology drugs on the market tend to serve specialty niches that are not as likely to be on the radar screen of Medicare reform. FACTORS AFFECTING PERFORMANCE Two types of stocks, genomics and Internet-based companies, provided much of the Fund's total return for the year. For example, SciQuest is a Web- based interactive marketplace for scientific and laboratory products used by drug companies and research scientists. The stock went public in November 1999 at $16 and reached $79.50 by December 31, 1999. In the genomics area, Maxygen uses its proprietary technologies to mimic the natural process of evolution, bringing together advances in molecular biology and classical breeding. The company went public at $16 in mid-December 1999, ending the year at $71. The Fund's investment in Amgen has been particularly rewarding during 1999, up nearly 130% for the year. Its robust performance historically has been driven by Epogen, the company's flagship product which generates red blood cell growth. Dresdner RCM believed the stock was fully valued for the growth of that single drug. However, by mid-year Amgen shifted from a mature company back to a development stage investment story with several new drugs for the treatment of prostate cancer, rheumatoid arthritis and a kidney disorder. Dresdner RCM's Grassroots-SM- Research division surveyed a select group of kidney doctors and asked them how new guidelines from the National Kidney Foundation regarding red blood cells would affect their utilitization of Amgen's new therapy. The survey found that utilization was going to be significantly higher than Wall Street anticipated. As a result, Dresdner RCM was able to anticipate upside surprises in Amgen's financial performance. Another excellent performer during the year was Genentech, a company that was spun off by Roche Holdings in July 1999. Based on Dresdner RCM's valuation analyses, the stock appeared inexpensive given the earnings potential of Herceptin (their breast cancer drug), Rituxan (for lymphoma), as well as other products for heart attack and asthma victims. A New England Journal of Medicine editorial said that Genentech's asthma drug was the first major step that has been taken in 40 years to treat the disease. Like Amgen, Genentech is becoming a core holding of the Fund, up 70% since the Fund's purchase. The large cap pharmaceutical companies, such as Glaxo-Wellcome, have underperformed due to the Medicare issue, and positions in these firms have been reduced in the portfolio. In addition to pharmaceutical companies, a disappointing performer included Guidant, a maker of implantable cardiac devices. FDA approval of the company's products has been delayed, causing the stock to underperform. Once the FDA approves the products, and there is no reason to think that it won't, the stock price should accelerate. Page 35 Dresdner RCM Global Health Care Fund Management's Performance Review OUTLOOK Dresdner RCM believes that pharmaceutical stocks are likely to remain weak over the next few quarters while Congress debates Medicare reform in a presidential election year. To bolster his legacy, President Clinton is anxious to broaden Medicare coverage to include prescription drugs. At a minimum, there is likely to be some examination regarding drug pricing and the tax advantages that pharmaceutical companies enjoy. Meanwhile, the Federal Trade Commission is examining certain business relationships with selected customers involving significant rebates. For these reasons, pharmaceuticals appear unattractive at least through the first quarter of 2000. In addition, the portfolio will likely avoid health maintenance organizations and drug distributors. Dresdner RCM believes that therapeutic biotechnology companies, such as Amgen, Genentech and IDEC Pharmaceuticals, will be insulated from the Medicare debate, as these companies are addressing very unique therapeutic areas. Because these companies are so R&D intensive, investors are looking at their product pipelines rather than the products that they are currently marketing. Dresdner RCM's expectation is that these companies, and companies like them, will modestly outperform the overall stock market. Among the most attractive investments, in Dresdner RCM's view, are the genomics companies, which are likely to enjoy enormous price-earnings multiple expansion based on their potential discoveries. In addition, companies that are using the Internet to make the health care industry more efficient are also likely to do extremely well. Page 36 Dresdner RCM Global Health Care Fund Total Return Index Comparison(c) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
RCM GLOBAL HEALTH CARE FUND CLASS N SHARES RUSSELL MIDCAP HEALTH CARE INDEX (B) S&P 500 STOCK INDEX (A) PERFORMANCE BENCHMARK DATA AS OF 6/30/97 $10,000 INVESTMENT (12/31/96-12/31/99) (D) 1/1/01 $10,000 $10,000 $10,000 2/1/01 $10,700 $10,353 $10,625 3/1/01 $10,650 $10,552 $10,708 4/1/01 $9,910 $9,637 $10,268 5/1/01 $10,050 $9,786 $10,881 6/1/01 $11,140 $10,712 $11,544 7/1/01 $11,660 $11,201 $12,061 8/1/01 $11,990 $11,904 $13,021 9/1/01 $11,790 $11,739 $12,292 10/1/01 $13,110 $12,373 $12,965 11/1/01 $12,910 $11,644 $12,532 12/1/01 $13,110 $11,886 $13,113 1/1/02 $13,000 $11,920 $13,338 2/1/02 $13,189 $11,938 $13,486 3/1/02 $14,060 $13,012 $14,458 4/1/02 $14,584 $13,725 $15,199 5/1/02 $14,897 $14,044 $15,352 6/1/02 $14,261 $13,805 $15,088 7/1/02 $14,295 $14,337 $15,701 8/1/02 $14,216 $13,961 $15,533 9/1/02 $12,241 $11,459 $13,287 10/1/02 $13,659 $13,170 $14,139 11/1/02 $14,004 $13,869 $15,288 12/1/02 $15,109 $14,571 $16,215 1/1/03 $16,324 $15,903 $17,148 2/1/03 $16,482 $15,117 $17,865 3/1/03 $16,056 $14,398 $17,310 4/1/03 $15,813 $14,287 $18,002 5/1/03 $15,059 $13,244 $18,699 6/1/03 $14,937 $13,466 $18,257 7/1/03 $15,874 $13,772 $19,271 8/1/03 $15,777 $13,446 $18,670 9/1/03 $16,117 $13,300 $18,577 10/1/03 $15,071 $11,845 $18,068 11/1/03 $16,056 $11,925 $19,211 12/1/03 $17,334 $12,625 $19,601 1/1/04 $21,013 $13,759 $20,756 Source: Performance Measurement
PERFORMANCE(c) DECEMBER 31, 1999
CUMULATIVE SINCE SINCE GLOBAL HEALTH CARE FUND 1 YEAR 3 YEARS INCEPTION INCEPTION Class N Average Annual Total Return(d) 28.74% 28.09% 28.09% 110.15% S&P 500 Stock Index Average Annual Total Return(a) 21.04% 27.56% 27.56% 107.56% Russell Midcap Health Care Index Average Annual Total Return(b) -13.48% 11.22% 11.22% 37.59%
The data above represents past performance of the Fund and may not indicate future performance. The investment return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. - -------------------------------- (a) The Standard & Poor's 500 Stock Index is a capitalization-weighted index of 500 stocks that attempts to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing major industries. (b) The Russell Midcap Health Care Index is composed of all medium and medium/small health care companies in the Russell 1000 Index. The Russell 1000 Index measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 90% of the total market capitalization of the Russell 3000 Index. (c) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (d) The Class N shares commenced operations on December 31, 1996. Page 37 Dresdner RCM Global Health Care Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - -------------------------------------------------------------------------------- EQUITY INVESTMENTS HEALTH CARE SECTOR 97.0% DRUGS AND HOSPITAL SUPPLIES 70.4% 1,100 US Affymetrix Inc. * $ 186,656 4,100 US Amgen Inc. * 246,256 6,800 US BioCryst Pharmaceuticals Inc. * 200,600 4,000 US Biomet Inc. 160,000 3,500 US Enzon Inc. * 151,813 1,000 US Genentech Inc. * 134,500 3,100 UK Glaxo Wellcome PLC (ADR) 173,212 10,400 US Guidant Corp. * 488,800 1,800 US IDEC Pharmaceuticals Corp. * 176,850 3,700 US INAMED Corp. * 162,337 6,100 US Inhale Therapeutic Systems Inc. * 259,631 3,150 US Johnson & Johnson 293,344 3,000 US Maxygen Inc. * 213,000 1,726 US Merck & Co. Inc. 115,750 2,100 US PE Biosystems Group 252,656 5,100 US Pfizer Inc. 165,431 1,200 US Pharmacia & Upjohn Inc. 54,000 3,600 CA QLT PhotoTherapeutics Inc. * 211,500 3,700 US Schering-Plough Corp. 156,094 600 US Sepracor Inc. * 59,513 5,300 US Titan Pharmaceuticals Inc. * 100,700 7,000 US Vertex Pharmaceuticals Inc. * 245,000 1,400 US Warner Lambert Co. 114,713 1,900 US Waters Corp. * 100,700 ---------- 4,423,056 ---------- HEALTH CARE SERVICES 26.6% 6,900 US Allscripts Inc. * 303,600 1,900 US CareInsite Inc. * 152,950 2,600 US IMS Health Inc. 70,688 19,700 US MedicaLogic Inc. * 413,700 17,500 US Medscape Inc. 175,000 7,000 US SciQuest.com Inc. * 556,500 ---------- 1,672,438 ---------- TOTAL EQUITY INVESTMENTS (COST $4,934,602) 97.0% 6,095,494 ----------
The accompanying notes are an integral part of the financial statements. Page 38 Dresdner RCM Global Health Care Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 3.0% 93,647 US SSgA Money Market Fund $ 93,647 93,647 US SSgA U.S. Government Money Market Fund 93,647 ---------- TOTAL SHORT-TERM INVESTMENTS (COST $187,294) 3.0% 187,294 ---------- TOTAL INVESTMENTS (COST $5,121,896)** 100.0% 6,282,788 OTHER ASSETS LESS LIABILITIES 0.0% 990 ---------- NET ASSETS 100.0% $6,283,778 ==========
- -------------------------------- * Non-income producing security ADR American Depository Receipt Tax Information: ** For Federal income tax purposes, cost is $5,167,925 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $1,303,375 Unrealized depreciation (188,512) ---------- Net unrealized appreciation $1,114,863 ==========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at December 31, 1999 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Canada CA 3.4% 3.4% United Kingdom UK 2.7% 2.7% United States US 90.9% 3.0% 93.9% ------ ------ ----- Total 97.0% 3.0% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 39 Dresdner RCM International Equity Fund Management's Performance Review A focus on Japan and a continuing overweight in technology and telecommunications caused the Dresdner RCM International Equity Fund to significantly outperform its benchmarks during 1999. For the year ended December 31, 1999, the Fund achieved total returns of 60.66% and 60.35% for Class I and Class N shares, respectively. That compares favorably to the portfolio's primary benchmark, the Morgan Stanley Capital International Europe, Australasia, Far East Index (EAFE), which returned 27.31%. For the five years ending 12/31/99, the Fund achieved an average annual return of 24.87% and 24.82% for Class I and Class N shares, respectively, nearly doubling the return of the benchmark at 13.15%. The Fund performed in the top quarter of all funds in the Lipper International Fund Universe for the 1-, 2-, 3- and 5-year periods ending December 31, 1999. MARKET REVIEW After being dormant for nearly a decade, the Japanese stock market surged forward in 1999, as investors became convinced that widespread corporate restructuring was finally taking place. A series of fiscal stimulus packages proposed by the Japanese government were not the catalyst. Instead, blue-chip companies such as Sony began to announce reductions in their labor force and that many subsidiaries would be consolidated into a single, efficient entity. These were the true indicators that corporate management would increasingly focus on the interests of shareholders. The improved business climate caused investment flows to accelerate into Japan, boosting the yen against the U.S. dollar. Europe began 1999 on a historic note: launching the euro in place of 11 local currencies. However, the initial euphoria quickly wore off and the euro soon weakened, partly because economic growth in Europe paled compared to the surging U.S economy. In addition, the European Central Bank (ECB) was unable to significantly lower interest rates to stimulate growth where it was needed, particularly in Germany, for fear of igniting inflation in fast-growing peripheral markets such as Italy, Portugal and Spain. Moreover, the ECB was reluctant to lower interest rates because it would exacerbate the euro's weakness. Still, cross-border merger and acquisition activity strengthened during 1999, as corporate managements showed their concern to enhance shareholder value. The new climate was typified by U.K.-based Vodafone AirTouch PLC's hostile bid to purchase Mannesmann AG of Germany, and by Olivetti's hostile acquisition of Telecom Italia, transactions that would not have taken place prior to the European Monetary Union. During 1999 and especially the fourth quarter, the "new economy" theme of Internet-driven productivity that allows growth without inflation also became very apparent throughout international markets. Indeed, new economy stocks in technology and telecommunications drove many international equity markets such as Japan and the rest of Asia to actually outperform the Standard & Poor's 500 Index, reinforcing the benefits to shareholders of geographic diversification. FACTORS AFFECTING PERFORMANCE Early in 1999, Dresdner RCM made an important shift in direction that had a major impact on performance for the year. Up until that point, the Fund's exposure to Japan was very low, because the government seemed unable to implement a meaningful reform package aimed at rehabilitating the country's banks. In late 1998, the stock market in Japan was showing signs of strength, particularly in the small-cap technology sector. At first, it was unclear whether this was the beginning of a real recovery, or simply more volatility. By the first quarter, however, it became apparent that a cultural shift was taking place in Japan, in which shareholder interests were being elevated. Meanwhile, the Fund's bottom-up stock selection process was uncovering more and more companies with solid earnings prospects brought about by corporate restructuring. The bulk of the Fund's Japanese commitment was to technology companies, many of which have long been global leaders. Dresdner RCM's Grassroots-SM- Research surveys of Japanese consumers indicated that Internet penetration in Japan was far short of that in the U.S., but the gap was likely to close. Meanwhile, the U.S. experience had not been factored into the valuation of Internet companies such as Softbank and Yahoo! Japan, and thus the stocks were attractively priced. In addition, the Fund's heavy emphasis on telecommunications stocks was very advantageous to performance. NTT DoCoMo, a Japanese cellular provider and one of the Page 40 Dresdner RCM International Equity Fund Management's Performance Review Fund's largest holdings, was the first company to launch phones that can access the Internet. To take advantage of the improving Japanese economy and awakened stock market, some investments were made in specialty financial services, such as Daiwa Securities Group. By emphasizing Japan, the Fund also benefited from the strengthening of the yen during the year. In emerging markets, the Fund achieved excellent performance from Samsung Electronics and Korea Telecom, two Korean companies benefiting from the rebound in Asia's economies. Within Singapore, DBS Group Holdings, which includes the Development Bank of Singapore, performed well due to a resurgence of the Singapore economy while Taiwan Semiconductor Manufacturing Co. Ltd. performed very well in the fourth quarter, when the bulk of the Fund's superior performance took place. Other positive factors impacting the portfolio include a general underweight in financial services outside of Asia and a lower-than-average holding in health care. Although interest rates did not rise evenly throughout the world, the U.S. environment of steadily rising rates set a negative tone for financial services stocks as a whole. Similarly, the difficult environment encountered by pharmaceutical stocks in the U.S. adversely affected pharmaceutical stocks in Europe. OUTLOOK As technology and telecommunications stocks have soared, the Fund has taken some profits and made allocations to more cyclical and energy-sensitive companies that typically would benefit from faster economic growth. For instance, a new law expected to pass in Germany reduces the tax burden on banks that sell certain industrial holdings, which makes German banks more attractive. Among the broad themes being viewed, management believes the euro is likely to stabilize, improving dollar-denominated returns for investors. Japan's markets should continue to offer opportunity, particularly in companies poised to benefit from recovery in domestic demand. Two examples are Sumitomo Corp. and Kawasaki Steel, which should benefit from firming steel prices and an economic recovery in Japan. Finally, and despite their recent appreciation, technology and telecommunications stocks continue to have a bright outlook. Page 41 Dresdner RCM International Growth Equity Fund Total Return Index Comparison(c) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PERFORMANCE FROM COMMENCEMENT OF OPERATIONS CLASS I SHARES MSCI-EAFE (A) MSCI-ACWI (B) 12/28/1994 $10,000 $10,000 $10,000 $9,555 $9,629 $9,617 $9,577 $9,576 $9,592 3/31/1995 $10,054 $10,117 $10,193 $10,492 $10,512 $10,579 $10,564 $10,466 $10,455 6/30/1995 $10,847 $10,321 $10,275 $11,570 $10,907 $10,917 $11,420 $10,529 $10,503 9/30/1995 $11,665 $10,709 $10,711 $11,489 $10,423 $10,426 $11,522 $10,668 $10,719 12/31/1995 $11,799 $11,089 $11,153 $12,126 $11,241 $11,201 $12,271 $11,241 $11,241 3/31/1996 $12,648 $11,450 $11,483 $13,096 $11,797 $11,820 $13,263 $11,620 $11,604 6/30/1996 $13,353 $11,680 $11,673 $12,822 $11,292 $11,334 $13,108 $11,358 $11,362 9/30/1996 $13,404 $11,640 $11,666 $13,302 $11,524 $11,549 $13,864 $11,969 $12,011 12/31/1996 $14,078 $11,830 $11,860 $14,355 $11,612 $11,447 $14,477 $11,825 $11,637 3/31/1997 $14,410 $11,800 $11,683 $14,654 $11,899 $11,747 $15,606 $12,634 $12,514 6/30/1997 $16,502 $13,332 $13,207 $17,509 $13,601 $13,424 $16,292 $12,530 $12,424 9/30/1997 $17,620 $13,208 $13,122 $16,458 $12,084 $12,117 $16,414 $11,933 $11,996 12/31/1997 $16,603 $12,070 $12,104 $17,063 $12,431 $12,661 $17,924 $13,261 $13,476 3/31/1998 $18,602 $13,719 $13,894 $18,954 $13,818 $14,006 $19,063 $13,568 $13,942 6/30/1998 $19,123 $13,517 $14,050 $19,754 $13,645 $14,197 $17,063 $11,721 $12,440 9/30/1998 $16,033 $11,474 $12,062 $16,869 $12,675 $13,323 $17,730 $13,356 $14,009 12/31/1998 $18,895 $13,816 $14,565 1/31/1999 $19,223 $13,801 $14,526 2/28/1999 $18,429 $13,492 $14,183 3/31/1999 $18,832 $14,144 $14,779 4/30/1999 $19,160 $14,851 $15,380 5/31/1999 $18,290 $14,153 $14,591 6/30/1999 $19,804 $14,804 $15,163 7/31/1999 $20,836 $15,152 $15,619 8/31/1999 $21,050 $15,205 $15,680 9/30/1999 $21,479 $15,308 $15,842 10/31/1999 $23,232 $15,878 $16,439 11/30/1999 $26,524 $16,513 $17,014 12/31/1999 $30,357 $18,088 $18,541 PERFORMANCE FROM FIRST PUBLIC OFFERING Class I Shares MSCI-EAFE (a) MSCI-ACWI (b) 5/22/95 $10,000 $10,000 $10,000 $10,117 $9,992 $10,111 $10,233 $9,984 $10,222 6/30/95 $10,508 $9,811 $10,081 $11,208 $10,424 $10,654 $11,063 $10,029 $10,284 9/30/95 $11,300 $10,228 $10,460 $11,130 $9,956 $10,180 $11,161 $10,236 $10,420 12/31/95 $11,430 $10,650 $10,831 $11,747 $10,696 $10,980 $11,887 $10,735 $10,980 3/31/1996 $12,254 $10,965 $11,184 $12,686 $11,287 $11,523 $12,848 $11,081 $11,350 6/30/1996 $12,935 $11,147 $11,408 $12,421 $10,823 $11,029 $12,698 $10,849 $11,094 9/30/1996 $12,985 $11,140 $11,369 $12,886 $11,029 $11,256 $13,430 $11,470 $11,690 12/31/1996 $13,638 $11,325 $11,554 $13,906 $10,931 $11,342 $14,024 $11,113 $11,549 3/31/1997 $13,959 $11,156 $11,525 $14,195 $11,217 $11,622 $15,117 $11,950 $12,340 6/30/1997 $15,986 $12,612 $13,021 $16,961 $12,819 $13,284 $15,782 $11,864 $12,239 9/30/1997 $17,069 $12,530 $12,901 $15,943 $11,571 $11,803 $15,900 $11,455 $11,656 12/31/1997 $16,083 $11,558 $11,790 $16,529 $12,090 $12,142 $17,363 $12,868 $12,952 3/31/1998 $18,020 $13,267 $13,400 $18,361 $13,375 $13,497 $18,466 $13,313 $13,252 6/30/1998 $18,525 $13,417 $13,202 $19,136 $13,556 $13,327 $16,529 $11,879 $11,448 9/30/1998 $15,532 $11,518 $11,207 $16,342 $12,722 $12,380 $17,175 $13,377 $13,045 12/31/1998 $18,304 $13,908 $13,495 1/31/1999 $18,622 $13,871 $13,480 2/28/1999 $17,852 $13,543 $13,178 3/31/1999 $18,243 $14,112 $13,815 4/30/1999 $18,561 $14,687 $14,580 5/31/1999 $17,718 $13,933 $13,790 6/30/1999 $19,184 $14,479 $14,459 7/31/1999 $20,186 $15,619 $14,799 8/31/1999 $20,394 $15,679 $14,851 9/30/1999 $20,809 $15,841 $14,952 10/31/1999 $22,508 $16,438 $15,508 11/30/1999 $25,697 $17,014 $16,129 12/31/1999 $29,407 $18,543 $17,667
PERFORMANCE(c) DECEMBER 31, 1999
INTERNATIONAL LIFE OF FUND LIFE OF FUND GROWTH EQUITY ANNUALIZED SINCE CUMULATIVE SINCE FUND 1 YEAR 3 YEARS 5 YEARS 12/28/94(D) 5/22/95(D) 12/28/94(D) 5/22/95(D) Class I Average Annual Total Return(d) 60.66% 29.19% 24.87% 24.82% 26.38% 203.57% 194.07% Class N Average Annual Total Return(e) 60.35% 29.11% 24.82% 24.77% 26.32% 202.97% 193.50% MSCI-EAFE Index Average Annual Total Return(a) 27.31% 16.06% 13.15% 12.56% 14.42% 80.88% 85.43% MSCI-ACWI Average Annual Total Return(b) 30.92% 15.21% 12.39% 13.12% 13.22% 85.41% 76.67%
The data above represents past performance of the Fund and may not indicate future performance. The investment return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. - -------------------------------- (a) The MSCI-EAFE Index is an arithmetic, market value-weighted average of the performance of over 900 securities listed on the stock exchanges of countries in Europe, Australasia, and the Far East. The Index is calculated on a total return basis, which includes reinvestment of gross dividends before deduction of withholding taxes. (b) The MSCI-ACWI Index is a market capitalization-weighted index composed of companies representative of the market structure of 47 developed and emerging market countries excluding the United States. Stock selection excludes securities which are not purchasable by foreigners. The Index is calculated on a total return basis, which includes reinvestment of gross dividends before deduction of withholding taxes. (c) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. Page 42 Dresdner RCM International Growth Equity Fund Total Return Index Comparison(c) (d) The Class I shares were registered for offer and sale under the Securities Act of 1933 on May 22, 1995. In accordance with SEC regulations, performance information is provided for the period beginning on May 22, 1995 ("Registration"). For the convenience of our long-term shareholders, performance information is also provided for the period beginning on December 28, 1994 ("Commencement of Operations"). (e) Class N shares were first issued on March 10, 1999, and pay Rule 12b-1 fees. Class N returns through December 31, 1998 are based on Class I returns, and would have been lower if Rule 12b-1 fees had been paid. (f) The growth of a $10,000 investment for the Class N is $30,295 and $29,350 for the Fund from December 28, 1994 to December 31, 1999 and from May 22,1995 to December 31, 1999, respectively. The performance of the Class N shares is lower than Class I shares due to the effects of 12b-1 fees. Page 43 Dresdner RCM International Growth Equity Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS CONSUMER DURABLES SECTOR 4.5% AUTOMOTIVE RELATED 0.5% 502 DE Porsche AG (Non-Voting Preferred Shares) $ 1,375,475 CONSUMER DURABLES 4.0% 7,100 JP Funai Electric Co. Ltd. 4,180,965 22,400 JP Sony Corp. 6,639,147 2,500 JP Sony Corp. (ADR) 711,875 ------------ 11,531,987 ------------ CONSUMER NON-DURABLES SECTOR 3.7% BEVERAGE/TOBACCO 0.1% 43,679 UK Imperial Tobacco Group PLC 359,695 FOOD/FOOD PROCESSING 0.0%* 20 JP Hokuto Corp. 1,074 HOUSEHOLD/RELATED NON-DURABLES 0.0%* 235 UK Reckitt Benckiser PLC 2,224 RETAIL TRADE 3.6% 15,920 FR Carrefour Supermarche S.A. 2,936,376 184,290 UK Dixons Group PLC 4,433,839 4,570 NL Gucci Group 523,265 11,500 JP Ryohin Keikaku Co. Ltd. 2,307,200 ------------ 10,200,680 ------------ CYCLICAL/CAPITAL GOODS SECTOR 12.3% CHEMICALS/TEXTILES 1.5% 17,900 NL Akzo Nobel N.V. 897,972 1,800 CH Clariant AG 858,058 55,000 JP Shin Etsu Chemical Co. Ltd. 2,367,211 ------------ 4,123,241 ------------ ELECTRICAL EQUIPMENT 1.1% 25,400 DE Siemens AG 3,231,598 INDUSTRIAL EQUIPMENT 0.7% 229,600 UK Invensys PLC 1,213,453 42,600 NO Tomra Systems ASA 723,522 ------------ 1,936,975 ------------ RAW/BASIC MATERIALS 8.6% 103,100 CA Alcan Aluminum Ltd. 4,246,431 44,870 BR Aracruz Celulose S.A. (ADR) 1,177,838
The accompanying notes are an integral part of the financial statements. Page 44 Dresdner RCM International Growth Equity Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) RAW/BASIC MATERIALS (CONTINUED) 203,790 AU Broken Hill Proprietary Co. Ltd. $ 2,666,521 2,519 CH Holderbank Financiere Glarus AG 3,448,951 488,800 IE Jefferson Smurfit Group PLC 1,464,087 10,600 FR Lafarge S.A. 1,234,366 964,000 JP Marubeni Corp. 4,045,349 58,900 KR Pohang Iron & Steel Co. Ltd. (ADR) 2,061,500 110,700 FI UPM-Kymmene Oyj 4,460,544 ------------ 24,805,587 ------------ TRANSPORTATION SERVICES 0.4% 200,000 JP Nippon Express Co. Ltd. 1,105,351 ENERGY SECTOR 5.1% ENERGY 5.1% 377,074 UK BP Amoco PLC 3,804,897 12,000 UK BP Amoco PLC (ADR) 711,750 509,900 UK Shell Transport & Trading Co. 4,236,062 44,000 FR Total Fina S.A. (B Shares) 5,872,848 ------------ 14,625,557 ------------ HEALTH CARE SECTOR 2.8% DRUGS AND HOSPITAL SUPPLIES 2.8% 136,000 UK Glaxo Wellcome PLC 3,851,770 208 CH Roche Holdings AG 2,469,037 42,020 FR Sanofi Synthelabo S.A. ** 1,749,874 ------------ 8,070,681 ------------ INTEREST-SENSITIVE SECTOR 15.7% BANKING 7.4% 118,000 JP Asahi Bank Ltd. 727,184 47,400 FR Banque Nationale de Paris 4,373,751 49,000 DE Bayerische Hypo- und Vereinsbank AG 3,346,617 122,322 SG DBS Group Holdings Ltd. ** 2,004,436 42,200 DE Deutsche Bank AG 3,564,476 19,900 KR Housing & Commercial Bank, Korea (GDR) ** 630,911 133,810 UK HSBC Holdings PLC 1,876,283 226,000 JP Industrial Bank of Japan Ltd. 2,177,541 26,080 KR Kookmin Bank 408,828 103,698 UK Lloyds TSB Group PLC 1,287,623 150,700 SE Nordbanken Holding AB ** 857,713 ------------ 21,255,363 ------------
The accompanying notes are an integral part of the financial statements. Page 45 Dresdner RCM International Growth Equity Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) GENERAL FINANCE 5.2% 13,100 JP Aeon Credit Service Ltd. $ 1,078,959 12,800 JP Aiful Corp. 1,565,098 359,000 JP Daiwa Securities Group Inc. 5,615,192 19,900 NL ING Groep N.V. 1,201,573 8,900 JP Mycal Card Inc. 282,941 325,000 JP Nikko Securities Co. Ltd. 4,110,584 67,000 JP Nomura Securities Co. Ltd. 1,209,185 ------------ 15,063,532 ------------ INSURANCE 3.1% 10,300 DE Allianz AG 3,460,296 119,600 UK Allied Zurich AG PLC 1,409,762 11,900 FR Axa S.A. 1,659,065 120,811 UK Prudential Corp. PLC 2,356,489 ------------ 8,885,612 ------------ TECHNOLOGY SECTOR 30.3% COMPUTERS/OFFICE EQUIPMENT 1.2% 700 JP Canon Inc. 10,819 150,000 JP NEC Corp. 3,572,826 ------------ 3,583,645 ------------ ELECTRONICS/NEW TECHNOLOGY 20.6% 7,000 JP Advantest Corp. 1,848,772 33,000 NL ASM Lithography Holding N.V. (ADR) ** 3,753,750 23,200 DE Epcos AG ** 1,741,103 76,900 SE Ericsson (LM) Telefonaktiebolaget (ADR) 4,948,741 150,000 JP Fujitsu Ltd. 6,837,524 375,001 JP Furukawa Electric Co. Ltd. 5,685,736 14,000 JP Matsushita Communications Industrial Co. 3,697,545 15,000 JP Murata Manufacturing Co. Ltd. 3,521,471 53,600 FI Nokia Oyj 9,718,909 45,000 CA Nortel Networks Corp. 4,545,000 8,900 KR Samsung Electronics 2,084,897 51,000 FR STMicroelectronics N.V. (NY Registered Shares) 7,723,312 68,108 TW Taiwan Semiconductor Manufacturing Co. (ADR) 3,064,860 ------------ 59,171,620 ------------ TECHNOLOGY SERVICES 8.5% 11,200 FR Cap Gemini S.A. 2,843,143 28,000 UK CMG PLC 2,053,963 51,000 NL KPNQwest N.V. ** 3,395,876 110,000 UK Misys PLC 1,706,900 9,900 JP Nippon System Development 1,442,923
The accompanying notes are an integral part of the financial statements. Page 46 Dresdner RCM International Growth Equity Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) TECHNOLOGY SERVICES (CONTINUED) 12,100 UK Psion PLC $ 507,985 4,000 DE SAP AG 1,970,376 14,000 DE SAP AG (ADR) 728,875 6,400 JP Softbank Corp. 6,122,665 4 JP Yahoo (Japan) Inc. ** 3,576,250 ------------ 24,348,956 ------------ TELEMEDIA/SERVICES SECTOR 22.6% BUSINESS SERVICES 2.1% 191,000 HK Hutchison Whampoa Ltd. 2,776,484 31,000 JP Secom Co. Ltd. 3,411,426 ------------ 6,187,910 ------------ COMMUNICATION SERVICES 18.2% 123,327 UK British Telecom PLC 2,987,042 980,000 HK China Telecom (Hong Kong) Ltd. ** 6,114,363 90 JP DDI Corp. 1,232,515 65,000 US Infonet Services Corp. (Class B) ** 1,706,250 70 JP Japan Telecom Co. Ltd. 2,807,395 50,800 KR Korea Telecom Corp. (ADR) 3,797,300 37,500 DE Mannesmann AG 9,047,259 235 JP Nippon Telegraph & Telephone Corp. 4,022,792 8,000 JP Nippon Telegraph & Telephone Corp. (ADR) 689,000 186 JP NTT Mobile Communications Network Inc. 7,150,347 52,500 FI Sonera Oyj 3,598,882 175,000 IT Telecom Italia Mobile SpA 1,955,014 80,446 ES Telefonica S.A. 2,009,724 24,000 MX Telefonos De Mexico (ADR) 2,700,000 494,100 UK Vodafone Airtouch PLC 2,462,003 ------------ 52,279,886 ------------ MEDIA 2.3% 19,000 JP Asatsu-DK Inc. 1,282,402 12,200 DE EM.TV & Merchandising AG 786,539 1,600 FR Havas Advertising S.A. 681,774 89,600 IT Mediaset SpA 1,393,592 56,000 SG Singapore Press Holdings Ltd. 1,213,445 1,200 FR Societe Television Francaise 628,586 40,000 UK WPP Group PLC 626,504 ------------ 6,612,842 ------------ TOTAL EQUITY INVESTMENTS (COST $187,776,448) 97.0% 278,759,491 ------------
The accompanying notes are an integral part of the financial statements. Page 47 Dresdner RCM International Growth Equity Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 2.6% 3,981,096 US SSgA Money Market Fund $ 3,981,096 3,378,122 US SSgA U.S. Government Money Market Fund 3,378,122 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $7,359,218) 2.6% 7,359,218 ------------ TOTAL INVESTMENTS (COST $195,135,666) *** 99.6% 286,118,709 OTHER ASSETS LESS LIABILITIES 0.4% 1,180,750 ------------ NET ASSETS 100.0% $287,299,459 ============
- -------------------------------- * Less than 0.1% of net assets ** Non-income producing security ADR American Depository Receipt GDR Global Depository Receipt *** For Federal income tax purposes, cost is $197,498,056 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $90,577,239 Unrealized depreciation (1,956,586) ----------- Net unrealized appreciation $88,620,653 ===========
The accompanying notes are an integral part of the financial statements. Page 48 Dresdner RCM International Growth Equity Fund Portfolio of Investments December 31, 1999 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at December 31, 1999 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Australia AU 0.9% 0.9% Brazil BR 0.4% 0.4% Canada CA 3.1% 3.1% Finland FI 6.2% 6.2% France FR 10.3% 10.3% Germany DE 10.2% 10.2% Hong Kong HK 3.1% 3.1% Ireland IE 0.5% 0.5% Italy IT 1.2% 1.2% Japan JP 33.1% 33.1% Korea KR 3.1% 3.1% Mexico MX 0.9% 0.9% Netherlands NL 3.4% 3.4% Norway NO 0.2% 0.2% Singapore SG 1.1% 1.1% Spain ES 0.7% 0.7% Sweden SE 2.0% 2.0% Switzerland CH 2.4% 2.4% Taiwan TW 1.1% 1.1% United Kingdom UK 12.5% 12.5% United States US 0.6% 3.0% 3.6% ------ ------ ----- Total 97.0% 3.0% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 49 Dresdner RCM Emerging Markets Fund Management's Performance Review Superior stock selection in strong markets, plus a significant overweight in telecommunications and technology, caused percentage returns to approach triple-digits in 1999. For the year ended December 31, 1999, the Dresdner RCM Emerging Markets Fund returned 92.12% and 91.78% for the Class I and Class N shares, respectively. In comparison, the MSCI Emerging Markets Free Index (EMF), the Fund's benchmark, returned 66.42%. MARKET REVIEW After a two-year period that featured a global economic crisis and a lack of confidence in the world's currencies, emerging market stock performance was expected to be sluggish at best in 1999. As a result, many emerging market mutual funds and other investment portfolios were sitting with a large percentage of cash as 1998 came to a close. However, central banks around the world aggressively lowered interest rates, and the response was dramatic. Asia revived almost immediately, while emerging markets in Eastern Europe, the Middle East and Africa picked up in midyear. Latin America, which endured the Brazilian devaluation, remained out of favor until later in 1999, when investors shifted some money away from Asia and Eastern Europe in search of better value. Political developments, such as the war in Kosovo in early 1999 and the instability of Boris Yeltsin in Russia, had little lasting impact on the markets. Meanwhile, emerging markets also benefited from an investment management trend to broaden traditional international investing beyond "EAFE" index countries to include developing areas such as Asia ex-Japan, Latin America and Eastern Europe. FACTORS AFFECTING PERFORMANCE Dresdner RCM Global Investors LLC ("Dresdner RCM"), the Fund's investment manager, invests in high quality companies with strong franchises, sustained earnings growth and excellent management. Stock selection is accomplished from a bottom-up perspective that includes personal meetings with management. Early in the year, the Fund benefited from a strong emphasis in Asia, driven by Japan's emergence from a decade-long recession. In mid-1999, Dresdner RCM shifted its emphasis toward energy and mining stocks in Eastern Europe, the Middle East and Africa to take advantage of Europe's economic recovery. Later in the year, Dresdner RCM sold many of these holdings based on the view that they were fully priced, and shifted assets to Latin America. Just over half of the portfolio was invested in telecommunications and technology as of December 31, 1999, compared to only 21% for the Fund's benchmark. This overweighting was the result of the Fund investing in many of the world's leading technology and telecom firms that have benefited from renewed global growth. For example, Korea-based Samsung Electronics, a natural beneficiary of the Asia recovery, was purchased at a very attractive price, especially compared to its U.S. rivals. Management, which had previously had a closed-door policy, became notably more pro-disclosure in 1999, particularly as the semiconductor cycle came back into favor. In addition to vastly improving fundamentals, this positive approach to investor relations was undoubtedly a positive factor in the stock's success in 1999. It should be emphasized that stock selection, not country or sector allocation, accounted for the lion's share of superior performance. For example, the Fund's largest position at the end of the year, Infosys Technologies Ltd., is an Indian software company. The fact that it is located in India or that it represents exposure to software is not a critical factor. What is important is that Infosys is considered one of the best software companies in the world, receiving high praise from Silicon Valley business leaders. It is the employer of choice for top engineering graduates in India. As another example, the portfolio benefited from its investment in Dr. Reddy's Laboratories Inc., a major Indian pharmaceutical concern. Again, the fact that it is located in India is coincidental. Its sector, pharmaceutical stocks, was generally out of favor in 1999. However, the stock was selected for the portfolio partly because Dresdner RCM's Grassroots-SM- Research division projected that India would pass landmark patent legislation beneficial to the company, which in fact took place. Sometimes, a country's political environment can have an influence on stock selection. In Taiwan, the Fund's Page 50 Dresdner RCM Emerging Markets Fund Management's Performance Review holdings are exclusively technology-based, including some of the world's premier companies in electronics, testing equipment and component manufacturing. However, the Fund was underweighted in Taiwan because about half of the available public companies are in financial services, and Dresdner RCM's analytical staff was uncomfortable with Taiwan's regulation of its banking and brokerage industries. In contrast, the Fund's portfolio managers have a greater degree of comfort in Mexico's economic policies. Indeed, a company such as Telefonos de Mexico is displaying solid earnings growth and, as the largest telecom company in Latin America, is also benefiting from its position as a highly liquid stock. Given the Fund's stellar total return for the year, there were notably very few adverse developments. One such disappointment was the Fund's investment in Elektrim, a Polish telecom/Internet company, which performed poorly because of the actions of two major shareholders fighting for control. The Fund also missed the bull market in Turkey, which was thought to be weak in the area of Y2K compliance. Of course, actual significant Y2K problems around the world appear to have been few and far between. OUTLOOK Assuming the U.S. economy slows and the Federal Reserve Board does not raise short-term interest rates too aggressively, Dresdner RCM expects emerging markets to thrive in 2000 because a benign interest rate environment makes investors more tolerant of risk. We expect the Fund to continue to focus on larger-cap, high-quality companies that can execute a valid business strategy and that have earnings growth at or above their peer groups. Page 51 Dresdner RCM Emerging Markets Fund Total Return Index Comparison(c) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
$10,000 INVESTMENT (12/30/97 - 12/31/99)(D)(E)(F) CLASS I SHARES MSCI EMERGING MARKETS FREE INDEX(A) 12/97 $9,990 $10,024 1/98 $9,720 $9,238 2/98 $10,530 $10,203 3/98 $10,950 $10,645 4/98 $11,120 $10,529 5/98 $9,920 $9,087 6/98 $9,170 $8,134 7/98 $9,590 $8,391 8/98 $7,660 $5,965 9/98 $7,810 $6,344 10/98 $8,660 $7,012 11/98 $8,910 $7,595 12/98 $9,151 $7,485 2/03 $8,879 $7,364 3/03 $8,839 $7,436 4/03 $9,696 $8,416 5/03 $10,715 $9,457 6/03 $10,493 $9,402 7/03 $11,644 $10,469 8/03 $11,472 $10,184 9/03 $11,855 $10,277 10/03 $11,482 $9,930 11/03 $12,098 $10,141 12/03 $14,378 $11,051 1/04 $17,562 $12,457 $10,000 INVESTMENT (12/30/97 - 12/31/99)(D)(E)(F) IFC EMERGING MARKETS INDEX(B) 12/97 $10,015 1/98 $9,358 2/98 $10,314 3/98 $10,718 4/98 $10,747 5/98 $9,406 6/98 $8,444 7/98 $8,779 8/98 $6,311 9/98 $6,615 10/98 $7,375 11/98 $7,812 12/98 $7,930 2/03 $7,630 3/03 $7,765 4/03 $8,661 5/03 $9,843 6/03 $9,667 7/03 $10,719 8/03 $10,564 9/03 $10,680 10/03 $10,383 11/03 $10,563 12/03 $11,513 1/04 $13,056
PERFORMANCE(c) DECEMBER 31, 1999
CUMULATIVE SINCE SINCE EMERGING MARKETS FUND 1 YEAR INCEPTION INCEPTION Class I Average Annual Total Return(d) 92.12% 32.47% 75.62% Class N Average Annual Total Return(e) 91.78% 32.36% 75.31% MSCI Emerging Markets Free Index Average Annual Total Return(a) 66.42% 11.59% 24.57% IFC Emerging Markets Index Average Annual Total Return(b) 67.15% 14.24% 30.56%
The data above represents past performance of the Fund and may not indicate future performance. The investment return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. - -------------------------------- (a) The MSCI Emerging Markets Free Index is a market capitalization-weighted index composed of 981 companies in 26 emerging market countries. The average market capitalization size of the listed companies is US$800 million. (b) The IFC Emerging Markets Index represents the IFC Investable regional total return composite. The term investable indicates that the stocks and the weights in the IFCI index represent the amount that the foreign institutional investors might buy by virtue of the applicable foreign institutional restrictions (either at the national level or by the individual company's corporate statute) plus factoring in minimum market capitalization and liquidity screens. (c) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (d) The Class I shares began operations on December 30, 1997. (e) Class N shares were first issued on March 9, 1999, and pay Rule 12b-1 fees. Class N returns through December 31, 1998 are based on Class I returns, and would have been lower if Rule 12b-1 fees had been paid. (f) The value of $10,000 for Class N is $17,531 for the period from 12/30/97 -12/31/99. The performance of the Class N shares is lower due to the effects of 12b-1 fees. Page 52 Dresdner RCM Emerging Markets Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS CONSUMER NON-DURABLES SECTOR 9.0% BEVERAGE/TOBACCO 1.4% 3,500 BR Companhia Cervejari Brahma (Sponsored ADR) $ 49,000 1,900 IN ITC Ltd. 29,046 ---------- 78,046 ---------- HOUSEHOLD/RELATED NON-DURABLE 1.6% 1,650 IN Hindustan Lever Ltd. 85,345 LEISURE TIME PRODUCTS/SERVICES 2.0% 32,700 MY Berjaya Sports Toto 70,563 2,000 HU Danubius Hotel and Spa Right * 36,346 ---------- 106,909 ---------- RETAIL TRADE 4.0% 47,500 MX Cifra S.A. de C.V. Series V * 95,251 45,000 HK Giordano International Ltd. 46,311 2,500 MX Grupo Elektra S.A. de C.V. (GDR) 24,063 22,000 HK Li & Fung Ltd. 55,187 ---------- 220,812 ---------- CYCLICALS/CAPITAL GOODS SECTOR 17.6% BUILDING/CONSTRUCTION 1.0% 2,500 EG Orascom Construction Industries * 51,524 CHEMICALS/TEXTILES 2.3% 1,700 KR L.G. Chemicals Ltd. 53,747 1,500 HU Pannonplast Rt 37,018 1,800 HU Tiszai Vegyi Kombinat Rt 34,313 ---------- 125,078 ---------- INDUSTRIAL EQUIPMENT 0.8% 1,200 GR Maillis 45,184 RAW/BASIC MATERIALS 12.9% 14,000 MX Alfa S.A. de C.V. Class A * 65,752 1,600 BR Aracruz Celulose S.A. (ADR) 42,000 13,800 UK Billiton PLC 79,257 8,000 MX Cemex S.A. de C.V. 44,749 1,400 MX Cemex S.A. de C.V. (Sponsored ADR) * 39,025 87 MX Cemex S.A. de C.V., Rights * 0 2,100 PO Compania de Minas Buenaventura S.A. (Sponsored ADR) 33,731 1,800 BR Companhia Vale do Rio Doce (Sponsored ADR) 50,180 1,500 IN Hindalco Industries Ltd. 27,759 2,160 SA Impala Platinum Holdings Ltd. 87,383 6,000 PL KGHM Polska Miedz S.A. 38,017 210 IN Madras Cements Ltd. 33,681
The accompanying notes are an integral part of the financial statements. Page 53 Dresdner RCM Emerging Markets Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) RAW/BASIC MATERIALS (CONTINUED) 675 KR Pohang Iron & Steel Co., Ltd. $ 74,306 8,900 SA Sappi Ltd. 87,916 ---------- 703,756 ---------- TRANSPORTATION SERVICES 0.6% 1,200 GR Minoan Lines 32,928 ENERGY SECTOR 5.7% ENERGY 5.7% 4,300 RU Lukoil Holding (Sponsored ADR) Pfd. 38,700 475,000 BR Petroleo Brasiliers S.A. (Petrobras) 120,952 6,800 SA Sasol Ltd. 57,339 3,109 KR S.K. Corp. 94,187 ---------- 311,178 ---------- HEALTHCARE SECTOR 1.0% DRUGS & HOSPITAL SUPPLIES 1.0% 1,600 IN Dr. Reddy's Laboratories Ltd. 53,039 INTEREST SENSITIVE SECTOR 8.2% BANKING 3.8% 3,500 EG Commercial International Bank 51,128 100,000 MX Grupo Financiero Bancomer S.A. de C.V. O Shares 41,794 18,200 MY Malayan Banking Berhad 64,658 1,650 BR Unibanco (Sponsored GDR) 49,706 ---------- 207,286 ---------- GENERAL FINANCE 4.4% 33,000 MY Arab-Malaysian Finance Berhad * 38,211 52,500 MY Commerce Asset Holdings Berhad 134,704 5,000 LT Sabanci Holding (GDR) 66,875 ---------- 239,790 ---------- TECHNOLOGY SECTOR 29.1% COMPUTERS/OFFICE EQUIPMENT 2.3% 1,000 TW Asustek Computer Inc. 10,546 5,404 TW Asustek Computer Inc. (GDR) 75,251 386 KR Trigem Computer Inc. 42,832 ---------- 128,629 ---------- ELECTRONICS/NEW TECHNOLOGY 11.9% 3,200 TW ASE Test Ltd. * 78,000 750 SG Chartered Semiconductor Manufacturing Ltd. * 54,750 680 IS Orbotech Ltd. * 52,700 733 KR Samsung Electronics Co. 171,711
The accompanying notes are an integral part of the financial statements. Page 54 Dresdner RCM Emerging Markets Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) ELECTRONICS/NEW TECHNOLOGY (CONTINUED) 9,000 TW Taiwan Semiconductor Manufacturing * $ 47,889 3,198 TW Taiwan Semiconductor Manufacturing (ADR) * 143,910 28,000 CI United Microelectronics Corp. Ltd. * 99,920 ---------- 648,880 ---------- TECHNOLOGY SERVICES 14.9% 560 IS Check Point Software Tech * 111,300 275 US Comverse Technology Inc. * 39,806 12,200 SG Datacraft Asia Ltd. 101,260 13,200 SA Dimension Data Holdings Ltd. * 82,782 770 IN Infosys Technologies Ltd. (ADR) 254,100 1,330 IN Satyam Infoway Ltd. (ADR) * 206,150 300 ES Terra Networks S.A. (Sponsored ADR) * 16,425 ---------- 811,823 ---------- TELEMEDIA/SERVICES SECTOR 24.7% COMMUNICATIONS SERVICES 22.2% 1,110 CI China Telecom (Hong Kong) Ltd. * 142,704 450 KR Dacom Corp. * 231,836 4,900 BR Embratel Participacoes S.A (ADR) 133,525 6,000 MX Grupo Carso Global Telecom * 56,359 4,500 GR Hellenic Telecommunications Organization S.A. (ADR) 53,719 600 KR Korea Telecom Corp. 94,584 1,100 KR Korea Telecom Corp. (Sponsored ADR) 82,225 2,800 IS Partner Communications Co. Ltd. * 72,450 2,200 BR Tele Norte Leste Participacoes S.A. (ADR) 56,100 700 BR Telecommunicacoes Brasileiras S.A. (ADR) 89,950 1,750 MX Telefonos de Mexico (ADR) 196,875 ---------- 1,210,327 ---------- MEDIA 2.5% 900 MX Grupo Televisa S.A. (ADR) * 61,425 3,600 SG Singapore Press Holdings Ltd. 78,031 ---------- 139,456 ---------- TOTAL INVESTMENTS (Cost $3,368,036) ** 95.3% 5,199,990 OTHER ASSETS LESS LIABILITIES 4.7% 253,439 ---------- NET ASSETS 100.0% $5,453,429 ==========
- -------------------------------- * Non-income producing security. ADR American Depository Receipt GDR Global Depository Receipt Pfd. Preferred Stock The accompanying notes are an integral part of the financial statements. Page 55 Dresdner RCM Emerging Markets Fund Portfolio of Investments December 31, 1999 Tax information: ** For Federal income tax purposes, cost is $3,373,212 and the gross aggregate unrealized appreciation (depreciation) for all securities as follows: Unrealized appreciation $1,854,604 Unrealized depreciation (27,826) ---------- Net unrealized appreciation $1,826,778 ==========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at December 31, 1999, categorized by country:
% OF NET ASSETS COUNTRY ------------------------- COUNTRY CODE EQUITIES OTHER TOTAL - ------------------------------------------------------------------ Brazil BR 10.8% 10.8% China CI 4.4% 4.4% Egypt EG 1.9% 1.9% Greece GR 2.4% 2.4% Hong Kong HK 1.9% 1.9% Hungary HU 2.0% 2.0% India IN 12.6% 12.6% Israel IS 4.3% 4.3% Korea KR 15.5% 15.5% Lithuania LT 1.2% 1.2% Malaysia MY 5.7% 5.7% Mexico MX 11.5% 11.5% Peru PO 0.6% 0.6% Poland PL 0.7% 0.7% Russia RU 0.7% 0.7% Singapore SG 4.3% 4.3% South Africa SA 5.8% 5.8% Spain ES 0.3% 0.3% Taiwan TW 6.5% 6.5% United Kingdom UK 1.5% 1.5% United States US 0.7% 4.7% 5.4% ------ ---- ----- Total 95.3% 4.7% 100.0% ====== ==== =====
The accompanying notes are an integral part of the financial statements. Page 56 Dresdner RCM Europe Fund Management's Performance Review A fourth quarter surge in technology and telecommunication stocks ignited the Dresdner RCM Europe Fund's overall performance for 1999. For the year ended December 31, 1999, the Fund achieved a total return of 43.59%. That compares favorably to the portfolio's primary benchmark, the Morgan Stanley Capital International Europe Index, which returned 16.21%. MARKET REVIEW After a weak first half, the European economy began to strengthen in the second half of 1999, supported by consumer spending, improving business confidence and a rise in exports. The euro's weakness, a reflection of sluggish growth in the first half of the year, generated improved business volume for European exporters. Meanwhile, European merger & acquisition activity reached record levels, as did mutual fund inflows, a direct result of the European's new focus on a new "equity culture." This new culture has come about as European governments promise less of an old-age safety net while more and more individuals invest in stocks and mutual funds to save for retirement. During 1999, the new European Central Bank performed a delicate balancing act between generating sufficient economic growth in core countries such as Germany, while restraining growth in peripheral markets such as Ireland to combat potential inflation, of which there was little evidence. In recent months, the central bank has moved from an easing posture in the first half of 1999 to a neutral policy. Still, short-term interest rates are just 3%, which is low compared to other parts of the world. An important political development took place in Germany, which still accounts for one third of Europe's economy. Germany's new social democratic government has put forward a dramatic change in tax policy that should be positive for German corporations, if the bill is passed. The corporate tax rate would fall from around 50% to roughly half its current rate. In addition, capital gains on industrial holdings would be tax free, which should encourage German corporations to accelerate their restructuring plans by selling non-core assets. FACTORS AFFECTING PERFORMANCE Dresdner RCM Global Investors LLC ("Dresdner RCM"), the Fund's investment manager, emphasized technology and telecommunications for most of the year, with these two groups comprising 59% of the Fund's assets at December 31, 1999 compared to 31% for the benchmark index. The telecommunications strategy focuses on leading wireless communications companies, such as Mannesmann AG in Germany and Sonera Oyj in Finland. Mannesmann has an excellent opportunity to capitalize on the growing consumer interest in wireless products throughout Europe, where usage is generally more prevalent than in the U.S. Sonera Oyj is a leading cellular company in Finland, a market where wireless penetration is 70%. The company also specializes in services allowing mobile subscribers to transact banking and e- commerce activities in a secure manner through handsets. Other very strong performers included Nokia, the largest provider of handsets, and Telefonaktiebolaget LM Ericsson, a leading provider of infrastructure for the telecom sector. In technology, STMicroelectronics NV, a French semiconductor company with production facilities in the U.S. and Europe, is benefiting from the upturn in the semiconductor cycle. The company has a major focus toward value-added products serving such fast growing areas as the telecom market and the automotive industry, where electronic capability is increasingly important. Another large holding is U.K.-based Baltimore Technologies PLC, which develops Internet security software, enabling secure communication between businesses and consumers through the issuance of digital certificates. The only non-technology or telecommunications holding in the Fund's top 10 is BIPOP SpA, an Italian bank which has made the transition from a regional player to a pan-European financial services company with value-added enhancements such as asset management as well as on-line trading and banking services. Generally, the Fund has been underweight in financials because of the rising interest rate environment. However, BIPOP has distinguished itself by seeking new channels of distribution, such as the Internet, and it has capitalized on the growth in the Italian savings market. Page 57 Dresdner RCM Europe Fund Management's Performance Review In addition to being underweight in financial services, the Fund is also light on pharmaceutical companies, which have performed poorly along with their U.S. counterparts, where the potential expansion of Medicare was thought to hurt profits. Despite being a significant part of the benchmark, the Fund does not own any utility stocks -- an advantage for the Fund -- as deregulation across Europe continues to exert downward pressure on electricity prices. One factor adversely impacting the Fund's performance was the need to sell German equities early in 1999 and purchase equities of other countries to meet its new investment mandate. This shift was driven by shareholder-approved changes in the investment mandate from a Germany-only fund to a pan-European portfolio, and its conversion from a closed-end to an open-end fund in May. Another negative factor was the Fund's underweight holdings in cyclical stocks during the second quarter, when investor preference shifted briefly from growth to value. OUTLOOK Dresdner RCM's 2000 outlook for Europe remains positive, as economic growth is increasing, inflation is low and the central bank posture towards rates does not threaten the currently benign environment. Attractive opportunities remain among companies in the telecommunications, media and technology sectors, and Dresdner RCM continues to believe these areas will yield profitable holdings for the future. Page 58 Dresdner RCM Europe Fund* Total Return Index Comparison(c) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
$10,000 INVESTMENT (4/5/90 - 12/31/99)(D) CLASS N SHARES MSCI-EUROPE(A) DAX 100(B) 4/90 $10,000 $10,000 $10,000 4/90 $9,150 $9,738 $9,346 5/90 $9,117 $10,535 $9,432 6/90 $9,400 $10,909 $9,862 7/90 $9,708 $11,372 $10,643 8/90 $8,617 $10,249 $9,117 9/90 $7,358 $9,046 $7,545 10/90 $8,250 $9,814 $8,450 11/90 $8,283 $9,917 $8,575 12/90 $8,000 $9,778 $8,318 1/91 $7,898 $10,111 $8,425 2/91 $8,289 $11,000 $8,858 3/91 $7,319 $10,266 $7,848 4/91 $7,600 $10,163 $8,194 5/91 $7,847 $10,466 $8,514 6/91 $7,311 $9,591 $7,813 7/91 $7,591 $10,260 $8,075 8/91 $7,694 $10,451 $8,216 9/91 $7,770 $10,769 $8,390 10/91 $7,481 $10,547 $8,239 11/91 $7,387 $10,303 $8,293 12/91 $7,739 $11,113 $8,872 1/92 $7,835 $11,114 $8,965 2/92 $8,071 $11,162 $9,123 3/92 $7,879 $10,776 $8,953 4/92 $7,853 $11,375 $8,974 5/92 $8,263 $12,026 $9,534 6/92 $8,202 $11,806 $9,712 7/92 $7,792 $11,390 $9,259 8/92 $7,818 $11,358 $9,266 9/92 $7,346 $11,175 $8,761 10/92 $6,883 $10,399 $8,171 11/92 $6,735 $10,398 $8,146 12/92 $6,602 $10,642 $7,980 1/93 $6,806 $10,664 $8,163 2/93 $7,134 $10,790 $8,580 3/93 $7,293 $11,349 $8,829 4/93 $7,249 $11,603 $8,691 5/93 $7,320 $11,732 $8,720 6/93 $6,992 $11,564 $8,369 7/93 $7,329 $11,607 $8,746 8/93 $8,002 $12,629 $9,740 9/93 $8,091 $12,594 $9,824 10/93 $8,490 $13,123 $10,290 11/93 $8,259 $12,843 $10,096 12/93 $8,792 $13,812 $10,880 1/94 $8,559 $14,519 $10,598 2/94 $8,541 $14,009 $10,397 3/94 $8,775 $13,617 $10,768 4/94 $9,142 $14,185 $11,477 5/94 $8,730 $13,586 $10,922 6/94 $8,541 $13,448 $10,871 7/94 $8,792 $14,156 $11,458 8/94 $9,026 $14,609 $11,854 9/94 $8,299 $14,035 $11,103 10/94 $8,550 $14,651 $11,682 11/94 $8,182 $14,095 $11,082 12/94 $8,364 $14,179 $11,508 1/95 $8,064 $14,073 $11,191 2/95 $8,500 $14,397 $12,166 3/95 $8,073 $15,070 $11,812 4/95 $8,300 $15,559 $12,295 5/95 $8,527 $15,882 $12,628 6/95 $8,664 $16,038 $12,958 7/95 $9,009 $16,880 $13,702 8/95 $8,500 $16,233 $12,947 9/95 $8,482 $16,730 $13,049 10/95 $8,436 $16,656 $12,974 11/95 $8,273 $16,781 $12,902 12/95 $8,364 $17,318 $13,188 1/96 $8,682 $17,438 $13,838 2/96 $8,836 $17,762 $13,942 3/96 $8,682 $17,981 $13,913 4/96 $8,355 $18,117 $13,414 5/96 $8,618 $18,264 $13,784 6/96 $8,964 $18,470 $14,119 7/96 $8,846 $18,245 $14,090 8/96 $9,073 $18,792 $14,367 9/96 $9,136 $19,195 $14,513 10/96 $9,164 $19,646 $14,611 11/96 $9,591 $20,648 $15,204 12/96 $9,709 $21,054 $15,299 1/97 $9,600 $21,118 $15,334 2/97 $9,883 $21,403 $15,951 3/97 $10,493 $22,100 $16,918 4/97 $10,210 $21,997 $16,409 5/97 $10,584 $22,942 $17,202 6/97 $11,149 $24,096 $17,926 7/97 $12,278 $25,231 $19,555 8/97 $11,285 $23,796 $17,670 9/97 $12,214 $26,109 $19,204 10/97 $11,522 $24,832 $17,692 11/97 $11,786 $25,219 $18,150 12/97 $12,182 $26,147 $19,048 1/98 $12,724 $27,243 $19,476 2/98 $13,430 $29,379 $20,801 3/98 $14,746 $31,479 $22,112 4/98 $15,558 $32,096 $22,846 5/98 $16,250 $32,754 $24,902 6/98 $17,268 $33,121 $25,822 7/98 $18,775 $33,784 $26,116 8/98 $15,346 $29,540 $21,849 9/98 $14,608 $28,368 $21,326 10/98 $15,676 $30,645 $22,438 11/98 $16,386 $32,285 $23,431 12/98 $16,738 $33,706 $23,515 1/99 $17,253 $33,497 $23,442 2/99 $16,088 $32,656 $21,825 3/99 $15,611 $33,022 $21,288 4/99 $15,973 $34,012 $22,781 5/99 $15,463 $32,386 $21,302 6/99 $16,138 $32,940 $22,233 7/99 $16,342 $33,253 $22,097 8/99 $15,909 $33,599 $22,517 9/99 $15,871 $33,347 $22,214 10/99 $17,095 $34,581 $23,276 11/99 $19,950 $35,521 $23,637 12/99 $24,034 $39,170 $27,457
PERFORMANCE(c) DECEMBER 31, 1999
CUMULATIVE SINCE SINCE EUROPE FUND 1 YEAR 3 YEARS 5 YEARS INCEPTION INCEPTION Class N Average Annual Total Return(d) 43.59% 35.27% 23.50% 9.42% 140.34% MSCI-Europe Average Annual Total Return(a) 16.21% 22.99% 22.53% 15.03% 291.67% DAX 100 Average Annual Total Return(b) 16.77% 21.52% 19.00% 10.93% 174.57%
The data above represents past performance of the Fund and may not indicate future performance. The investment return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. - -------------------------------- * The fund commenced operations on April 5, 1990. The line graph and chart below reflect the performance of the Fund primarily as a closed-end investment company that invested primarily in equity securities of German companies. Beginning on February 9, 1999, the Fund's objective was expanded to permit investment in European companies. On May 3, 1999, the Fund converted from a closed-end to an open-end investment company. (a) The MSCI-Europe Index is a market capitalization-weighted index composed of companies representative of the market structure of 15 developed countries. The Index is calculated on a total return basis, which includes reinvestment of gross dividends before deduction of withholding taxes. The graph for the MSCI-Europe Index represents growth of $10,000 from March 31, 1990 compared to the Fund's inception date of April 5, 1990. (b) The DAX 100 Index is a total rate of return index of the 100 most highly capitalized stocks traded on the Frankfurt Stock Exchange. The Index was developed with a base value of 500 as of December 31, 1987. The underlying stock prices are from XETRA. (c) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (d) On May 3, 1999, when the Fund converted from a closed-end fund to an open-end fund, all outstanding shares were converted to Class N shares subject to a Rule 12b-1 fee. Class N returns thru 5/3/99 do not reflect 12b-1 fees and would be lower if Rule 12b-1 fees had been paid. Page 59 Dresdner RCM Europe Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------------- EQUITY INVESTMENTS CONSUMER DURABLES SECTOR 2.5% AUTOMOTIVE RELATED 2.5% 150,000 IT Magneti Marelli * $ 572,678 400 DE Porsche AG (Non-Voting Preferred Shares) 1,095,997 ----------- 1,668,675 ----------- CONSUMER NON-DURABLES SECTOR 3.8% HOUSEHOLD/RELATED NON-DURABLES 0.0%** 560 UK Reckitt Benckiser PLC 5,299 RETAIL TRADE 3.8% 7,000 FR Carrefour Supermarche S.A. 1,291,120 52,783 UK Dixons Group PLC 1,269,908 ----------- 2,561,028 ----------- CYCLICAL/CAPITAL GOODS SECTOR 10.4% CHEMICALS/TEXTILES 0.8% 10,000 NL Akzo Nobel N.V. 501,660 ELECTRICAL EQUIPMENT 3.0% 5,600 DE Siemens AG 712,478 25,000 FR Thomson Multimedia * 1,347,330 ----------- 2,059,808 ----------- INDUSTRIAL EQUIPMENT 1.6% 18,000 DE Steag Hamatech AG * 652,763 26,600 NO Tomra Systems ASA 451,776 ----------- 1,104,539 ----------- RAW/BASIC MATERIALS 4.7% 104,000 UK Billiton PLC 616,299 350 CH Holderbank Financiere Glarus AG 479,211 13,500 DE SGL Carbon AG * 897,548 30,000 FI UPM-Kymmene Oyj 1,208,820 ----------- 3,201,878 ----------- TRANSPORTATION SERVICES 0.3% 11,200 DE Sixt AG (Non-Voting Preferred Shares) 203,082 ENERGY SECTOR 6.3% ENERGY 6.3% 111,098 UK BP Amoco PLC 1,121,044 144,000 UK Shell Transport & Trading Co. 1,196,299 5,000 FR Total Fina S.A. (ADR) 346,250 12,300 FR Total Fina S.A. (B Shares) 1,641,728 ----------- 4,305,321 -----------
The accompanying notes are an integral part of the financial statements. Page 60 Dresdner RCM Europe Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) HEALTH CARE SECTOR 4.7% DRUGS AND HOSPITAL SUPPLIES 4.7% 20,000 UK Glaxo Wellcome PLC $ 566,437 12,500 UK Glaxo Wellcome PLC (ADR) 698,437 16,000 DK H Lundbeck A/S 639,233 69 CH Roche Holdings AG 819,055 10,600 FR Sanofi Synthelabo S.A. * 441,425 ----------- 3,164,587 ----------- INTEREST-SENSITIVE SECTOR 10.6% BANKING 7.7% 25,500 IT Banca Popolare di Brescia 2,256,639 6,000 FR Banque Nationale de Paris 553,639 12,600 DE Bayerische Hypo- und Vereinsbank AG 860,559 13,000 DE Deutsche Bank AG 1,098,061 150 CH Julius Baer Holding Ltd. 453,147 ----------- 5,222,045 ----------- INSURANCE 2.9% 3,050 DE Allianz AG 1,024,651 40,000 UK Allied Zurich AG PLC 471,492 25,000 UK Prudential Corp. PLC 487,640 ----------- 1,983,783 ----------- TECHNOLOGY SECTOR 30.2% ELECTRONICS/NEW TECHNOLOGY 22.1% 23,400 NL ASM Lithography Holding N.V. (ADR) * 2,661,750 9,700 DE Epcos AG * 727,961 38,000 SE Ericsson (LM) Telefonaktiebolaget (ADR) 2,496,125 30,000 FI Nokia Corp. (ADR) 5,700,000 22,500 FR STMicroelectronics N.V. (NY Registered Shares) 3,407,344 ----------- 14,993,180 ----------- TECHNOLOGY SERVICES 8.1% 21,000 UK Baltimore Technologies PLC * 1,729,344 12,500 UK CMG PLC 916,948 2,000 SE Framtidsfabriken AB 362,353 9,000 SE Icon Medialab International AB * 313,412 27,500 UK Psion PLC 1,154,511 13,000 DE SAP AG (ADR) 676,812 6,700 ES Terra Networks S.A. * 366,146 ----------- 5,519,526 ----------- TELEMEDIA/SERVICES SECTOR 31.3% BUSINESS SERVICES 6.5% 2,500 FR Altran Technologies S.A. 1,511,025 22,500 DE I-D Media AG * 1,393,920
The accompanying notes are an integral part of the financial statements. Page 61 Dresdner RCM Europe Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) BUSINESS SERVICES (CONTINUED) 12,500 NL Randstad Holding N.V. $ 601,891 90,000 NL Vedior N.V. 924,747 ----------- 4,431,583 ----------- COMMUNICATION SERVICES 19.4% 45,255 UK British Telecom PLC 1,096,099 31,000 US Infonet Services Corp. (Class B) * 813,750 8,880 UK Jazztel PLC (ADR) * 578,310 17,500 DE Mannesmann AG 4,222,054 49,000 FI Sonera Oyj 3,358,957 90,000 IT Telecom Italia Mobile SpA 1,005,435 42,840 ES Telefonica S.A. 1,070,241 4,500 ES Telefonica S.A. (ADR) 354,656 137,080 UK Vodafone Airtouch PLC 683,043 ----------- 13,182,545 ----------- MEDIA 5.4% 11,000 DE EM.TV & Merchandising AG 709,174 1,000 FR Havas Advertising S.A. 426,109 65,000 IT Mediaset SpA 1,010,976 15,700 UK NDS Group PLC (ADR) * 478,850 2,000 FR Societe Television Francaise 1 1,047,644 ----------- 3,672,753 ----------- TOTAL EQUITY INVESTMENTS (COST $44,013,621) 99.8% 67,781,292 ----------- SHORT-TERM INVESTMENT FACE AMOUNT - --------- TIME DEPOSIT 0.6% $ 412,000 US State Street Bank & Co., Euro Dollar Time Deposit, 3.750% maturing 01/03/00 (cost $412,000) 412,000 TOTAL INVESTMENTS (COST $44,425,621) *** 100.4% 68,193,292 OTHER ASSETS LESS LIABILITIES (0.4)% (283,417) ----------- NET ASSETS 100.0% $67,909,875 ===========
- -------------------------------- * Non-income producing security ** Less than 0.1% of net assets ADR American Depository Receipt The accompanying notes are an integral part of the financial statements. Page 62 Dresdner RCM Europe Fund Portfolio of Investments December 31, 1999 Tax Information: *** For Federal income tax purposes, cost is $44,629,936 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows:
Unrealized appreciation $24,003,498 Unrealized depreciation (440,142) ----------- Net unrealized appreciation $23,563,356 ===========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at December 31, 1999 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Denmark DK 0.9% 0.9% Finland FI 15.1% 15.1% France FR 17.7% 17.7% Germany DE 21.0% 21.0% Italy IT 7.1% 7.1% Netherlands NL 6.9% 6.9% Norway NO 0.7% 0.7% Spain ES 2.6% 2.6% Sweden SE 4.7% 4.7% Switzerland CH 2.6% 2.6% United Kingdom UK 19.3% 19.3% United States US 1.2% 0.2% 1.4% ------ ------ ----- Total 99.8% 0.2% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 63 Dresdner RCM Global Equity Fund Management's Performance Review A rebounding Japan as well as a heavy emphasis on technology and telecom stocks helped the Dredner RCM Global Equity Fund outperform its benchmark in 1999. For the year ended December 31, 1999, the Fund returned 62.20%, while the portfolio's primary benchmark, the MSCI All Country World Free Index, rose 26.82%. The Global Equity Fund performed in the top quintile of the Lipper Global Funds Universe, ranking 32 out of 257 funds during its first year of operation. MARKET REVIEW Decisive action by the Federal Reserve Board and central banks around the world stopped the Asian economic crisis of 1997-1998 in its tracks and restored confidence in global markets. By early 1999, fears of deflation evaporated as commodity prices surged but inflation remained modest. Overall, non-U.S. markets outperformed the U.S. stock market in 1999, an impressive feat considering that the S&P 500 Index rose by more than 20% for the fifth year in a row. In Japan, a revolutionary cultural shift began to take place in the business community, as profitability increasingly became a key objective. Leading the charge was Japan's technology community, which is setting the standards for corporate restructuring in Japan. Initially, Europe's markets suffered from an outflow of capital to Asian markets. However, the euro stabilized and Europe's major economies began to improve in the latter half of 1999. The euro's weakness, a reflection of sluggish growth in the first half of the year, actually generated improved business volume for European exporters. Meanwhile, European merger and acquisition activity reached record levels. As 1999 progressed, the world was increasingly divided into two spheres -- not West vs. East or Europe vs. Asia, but new economy vs. old economy. The new economy camp included the obvious technology leaders in computer software, the Internet, telecommunications, semiconductor equipment and so on. It also included non-technology companies that were embracing the efficiencies of the Internet and business-to-business/business-to-consumer commerce. FACTORS AFFECTING PERFORMANCE Throughout most of the year, the Fund overweighed the Japanese market compared to its benchmark index, with an emphasis on technology, telecommunications and, recently, financial services. Companies such as Daiwa Securities Group and Aeon Credit benefitted from the rapid financial market deregulation in Japan. This shift to Japan caused the Fund to underweight in Europe and slightly underweight the U.S. From a sector standpoint, technology and telemedia/ services represented 55% of the portfolio as of December 31, 1999 compared to 37% for the primary benchmark. This dual focus on Japan and global technology helped the Fund outperform its benchmarks. In Japan, one of the Fund's strongest performers was Sony Corp. This new economy stock has positioned itself as a convergence of consumer electronic appliances, computing and communications devices, as well as movie, television and music content. Their next generation Sony PlayStation is going to feature enhanced connectivity to the Internet as well as other computing-related devices. Dresdner RCM's Grassroots-SM- Research has been instrumental in assessing the acceptance of Sony's new products into the market place through customer interviews, focus groups and interviews with retail store managers. As a result, Sony, a major Japanese exporter, has been a strong performer, despite the yen's strength. Telecommunications was one of the strongest performing sectors throughout the globe. Portfolio holdings include STMicroelectronics, a French-based producer of specialized semiconductors for the telecommunications, consumer electronics and automotive industries. Another holding, Mannesmann, a top German-based telecommunications company, has assembled a very cost-efficient pan-European cellular network. In emerging markets, China Telecom is the dominant cellular operator in China, commanding a market share of about 90% in a country where cellular penetration is only about 2%. Over the next few years, that penetration is likely to grow to 15%, which suggests dramatic growth opportunities for China Telecom. Within Page 64 Dresdner RCM Global Equity Fund Management's Performance Review the U.S., JDS Uniphase is a company whose laser technology plays an important role in the telecommunications industry's ability to increase the capacity of traffic carried over fiber-optic networks. Outside of technology, Colgate Palmolive, one of the world's leading consumer products companies, boosted revenue growth from the recovery in emerging markets, while simultaneously cutting costs and raising profit margins. However, Raytheon, a leading U.S. defense contractor, was unable to fill orders in a timely fashion, resulting in disappointing earnings. The stock was subsequently sold due to a loss of confidence in Raytheon's management. OUTLOOK World economic growth is likely to be very robust in 2000, which should benefit commodity and economically-sensitive stocks, particularly in emerging markets. In Europe, increasing consumer demand should lead to stronger economic growth and ultimately productivity. Although economic growth in Japan will remain modest, a new emphasis on shareholder value will increasingly permeate the culture leading Japanese firms to improve operating efficiencies and profitability. In the U.S., rising interest rates are likely to slow the economy, although investors may focus more on booming corporate profits. Overall, the new economy should lead to continued profitability gains around the world, as the Internet brings down distribution costs and allows companies to expand sales channels. Page 65 Dresdner RCM Global Equity Fund Total Return Index Comparison(c) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
$10,000 INVESTMENT (12/31/98 - 12/31/99)(D) CLASS I SHARES S&P 500 STOCK INDEX(A) MSCI-ACWI FREE(B) 12/98 $10,000 $10,000 $10,000 1/99 $10,300 $10,418 $10,204 2/99 $9,940 $10,094 $9,948 3/99 $10,430 $10,498 $10,396 4/99 $10,520 $10,904 $10,845 5/99 $10,160 $10,647 $10,462 6/99 $11,000 $11,238 $10,983 7/99 $11,130 $10,887 $10,938 8/99 $11,320 $10,833 $10,925 9/99 $11,380 $10,536 $10,807 10/99 $12,260 $11,203 $11,353 11/99 $13,850 $11,430 $11,707 12/99 $16,220 $12,104 $12,682
PERFORMANCE(c) DECEMBER 31, 1999
CUMULATIVE SINCE SINCE GLOBAL EQUITY FUND 1 YEAR INCEPTION INCEPTION Class I Average Annual Total Return(d) 62.20% 62.20% 62.20% S&P 500 Stock Index Average Annual Total Return(a) 21.04% 21.04% 21.04% MSCI-ACWI Free Average Annual Total Return(b) 26.82% 26.82% 26.82%
The data above represents past performance of the Fund and may not indicate future performance. The investment return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. - -------------------------------- (a) The Standard & Poor's 500 Stock Index is a capitalization-weighted index of 500 stocks that attempts to measure performance of the board domestic economy through changes in the aggregate market value of 500 stocks representing major industries. (b) The Morgan Stanley Capital International ("MSCI") Global Equity All Country World Free Index ("ACWI Free") is a market capitalization-weighted index composed of companies representative of the market structure of 47 developed and emerging market countries in the Americas, Europe/Middle East, and Asia/Pacific regions. The Index is calculated without dividends or with gross dividends reinvested, in both U.S. Dollars and local currencies. The MSCI ACWI Free Index excludes closed markets and those shares in otherwise free markets which are not purchasable by foreigners. (c) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (d) The Class I shares commenced operations on December 31, 1998. Page 66 Dresdner RCM Global Equity Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS CONSUMER DURABLES SECTOR 3.6% AUTOMOTIVE RELATED 0.4% 2 DE Porsche AG (Non-Voting Preferred Shares) $ 5,480 CONSUMER DURABLES 3.2% 180 JP Sony Corp. (ADR) 51,255 CONSUMER NON-DURABLES SECTOR 6.5% BEVERAGE/TOBACCO 0.7% 70 US Anheuser-Busch Companies Inc. 4,961 120 US Coca Cola Co. 6,990 ---------- 11,951 ---------- HOUSEHOLD/RELATED NON-DURABLES 2.1% 250 US Colgate Palmolive Co. 16,250 410 US Gillette Co. 16,887 ---------- 33,137 ---------- LEISURE TIME PRODUCTS/SERVICES 0.3% 100 US McDonalds Corp. 4,031 RETAIL TRADE 3.4% 42 FR Carrefour Supermarche S.A. 7,747 160 US Circuit City Stores Inc. 7,210 902 UK Dixons Group PLC 21,701 80 NL Gucci Group 9,160 240 US Safeway Inc. * 8,535 ---------- 54,353 ---------- CYCLICAL/CAPITAL GOODS SECTOR 11.0% AEROSPACE/DEFENSE 0.5% 150 US General Dynamics Corp. 7,913 CHEMICALS/TEXTILES 0.4% 115 NL Akzo Nobel N.V. 5,769 ELECTRICAL EQUIPMENT 3.0% 250 US General Electric Co. 38,687 70 DE Siemens AG 8,906 ---------- 47,593 ----------
The accompanying notes are an integral part of the financial statements. Page 67 Dresdner RCM Global Equity Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) INDUSTRIAL EQUIPMENT 1.2% INDUSTRIAL EQUIPMENT 1.2%:(Continued) 500 BH Tyco International Ltd. $ 19,437 RAW/BASIC MATERIALS 5.9% 230 CA Alcan Aluminum Ltd. 9,473 943 AU Broken Hill Proprietary Co. Ltd. 12,339 8 CH Holderbank Financiere Glarus AG 10,954 2,500 IE Jefferson Smurfit Group PLC 7,488 7,000 JP Marubeni Corp. 29,375 350 KR Pohang Iron & Steel Co. Ltd. (ADR) 12,250 290 FI UPM-Kymmene Oyj 11,685 ---------- 93,564 ---------- ENERGY SECTOR 3.6% ENERGY 3.6% 649 UK BP Amoco PLC 6,549 300 US Enron Corp. 13,312 140 US Schlumberger Ltd. 7,875 1,670 UK Shell Transport & Trading Co. 13,874 110 FR Total Fina S.A. (B Shares) 14,682 27 US Transocean Sedco Forex Inc. 910 ---------- 57,202 ---------- HEALTH CARE SECTOR 7.5% DRUGS AND HOSPITAL SUPPLIES 7.5% 200 US Amgen Inc. * 12,013 135 US Bristol-Myers Squibb Co. 8,665 80 US Genentech Inc. * 10,760 463 UK Glaxo Wellcome PLC 13,113 120 US Guidant Corp. * 5,640 150 US Merck & Co. Inc. 10,060 135 US PE Biosystems Group 16,242 105 US Pfizer Inc. 3,406 165 US Pharmacia & Upjohn Inc. 7,425 154 FR Sanofi Synthelabo S.A. * 6,413 300 US Warner Lambert Co. 24,581 ---------- 118,318 ---------- INTEREST-SENSITIVE SECTOR 11.5% BANKING 5.4% 1,000 JP Asahi Bank Ltd. 6,163 300 US Bank of New York Inc. 12,000 150 FR Banque Nationale de Paris 13,841 190 DE Bayerische Hypo- und Vereinsbank AG 12,977 125 US Citigroup Inc. 6,945
The accompanying notes are an integral part of the financial statements. Page 68 Dresdner RCM Global Equity Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) BANKING (CONTINUED) 465 SG DBS Group Holdings Ltd. * $ 7,620 140 DE Deutsche Bank AG 11,825 4 UK HSBC Holdings PLC 56 1,000 JP Industrial Bank of Japan Ltd. 9,635 404 UK Lloyds TSB Group PLC 5,016 ---------- 86,078 ---------- GENERAL FINANCE 2.5% 30 JP Aiful Corp. 3,668 140 US Charles Schwab Corp. 5,373 2,000 JP Daiwa Securities Group Inc. 31,282 ---------- 40,323 ---------- INSURANCE 3.6% 40 DE Allianz AG 13,438 400 UK Allied Zurich AG PLC 4,715 142 US American International Group Inc. 15,354 45 FR Axa S.A. 6,274 7 UK CGU PLC 113 836 UK Prudential Corp. PLC 16,306 ---------- 56,200 ---------- TECHNOLOGY SECTOR 37.3% COMPUTERS/OFFICE EQUIPMENT 8.2% 140 US E M C Corp. * 15,295 205 JP Fujitsu Ltd. (ADR) 47,355 140 US Hewlett-Packard Co. 15,951 110 US International Business Machines 11,880 250 JP NEC Corp. (ADR) 30,469 120 US Sun Microsystems Inc. * 9,292 ---------- 130,242 ---------- ELECTRONICS/NEW TECHNOLOGY 18.8% 180 NL ASM Lithography Holding N.V. (ADR) * 20,475 260 US Cisco Systems Inc. * 27,853 200 DE Epcos AG * 15,010 240 US JDS Uniphase Corp. * 38,715 100 US Lucent Technologies Inc. 7,481 90 US Motorola Inc. 13,253 280 FI Nokia Oyj 50,770 215 CA Nortel Networks Corp. 21,715 240 US QUALCOMM Inc. * 42,270 40 KR Samsung Electronics 9,370 215 FR STMicroelectronics N.V. (NY Registered Shares) 32,559
The accompanying notes are an integral part of the financial statements. Page 69 Dresdner RCM Global Equity Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) ELECTRONICS/NEW TECHNOLOGY (CONTINUED) 392 TW Taiwan Semiconductor Manufacturing Co. (ADR) $ 17,640 ---------- 297,111 ---------- TECHNOLOGY SERVICES 10.3% 400 US Amdocs Ltd. * 13,800 130 US BMC Software Inc. * 10,392 150 UK CMG PLC 11,003 180 US Exodus Communications Inc. * 15,986 405 US Microsoft Corp. * 47,284 650 UK Misys PLC 10,086 200 US Oracle Corp. * 22,413 75 US Yahoo Inc. * 32,452 ---------- 163,416 ---------- TELEMEDIA/SERVICES SECTOR 18.4% COMMUNICATION SERVICES 15.2% 115 US Bell Atlantic Corp. 7,080 11 UK British Telecom PLC 266 6,000 HK China Telecom (Hong Kong) Ltd. * 37,435 400 US Infonet Services Corp. (Class B) * 10,500 150 KR Korea Telecom Corp. (ADR) 11,212 172 DE Mannesmann AG 41,497 270 US MCI WorldCom Inc. * 14,327 220 JP Nippon Telegraph & Telephone Corp. (ADR) 18,947 1 JP NTT Mobile Communications Network Inc. 38,443 150 US SBC Communications Inc. 7,313 300 FI Sonera Oyj 20,565 1,000 IT Telecom Italia Mobile SpA 11,172 135 MX Telefonos De Mexico (ADR) 15,187 1,415 UK Vodafone Airtouch PLC 7,051 ---------- 240,995 ---------- MEDIA 3.2% 100 JP Asatsu-DK Inc. 6,749 150 US Clear Channel Communications * 13,387 10 FR Havas Advertising S.A. 4,261 8 FR Societe Television Francaise 1 4,191 115 US Time Warner Inc. 8,330 250 UK WPP Group PLC 3,916 130 US Young & Rubicam Inc. 9,198 ---------- 50,032 ---------- TOTAL EQUITY INVESTMENTS (COST $1,092,473) 99.4% 1,574,400 ----------
The accompanying notes are an integral part of the financial statements. Page 70 Dresdner RCM Global Equity Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 0.1% 912 US SSgA Money Market Fund $ 912 67 US SSgA U.S. Government Money Market Fund 67 ---------- TOTAL SHORT-TERM INVESTMENTS (COST $979) 0.1% 979 ---------- TOTAL INVESTMENTS (COST $1,093,452)** 99.5% 1,575,379 OTHER ASSETS LESS LIABILITIES 0.5% 8,696 ---------- NET ASSETS 100.0% $1,584,075 ==========
- -------------------------------- * Non-income producing security ADR American Depository Receipt Tax Information: ** For Federal income tax purposes, cost is $1,096,708 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $500,955 Unrealized depreciation (22,284) -------- Net unrealized appreciation $478,671 ========
The accompanying notes are an integral part of the financial statements. Page 71 Dresdner RCM Global Equity Fund Portfolio of Investments December 31, 1999 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at December 31, 1999 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Australia AU 0.8% 0.8% Bermuda BH 1.2% 1.2% Canada CA 2.0% 2.0% Finland FI 5.2% 5.2% France FR 5.7% 5.7% Germany DE 6.9% 6.9% Hong Kong HK 2.4% 2.4% Ireland IE 0.5% 0.5% Italy IT 0.7% 0.7% Japan JP 17.2% 17.2% Korea KR 2.1% 2.1% Mexico MX 1.0% 1.0% Netherlands NL 2.2% 2.2% Singapore SG 0.5% 0.5% Switzerland CH 0.7% 0.7% Taiwan TW 1.1% 1.1% United Kingdom UK 7.2% 7.2% United States US 42.0% 0.6% 42.6% ------ ------ ----- Total 99.4% 0.6% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 72 Dresdner RCM Strategic Income Fund Management's Performance Review A focus on rebounding emerging market debt in the face of rising interest rates allowed investors in the Dresdner RCM Strategic Income Fund to earn a positive total return for 1999. For the year ended December 31, 1999, the Fund returned 2.67% while the Lehman Brothers U.S. Universal Index, the Fund's unmanaged benchmark, returned 0.18%. While the Fund's total return -- which equals bond income plus or minus changes in bond prices -- was modest, its income to shareholders, at 7.09%, was well in excess of inflation. MARKET REVIEW During the 1990s, there have been two negative performing years for bonds -- 1994 and 1999. In both years, interest rates rose rapidly because of a surging economy. In 1999, rates rose sharply because the U.S. economy continued to be very robust and bond investors wanted to be compensated for future inflation. Meanwhile, other economies were rebounding from the recession of 1997-1998, boosting the demand for credit as well as commodities. Indeed, with oil prices more than doubling, inflation began to rise moderately, reversing a downward trend that had lasted several years. The Federal Reserve Board responded by raising short-term interest rates three times in an effort to cool the economy and stave off inflation. U.S. Treasury bonds, which have no credit component, performed the worst of all fixed income asset classes in 1999. The Merrill Lynch U.S. Treasury Master Index, a measure of a broad maturity spectrum of U.S. Treasury bonds, returned -2.38% during 1999. The results might have been worse had the federal government not posted its first surplus in 30 years, thus reducing supply and exerting upward pressure on prices. Another reason for the poor performance was that government bonds were overbought in 1998 as global investors engaged in a flight to quality. That position was unwound in 1999, when investor behavior reflected a flight from quality, as it became apparent that the world economy would not collapse, and in fact, would be strong and there would be a surge in credit demand. Indeed, the J.P. Morgan Emerging Markets Bond Index returned 21.58% in 1999. FACTORS AFFECTING PERFORMANCE During 1999, the Dresdner RCM Strategic Income Fund reduced its allocation to U.S. Treasuries, the worst performing fixed income class, from about 50% at the end of January, 1999 to zero by year-end. That decision explains some of the Fund's outperformance during the year. In addition, the portfolio's duration -- its sensitivity to changes in interest rates -- was slightly shorter than the benchmark. As a result, the bonds in the portfolio decreased relatively less in price in the rising interest rate environment of 1999. The most important reason for the Fund's outperformance was its weighting in emerging market bonds. The balance of the portfolio was invested in investment-grade corporate bonds, mortgage-backed securities and domestic high-yield bonds. Investment-grade corporate bonds, which ended 1999 at about 5% of the Fund, offered modest incremental income over Treasury bonds of about one percent. The sector was adversely affected during the summer by Y2K concerns that third quarter supply would surge because issuers would want to get their financing out of the way. In addition, investors became more concerned about event risk -- hence, the modest performance for 1999. The Fund's mortgage component, at about 20% throughout the year, offered about a 2.5% incremental yield over Treasury bonds. Mortgages are unique in that they permit borrowers to refinance at any time, which is a risk in a falling interest rate environment. However, mortgages typically outperform when interest rates are rising because homeowners do not refinance. Meanwhile, investors are compensated for the prepayment risk with higher coupons. The Fund included a 4.5% position in Greek bonds at year-end, on the theory that Greece will likely join the European Monetary Union. Although the bonds did appreciate, the Greek Dracma declined in value along with the euro, thus offsetting the bonds' appreciation. Domestic high-yield bonds, which comprised 28% of the Fund at year-end, offered modest incremental returns, with the Merrill Lynch High Yield U.S. Corporates Page 73 Dresdner RCM Strategic Income Fund Management's Performance Review index up just 1.57%. Although there were no problem credits in the portfolio, there were some defaults in the high-yield market that caused broader nervousness. The best performing sector was emerging market debt, which began 1999 at very high yields on the heels of the Asian and Russian economic crises. World growth rebounded beyond expectations, boosting credit quality and bond prices. The Fund's allocation to emerging market debt increased during the year to about 33% at year-end. Areas of particular interest include Latin America, which is benefiting from strengthening oil prices, and Asia, where economies have rebounded, and Eastern Europe including Russia, where yields are extremely high to compensate investors for risk. OUTLOOK Dresdner RCM believes that global growth is likely to remain strong, emerging market debt continues to be attractive. Meanwhile, the outlook for U.S. Treasury bonds, corporate bonds and mortgage-backed securities is cautious in an interest rate environment that continues to drift upward. Domestic high-yield bonds should have a better year in 2000 as 1999's relatively high default rate fades from view. Even with its high allocation to emerging markets and domestic high-yield debt, the Dresdner RCM Strategic Income Fund maintains an average credit rating of BAA(2)/BBB+ while yielding around 9% -- a compelling premium over inflation. Page 74 Dresdner RCM Strategic Income Fund Total Return Index Comparison(b) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
$10,000 INVESTMENT (12/31/98 - 12/31/99)(C) CLASS I SHARES LEHMAN BROTHERS U.S. UNIVERSAL INDEX(A) 12/98 $10,000 $10,000 1/99 $10,040 $10,067 2/99 $9,840 $9,905 3/99 $10,020 $9,984 4/99 $10,336 $10,043 5/99 $10,057 $9,942 6/99 $10,060 $9,924 7/99 $10,011 $9,883 8/99 $9,942 $9,872 9/99 $10,005 $9,979 10/99 $10,052 $10,021 11/99 $10,126 $10,037 12/99 $10,267 $10,018
PERFORMANCE(b) DECEMBER 31, 1999
CUMULATIVE SINCE SINCE STRATEGIC INCOME FUND 1 YEAR INCEPTION INCEPTION Class I Average Annual Total Return(c) 2.67% 2.67% 2.67% Lehman Brothers U.S. Universal Index Average Annual Total Return(a) 0.18% 0.18% 0.18%
The data above represents past performance of the Fund and may not indicate future performance. The investment return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. - -------------------------------- (a) The Lehman Brothers U.S. Universal Index, like the Lehman Brothers Aggregate Index, is modular and combines the core Lehman Aggregate Index with the following cap-weighted sub-sectors: High Yield, Emerging Market, Rule 144a, and Eurobond Dollar. The Index is broadly diversified by sector, but is concentrated in AAA-rated and government quality issues. (b) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (c) The Class I shares commenced operations on December 31, 1998. Page 75 Dresdner RCM Strategic Income Fund Portfolio of Investments December 31, 1999
FACE % OF MARKET VALUE AMOUNT CURRENCY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------------------ DEBT INVESTMENTS ARGENTINA 8.2% 53,000 ARS Republic of Argentina 3.114%, maturing 4/1/01, Floating Rate-Bocon Bond $ 21,342 38,000 ARS Republic of Argentina 3.114%, maturing 9/1/02, Floating Rate-Bocon Bond 28,820 55,000 USD Republic of Argentina 0.000%, maturing 10/15/03, Zero Coupon 36,713 162,800 USD Republic of Argentina 6.813%, maturing 3/31/05, Floating Rate 148,148 ---------- 235,023 ---------- BRAZIL 3.8% 53,000 USD Federal Republic of Brazil 7.000%, maturing 4/15/00, Floating Rate 39,443 93,417 USD Federal Republic of Brazil, C Bond 5.000%, with 3.00% Interest Capitalization maturing 4/15/14 70,184 ---------- 109,627 ---------- BULGARIA 2.3% 93,000 USD National Republic of Bulgaria 2.750%, maturing 7/28/12, Step Coupon 66,960 CANADA 3.6% 50,000 CAD Clearnet Communications Inc. 0.000%, maturing 5/1/09, Step Coupon 30,000 25,000 USD Gulf Canada Resources Ltd. 8.375%, maturing 11/15/05 25,000 50,000 USD Imax Corp. 7.875%, maturing 12/1/05 47,000 ---------- 102,000 ---------- GREECE 4.5% 43,000,000 GRD Hellenic Republic 6.000%, maturing 2/19/06 128,462 INDIA 0.7% 20,000 USD Reliance Industries Ltd. 9.375%, maturing 6/24/26, (144A) 20,106 KOREA 1.1% 17,000 USD Korea Electric Power Corp. 6.375%, maturing 12/1/03 16,120 17,000 USD Korea Telecom Corp. 7.625%, maturing 4/15/07 15,836 ---------- 31,956 ----------
The accompanying notes are an integral part of the financial statements. Page 76 Dresdner RCM Strategic Income Fund Portfolio of Investments December 31, 1999
FACE % OF MARKET VALUE AMOUNT CURRENCY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------------------ DEBT INVESTMENTS (CONTINUED) PANAMA 1.2% 43,000 USD Republic of Panama 4.250%, maturing 7/17/14, Step Coupon $ 33,648 PHILIPPINES 2.4% 70,000 USD Republic of Philippines 9.875%, maturing 1/15/19 69,125 RUSSIA 1.3% 55,000 USD Russian Federation 12.750%, maturing 6/24/28, (144A) 38,500 TURKEY 2.2% 60,000 USD Republic of Turkey 11.875%, maturing 11/5/04 61,950 UNITED KINGDOM 0.5% 15,000 USD Royal Sun & Alliance Insurance Group PLC 8.950%, maturing 10/15/29, (144A) 14,996 UNITED STATES 53.6% 75,000 EUR Adelphia Communications Corp. 7.750%, maturing 1/15/09, Series B 67,875 75,000 USD Alaska Steel Corp. 7.875%, maturing 2/15/09 71,437 15,000 USD American General Institutional Capital (144A) 7.570%, maturing 12/1/45, (144A) 13,992 75,000 USD American Standard Inc. 7.375%, maturing 2/1/08 69,562 50,000 USD Applied Power Inc. 8.750%, maturing 4/1/09 49,000 50,000 USD Calpine Corp. 7.750%, maturing 4/15/09 47,500 25,000 USD Charter Communication Holdings LLC 8.250%, maturing 4/1/07 23,188 15,000 USD Dow Chemical Co. 7.375%, maturing 11/1/29 14,397 50,000 USD Echostar DBS Corp. 9.375%, maturing 2/1/09 50,365 390,066 USD Federal National Mortgage Association 6.000%, maturing 1/1/29 356,785 225,000 USD Federal National Mortgage Association, 7.000%, 30 year, TBA* 217,546 100,000 USD Fox/Liberty Networks LLC 9.750%, maturing 8/1/02, Step Coupon 80,250 25,000 USD Georgia Gulf Corp. 10.375%, maturing 11/1/07, (144A) 26,187 25,000 USD Global Crossing Holdings Ltd. 9.125%, maturing 11/15/06, (144A) 24,813
The accompanying notes are an integral part of the financial statements. Page 77 Dresdner RCM Strategic Income Fund Portfolio of Investments December 31, 1999
FACE % OF MARKET VALUE AMOUNT COUNTRY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------------------ DEBT INVESTMENTS (CONTINUED) UNITED STATES (CONTINUED) 25,000 USD HMH Properties 7.875%, maturing 8/1/08, Series B $ 22,375 25,000 USD ISP Holdings Inc. 9.750%, maturing 2/15/02, Series B 25,125 35,000 USD Liberty Media Group 8.500%, maturing 7/15/29, (144A) 35,264 15,000 USD Lucent Technologies Inc. 6.450%, maturing 3/15/29 13,127 25,000 USD Manadalay Resort Group 9.250%, maturing 12/1/05 25,437 25,000 USD Navistar International Corp. 8.000%, maturing 2/1/08, Series B 24,063 50,000 USD Nextel Communications Inc. 9.950%, maturing 2/15/08, Step Coupon 35,375 75,000 USD Owens Illinois Inc. 7.350%, maturing 5/15/08 68,110 25,000 USD Qwest Communications International Inc. 8.290%, maturing 2/1/08, Series B, Step Coupon 19,125 30,000 USD Rohm & Haas Co. 7.850%, maturing 7/15/29 30,102 25,000 USD Sbarro Inc. 11.000%, maturing 9/15/09, (144A) 25,750 25,000 USD Scotts Co. 8.625%, maturing 1/15/09, (144A) 24,500 25,000 USD Stater Bros. Holdings Inc. 10.750%, maturing 8/15/06, (144A) 25,125 60,000 USD Waste Management Inc. 6.875%, maturing 5/15/09, (144A) 50,104 ---------- 1,536,479 ---------- VENEZUELA 1.8% 78,000 USD Republic of Venezuela 9.250%, maturing 9/15/27 51,776 ---------- TOTAL DEBT INVESTMENTS (COST $2,556,159) 87.2% 2,500,608 ---------- PREFERRED STOCKS SHARES - ----------- UNITED STATES 0.9% 635 USD Citigroup Inc. 5.864%, Preferred Shares-Series M 26,353 ---------- TOTAL PREFERRED STOCKS (COST $29,083) 0.9% 26,353 ----------
The accompanying notes are an integral part of the financial statements. Page 78 Dresdner RCM Strategic Income Fund Portfolio of Investments December 31, 1999
FACE % OF MARKET VALUE AMOUNT CURRENCY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------------------ SHORT-TERM INVESTMENTS
COMMERCIAL PAPER 7.0% 75,000 USD Associates Corp. of North America 5.670%, maturing 1/14/00 ** $ 74,846 125,000 USD Citicorp. 5.670%, maturing 1/28/00 ** 124,469 ---------- 199,315 ---------- SHARES - ---------- MONEY MARKET FUNDS 9.0% 128,944 USD SSgA Money Market Fund ** 128,944 128,944 USD SSgA U.S. Government Money Market Fund 128,944 ---------- 257,888 ---------- TOTAL SHORT-TERM INVESTMENTS (COST $457,203) 16.0% 457,203 ---------- TOTAL INVESTMENTS (COST $3,042,445)*** 104.1% 2,984,164 OTHER ASSETS LESS LIABILITIES (4.1)% (117,797) ---------- NET ASSETS 100.0% $2,866,367 ==========
- -------------------------------- 144A Security is purchased prusuant to Rule 144A of the Securities Act of 1933 and may be resold only to qualified institutional buyers. The accompanying notes are an integral part of the financial statements. Page 79 Dresdner RCM Strategic Income Fund Portfolio of Investments December 31, 1999 * Settlement of mortgage backed securities is on a delayed delivery basis with the final maturity to be announced (TBA) in the future. At December 31,1999, the cost of the Fund's forward commitment purchases was $220,209. ** A portion of this security has been segregated to cover the forward commitment purchases. Tax Information: *** For Federal income tax purposes, cost is $3,067,221 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows:
Unrealized appreciation $ 41,153 Unrealized depreciation (124,210) -------- Net unrealized depreciation $(83,057) ========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at December 31, 1999 categorized by country:
% OF NET ASSETS ---------------------------------------- PREFERRED SHORT-TERM COUNTRY STOCK DEBT AND OTHER TOTAL - ------------------------------------------------------------------------ Argentina 8.2% 8.2% Brazil 3.8% 3.8% Bulgaria 2.3% 2.3% Canada 3.6% 3.6% Greece 4.5% 4.5% India 0.7% 0.7% Korea 1.1% 1.1% Panama 1.2% 1.2% Philippines 2.4% 2.4% Russia 1.3% 1.3% Turkey 2.2% 2.2% United Kingdom 0.5% 0.5% United States 0.9% 53.6% 11.9% 66.4% Venezuela 1.8% 1.8% ------ ---- ------- ----- Total 0.9% 87.2% 11.9% 100.0% ====== ==== ======= =====
The accompanying notes are an integral part of the financial statements. Page 80 Dresdner RCM Balanced Fund Management's Performance Review Due to the fact that the Dresdner RCM Balanced Fund only had a 15 day operating history in 1999, a formal Management Performance Review is not being provided. In lieu of this Review, the Fund's Goal and Principal Investment Strategies are listed below for your information. For additional information on Dresdner RCM Balanced Fund, please see the prospectus for complete information, including risks, fees and expenses. GOAL The Fund's goal is to seek long term capital appreciation and current income by investing in a diversified portfolio of equity and fixed income securities. PRINCIPAL INVESTMENT STRATEGIES Under normal market conditions, the Fund will invest up to 75% of its total assets in equity securities and at least 25% of its total assets in investment grade fixed income securities. Up to 30% of the Fund's total assets may be invested in securities of foreign issuers. The Fund will allocate its assets among various types of equity and fixed income securities. The allocation of the Fund's assets will fluctuate with factors affecting the relative attractiveness of such equity and fixed income securities. These factors include, among others: general market and economic conditions and trends, interest and inflation rates, fiscal and monetary developments, long-term corporate earnings growth, and expected total return and risk of each asset class. The Fund focuses its equity securities on companies that it expects will have higher than average rates of growth and strong potential for capital appreciation. Foreign stocks are chosen using a similar process, while also considering country allocation and currency exposure. The Fund's equity securities may be of any capitalization. However, the Fund will generally not invest in securities with market capitalizations below $1 billion. The Fund uses fundamental and original research to select fixed income securities and manage the mix between U.S. and foreign bonds. The Fund's debt securities may be of any maturity. A bond's maturity and duration, among other factors, are important components to the Fund's fixed income process. Page 81 Dresdner RCM Balanced Fund Total Return Index Comparison(d) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
$10,000 INVESTMENT (12/15/99 - 12/31/99)(E) CLASS I SHARES S&P 500 STOCK INDEX(A) LEHMAN BROTHERS AGGREGATE BOND INDEX(B) 12/99 $10,000 $10,000 $10,000 12/99 $10,650 $10,400 $9,938 $10,000 INVESTMENT (12/15/99 - 12/31/99)(E) BLENDED S&P 500 STOCK/LEHMAN BROTHERS AGGREGATE BOND INDEX(C) 12/99 $10,000 12/99 $10,215
PERFORMANCE(d)(f) DECEMBER 31, 1999
CUMULATIVE SINCE SINCE BALANCED FUND YTD(F) INCEPTION INCEPTION Class I Average Annual Total Return(d)(e) 6.50% 6.50% 6.50% S&P 500 Stock Index Average Annual Total Return(a) 4.00% 4.00% 4.00% Lehman Brothers Aggregate Bond Index Average Annual Total Return(b) -0.62% -0.62% -0.62% Blended S&P 500 Stock/Lehman Brothers Aggregate Bond Index Average Annual Total Return(c) 2.15% 2.15% 2.15%
The data above represents past performance of the Fund and may not indicate future performance. The investment return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. - -------------------------------- (a) The Standard & Poor's 500 Stock Index is a capitalization-weighted index of 500 stocks that attempts to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing major industries. (b) The Lehman Brothers Aggregate Bond Index, which is a market value weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities, with maturities of at least one year. (c) The Blended S & P 500 Stock /Lehman Brothers Aggregate Bond Index is a blended index comprised of the performance of the two indexes weighted 60% Standard & Poor's 500 Stock Index and 40% Lehman Brothers Aggregate Bond Index. (d) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (e) The Class I shares commenced operations on December 15, 1999. (f) Unannualized. Page 82 Dresdner RCM Balanced Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------------- EQUITY INVESTMENTS CONSUMER NON-DURABLES SECTOR 10.0% BEVERAGE/TOBACCO 1.9% 100 US Anheuser-Busch Companies Inc. $ 7,087 100 US Coca Cola Co. 5,825 300 US Coca Cola Enterprises Inc. 6,038 ---------- 18,950 ---------- HOUSEHOLD/RELATED NON-DURABLES 3.3% 200 US Colgate Palmolive Co. 13,000 400 US Estee Lauder Cos. Inc. (Class A) 20,175 ---------- 33,175 ---------- LEISURE TIME PRODUCTS/SERVICES 1.6% 400 US McDonalds Corp. 16,125 RETAIL TRADE 3.2% 200 US Costco Cos. Inc. * 18,250 500 US Walgreen Co. 14,625 ---------- 32,875 ---------- CYCLICAL/CAPITAL GOODS SECTOR 7.4% AEROSPACE/DEFENSE 1.2% 200 US Honeywell International Inc. 11,538 ELECTRICAL EQUIPMENT 3.1% 200 US General Electric Co. 30,950 INDUSTRIAL EQUIPMENT 2.3% 600 BH Tyco International Ltd. 23,325 RAW/BASIC MATERIALS 0.8% 100 US Alcoa Inc. 8,300 ENERGY SECTOR 2.3% ENERGY 2.3% 300 US Enron Corp. 13,313 250 US Weatherford International Inc. 9,984 ---------- 23,297 ---------- HEALTH CARE SECTOR 11.8% DRUGS AND HOSPITAL SUPPLIES 11.8% 400 US Amgen Inc. * 24,025 200 US Bristol-Myers Squibb Co. 12,838 250 US Eli Lilly & Co. 16,625 100 US Genentech Inc. * 13,450 150 US Guidant Corp. * 7,050 200 US Johnson & Johnson 18,625
The accompanying notes are an integral part of the financial statements. Page 83 Dresdner RCM Balanced Fund Portfolio of Investments December 31, 1999
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) DRUGS AND HOSPITAL SUPPLIES (CONTINUED) 300 US Pfizer Inc. $ 9,731 200 US Warner Lambert Co. 16,387 ---------- 118,731 ---------- INTEREST-SENSITIVE SECTOR 2.8% BANKING 1.1% 200 US Citigroup Inc. 11,112 GENERAL FINANCE 0.6% 100 US Federal National Mortgage Association 6,244 INSURANCE 1.1% 100 US American International Group Inc. 10,813 TECHNOLOGY SECTOR 21.2% COMPUTERS/OFFICE EQUIPMENT 4.7% 208 US E M C Corp. * 22,724 150 US Hewlett-Packard Co. 17,091 75 US International Business Machines 8,100 ---------- 47,915 ---------- ELECTRONICS/NEW TECHNOLOGY 13.0% 200 US Cisco Systems Inc. * 21,425 200 US Intel Corp. 16,462 150 US JDS Uniphase Corp. * 24,197 100 US Lucent Technologies Inc. 7,481 150 FI Nokia Corp. (ADR) 28,500 50 CA Nortel Networks Corp. 5,050 160 US QUALCOMM Inc. * 28,180 ---------- 131,295 ---------- TECHNOLOGY SERVICES 3.5% 300 US Microsoft Corp. * 35,025 TELEMEDIA/SERVICES SECTOR 9.1% COMMUNICATION SERVICES 5.9% 525 US MCI WorldCom Inc. * 27,858 400 US Qwest Communications International Inc. * 17,200 300 UK Vodafone AirTouch PLC (ADR) 14,850 ---------- 59,908 ---------- MEDIA 3.2% 200 US Clear Channel Communications * 17,850 200 US Time Warner Inc. 14,487 ---------- 32,337 ---------- TOTAL EQUITY INVESTMENTS (COST $595,237) 64.6% 651,915 ----------
The accompanying notes are an integral part of the financial statements. Page 84 Dresdner RCM Balanced Fund Portfolio of Investments December 31, 1999
FACE % OF MARKET VALUE AMOUNT COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------------- DEBT INVESTMENTS CORPORATE BONDS 6.7% 5,000 CA Hydro Quebec 8.050%, maturing 7/7/24 $ 5,281 5,000 SK Republic of Korea 8.875%, maturing 4/15/08 5,244 10,000 US American General Finance Corp. 6.750%, maturing 11/15/04 9,700 10,000 US CIT Group Inc. 7.125%, maturing 10/15/04 9,915 5,000 US CSX Corp. 6.250%, maturing 10/15/08 4,524 5,000 US Ford Motor 6.625%, maturing 10/1/28 4,338 5,000 US International Business Machines 6.500%, maturing 1/15/28 4,417 5,000 US Lehman Brothers Holdings Inc. 7.000%, maturing 5/15/03 4,933 5,000 US NBD Bank 8.250%, maturing 11/1/24 5,259 5,000 US Safeway Inc. 7.500%, maturing 9/15/09 4,902 5,000 US Tyco International Group S.A. 6.875%, maturing 1/15/29 4,249 5,000 US United Technologies Corp. 7.500%, maturing 9/15/29 4,887 ---------- 67,649 ---------- U.S. GOVERNMENT AND AGENCY BONDS 26.3% 15,000 US Federal National Mortgage Association 6.250%, maturing 5/15/29 *** 13,350 80,000 US Federal National Mortgage Association, 7.000%, 30 year, TBA ** 77,349 80,000 US Federal National Mortgage Association, 7.500%, 30 year, TBA ** 79,100 65,000 US United States Treasury Notes 5.500%, maturing 2/28/03 *** 63,436 35,000 US United States Treasury Notes 5.625%, maturing 5/15/08 *** 32,922 ---------- 266,157 ---------- TOTAL DEBT INVESTMENTS (COST $334,644) 33.0% 333,806 ---------- TOTAL INVESTMENTS (COST $929,881) **** 97.6% 985,721 OTHER ASSETS LESS LIABILITIES *** 2.4% 23,736 ---------- NET ASSETS 100.0% $1,009,457 ==========
- -------------------------------- * Non-income producing security ** Settlement of mortgage backed securities is on a delayed delivery basis with the final maturity to be announced (TBA) in the future. At December 31, 1999, the cost of the Fund's forward commitment purchases was $156,463. *** A portion of this security and cash have been segregated to cover the forward commitment purchase. ADR American Depository Receipt The accompanying notes are an integral part of the financial statements. Page 85 Dresdner RCM Balanced Fund Portfolio of Investments December 31, 1999 Tax Information: **** For Federal income tax purposes, cost is $849,503 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows:
Unrealized appreciation $148,995 Unrealized depreciation (12,777) -------- Net unrealized appreciation $136,218 ========
The Fund's investments in securities at December 31, 1999 categorized by country:
% OF NET ASSETS --------------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES DEBT AND OTHER TOTAL - --------------------------------------------------------------------------- Bermuda BH 2.3% 2.3% Canada CA 0.5% 0.5% 1.0% Finland FI 2.8% 2.8% South Korea SK 0.5% 0.5% United Kingdom UK 1.5% 1.5% United States US 57.5% 32.0% 2.4% 91.9% ------ ---- ------ ----- Total 64.6% 33.0% 2.4% 100.0% ====== ==== ====== =====
The accompanying notes are an integral part of the financial statements. Page 86 (THIS PAGE INTENTIONALLY LEFT BLANK) The accompanying notes are an integral part of the financial statements. Page 87 Dresdner RCM Global Funds Statements of Assets and Liabilities December 31, 1999 (All numbers in thousands except net asset values per share)
LARGE CAP TAX MANAGED GROWTH BIOTECHNOLOGY GROWTH FUND FUND FUND ----------- ------------- ----------- ASSETS: Investments at cost $ 11,168 $ 8,672 $ 1,571 =========== ========== ========== Foreign currency at cost $ -- $ -- $ -- =========== ========== ========== Short-term investments at cost $ 525 $ 1,348 $ 22 =========== ========== ========== Investments at value (Note 1) $ 15,445 $ 12,597 $ 2,186 Foreign currency at value (Note 1) -- -- -- Cash 30 567 -- Short-term investments at value (Note 1) 525 1,348 22 Receivables: Investments sold 27 -- -- Fund shares sold 94 375 26 Forward foreign currency contracts (Notes 1 and 6) -- -- -- Dividends 7 2 1 Interest 1 2 -- Investment Manager (Note 2) 76 46 83 Insurance proceeds* -- -- -- Prepaid expenses -- -- -- Organizational costs (Note 5) 7 -- -- ----------- ---------- ---------- Total Assets 16,212 14,937 2,318 ----------- ---------- ---------- LIABILITIES: Payables: Bank overdraft -- -- -- Investments purchased 302 -- -- Fund shares repurchased -- -- -- Accrued Expenses: Management fees (Note 2) -- -- -- Distribution fees (Note 3) -- 2 -- Directors' fees (Note 7) 31 31 23 Other 55 34 37 Distributions payable -- -- -- ----------- ---------- ---------- Total Liabilities 388 67 60 ----------- ---------- ---------- NET ASSETS $ 15,824 $ 14,870 $ 2,258 =========== ========== ========== NET ASSETS CONSIST OF: Paid-in capital (Note 4) $ 11,260 $ 9,979 $ 1,655 Accumulated net investment income (loss) -- -- -- Accumulated net realized gain (loss) on investments, options written and foreign currency transactions 287 966 (12) Net unrealized appreciation (depreciation) on foreign currency translations -- -- -- Net unrealized appreciation (depreciation) on investments 4,277 3,925 615 ----------- ---------- ---------- NET ASSETS $ 15,824 $ 14,870 $ 2,258 =========== ========== ========== CLASS I NET ASSETS $ 14,898 $ -- $ 1,499 =========== ========== ========== CLASS I SHARES OUTSTANDING 781 -- 100 =========== ========== ========== CLASS I NET ASSET VALUE PER SHARE, OFFERING AND REDEMPTION PRICE PER SHARE (NOTES 1 AND 4) $ 19.07 $ -- $ 14.99 =========== ========== ========== CLASS N NET ASSETS $ 926 $ 14,870 $ 759 =========== ========== ========== CLASS N SHARES OUTSTANDING 49 743 51 =========== ========== ========== CLASS N NET ASSET VALUE PER SHARE, OFFERING AND REDEMPTION PRICE PER SHARE (NOTES 1 AND 4) $ 19.00 $ 20.02 $ 14.95 =========== ========== ==========
- ------------------------------------ * See "Notes to Financial Highlights," Footnote 13, page 106. The accompanying notes are an integral part of the financial statements. Page 88 Dresdner RCM Global Funds Statements of Assets and Liabilities December 31, 1999 (All numbers in thousands except net asset values per share)
GLOBAL GLOBAL GLOBAL INTERNATIONAL EMERGING SMALL CAP TECHNOLOGY HEALTH CARE GROWTH EQUITY MARKETS FUND FUND FUND FUND FUND ---------- ------------ ----------- ------------- ----------- ASSETS: Investments at cost $ 18,044 $ 151,624 $ 4,935 $ 187,776 $ 3,368 ========== ============ ========== ============ =========== Foreign currency at cost $ -- $ 547 $ -- $ 937 $ 124 ========== ============ ========== ============ =========== Short-term investments at cost $ 897 $ 19,390 $ 187 $ 7,359 $ -- ========== ============ ========== ============ =========== Investments at value (Note 1) $ 24,419 $ 258,246 $ 6,095 $ 278,759 $ 5,200 Foreign currency at value (Note 1) -- 550 -- 937 124 Cash 145 536 -- 1 59 Short-term investments at value (Note 1) 897 19,390 187 7,359 -- Receivables: Investments sold 176 5,639 -- 108 -- Fund shares sold 98 5,641 12 2,405 35 Forward foreign currency contracts (Notes 1 and 6) -- -- -- -- -- Dividends 2 33 2 229 5 Interest 3 32 1 51 7 Investment Manager (Note 2) 82 -- 53 -- 117 Insurance proceeds* -- -- -- -- -- Prepaid expenses -- 5 -- 12 -- Organizational costs (Note 5) -- 16 -- -- 12 ---------- ------------ ---------- ------------ ----------- Total Assets 25,822 290,088 6,350 289,861 5,559 ---------- ------------ ---------- ------------ ----------- LIABILITIES: Payables: Bank overdraft 46 -- -- -- -- Investments purchased 192 8,311 -- 682 -- Fund shares repurchased 4 1,028 -- 1,643 19 Accrued Expenses: Management fees (Note 2) -- 383 -- 62 -- Distribution fees (Note 3) -- 13 1 -- -- Directors' fees (Note 7) 31 31 31 80 25 Other 46 95 34 95 62 Distributions payable -- -- -- -- -- ---------- ------------ ---------- ------------ ----------- Total Liabilities 319 9,861 66 2,562 106 ---------- ------------ ---------- ------------ ----------- NET ASSETS $ 25,503 $ 280,227 $ 6,284 $ 287,299 $ 5,453 ========== ============ ========== ============ =========== NET ASSETS CONSIST OF: Paid-in capital (Note 4) $ 18,446 $ 168,267 $ 4,541 $ 184,101 $ 3,298 Accumulated net investment income (loss) (104) (16) -- (1,060) (2) Accumulated net realized gain (loss) on investments, options written and foreign currency transactions 784 5,350 583 13,280 325 Net unrealized appreciation (depreciation) on foreign currency translations 2 4 -- (5) -- Net unrealized appreciation (depreciation) on investments 6,375 106,622 1,160 90,983 1,832 ---------- ------------ ---------- ------------ ----------- NET ASSETS $ 25,503 $ 280,227 $ 6,284 $ 287,299 $ 5,453 ========== ============ ========== ============ =========== CLASS I NET ASSETS $ 24,073 $ 197,897 $ -- $ 285,561 $ 5,154 ========== ============ ========== ============ =========== CLASS I SHARES OUTSTANDING 1,030 3,342 -- 12,783 305 ========== ============ ========== ============ =========== CLASS I NET ASSET VALUE PER SHARE, OFFERING AND REDEMPTION PRICE PER SHARE (NOTES 1 AND 4) $ 23.38 $ 59.21 $ -- $ 22.34 $ 16.87 ========== ============ ========== ============ =========== CLASS N NET ASSETS $ 1,430 $ 82,330 $ 6,284 $ 1,738 $ 299 ========== ============ ========== ============ =========== CLASS N SHARES OUTSTANDING 61 1,392 441 78 18 ========== ============ ========== ============ =========== CLASS N NET ASSET VALUE PER SHARE, OFFERING AND REDEMPTION PRICE PER SHARE (NOTES 1 AND 4) $ 23.31 $ 59.13 $ 14.25 $ 22.31 $ 16.84 ========== ============ ========== ============ =========== GLOBAL STRATEGIC EUROPE EQUITY INCOME BALANCED FUND FUND FUND FUND ----------- ---------- ----------- ----------- ASSETS: Investments at cost $ 44,014 $ 1,092 $ 2,585 $ 930 =========== ========== =========== =========== Foreign currency at cost $ 894 $ 3 $ 8 $ -- =========== ========== =========== =========== Short-term investments at cost $ 412 $ 1 $ 457 $ -- =========== ========== =========== =========== Investments at value (Note 1) $ 67,781 $ 1,574 $ 2,527 $ 986 Foreign currency at value (Note 1) 889 3 8 -- Cash 10 -- 50 58 Short-term investments at value (Note 1) 412 1 457 -- Receivables: Investments sold 600 -- -- 127 Fund shares sold 78 -- -- -- Forward foreign currency contracts (Notes 1 and 6) -- -- 7 -- Dividends 110 1 -- 1 Interest 45 -- 44 3 Investment Manager (Note 2) 48 65 48 17 Insurance proceeds* 800 -- -- -- Prepaid expenses 3 -- -- -- Organizational costs (Note 5) -- -- -- -- ----------- ---------- ----------- ----------- Total Assets 70,776 1,644 3,141 1,192 ----------- ---------- ----------- ----------- LIABILITIES: Payables: Bank overdraft -- -- -- -- Investments purchased -- -- 220 167 Fund shares repurchased 1,175 -- -- -- Accrued Expenses: Management fees (Note 2) -- -- -- -- Distribution fees (Note 3) 11 -- -- -- Directors' fees (Note 7) 9 23 23 4 Other 79 37 32 12 Distributions payable 1,592 -- -- -- ----------- ---------- ----------- ----------- Total Liabilities 2,866 60 275 183 ----------- ---------- ----------- ----------- NET ASSETS $ 67,910 $ 1,584 $ 2,866 $ 1,009 =========== ========== =========== =========== NET ASSETS CONSIST OF: Paid-in capital (Note 4) $ 42,582 $ 1,000 $ 3,000 $ 881 Accumulated net investment income (loss) (17) (1) (29) 1 Accumulated net realized gain (loss) on investments, options written and foreign currency transactions 1,590 103 (53) 71 Net unrealized appreciation (depreciation) on foreign currency translations (12) -- 6 -- Net unrealized appreciation (depreciation) on investments 23,767 482 (58) 56 ----------- ---------- ----------- ----------- NET ASSETS $ 67,910 $ 1,584 $ 2,866 $ 1,009 =========== ========== =========== =========== CLASS I NET ASSETS $ -- $ 1,584 $ 2,866 $ 1,009 =========== ========== =========== =========== CLASS I SHARES OUTSTANDING -- 100 300 95 =========== ========== =========== =========== CLASS I NET ASSET VALUE PER SHARE, OFFERING AND REDEMPTION PRICE PER SHARE (NOTES 1 AND 4) $ -- $ 15.84 $ 9.55 $ 10.65 =========== ========== =========== =========== CLASS N NET ASSETS $ 67,910 $ -- $ -- $ -- =========== ========== =========== =========== CLASS N SHARES OUTSTANDING 4,212 -- -- -- =========== ========== =========== =========== CLASS N NET ASSET VALUE PER SHARE, OFFERING AND REDEMPTION PRICE PER SHARE (NOTES 1 AND 4) $ 16.12 $ -- $ -- $ -- =========== ========== =========== ===========
- ------------------------------------ * See "Notes to Financial Highlights," Footnote 13, page 106. The accompanying notes are an integral part of the financial statements. Page 89 Dresdner RCM Global Funds Statements of Operations For the Year Ended December 31, 1999 (All numbers in thousands)
LARGE CAP TAX MANAGED GROWTH BIOTECHNOLOGY GROWTH FUND FUND FUND --------- ------------- ----------- INVESTMENT INCOME: (NOTE 1) Income: Dividends $ 75 $ 17 $ 6 Interest 10 7 1 Foreign tax withheld -- -- -- ------ ------ ----- Total investment income 85 24 7 ------ ------ ----- Expenses: Investment management fees (Note 2) 86 58 10 Administration fees 31 31 31 Shareholder servicing fee, Class I 13 -- 15 Shareholder servicing fee, Class N 14 19 15 Registration and filing, Class I 32 -- 24 Registration and filing, Class N 19 30 18 Reports to shareholders 19 19 20 Accounting expense 40 15 17 Audit fees 24 19 25 Directors' fees and expenses (Note 7) 28 28 28 Legal fees** 18 17 14 Custodian fees 10 6 7 Distribution fees (Note 3) -- 14 -- Amortization of organization costs (Note 5) -- 3 -- Reimbursement of expenses previously assumed by Investment Manager (Note 2) -- -- -- Miscellaneous expenses 1 3 3 ------ ------ ----- Total expenses before waivers and reimbursements 335 262 227 Less: Expenses waived and reimbursed by Investment Manager (Note 2) (218) (175) (210) Recovery from insurance proceeds** -- -- -- ------ ------ ----- Total expenses waived, reimbursed, and recovered (218) (175) (210) ------ ------ ----- Total net expenses 117 87 17 ------ ------ ----- Net investment income (loss) (32) (63) (10) ------ ------ ----- NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on investments 2,485 2,836 27 Net realized gain (loss) on foreign currency transactions -- (16) -- Net realized gain on options written -- -- -- ------ ------ ----- Net realized gain (loss) 2,485 2,820 27 ------ ------ ----- Net change in unrealized appreciation (depreciation) on investments 2,205 3,516 615 Net change in unrealized appreciation (depreciation) on foreign currency translations -- -- -- ------ ------ ----- Net unrealized appreciation (depreciation) 2,205 3,516 615 ------ ------ ----- Net realized and unrealized gain (loss) 4,690 6,336 642 ------ ------ ----- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,658 $6,273 $ 632 ====== ====== =====
- ------------------------------------ * Period from December 15, 1999 (commencement of operations) to December 31, 1999. ** See "Notes to Financial Highlights," Footnote 13, page 106. The accompanying notes are an integral part of the financial statements. Page 90 Dresdner RCM Global Funds Statements of Operations For the Year Ended December 31, 1999 (All numbers in thousands)
GLOBAL GLOBAL GLOBAL INTERNATIONAL EMERGING SMALL CAP TECHNOLOGY HEALTH CARE GROWTH EQUITY MARKETS EUROPE FUND FUND FUND FUND FUND FUND --------- ---------- ----------- ------------- -------- -------- INVESTMENT INCOME: (NOTE 1) Income: Dividends $ 24 $ 152 $ 35 $ 1,870 $ 46 $ 999 Interest 6 169 4 165 6 74 Foreign tax withheld (3) (3) (1) (192) (5) (128) ------ -------- ------ -------- ------ -------- Total investment income 27 318 38 1,843 47 945 ------ -------- ------ -------- ------ -------- Expenses: Investment management fees (Note 2) 72 683 55 1,234 35 928 Administration fees 31 31 31 31 30 27 Shareholder servicing fee, Class I 16 29 -- 17 14 -- Shareholder servicing fee, Class N 15 34 18 15 14 72 Registration and filing, Class I 31 61 -- 28 23 -- Registration and filing, Class N 12 24 34 24 23 21 Reports to shareholders 19 28 19 20 18 60 Accounting expense 28 43 19 46 46 40 Audit fees 24 24 19 54 25 55 Directors' fees and expenses (Note 7) 28 30 28 75 26 202 Legal fees** 18 18 17 22 18 429 Custodian fees 25 36 11 207 83 51 Distribution fees (Note 3) 1 32 13 1 -- 91 Amortization of organization costs (Note 5) -- 15 -- -- 4 -- Reimbursement of expenses previously assumed by Investment Manager (Note 2) -- 1 -- -- -- -- Miscellaneous expenses 4 3 2 5 3 78 ------ -------- ------ -------- ------ -------- Total expenses before waivers and reimbursements 324 1,092 266 1,779 362 2,054 Less: Expenses waived and reimbursed by Investment Manager (Note 2) (215) (33) (184) (132) (310) (199) Recovery from insurance proceeds** -- -- -- -- -- (800) ------ -------- ------ -------- ------ -------- Total expenses waived, reimbursed, and recovered (215) (33) (184) (132) (310) (999) ------ -------- ------ -------- ------ -------- Total net expenses 109 1,059 82 1,647 52 1,055 ------ -------- ------ -------- ------ -------- Net investment income (loss) (82) (741) (44) 196 (5) (110) ------ -------- ------ -------- ------ -------- NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on investments 1,651 9,515 1,375 39,085 990 39,674 Net realized gain (loss) on foreign currency transactions (85) 538 (64) (2,185) (60) (5,625) Net realized gain on options written -- 581 -- -- -- -- ------ -------- ------ -------- ------ -------- Net realized gain (loss) 1,566 10,634 1,311 36,900 930 34,049 ------ -------- ------ -------- ------ -------- Net change in unrealized appreciation (depreciation) on investments 5,651 101,298 206 64,060 1,662 (21,373) Net change in unrealized appreciation (depreciation) on foreign currency translations 3 4 -- 998 -- (42) ------ -------- ------ -------- ------ -------- Net unrealized appreciation (depreciation) 5,654 101,302 206 65,058 1,662 (21,415) ------ -------- ------ -------- ------ -------- Net realized and unrealized gain (loss) 7,220 111,936 1,517 101,958 2,592 12,634 ------ -------- ------ -------- ------ -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $7,138 $111,195 $1,473 $102,154 $2,587 $ 12,524 ====== ======== ====== ======== ====== ======== GLOBAL STRATEGIC EQUITY INCOME BALANCED FUND FUND FUND* ------ --------- -------- INVESTMENT INCOME: (NOTE 1) Income: Dividends $ 11 $ 4 $ 1 Interest 1 192 -- Foreign tax withheld (1) (1) -- ----- ----- ---- Total investment income 11 195 1 ----- ----- ---- Expenses: Investment management fees (Note 2) 8 22 -- Administration fees 31 31 4 Shareholder servicing fee, Class I -- -- 1 Shareholder servicing fee, Class N -- -- -- Registration and filing, Class I 6 8 1 Registration and filing, Class N -- -- -- Reports to shareholders 11 11 2 Accounting expense 12 9 1 Audit fees 24 24 2 Directors' fees and expenses (Note 7) 28 25 4 Legal fees** 13 12 2 Custodian fees 29 12 -- Distribution fees (Note 3) -- -- -- Amortization of organization costs (Note 5) -- -- -- Reimbursement of expenses previously assumed by Investment Manager (Note 2) -- -- -- Miscellaneous expenses 2 2 -- ----- ----- ---- Total expenses before waivers and reimbursements 164 156 17 Less: Expenses waived and reimbursed by Investment Manager (Note 2) (150) (120) (17) Recovery from insurance proceeds** -- -- -- ----- ----- ---- Total expenses waived, reimbursed, and recovered (150) (120) (17) ----- ----- ---- Total net expenses 14 36 -- ----- ----- ---- Net investment income (loss) (3) 159 1 ----- ----- ---- NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on investments 141 (47) 5 Net realized gain (loss) on foreign currency transactions (1) 19 -- Net realized gain on options written -- -- -- ----- ----- ---- Net realized gain (loss) 140 (28) 5 ----- ----- ---- Net change in unrealized appreciation (depreciation) on investments 482 (58) 56 Net change in unrealized appreciation (depreciation) on foreign currency translations -- 6 -- ----- ----- ---- Net unrealized appreciation (depreciation) 482 (52) 56 ----- ----- ---- Net realized and unrealized gain (loss) 622 (80) 61 ----- ----- ---- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 619 $ 79 $ 62 ===== ===== ====
- ------------------------------------ * Period from December 15, 1999 (commencement of operations) to December 31, 1999. ** See "Notes to Financial Highlights," Footnote 13, page 106. The accompanying notes are an integral part of the financial statements. Page 91 Dresdner RCM Global Funds Statements of Changes in Net Assets (All numbers in thousands)
LARGE CAP GROWTH FUND BIOTECHNOLOGY FUND ---------------------------- ---------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DEC. 31, 1999 DEC. 31, 1998 DEC. 31, 1999 DEC. 31, 1998 ------------- ------------- ------------- ------------- OPERATIONS: Net investment income (loss) $ (32) $ (6) $ (63) $ (30) Net realized gain (loss) on investments, foreign currency transactions and options written 2,485 1,044 2,820 219 Net change in unrealized appreciation (depreciation) on investments, foreign currency translations and options written 2,205 1,181 3,516 409 ------- ------ ------- ------ Net increase (decrease) in net assets resulting from operations 4,658 2,219 6,273 598 DISTRIBUTIONS TO SHAREHOLDERS FROM: Class I shares: Net investment income -- (4) -- -- In excess of net investment income -- -- -- -- Net realized gain on investments (2,517) (758) -- -- In excess of net realized gain on investments -- -- -- -- ------- ------ ------- ------ Total distributions, Class I (2,517) (762) -- -- ------- ------ ------- ------ Class N shares: Net investment income -- -- -- -- In excess of net investment income -- -- -- -- Net realized gain on investments (46) -- (1,875) (109) In excess of net realized gain on investments -- -- -- -- ------- ------ ------- ------ Total distributions, Class N (46) -- (1,875) (109) ------- ------ ------- ------ Total distributions to shareholders (2,563) (762) (1,875) (109) NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS* 5,794 1,453 6,561 422 Redemption fees (Note 1) -- -- -- -- ------- ------ ------- ------ TOTAL INCREASE (DECREASE) IN NET ASSETS 7,889 2,910 10,959 911 NET ASSETS: Beginning of period 7,935 5,025 3,911 3,000 ------- ------ ------- ------ End of period $15,824 $7,935 $14,870 $3,911 ======= ====== ======= ====== End of period net assets include net investment income (loss) of: $ -- $ -- $ -- $ -- ======= ====== ======= ======
- ------------------------------------ * For detail on capital share transactions by class, see Statements of Changes in Net Assets (Capital Stock Activity) on pages 96 and 97. ** Period from December 15, 1999 (commencement of operations) to December 31, 1999. *** Period from December 31, 1998 (commencement of operations) to December 31, 1998. The accompanying notes are an integral part of the financial statements. Page 92 Dresdner RCM Global Funds Statements of Changes in Net Assets (All numbers in thousands)
TAX MANAGED GROWTH FUND GLOBAL SMALL CAP FUND ------------------------------- ---------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DEC. 31, 1999 DEC. 31, 1998*** DEC. 31, 1999 DEC. 31, 1998 ------------- ---------------- ------------- ------------- OPERATIONS: Net investment income (loss) $ (10) $ -- $ (82) $ (54) Net realized gain (loss) on investments, foreign currency transactions and options written 27 -- 1,566 557 Net change in unrealized appreciation (depreciation) on investments, foreign currency translations and options written 615 -- 5,654 298 ------ ------ ------- ------ Net increase (decrease) in net assets resulting from operations 632 -- 7,138 801 DISTRIBUTIONS TO SHAREHOLDERS FROM: Class I shares: Net investment income -- -- -- -- In excess of net investment income -- -- -- -- Net realized gain on investments (21) -- (868) (362) In excess of net realized gain on investments (2) -- -- -- ------ ------ ------- ------ Total distributions, Class I (23) -- (868) (362) ------ ------ ------- ------ Class N shares: Net investment income -- -- -- -- In excess of net investment income -- -- -- -- Net realized gain on investments (6) -- (86) -- In excess of net realized gain on investments -- -- -- -- ------ ------ ------- ------ Total distributions, Class N (6) -- (86) -- ------ ------ ------- ------ Total distributions to shareholders (29) -- (954) (362) NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS* 655 1,000 13,840 585 Redemption fees (Note 1) -- -- -- -- ------ ------ ------- ------ TOTAL INCREASE (DECREASE) IN NET ASSETS 1,258 1,000 20,024 1,024 NET ASSETS: Beginning of period 1,000 -- 5,479 4,455 ------ ------ ------- ------ End of period $2,258 $1,000 $25,503 $5,479 ====== ====== ======= ====== End of period net assets include net investment income (loss) of: $ -- $ -- $ (104) $ (1) ====== ====== ======= ====== GLOBAL TECHNOLOGY FUND GLOBAL HEALTH CARE FUND ---------------------------- ---------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DEC. 31, 1999 DEC. 31, 1998 DEC. 31, 1999 DEC. 31, 1998 ------------- ------------- ------------- ------------- OPERATIONS: Net investment income (loss) $ (741) $ (103) $ (44) $ (35) Net realized gain (loss) on investments, foreign currency transactions and options written 10,634 1,689 1,311 854 Net change in unrealized appreciation (depreciation) on investments, foreign currency translations and options written 101,302 4,072 206 366 -------- ------- ------ ------ Net increase (decrease) in net assets resulting from operations 111,195 5,658 1,473 1,185 DISTRIBUTIONS TO SHAREHOLDERS FROM: Class I shares: Net investment income -- -- -- -- In excess of net investment income -- -- -- -- Net realized gain on investments (4,100) (464) -- -- In excess of net realized gain on investments -- -- -- -- -------- ------- ------ ------ Total distributions, Class I (4,100) (464) -- -- -------- ------- ------ ------ Class N shares: Net investment income -- -- -- -- In excess of net investment income -- -- -- -- Net realized gain on investments (1,490) -- (1,103) (473) In excess of net realized gain on investments -- -- -- -- -------- ------- ------ ------ Total distributions, Class N (1,490) -- (1,103) (473) -------- ------- ------ ------ Total distributions to shareholders (5,590) (464) (1,103) (473) NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS* 156,064 6,414 427 104 Redemption fees (Note 1) -- -- -- -- -------- ------- ------ ------ TOTAL INCREASE (DECREASE) IN NET ASSETS 261,669 11,608 797 816 NET ASSETS: Beginning of period 18,558 6,950 5,487 4,671 -------- ------- ------ ------ End of period $280,227 $18,558 $6,284 $5,487 ======== ======= ====== ====== End of period net assets include net investment income (loss) of: $ (16) $ -- $ -- $ -- ======== ======= ====== ======
- ------------------------------------ * For detail on capital share transactions by class, see Statements of Changes in Net Assets (Capital Stock Activity) on pages 96 and 97. ** Period from December 15, 1999 (commencement of operations) to December 31, 1999. *** Period from December 31, 1998 (commencement of operations) to December 31, 1998. The accompanying notes are an integral part of the financial statements. Page 93 Dresdner RCM Global Funds Statements of Changes in Net Assets (All numbers in thousands)
INTERNATIONAL GROWTH EQUITY FUND EMERGING MARKETS FUND ---------------------------- ---------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DEC. 31, 1999 DEC. 31, 1998 DEC. 31, 1999 DEC. 31, 1998 ------------- ------------- ------------- ------------- OPERATIONS: Net investment income (loss) $ 196 $ 435 $ (5) $ 35 Net realized gain (loss) on investments, foreign currency transactions and options written 36,900 (4,599) 930 (463) Net change in unrealized appreciation (depreciation) on investments, foreign currency translations and options written 65,058 18,441 1,662 174 -------- -------- ------ ------ Net increase (decrease) in net assets resulting from operations 102,154 14,277 2,587 (254) DISTRIBUTIONS TO SHAREHOLDERS FROM: Class I shares: Net investment income (854) (1,801) -- (24) In excess of net investment income (1,135) -- -- -- Net realized gain on investments (16,421) (2,742) (144) -- In excess of net realized gain on investments -- -- -- -- -------- -------- ------ ------ Total distributions, Class I (18,410) (4,543) (144) (24) -------- -------- ------ ------ Class N shares: Net investment income (4) -- -- -- In excess of net investment income (6) -- -- -- Net realized gain on investments (92) -- (5) -- In excess of net realized gain on investments -- -- -- -- -------- -------- ------ ------ Total distributions, Class N (102) -- (5) -- -------- -------- ------ ------ Total distributions to shareholders (18,512) (4,543) (149) (24) NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS* 81,682 13,798 281 16 Redemption fees (Note 1) -- -- -- -- -------- -------- ------ ------ TOTAL INCREASE (DECREASE) IN NET ASSETS 165,324 23,532 2,719 (262) NET ASSETS: Beginning of period 121,975 98,443 2,734 2,996 -------- -------- ------ ------ End of period $287,299 $121,975 $5,453 $2,734 ======== ======== ====== ====== End of period net assets include net investment income (loss) of: $ (1,060) $ 662 $ (2) $ (1) ======== ======== ====== ======
- ------------------------------------ * For detail on capital share transactions by class, see Statements of Changes in Net Assets (Capital Stock Activity) on pages 98 and 99. ** Period from December 15, 1999 (commencement of operations) to December 31, 1999. *** Period from December 31, 1998 (commencement of operations) to December 31, 1998. The accompanying notes are an integral part of the financial statements. Page 94 Dresdner RCM Global Funds Statements of Changes in Net Assets (All numbers in thousands)
EUROPE FUND GLOBAL EQUITY FUND ---------------------------- ------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DEC. 31, 1999 DEC. 31, 1998 DEC. 31, 1999 DEC. 31, 1998*** ------------- ------------- ------------- ---------------- OPERATIONS: Net investment income (loss) $ (110) $ (666) $ (3) $ -- Net realized gain (loss) on investments, foreign currency transactions and options written 34,049 50,945 140 -- Net change in unrealized appreciation (depreciation) on investments, foreign currency translations and options written (21,415) 13,394 482 -- --------- -------- ------ ------ Net increase (decrease) in net assets resulting from operations 12,524 63,673 619 -- DISTRIBUTIONS TO SHAREHOLDERS FROM: Class I shares: Net investment income -- -- -- -- In excess of net investment income -- -- (6) -- Net realized gain on investments -- -- (29) -- In excess of net realized gain on investments -- -- -- -- --------- -------- ------ ------ Total distributions, Class I -- -- (35) -- --------- -------- ------ ------ Class N shares: Net investment income -- (2,381) -- -- In excess of net investment income (336) -- -- -- Net realized gain on investments (16,858) (46,368) -- -- In excess of net realized gain on investments -- -- -- -- --------- -------- ------ ------ Total distributions, Class N (17,194) (48,749) -- -- --------- -------- ------ ------ Total distributions to shareholders (17,194) (48,749) (35) -- NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS* (119,298) -- -- 1,000 Redemption fees (Note 1) 540 -- -- -- --------- -------- ------ ------ TOTAL INCREASE (DECREASE) IN NET ASSETS (123,428) 14,924 584 1,000 NET ASSETS: Beginning of period 191,338 176,414 1,000 -- --------- -------- ------ ------ End of period $ 67,910 $191,338 $1,584 $1,000 ========= ======== ====== ====== End of period net assets include net investment income (loss) of: $ (17) $ (2,619) $ (1) $ -- ========= ======== ====== ====== STRATEGIC INCOME FUND BALANCED FUND ------------------------------- --------------- YEAR ENDED YEAR ENDED YEAR ENDED DEC. 31, 1999 DEC. 31, 1998*** DEC. 31, 1999** ------------- ---------------- --------------- OPERATIONS: Net investment income (loss) $ 159 $ -- $ 1 Net realized gain (loss) on investments, foreign currency transactions and options written (28) -- 5 Net change in unrealized appreciation (depreciation) on investments, foreign currency translations and options written (52) -- 56 ------ ------ ------ Net increase (decrease) in net assets resulting from operations 79 -- 62 DISTRIBUTIONS TO SHAREHOLDERS FROM: Class I shares: Net investment income (159) -- -- In excess of net investment income (54) -- -- Net realized gain on investments -- -- -- In excess of net realized gain on investments -- -- -- ------ ------ ------ Total distributions, Class I (213) -- -- ------ ------ ------ Class N shares: Net investment income -- -- -- In excess of net investment income -- -- -- Net realized gain on investments -- -- -- In excess of net realized gain on investments -- -- -- ------ ------ ------ Total distributions, Class N -- -- -- ------ ------ ------ Total distributions to shareholders (213) -- -- NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS* -- 3,000 947 Redemption fees (Note 1) -- -- -- ------ ------ ------ TOTAL INCREASE (DECREASE) IN NET ASSETS (134) 3,000 1,009 NET ASSETS: Beginning of period 3,000 -- -- ------ ------ ------ End of period $2,866 $3,000 $1,009 ====== ====== ====== End of period net assets include net investment income (loss) of: $ (29) $ -- $ 1 ====== ====== ======
- ------------------------------------ * For detail on capital share transactions by class, see Statements of Changes in Net Assets (Capital Stock Activity) on pages 98 and 99. ** Period from December 15, 1999 (commencement of operations) to December 31, 1999. *** Period from December 31, 1998 (commencement of operations) to December 31, 1998. The accompanying notes are an integral part of the financial statements. Page 95 Dresdner RCM Global Funds Statements of Changes in Net Assets Capital Stock Activity (All numbers in thousands)
LARGE CAP GROWTH FUND BIOTECHNOLOGY FUND ---------------------------- ---------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DEC. 31, 1999 DEC. 31, 1998 DEC. 31, 1999 DEC. 31, 1998 ------------- ------------- ------------- ------------- FUND SHARE TRANSACTIONS DOLLAR AMOUNTS Class I shares: Sold $ 7,126 $ 6,444 $ -- $ -- Issued to shareholders in reinvestment of distributions 2,468 9 -- -- Repurchased (4,708) (5,000) -- -- ---------- ----------- ---------- ---------- Net increase (decrease), Class I $ 4,886 $ 1,453 $ -- $ -- ========== =========== ========== ========== Class N shares: Sold $ 875 $ -- $ 6,483 $ 482 Issued to shareholders in reinvestment of distributions 40 -- 872 10 Repurchased (7) -- (794) (70) ---------- ----------- ---------- ---------- Net increase (decrease), Class N $ 908 $ -- $ 6,561 $ 422 ========== =========== ========== ========== SHARE AMOUNTS Class I shares: Sold 414 403 -- -- Issued to shareholders in reinvestment of distributions 140 1 -- -- Repurchased (265) (313) -- -- ---------- ----------- ---------- ---------- Net increase (decrease), Class I 289 91 -- -- ========== =========== ========== ========== Class N shares: Sold 47 -- 401 48 Issued to shareholders in reinvestment of distributions 2 -- 55 1 Repurchased -- (55) (7) ---------- ----------- ---------- ---------- Net increase (decrease), Class N 49 -- 401 42 ========== =========== ========== ========== PURCHASES AND SALES OF INVESTMENT SECURITIES: (EXCLUDING SHORT-TERM SECURITIES) Purchases of securities $ 17,147 $ 5,615 $ 27,104 $ 6,545 Proceeds from sales of securities 12,789 6,264 24,690 3,326
- ------------------------------------ * Period from December 15, 1999 (commencement of operations) to December 31, 1999. ** Period from December 31, 1998 (commencement of operations) to December 31, 1998. The accompanying notes are an integral part of the financial statements. Page 96 Dresdner RCM Global Funds Statements of Changes in Net Assets Capital Stock Activity (All numbers in thousands)
TAX MANAGED GROWTH FUND GLOBAL SMALL CAP FUND ------------------------------ ---------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DEC. 31, 1999 DEC. 31, 1998** DEC. 31, 1999 DEC. 31, 1998 ------------- --------------- ------------- ------------- FUND SHARE TRANSACTIONS DOLLAR AMOUNTS Class I shares: Sold $ -- $ 1,000 $ 13,423 $ 770 Issued to shareholders in reinvestment of distributions -- -- 154 32 Repurchased -- -- (920) (217) ---------- ---------- ---------- ---------- Net increase (decrease), Class I $ -- $ 1,000 $ 12,657 $ 585 ========== ========== ========== ========== Class N shares: Sold $ 649 $ -- $ 1,118 $ -- Issued to shareholders in reinvestment of distributions 6 -- 85 -- Repurchased -- -- (20) -- ---------- ---------- ---------- ---------- Net increase (decrease), Class N $ 655 $ -- $ 1,183 $ -- ========== ========== ========== ========== SHARE AMOUNTS Class I shares: Sold -- 100 636 58 Issued to shareholders in reinvestment of distributions -- -- 7 2 Repurchased -- -- (56) (19) ---------- ---------- ---------- ---------- Net increase (decrease), Class I -- 100 587 41 ========== ========== ========== ========== Class N shares: Sold 51 -- 58 -- Issued to shareholders in reinvestment of distributions -- -- 4 -- Repurchased -- -- (1) -- ---------- ---------- ---------- ---------- Net increase (decrease), Class N 51 -- 61 -- ========== ========== ========== ========== PURCHASES AND SALES OF INVESTMENT SECURITIES: (EXCLUDING SHORT-TERM SECURITIES) Purchases of securities $ 2,141 $ -- $ 24,604 $ 9,265 Proceeds from sales of securities 593 -- 12,387 9,231 GLOBAL TECHNOLOGY FUND GLOBAL HEALTH CARE FUND ---------------------------- ---------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DEC. 31, 1999 DEC. 31, 1998 DEC. 31, 1999 DEC. 31, 1998 ------------- ------------- ------------- ------------- FUND SHARE TRANSACTIONS DOLLAR AMOUNTS Class I shares: Sold $ 125,712 $ 8,186 $ -- $ -- Issued to shareholders in reinvestment of distributions 4,025 440 -- -- Repurchased (31,266) (2,212) -- -- ----------- ----------- ---------- ---------- Net increase (decrease), Class I $ 98,471 $ 6,414 $ -- $ -- =========== =========== ========== ========== Class N shares: Sold $ 64,142 $ -- $ 748 $ 121 Issued to shareholders in reinvestment of distributions 1,438 -- 67 9 Repurchased (7,987) -- (388) (26) ----------- ----------- ---------- ---------- Net increase (decrease), Class N $ 57,593 $ -- $ 427 $ 104 =========== =========== ========== ========== SHARE AMOUNTS Class I shares: Sold 3,164 474 -- -- Issued to shareholders in reinvestment of distributions 76 21 -- -- Repurchased (765) (135) -- -- ----------- ----------- ---------- ---------- Net increase (decrease), Class I 2,475 360 -- -- =========== =========== ========== ========== Class N shares: Sold 1,564 -- 56 9 Issued to shareholders in reinvestment of distributions 27 -- 5 1 Repurchased (199) -- (29) (2) ----------- ----------- ---------- ---------- Net increase (decrease), Class N 1,392 -- 32 8 =========== =========== ========== ========== PURCHASES AND SALES OF INVESTMENT SECURITIES: (EXCLUDING SHORT-TERM SECURITIES) Purchases of securities $ 211,880 $ 26,910 $ 21,409 $ 7,670 Proceeds from sales of securities 80,869 23,828 22,322 7,857
- ------------------------------------ * Period from December 15, 1999 (commencement of operations) to December 31, 1999. ** Period from December 31, 1998 (commencement of operations) to December 31, 1998. The accompanying notes are an integral part of the financial statements. Page 97 Dresdner RCM Global Funds Statements of Changes in Net Assets Capital Stock Activity (All numbers in thousands)
INTERNATIONAL GROWTH EQUITY FUND EMERGING MARKETS FUND ---------------------------- ---------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DEC. 31, 1999 DEC. 31, 1998 DEC. 31, 1999 DEC. 31, 1998 ------------- ------------- ------------- ------------- FUND SHARE TRANSACTIONS DOLLAR AMOUNTS Class I shares: Sold $ 182,299 $ 21,109 $ 56 $ 20 Issued to shareholders in reinvestment of distributions 17,745 4,362 2 -- Repurchased (119,912) (11,673) (17) (4) ------------ ------------ ---------- ---------- Net increase (decrease), Class I $ 80,132 $ 13,798 $ 41 $ 16 ============ ============ ========== ========== Class N shares: Sold $ 2,341 $ -- $ 253 $ -- Issued to shareholders in reinvestment of distributions 61 -- 5 -- Repurchased (852) -- (18) -- ------------ ------------ ---------- ---------- Net increase (decrease), Class N $ 1,550 $ -- $ 240 $ -- ============ ============ ========== ========== SHARE AMOUNTS Class I shares: Sold 10,871 1,461 5 2 Issued to shareholders in reinvestment of distributions 872 307 -- -- Repurchased (7,103) (809) (1) -- ------------ ------------ ---------- ---------- Net increase (decrease), Class I 4,640 959 4 2 ============ ============ ========== ========== Class N shares: Sold 130 -- 19 -- Issued to shareholders in reinvestment of distributions 3 -- -- -- Repurchased (55) -- (1) -- ------------ ------------ ---------- ---------- Net increase (decrease), Class N 78 -- 18 -- ============ ============ ========== ========== PURCHASES AND SALES OF INVESTMENT SECURITIES: (EXCLUDING SHORT-TERM SECURITIES) Purchases of securities $ 280,952 $ 113,487 $ 7,324 $ 7,092 Proceeds from sales of securities 224,692 95,449 7,103 6,476
- ------------------------------------ * Period from December 15, 1999 (commencement of operations) to December 31, 1999. ** Period from December 31, 1998 (commencement of operations) to December 31, 1998. The accompanying notes are an integral part of the financial statements. Page 98 Dresdner RCM Global Funds Statements of Changes in Net Assets Capital Stock Activity (All numbers in thousands)
EUROPE FUND GLOBAL EQUITY FUND ---------------------------- ------------------------------ YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DEC. 31, 1999 DEC. 31, 1998 DEC. 31, 1999 DEC. 31, 1998** ------------- ------------- ------------- --------------- FUND SHARE TRANSACTIONS DOLLAR AMOUNTS Class I shares: Sold $ -- $ -- $ -- $ 1,000 Issued to shareholders in reinvestment of distributions -- -- -- -- Repurchased -- -- -- -- ------------ ------------ ---------- ---------- Net increase (decrease), Class I $ -- $ -- $ -- $ 1,000 ============ ============ ========== ========== Class N shares: Sold $ 10,001 $ -- $ -- $ -- Issued to shareholders in reinvestment of distributions 8,465 -- -- -- Repurchased (137,764) -- -- -- ------------ ------------ ---------- ---------- Net increase (decrease), Class N $ (119,298) $ -- $ -- $ -- ============ ============ ========== ========== SHARE AMOUNTS Class I shares: Sold -- -- -- 100 Issued to shareholders in reinvestment of distributions -- -- -- -- Repurchased -- -- -- -- ------------ ------------ ---------- ---------- Net increase (decrease), Class I -- -- -- 100 ============ ============ ========== ========== Class N shares: Sold 583 -- -- -- Issued to shareholders in reinvestment of distributions 535 -- -- -- Repurchased (10,914) -- -- -- ------------ ------------ ---------- ---------- Net increase (decrease), Class N (9,796) -- -- -- ============ ============ ========== ========== PURCHASES AND SALES OF INVESTMENT SECURITIES: (EXCLUDING SHORT-TERM SECURITIES) Purchases of securities $ 202,304 $ 237,506 $ 2,077 $ -- Proceeds from sales of securities 362,350 260,361 1,617 -- STRATEGIC INCOME FUND BALANCED FUND ------------------------------ -------------- YEAR ENDED YEAR ENDED YEAR ENDED DEC. 31, 1999 DEC. 31, 1998** DEC. 31, 1999* ------------- --------------- -------------- FUND SHARE TRANSACTIONS DOLLAR AMOUNTS Class I shares: Sold $ -- $ 3,000 $ 947 Issued to shareholders in reinvestment of distributions -- -- -- Repurchased -- -- -- ---------- ---------- ----------- Net increase (decrease), Class I $ -- $ 3,000 $ 947 ========== ========== =========== Class N shares: Sold $ -- $ -- $ -- Issued to shareholders in reinvestment of distributions -- -- -- Repurchased -- -- -- ---------- ---------- ----------- Net increase (decrease), Class N $ -- $ -- $ -- ========== ========== =========== SHARE AMOUNTS Class I shares: Sold -- 300 95 Issued to shareholders in reinvestment of distributions -- -- -- Repurchased -- -- -- ---------- ---------- ----------- Net increase (decrease), Class I -- 300 95 ========== ========== =========== Class N shares: Sold -- -- -- Issued to shareholders in reinvestment of distributions -- -- -- Repurchased -- -- -- ---------- ---------- ----------- Net increase (decrease), Class N -- -- -- ========== ========== =========== PURCHASES AND SALES OF INVESTMENT SECURITIES: (EXCLUDING SHORT-TERM SECURITIES) Purchases of securities $ 11,635 $ -- $ 1,475 Proceeds from sales of securities 8,896 -- 551
- ------------------------------------ * Period from December 15, 1999 (commencement of operations) to December 31, 1999. ** Period from December 31, 1998 (commencement of operations) to December 31, 1998. The accompanying notes are an integral part of the financial statements. Page 99 Dresdner RCM Global Funds Financial Highlights For a share outstanding throughout each fiscal year or period ended:
LARGE CAP GROWTH FUND ---------------------------------------------------------- CLASS I CLASS N ---------------------------------------------- ------- DECEMBER 31, ---------------------------------------------------------- 1999 1998 1997 1996(3) 1999(9) ------- -------- -------- -------- ------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 16.14 $12.53 $ 10.00 $10.00 $ 16.60 ------- ------ ------- ------ ------- Income from investment operations: Net investment income (loss) (0.05) (0.02) 0.01 -- (0.08) Net realized and unrealized gain on investments 6.95 5.51 3.17 -- 6.45 ------- ------ ------- ------ ------- Total from investment operations 6.90 5.49 3.18 -- 6.37 Less distributions: From net investment income -- (0.01) (0.01) -- -- From net realized gain on investments (3.97) (1.87) (0.64) -- (3.97) ------- ------ ------- ------ ------- Total distributions (3.97) (1.88) (0.65) -- (3.97) ------- ------ ------- ------ ------- NET ASSET VALUE, END OF PERIOD $ 19.07 $16.14 $ 12.53 $10.00 $ 19.00 ------- ------ ------- ------ ------- ------- ------ ------- ------ ------- TOTAL RETURN (7) 44.84% 44.11% 31.99% 0.00% 40.48% ------- ------ ------- ------ ------- ------- ------ ------- ------ ------- RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $14,898 $7,935 $ 5,025 $4,000 $ 926 ------- ------ ------- ------ ------- ------- ------ ------- ------ ------- Ratio of expenses to average net assets: With waiver and reimbursement (15) 0.95% 0.95% 0.95% 0.00%(8) 1.20% ------- ------ ------- ------ ------- ------- ------ ------- ------ ------- Without waiver and reimbursement (15) 2.45% 3.04% 2.63% -- 60.04% ------- ------ ------- ------ ------- ------- ------ ------- ------ ------- Ratio of net investment income to average net assets: With waiver and reimbursement (15) (0.26)% (0.11)% 0.10% 0.00%(8) (0.55)% ------- ------ ------- ------ ------- ------- ------ ------- ------ ------- Without waiver and reimbursement (15) (1.76)% (2.20)% (1.58)% -- (59.39)% ------- ------ ------- ------ ------- ------- ------ ------- ------ ------- Portfolio turnover 109.29% 99.58% 119.87% 0.00% 109.29% ------- ------ ------- ------ ------- ------- ------ ------- ------ -------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights."
BIOTECHNOLOGY FUND --------------------------------- CLASS N --------------------------------- DECEMBER 31, --------------------------------- 1999 1998 1997(4) ------- -------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 11.44 $ 10.00 $10.00 ------- ------- ------ Income from investment operations: Net investment loss (0.15) (0.10) -- Net realized and unrealized gain on investments 12.03 1.86 -- ------- ------- ------ Total from investment operations 11.88 1.76 -- Less distributions: From net realized gain on investments (3.30) (0.32) -- ------- ------- ------ NET ASSET VALUE, END OF PERIOD $ 20.02 $ 11.44 $10.00 ------- ------- ------ ------- ------- ------ TOTAL RETURN (7) 111.39% 17.76% 0.00% ------- ------- ------ ------- ------- ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $14,870 $ 3,911 $3,000 ------- ------- ------ ------- ------- ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.50% 1.50% 0.01%(8) ------- ------- ------ ------- ------- ------ Without waiver and reimbursement (15) 4.53% 4.87% -- ------- ------- ------ ------- ------- ------ Ratio of net investment income to average net assets: With waiver and reimbursement (15) (1.09)% (0.95)% 0.01%(8) ------- ------- ------ ------- ------- ------ Without waiver and reimbursement (15) (4.12)% (4.32)% -- ------- ------- ------ ------- ------- ------ Portfolio turnover 431.27% 127.21% 0.00% ------- ------- ------ ------- ------- ------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights." Page 100 Dresdner RCM Global Funds Financial Highlights For a share outstanding throughout each fiscal year or period ended:
TAX MANAGED GROWTH FUND --------------------------------- CLASS I CLASS N -------------------- -------- DECEMBER 31, --------------------------------- 1999 1998(5) 1999(10) ------- -------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 10.00 $10.00 $ 10.34 ------- ------ ------- Income from investment operations: Net investment loss (0.06) -- (0.29) Net realized and unrealized gain on investments 5.28 -- 5.13 ------- ------ ------- Total from investment operations 5.22 -- 4.84 Less distributions: From net realized gain on investments (0.21) -- (0.21) In excess of net realized gain on investments (0.02) -- (0.02) ------- ------ ------- Total distributions (0.23) -- (0.23) ------- ------ ------- NET ASSET VALUE, END OF PERIOD $ 14.99 $10.00 $ 14.95 ------- ------ ------- ------- ------ ------- TOTAL RETURN (7) 52.44% 0.00% 47.07% ------- ------ ------- ------- ------ ------- RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $ 1,499 $1,000 $ 759 ------- ------ ------- ------- ------ ------- Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.25% 0.00%(8) 1.50% ------- ------ ------- ------- ------ ------- Without waiver and reimbursement (15) 14.36% -- 35.08% ------- ------ ------- ------- ------ ------- Ratio of net investment income to average net assets: With waiver and reimbursement (15) (0.47)% 0.00%(8) (2.66)% ------- ------ ------- ------- ------ ------- Without waiver and reimbursement (15) (13.58)% -- (36.24)% ------- ------ ------- ------- ------ ------- Portfolio turnover 43.35% 0.00% 43.35% ------- ------ ------- ------- ------ -------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights."
GLOBAL SMALL CAP FUND ----------------------------------------------------------- CLASS I CLASS N ---------------------------------------------- -------- DECEMBER 31, ----------------------------------------------------------- 1999 1998 1997 1996(3) 1999(11) ------- -------- -------- -------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 12.37 $ 11.09 $ 10.00 $10.00 $ 11.63 ------- ------- ------- ------ ------- Income from investment operations: Net investment loss (0.17) (0.13) (0.13) -- (0.21) Net realized and unrealized gain on investments 12.96 2.23 2.64 -- 13.67 ------- ------- ------- ------ ------- Total from investment operations 12.79 2.10 2.51 -- 13.46 Less distributions: From net realized gain on investments (1.78) (0.82) (1.42) -- (1.78) ------- ------- ------- ------ ------- NET ASSET VALUE, END OF PERIOD $ 23.38 $ 12.37 $ 11.09 $10.00 $ 23.31 ------- ------- ------- ------ ------- ------- ------- ------- ------ ------- TOTAL RETURN (7) 104.63% 19.29% 25.48% 0.00% 116.97% ------- ------- ------- ------ ------- ------- ------- ------- ------ ------- RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $24,073 $ 5,479 $ 4,456 $4,000 $ 1,430 ------- ------- ------- ------ ------- ------- ------- ------- ------ ------- Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.50% 1.75% 1.75% 0.00%(8) 1.75% ------- ------- ------- ------ ------- ------- ------- ------- ------ ------- Without waiver and reimbursement (15) 4.10% 3.86% 3.09% -- 16.71% ------- ------- ------- ------ ------- ------- ------- ------- ------ ------- Ratio of net investment income to average net assets: With waiver and reimbursement (15) (1.13)% (1.03)% (1.14)% 0.00%(8) (1.49)% ------- ------- ------- ------ ------- ------- ------- ------- ------ ------- Without waiver and reimbursement (15) (3.73)% (3.14)% (2.49)% -- (16.44)% ------- ------- ------- ------ ------- ------- ------- ------- ------ ------- Portfolio turnover 161.61% 184.38% 153.49% 0.00% 161.61% ------- ------- ------- ------ ------- ------- ------- ------- ------ -------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights." Page 101 Dresdner RCM Global Funds Financial Highlights For a share outstanding throughout each fiscal year or period ended:
GLOBAL TECHNOLOGY FUND ------------------------------------------------------------------------- CLASS I CLASS N ------------------------------------------------------------ -------- DECEMBER 31, ------------------------------------------------------------------------- 1999 1998 1997 1996 1995(2) 1999(12) -------- -------- -------- -------- -------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 21.40 $ 13.69 $ 12.60 $ 10.04 $10.00 $ 24.01 -------- ------- ------- ------- ------ ------- Income from investment operations: Net investment loss (0.35) (0.16) (0.16) (0.15) -- (0.49) Net realized and unrealized gain on investments 39.54 8.44 3.46 2.80 0.04 36.99 -------- ------- ------- ------- ------ ------- Total from investment operations 39.19 8.28 3.30 2.65 0.04 36.50 Less distributions: From net realized gain on investments (1.38) (0.57) (2.21) (0.09) -- (1.38) -------- ------- ------- ------- ------ ------- NET ASSET VALUE, END OF PERIOD $ 59.21 $ 21.40 $ 13.69 $ 12.60 $10.04 $ 59.13 -------- ------- ------- ------- ------ ------- -------- ------- ------- ------- ------ ------- TOTAL RETURN (7) 182.95% 60.53% 27.08% 26.41% 0.40% 152.69% -------- ------- ------- ------- ------ ------- -------- ------- ------- ------- ------ ------- RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $197,897 $18,558 $ 6,950 $ 5,117 $ 954 $82,330 -------- ------- ------- ------- ------ ------- -------- ------- ------- ------- ------ ------- Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.50% 1.75% 1.75% 1.73% 0.00%(8) 1.75% -------- ------- ------- ------- ------ ------- -------- ------- ------- ------- ------ ------- Without waiver and reimbursement (15) 1.50% 2.49% 2.45% 7.75% -- 1.99% -------- ------- ------- ------- ------ ------- -------- ------- ------- ------- ------ ------- Ratio of net investment income to average net assets: With waiver and reimbursement (15) (1.02)% (0.99)% (1.15)% (1.34)% (0.02)%(8) (1.32)% -------- ------- ------- ------- ------ ------- -------- ------- ------- ------- ------ ------- Without waiver and reimbursement (15) (1.02)% (1.73)% (1.86)% 7.36% -- (1.56)% -------- ------- ------- ------- ------ ------- -------- ------- ------- ------- ------ ------- Portfolio turnover 119.32% 265.99% 189.41% 155.58% 0.00% 119.32% -------- ------- ------- ------- ------ ------- -------- ------- ------- ------- ------ -------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights."
GLOBAL HEALTH CARE FUND ---------------------------------------------- CLASS N ---------------------------------------------- DECEMBER 31, ---------------------------------------------- 1999 1998 1997 1996(3) ------- -------- -------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 13.42 $ 11.65 $ 10.00 $10.00 ------- ------- ------- ------ Income from investment operations: Net investment loss (0.11) (0.09) (0.06) -- Net realized and unrealized gain on investments 3.53 3.02 3.03 -- ------- ------- ------- ------ Total from investment operations 3.42 2.93 2.97 -- Less distributions: From net realized gain on investments (2.59) (1.16) (1.32) -- ------- ------- ------- ------ NET ASSET VALUE, END OF PERIOD $ 14.25 $ 13.42 $ 11.65 $10.00 ------- ------- ------- ------ ------- ------- ------- ------ TOTAL RETURN (7) 28.74% 25.57% 30.00% 0.00% ------- ------- ------- ------ ------- ------- ------- ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $ 6,284 $ 5,487 $ 4,671 $4,000 ------- ------- ------- ------ ------- ------- ------- ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.50% 1.50% 1.50% 0.00%(8) ------- ------- ------- ------ ------- ------- ------- ------ Without waiver and reimbursement (15) 4.85% 3.65% 2.93% -- ------- ------- ------- ------ ------- ------- ------- ------ Ratio of net investment income to average net assets: With waiver and reimbursement (15) (0.81)% (0.69)% (0.55)% 0.00%(8) ------- ------- ------- ------ ------- ------- ------- ------ Without waiver and reimbursement (15) (4.16)% (2.84)% (1.98)% -- ------- ------- ------- ------ ------- ------- ------- ------ Portfolio turnover 393.83% 153.92% 157.65% 0.00% ------- ------- ------- ------ ------- ------- ------- ------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights." Page 102 Dresdner RCM Global Funds Financial Highlights For a share outstanding throughout each fiscal year or period ended:
INTERNATIONAL GROWTH EQUITY FUND -------------------------------------------------------------------------- CLASS I CLASS N ------------------------------------------------------------- -------- DECEMBER 31, -------------------------------------------------------------------------- 1999 1998 1997 1996(6) 1995 1999(11) -------- --------- -------- -------- -------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 14.98 $ 13.70 $ 12.72 $ 11.56 $ 10.00 $ 14.78 -------- -------- ------- ------- ------- ------- Income from investment operations: Net investment income 0.02 0.06 0.06 0.04 0.12 0.01 Net realized and unrealized gain on investments 8.91 1.80 2.22 2.16 1.68 9.08 -------- -------- ------- ------- ------- ------- Total from investment operations 8.93 1.86 2.28 2.20 1.80 9.09 Less distributions: From net investment income (0.07) (0.23) (0.14) (0.16) (0.11) (0.07) In excess of net investment income (0.10) -- -- -- -- (0.09) From net realized gain on investments (1.40) (0.35) (1.16) (0.88) (0.13) (1.40) -------- -------- ------- ------- ------- ------- Total distributions (1.57) (0.58) (1.30) (1.04) (0.24) (1.56) -------- -------- ------- ------- ------- ------- NET ASSET VALUE, END OF PERIOD $ 22.34 $ 14.98 $ 13.70 $ 12.72 $ 11.56 $ 22.31 -------- -------- ------- ------- ------- ------- -------- -------- ------- ------- ------- ------- TOTAL RETURN (7) 60.66% 13.81% 17.93% 19.31% 17.98% 62.48% -------- -------- ------- ------- ------- ------- -------- -------- ------- ------- ------- ------- RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $285,561 $121,975 $98,443 $52,605 $34,347 $ 1,738 -------- -------- ------- ------- ------- ------- -------- -------- ------- ------- ------- ------- Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.00% 1.00% 1.00% 0.99% 0.75% 1.25% -------- -------- ------- ------- ------- ------- -------- -------- ------- ------- ------- ------- Without waiver and reimbursement (15) 1.06% 1.06% 1.06% 1.25% 1.11% 10.89% -------- -------- ------- ------- ------- ------- -------- -------- ------- ------- ------- ------- Ratio of net investment income to average net assets: With waiver and reimbursement (15) 0.12% 0.37% 0.41% 0.32% 1.19% 0.07% -------- -------- ------- ------- ------- ------- -------- -------- ------- ------- ------- ------- Without waiver and reimbursement (15) 0.06% 0.31% 0.35% 0.06% 0.83% (9.56)% -------- -------- ------- ------- ------- ------- -------- -------- ------- ------- ------- ------- Portfolio turnover 139.69% 84.49% 122.43% 119.09% 87.40% 139.69% -------- -------- ------- ------- ------- ------- -------- -------- ------- ------- ------- -------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights."
EMERGING MARKETS FUND ---------------------------------------------- CLASS I CLASS N --------------------------------- -------- DECEMBER 31, ---------------------------------------------- 1999 1998 1997(4) 1999(11) ------- -------- -------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 9.06 $ 9.99 $10.00 $ 9.13 ------- ------- ------ ------- Income from investment operations: Net investment income (loss) (0.01) 0.12 -- (0.06) Net realized and unrealized gain (loss) on investments 8.29 (0.97) (0.01) 8.24 ------- ------- ------ ------- Total from investment operations 8.28 (0.85) (0.01) 8.18 Less distributions: From net investment income -- (0.08) -- -- From net realized gain on investments (0.47) -- -- (0.47) ------- ------- ------ ------- Total distributions (0.47) (0.08) -- (0.47) ------- ------- ------ ------- NET ASSET VALUE, END OF PERIOD $ 16.87 $ 9.06 $ 9.99 $ 16.84 ------- ------- ------ ------- ------- ------- ------ ------- TOTAL RETURN (7) 92.12% (8.50)% -- 90.31% ------- ------- ------ ------- ------- ------- ------ ------- RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $ 5,154 $ 2,734 $2,996 $ 299 ------- ------- ------ ------- ------- ------- ------ ------- Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.50% 1.50% 0.01%(8) 1.75% ------- ------- ------ ------- ------- ------- ------ ------- Without waiver and reimbursement (15) 9.33% 8.29% -- 79.18% ------- ------- ------ ------- ------- ------- ------ ------- Ratio of net investment income to average net assets: With waiver and reimbursement (15) (0.13)% 1.23% -- (0.68)% ------- ------- ------ ------- ------- ------- ------ ------- Without waiver and reimbursement (15) (7.96)% (5.56)% -- (78.11)% ------- ------- ------ ------- ------- ------- ------ ------- Portfolio turnover 215.64% 279.25% --(8) 215.64% ------- ------- ------ ------- ------- ------- ------ -------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights." Page 103 Dresdner RCM Global Funds Financial Highlights For a share outstanding throughout each fiscal year or period ended:
EUROPE FUND ---------------------------------------------------------------- CLASS N ---------------------------------------------------------------- DECEMBER 31, ---------------------------------------------------------------- 1999(1) 1998(1) 1997(1) 1996(1) 1995 -------- --------- --------- --------- --------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of year $ 13.66 $ 12.59 $ 10.66 $ 9.20 $ 9.20 -------- -------- -------- -------- -------- Income from investment operations: Net investment income (loss) (0.01) (0.05) 0.01 0.03 0.07 Net realized and unrealized gain (loss) on investments 5.66 4.60 2.70 1.45 (0.07) -------- -------- -------- -------- -------- Total from investment operations 5.65 4.55 2.71 1.48 0.00 Less distributions: From net investment income -- (0.17) (0.06) (0.02) -- In excess of net investment income (0.02) -- -- -- -- From net realized gain on investments (3.17) (3.31) (0.72) -- -- -------- -------- -------- -------- -------- Total distributions (3.19) (3.48) (0.78) (0.02) -- -------- -------- -------- -------- -------- NET ASSET VALUE, END OF YEAR $ 16.12 $ 13.66 $ 12.59 $ 10.66 $ 9.20 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- TOTAL RETURN (7) 43.59% 37.23% 25.70% 15.87% 1.33% -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $ 67,910 $191,338 $176,414 $149,299 $128,932 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Ratio of expenses to average net assets: (13) With waiver and reimbursement 1.03% -- -- -- -- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Without waiver and reimbursement 2.01% 1.97% 1.30% 1.42% 1.51% -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Ratio of net investment income to average net assets: With waiver and reimbursement (0.11)% -- -- -- -- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Without waiver and reimbursement (1.08)% (0.31)% 0.06% 0.33% 0.76% -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Portfolio turnover 202.90% 114.00% 85.00% 51.00% 40.00% -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights."
GLOBAL EQUITY FUND -------------------- CLASS I -------------------- DECEMBER 31, -------------------- 1999 1998(5) ------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 10.00 $10.00 ------- ------ Income from investment operations: Net investment loss (0.03) -- Net realized and unrealized gain on investments 6.22 -- ------- ------ Total from investment operations 6.19 -- Less distributions: In excess of net investment income (0.06) -- From net realized gain on investments (0.29) -- ------- ------ Total distributions (0.35) -- ------- ------ NET ASSET VALUE, END OF PERIOD $ 15.84 $10.00 ------- ------ ------- ------ TOTAL RETURN (7) 62.20% 0.00% ------- ------ ------- ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $ 1,584 $1,000 ------- ------ ------- ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.25% 0.00%(8) ------- ------ ------- ------ Without waiver and reimbursement (15) 14.59% -- ------- ------ ------- ------ Ratio of net investment income to average net assets: With waiver and reimbursement (15) (0.27)% 0.00%(8) ------- ------ ------- ------ Without waiver and reimbursement (15) (13.61)% -- ------- ------ ------- ------ Portfolio turnover 149.96% 0.00% ------- ------ ------- ------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights." Page 104 Dresdner RCM Global Funds Financial Highlights For a share outstanding throughout each fiscal year or period ended:
STRATEGIC INCOME FUND -------------------- CLASS I -------------------- DECEMBER 31, -------------------- 1999 1998(5) ------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 10.00 $10.00 ------- ------ Income from investment operations: Net investment income 0.53 -- Net realized and unrealized loss on investments (0.27) -- ------- ------ Total from investment operations 0.26 -- Less distributions: From net investment income (0.53) -- In excess of net investment income (0.18) -- ------- ------ Total distributions (0.71) -- ------- ------ NET ASSET VALUE, END OF PERIOD $ 9.55 $10.00 ------- ------ ------- ------ TOTAL RETURN (7) 2.67% 0.00% ------- ------ ------- ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $ 2,866 $3,000 ------- ------ ------- ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.25% 0.00%(8) ------- ------ ------- ------ Without waiver and reimbursement (15) 5.31% -- ------- ------ ------- ------ Ratio of net investment income to average net assets: With waiver and reimbursement (15) 5.38% 0.00%(8) ------- ------ ------- ------ Without waiver and reimbursement (15) 1.32% -- ------- ------ ------- ------ Portfolio turnover 346.34% 0.00% ------- ------ ------- ------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights."
BALANCED FUND ------------- CLASS I ------------- DECEMBER 31, ------------- 1999(14) ------------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 10.00 ------- Income from investment operations: Net investment income 0.01 Net realized and unrealized gain on investments 0.64 ------- Total from investment operations 0.65 ------- NET ASSET VALUE, END OF PERIOD $ 10.65 ------- ------- TOTAL RETURN (7) 6.50% ------- ------- RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $ 1,009 ------- ------- Ratio of expenses to average net assets: With waiver and reimbursement (15) 0.90% ------- ------- Without waiver and reimbursement (15) 41.29% ------- ------- Ratio of net investment income to average net assets: With waiver and reimbursement (15) 1.41% ------- ------- Without waiver and reimbursement (15) (38.97)% ------- ------- Portfolio turnover 59.94% ------- -------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights." Page 105 Dresdner RCM Global Funds Notes to Financial Highlights For the Fiscal Year or Period Ended December 31, 1999 The following notes are being used as reference items in the Financial Highlights of the Funds. (1) Calculated using the average share method. (2) Commencement of operations was December 27, 1995. (3) Commencement of operations was December 31, 1996. (4) Commencement of operations was December 30, 1997. (5) Commencement of operations was December 31, 1998. (6) Stock split 10:1 at close of business on June 17, 1996. All prior period per share amounts were restated to reflect the stock split. (7) Total return measures the change in value of an investment over the period indicated. For periods less than one year, the total return is not annualized. (8) Not annualized. Fund was in operation for less than five days. (9) Commencement of operations was March 2, 1999. (10) Commencement of operations was February 12, 1999. (11) Commencement of operations was March 9, 1999. (12) Commencement of operations was January 20, 1999. (13) The operating expenses for the Dresdner RCM Europe Fund include certain non-recurring legal expenses of 0.46% and 0.32% of average net assets for the years ended December 31, 1998 and 1999, respectively, for which the insurance carrier has agreed to reimburse the Fund 0.78 % ($800,000) of average net assets for the year ended December 31, 1999. (14) Commencement of operations was December 15, 1999. (15) Annualized for periods of less than one year. Page 106 Dresdner RCM Global Funds Notes to Financial Statements December 31, 1999 1. SIGNIFICANT ACCOUNTING POLICIES The Dresdner RCM Global Funds, Inc. (the "Global Company"), the Dresdner RCM Capital Funds, Inc. (the "Capital Company") and the Dresdner RCM Investment Funds Inc. (the "Investment Company") are organized as Maryland corporations and are registered as open-end management investment companies under the Investment Company Act of 1940 (the "1940 Act"), as amended. These three corporations are each referred to as a "Company" and collectively as the "Companies." The Global Company consists of ten no-load series: NON-DIVERSIFIED FUNDS Dresdner RCM Global Technology Fund (the "Global Technology Fund") Dresdner RCM Global Health Care Fund (the "Global Health Care Fund") Dresdner RCM Biotechnology Fund (the "Biotechnology Fund") DIVERSIFIED FUNDS Dresdner RCM Global Small Cap Fund (the "Global Small Cap Fund") Dresdner RCM Large Cap Growth Fund (the "Large Cap Growth Fund") Dresdner RCM Emerging Markets Fund (the "Emerging Markets Fund") Dresdner RCM Tax Managed Growth Fund (the "Tax Managed Growth Fund") Dresdner RCM Global Equity Fund (the "Global Equity Fund") Dresdner RCM Strategic Income Fund (the "Strategic Income Fund") Dresdner RCM Balanced Fund (the "Balanced Fund") The Dresdner RCM International Growth Equity Fund (the "International Fund"), is a non-diversified, no-load series of the Capital Company (financial information of the other series of the Capital Company are reported in the Dresdner RCM Capital Funds' annual report). The Dresdner RCM Europe Fund (the "Europe Fund"), formerly The Emerging Germany Fund, Inc., is a non-diversified, no load series of the Investment Company. These twelve series are collectively referred to as the "Funds." The Europe Fund was incorporated in the State of Maryland on February 2, 1990 as a non-diversified, closed-end management investment company and registered under the 1940 Act. On January 26, 1999, the stockholders of the Fund approved the conversion of the Fund from a closed-end investment company to an open-end investment company. Upon conversion of the Fund on May 3, 1999, two classes of shares were offered: Class N and Class I. Existing shareholders of the Fund received Class N shares of the converted open-end Fund, equal in number to their previous closed-end Fund shares. The Balanced Fund had no operations prior to December 15, 1999 other than matters relating to its organization and registration as a diversified open-ended management investment company under the 1940 Act and registration of its shares under the Securities Act of 1933, as amended. The Funds, with the exception of the Global Health Care Fund, the Biotechnology Fund and the Balanced Fund, are presently authorized to issue two classes of shares -- Institutional shares (Class I) and Non-institutional shares (Class N). The Global Health Care Fund and the Biotechnology Fund are presently authorized to issue Class N shares, and the Balanced Fund is authorized to issue Class I shares. As of December 31, 1999, the Large Cap Growth Fund, Tax Page 107 Dresdner RCM Global Funds Notes to Financial Statements December 31, 1999 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Managed Growth Fund, Global Small Cap Fund, Global Technology Fund, International Fund, and Emerging Markets Fund have both Class I and Class N shares operational; the Global Equity Fund and Strategic Income Fund have only the Class I shares operational; and the Europe Fund has only the Class N shares operational. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The policies are in conformity with generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates. A. PORTFOLIO VALUATIONS: Investment securities are stated at market value. Equity securities traded on stock exchanges are valued at the last sale price on the exchange or in the principal over-the-counter market in which such securities are traded as of the close of business on the day the securities are being valued. If there has been no sale on such day, then the security will be valued at the closing bid price on such day. If no bid price is quoted on such day, then the security will be valued by such method as the Board of Directors of the appropriate Company or a duly constituted committee of the Board of Directors of the appropriate Company shall determine in good faith will reflect its fair value. Readily marketable securities traded only in the over-the-counter market that are not listed on NASDAQ or similar foreign reporting service will be valued at the mean bid price, or using such other comparable sources as the Board of Directors of the appropriate Company or a duly constituted committee of the Board of Directors of the appropriate company in good faith deems appropriate to reflect their fair value. Other portfolio securities held by the Funds will be valued at current market value, if current market quotations are readily available for such securities. To the extent that market quotations are not readily available, such securities will be valued by whatever means the Board of Directors of the appropriate Company or a duly constituted committee of the Board of Directors of the appropriate Company in good faith deems appropriate to reflect their fair market value. Short-term investments with a maturity of 60 days or less are valued at amortized cost, which approximates market value. B. SECURITY TRANSACTIONS, RELATED INVESTMENT INCOME AND EXPENSES: Security transactions are recorded as of the date of purchase or sale. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis and includes accretion of discount and amortization of premium. Realized gains and losses on security transactions are determined on the identified cost basis for both financial statement and federal income tax purposes. Each Fund bears expenses incurred specifically on its behalf as well as a portion of any general expenses of the appropriate Company. Investment income, realized and unrealized gains and losses, and the common expenses of the Funds are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Funds. Each class of shares differs in its respective distribution and certain other class specific fees and expense reductions. C. FOREIGN CURRENCY TRANSLATIONS AND FOREIGN INVESTMENTS: The books and records of each of the Funds are maintained in U.S. dollars. The value of securities, currencies, and other assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars based Page 108 Dresdner RCM Global Funds Notes to Financial Statements December 31, 1999 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) upon foreign exchange rates prevailing at the end of the period. Purchases and sales of investments are translated at the contracted currency exchange rates established at the time of the trade. Income and expenses are translated at the prevailing exchange rates on the respective dates of such transactions. Net realized currency gains and losses include foreign currency gains and losses between trade date and settlement date and foreign currency translations and the difference between the amount of net investment income accrued and the U.S. dollar amount actually received. The Funds do not isolate that portion of foreign currency exchange fluctuation on investments from unrealized appreciation and depreciation which arises from changes in market prices. Such fluctuations are included with the net unrealized appreciation or depreciation on investments. Investing in securities of foreign companies and foreign governments involves special risks and considerations not typically associated with investing in U.S. companies and securities of the U.S. Government. These risks include revaluation of currencies and the risk of appropriation. Moreover, the markets for securities of many foreign companies and foreign governments may be less liquid and the prices of such securities may be more volatile than those of comparable U.S. companies and the U.S. Government. D. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: A forward foreign currency exchange contract ("forward contract") is an agreement between two parties to buy and sell a currency at a set price on a future date. A Fund may enter into a forward contract in order to hedge foreign currency risk associated with its portfolio securities or for other risk management or investment purposes. The market value of the forward contract fluctuates with changes in currency exchange rates. The forward contract is marked-to-market daily and the change in market value is recorded by the Fund as unrealized appreciation or depreciation on foreign currency translations on the Fund's Statement of Assets and Liabilities. When the forward contract is closed, the Fund records a realized gain or loss on foreign currency transactions in the Fund's Statement of Operations equal to the difference between the value at the time the forward contract was opened and the value at the time it was closed. A Fund could be exposed to risk of loss if the counterparty is unable to meet the terms of the forward contract or if the value of the currency changes unfavorably. E. OPTION ACCOUNTING PRINCIPLES: A Fund may purchase or write put and call options on stocks and stock indices as a hedge against changes in market conditions that may result in changes in the value of the Fund's portfolio securities. When a Fund writes a call or put option, an amount equal to the premium received is included in the Fund's Statement of Assets and Liabilities as an asset and an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option. An option listed on a traded exchange is valued at its last sale price. If there has been no sale on such day, then the option will be valued at the closing bid price on such day. If a written option expires on its stipulated expiration date or if the Fund enters into a closing purchase transaction, a gain or loss is realized without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written call option is exercised, a gain or loss is realized from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. If a written put option is exercised, the cost of the underlying security purchased is decreased by the premium originally received. Page 109 Dresdner RCM Global Funds Notes to Financial Statements December 31, 1999 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The premium paid by a Fund for the purchase of a call or put option is included in the Fund's Statement of Assets and Liabilities as an investment and subsequently marked-to-market to reflect the current market value of the option. If an option which the Fund has purchased expires on the stipulated expiration date, the Fund realizes a loss in the amount of the cost of the option. If the Fund enters into a closing sale transaction, the Fund realizes a gain or loss, depending on whether proceeds from the closing sale transaction are greater or less than the cost of the option. If the Fund exercises a call option, the cost of the securities acquired by exercising the call is increased by the premium paid to buy the call. If the Fund exercises a put option, it realizes a gain or loss from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. F. FEDERAL INCOME TAXES: Each Fund is a separate entity for federal income tax purposes. Each Fund intends to comply with the requirements for qualification as a "regulated investment company" under the Internal Revenue Code of 1986, as amended (the "Code"). It is also the intention of each Fund to make distributions sufficient to avoid imposition of any excise tax under Section 4982 of the Code. Therefore, no provision has been made for Federal income or excise taxes on income and capital gains. As of December 31, 1999, the Strategic Income Fund had a capital loss carryover of $53,023 which will expire on December 31, 2007. G. DISTRIBUTIONS: The Strategic Income Fund declares and distributes income dividends to shareholders monthly. The Balanced Fund declares and distributes income dividends to shareholders quarterly. All of the other Funds declare and distribute income dividends to shareholders annually. Capital gain distributions (if any) are declared and distributed to shareholders annually. Distributions to shareholders are recorded by the Funds on the ex-dividend date. Income dividends and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from generally accepted accounting principles, and only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Differences in the recognition or classification of income between the financial statements and tax earnings and profits which result in temporary over-distributions for financial statement purposes are classified as distributions in excess of net investment income or net realized gain on investments. These differences are primarily due to differing treatments for losses as a result of wash sales, foreign currency transactions and/or investments in passive foreign investment companies. H. SECURITIES LENDING: The Europe Fund has a Securities Lending Agreement with State Street Global Advisors ("SSgA"). For international securities, cash collateral is received by the Fund against loaned securities in an amount at least equal to 105% of the market value of the loaned securities at the inception of each loan. This collateral must be maintained at not less than 104.5% of the market value of the loaned securities during the period of the loan. The Fund invests the cash collateral in repurchase agreements through State Street Bank & Trust Company pursuant to guidelines approved by the Europe Fund's Board of Directors. Income earned on the collateral is paid to SSgA monthly. The Fund receives a fee, payable monthly, negotiated by the Fund and SSgA, based on the number and duration of the lending transactions. Page 110 Dresdner RCM Global Funds Notes to Financial Statements December 31, 1999 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) At December 31, 1999, the Europe Fund had no securities on loan to brokers. For the period May 1, 1999 (commencement of securities lending) through December 31, 1999, net securities lending income was $6,615 and is included in interest income. As with other extensions of credit, the Fund may bear the risk of delay in the recovery of the loaned securities or in the foreclosure on collateral. I. REDEMPTION FEES: The Tax Managed Growth Fund charges a 1.00% redemption fee to shareholders of both the I Class and the N Class who redeem shares held for less than twelve consecutive months. The redemption fee for the Tax Managed Growth Fund will remain in effect indefinitely. For the year ended December 31, 1999, there were no redemption fees for the Fund. For the period of May 1, 1999 through October 31, 1999, the Europe Fund charged a 1.00% redemption fee to shareholders who redeemed shares held for less than twelve consecutive months. The redemption fee is no longer in effect as of November 1, 1999. For the period from May 1, 1999 to October 31, 1999, the redemption fees for the Fund amounted to $540,588, which is included in the Statement of Changes in Net Assets. 2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Dresdner RCM Global Investors LLC ("Dresdner RCM") serves as the Funds' investment manager, subject to the authority of the Boards of Directors. The Funds pay the management fees shown below to Dresdner RCM monthly. The fees are based on each Fund's average daily net assets as listed in the following table. Dresdner RCM has voluntarily agreed, until at least December 31, 1999, to pay each Fund (except the Europe Fund) the amount, if any, by which ordinary operating expenses of the Fund for each quarter (except interest, taxes, and extraordinary expenses) exceed its annualized total expense ratio noted below as a percentage of its average daily net assets. In subsequent years, each Fund will reimburse Dresdner RCM for any such payments during a five-year period to the extent that operating expenses are otherwise below the expense cap. Upon conversion of the Europe Fund on May 3, 1999, Dresdner RCM voluntarily agreed, until at least December 31, 2002, to waive a portion of its fee and to pay the Europe Fund on a quarterly basis the amount, if any, by which the ordinary operating expenses of the Fund (except taxes, interest, and extraordinary expenses) exceed an annual expense ratio of 1.60% (Class N) and 1.35% (Class I). In subsequent years, the Europe Fund will reimburse Dresdner RCM, for such payments for a period of up to five years after they are made, to the extent that the Fund's ordinary operating expenses are less than the expense limit. Prior to conversion, the Europe Fund paid Dresdner RCM investment management and administrative fees monthly, at an annual rate of 1.00% of the average daily net assets up to $100 million and at an annual rate of 0.80% of such assets in excess of $100 million. Page 111 Dresdner RCM Global Funds Notes to Financial Statements December 31, 1999 2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED) For the respective periods ended December 31, 1999, Dresdner RCM reimbursed the Funds' for the following operating expenses. MANAGEMENT FEES, EXPENSE CAPS AND EXPENSE REIMBURSEMENTS FISCAL PERIOD ENDED DECEMBER 31, 1999
ANNUAL MANAGEMENT FEE PERCENTAGES EXPENSES ------------------------------------------ ---------------------- FIRST $500 NEXT $500 ABOVE $1 EXPENSE FUND FLAT RATE MILLION MILLION BILLION CAPS REIMBURSEMENT - ------------------------- --------- ---------- --------- -------- ------- ------------- Large Cap Growth Fund--I -- 0.70% 0.65% 0.60% 0.95% $183,104 Large Cap Growth Fund--N -- 0.70% 0.65% 0.60% 1.20% 35,363 Biotechnology Fund--N -- 1.00% 0.95% 0.90% 1.50% 175,130 Tax Managed Fund--I -- 0.75% 0.70% 0.65% 1.25% 153,642 Tax Managed Fund--N -- 0.75% 0.70% 0.65% 1.50% 56,697 Global Small Cap Fund--I -- 1.00% 0.95% 0.90% 1.50% 182,326 Global Small Cap Fund--N -- 1.00% 0.95% 0.90% 1.75% 32,415 Global Technology Fund--I 1.00% -- -- -- 1.50% -- Global Technology Fund--N 1.00% -- -- -- 1.75% 33,268 Global Health Care Fund--N -- 1.00% 0.95% 0.90% 1.50% 183,721 International Fund--I 0.75% -- -- -- 1.00% 93,310 International Fund--N 0.75% -- -- -- 1.25% 39,047 Emerging Markets Fund--I 1.00% -- -- -- 1.50% 267,703 Emerging Markets Fund--N 1.00% -- -- -- 1.75% 42,518 Europe Fund--I 1.00% * -- -- -- 1.35% -- Europe Fund--N 1.00% * -- -- -- 1.60% 199,096 Global Equity Fund--I -- 0.75% 0.70% 0.65% 1.25% 150,248 Global Equity Fund--N -- 0.75% 0.70% 0.65% 1.50% -- Strategic Income Fund--I -- 0.75% 0.70% 0.65% 1.25% 119,666 Strategic Income Fund--N -- 0.75% 0.70% 0.65% 1.50% -- Balanced Fund--I -- 0.65% 0.60% 0.55% 0.90% 17,306
* The Europe Fund pays management fees at 1.00% annually for assets under $100 million and 0.80% for assets above $100 million. For the year ended December 31, 1999, the Global Technology Fund, Class I, reimbursed Dresdner RCM $830 under the above Reimbursement Agreement. At December 31, 1999, the Global Technology Fund, Class I, has a remaining contingent liability of $305,344. Of this contingent liability, $184,721, $43,147 and $77,476 expires on December 31, 2001, December 31, 2002 and December 31, 2003, respectively. On December 31, 1999, the Dresdner RCM Profit Sharing Plan, participation in which is limited to employees of Dresdner RCM, owned 342,120 shares and 458,053 shares of the total 4,734,785 and 12,860,719 outstanding shares of the Global Technology Fund and the International Fund, respectively. Page 112 Dresdner RCM Global Funds Notes to Financial Statements December 31, 1999 2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED) As of December 31, 1999, certain Dresdner RCM employees individually owned the following shares of the Funds:
FUND SHARES OWNED - -------------------------------------------------- ------------ Large Cap Growth Fund 283 Global Small Cap Fund 181 Global Technology Fund 485,927 Global Health Care Fund 210
As of December 31, 1999, clients of Dresdner Bank AG/Investment Management/Institutional Asset Management Division owned the following shares of the Funds:
FUND SHARES OWNED OUTSTANDING SHARES - ---------------------------------------- ------------ ------------------ Biotechnology Fund 300,000 742,818 Tax Managed Growth Fund 100,000 150,798 Global Small Cap Fund 400,000 1,090,950 Global Health Care Fund 400,000 441,001 Emerging Markets Fund 300,000 323,000 Global Equity Fund 100,000 100,000 Strategic Income Fund 300,000 300,000
At December 31, 1999, the following Funds had shareholders which each held more than 5% of the Fund's Net Assets:
PERCENTAGE OF NUMBER OF AGGREGATE FUND SHAREHOLDERS OWNERSHIP - ---------------------------------------- ------------ ------------- Large Cap Growth Fund 3 88.40% Biotechnology Fund 3 95.35% Tax Managed Growth Fund 2 81.67% Global Small Cap Fund 3 90.62% Global Technology Fund 5 71.43% Global Health Care Fund 1 90.70% International Fund 5 57.56% Emerging Markets Fund 1 93.07% Europe Fund 5 45.16% Global Equity Fund 1 100.00% Strategic Income Fund 1 100.00% Balanced Fund 1 100.00%
Page 113 Dresdner RCM Global Funds Notes to Financial Statements December 31, 1999 3. DISTRIBUTOR Funds Distributor, Inc. (the "Distributor") acts as distributor of shares of the Funds. Both the Global Company and the Capital Company have a distribution and service plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, each Fund pays the Distributor an annual fee of up to 0.25% of the average daily net assets of its Class N shares as reimbursement for certain expenses incurred by the Distributor in providing distribution and shareholder support services to such shares. Class I shares are not subject to 12b-1 fees. Effective May 3, 1999, the Investment Funds adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, whereby the Fund pays the Distributor on a monthly basis for all costs incurred by it in distributing Class N shares at an annual rate not to exceed 0.25% of the Fund's Class N shares' average daily net assets. 4. CAPITAL SHARES At December 31, 1999, the Global Company and Capital Company each has 1,000,000,000 authorized shares of common stock at $0.0001 par value, and the Investment Company has 1,000,000,000 authorized shares of $0.001 par value common stock, designated as follows:
CLASS I CLASS N ----------- ----------- Large Cap Growth Fund 50,000,000 25,000,000 Biotechnology Fund -- 50,000,000 Tax Managed Growth Fund 25,000,000 25,000,000 Global Small Cap Fund 50,000,000 25,000,000 Global Technology Fund 50,000,000 25,000,000 Global Health Care Fund -- 50,000,000 International Fund 100,000,000 50,000,000 Emerging Markets Fund 50,000,000 25,000,000 Europe Fund 100,000,000 100,000,000 Global Equity Fund 25,000,000 25,000,000 Strategic Income Fund 25,000,000 25,000,000 Balanced Fund 25,000,000 --
5. DEFERRED ORGANIZATION COSTS Costs incurred by the Funds in connection with their organization are being amortized on a straight-line basis over a five-year period beginning at the commencement of each Fund's operations. The Tax Managed Growth Fund, International Fund, Europe Fund, Global Equity Fund, Strategic Income Fund, and Balanced Fund did not have any organization costs. Page 114 Dresdner RCM Global Funds Notes to Financial Statements December 31, 1999 6. WRITTEN OPTIONS AND FORWARD FOREIGN CURRENCY CONTRACTS Transactions in written put and call options for the year ended December 31, 1999 for the Global Technology Fund were as follows:
AMOUNT OF NUMBER OF PREMIUMS CONTRACTS ----------- --------- Options outstanding at December 31, 1998 $ -- -- Options sold 3,398,087 600 Options cancelled in closing purchase transactions (3,398,087) (600) Options expired prior to exercise -- -- Options exercised -- -- ----------- ------- Options outstanding at December 31, 1999 $ -- -- =========== =======
No written options were outstanding at December 31, 1999. Forward foreign currency contracts outstanding at December 31, 1999 are as follows:
IN CONTRACTS EXCHANGE SETTLEMENT NET UNREALIZED FUND SALES TO DELIVER FOR DATE VALUE APPRECIATION - ------------------------- ------ ---------- -------- ---------- -------- -------------- Strategic Income Fund Euro 135,000 $143,876 3/28/00 $136,876 $7,000 ======== ======== ====== International Fund GBP 33,321 $53,826 1/04/00 $ 53,803 $ 23 GBP 33,473 54,170 1/05/00 54,049 121 -------- -------- ------ $107,996 $107,852 $ 144 ======== ======== ======
7. DIRECTORS' FEES Each Director who is not an interested person of the Global Company (as defined in the 1940 Act) receives from the Global Company an annual retainer of $1,000 (the retainer is evenly prorated among each series of the Global Company), plus $500 for each Board meeting attended for each series, and $250 for each committee meeting attended for each series. Each Director who is not an interested person of the Capital Company (International Fund) (as defined in the 1940 Act) receives from the Capital Company an annual retainer of $9,000, plus $1,500 for each Board meeting attended for each series, and $500 for each committee meeting attended for each series. Each Director who is not an interested person of the Investment Company (Europe Fund) (as defined in the 1940 Act) receives from the Investment Company an annual retainer of $9,000, plus $1,500 for each Board meeting attended for the series. The Europe Fund also pays each member of the strategic planning and communications subcommittees $1,500 for each meeting attended. Page 115 Dresdner RCM Global Funds Notes to Financial Statements December 31, 1999 7. DIRECTORS' FEES (CONTINUED) Each Director of a Company who is not an interested person of the Global Company and the Capital Company may elect to defer receipt of all or a portion of his or her fees for service as a director in accordance with the terms of a Deferred Compensation Plan for Non-Interested Directors ("Directors' Plan"). Under the Directors' Plan, an eligible Director may elect to have his/her deferred fees deemed invested either in 90-day U.S. Treasury bills, or shares of the common stock of the Capital Company, the Global Company, or a combination of these options. The amount of deferred fees payable to such Director under the Directors' Plan will be determined by reference to the return on such deemed investments. Generally, the deferred fees (reflecting any earnings, gains or losses thereon) become payable upon the Director's retirement or disability. 8. LINE OF CREDIT The Europe Fund has an uncommitted Line of Credit arrangement ("LOC") with State Street Bank and Trust Company, primarily to temporarily finance the repurchase of capital shares. The Fund's borrowings cannot exceed 33 1/3% of the Fund's net assets and cannot exceed the $60 million limit on the LOC. Interest is charged to the Fund based on its borrowings at the prevailing market rates as defined in the LOC. The average daily loan balance was $199,314 at a weighted average interest rate of 5.49%. The maximum loan outstanding during the period ended December 31, 1999 was $11,148,000. Interest expense of $11,093 was recorded during the year and has been included in miscellaneous expense on the statement of operations. At December 31, 1999, there were no such borrowings outstanding. Page 116 Report of Independent Accountants TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THE DRESDNER RCM GLOBAL FUNDS, INC., THE DRESDNER RCM INVESTMENT FUNDS, INC. AND THE BOARD OF DIRECTORS OF THE DRESDNER RCM CAPITAL FUNDS, INC. AND THE SHAREHOLDERS OF THE DRESDNER RCM INTERNATIONAL GROWTH EQUITY FUND: In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the Dresdner RCM Global Funds, Inc. (consisting of the Dresdner RCM Global Technology Fund, Dresdner RCM Global Small Cap Fund, Dresdner RCM Health Care Fund, Dresdner RCM Large Cap Growth Fund, Dresdner RCM Biotechnology Fund, Dresdner RCM Emerging Markets Fund, Dresdner RCM Tax Managed Growth Fund, Dresdner RCM Global Equity Fund, Dresdner RCM Strategic Income Fund and the Dresdner RCM Balanced Fund), the Dresdner RCM Capital Funds, Inc. (consisting of the Dresdner RCM International Growth Equity Fund) and the Dresdner RCM Investment Funds, Inc. (consisting of the Dresdner RCM Europe Fund, formerly the Emerging Germany Fund, Inc.), hereafter referred to as the "Funds" at December 31, 1999, the results of their operations, the changes in their net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1999 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP Boston, Massachusetts February 18, 2000 Page 117 TAX INFORMATION (UNAUDITED) On December 20, 1999 distributions were paid from investment operations for the Funds except the Europe Fund. The dividends were recorded on December 16, 1999, to shareholders of record on December 15, 1999. On January 14, 2000, distributions were paid from investment operations for the Europe Fund. The dividend was recorded on December 30, 1999 to shareholders of record on December 29, 1999.
ORDINARY LONG-TERM TOTAL FUND INCOME CAPITAL GAIN DISTRIBUTIONS - ----------------------------------- ---------- ------------ ------------- Large Cap Growth Fund--Class I Per Share $ 1.52 $ 2.45 $ 3.97 Amount $ 965,548 $ 1,550,904 $ 2,516,452 Large Cap Growth Fund--Class N Per Share $ 1.52 $ 2.45 $ 3.97 Amount $ 17,754 $ 28,518 $ 46,272 Biotechnology Fund--Class N Per Share $ 3.25 $ 0.05 $ 3.30 Amount $1,844,357 $ 31,109 $ 1,875,466 Tax Managed Growth Fund--Class I Per Share $ 0.23 $ 0.00 $ 0.23 Amount $ 23,023 $ 0 $ 23,023 Tax Managed Growth Fund--Class N Per Share $ 0.23 $ 0.00 $ 0.23 Amount $ 5,987 $ 0 $ 5,987 Global Small Cap Fund--Class I Per Share $ 1.51 $ 0.27 $ 1.78 Amount $ 736,527 $ 131,682 $ 868,209 Global Small Cap Fund--Class N Per Share $ 1.51 $ 0.27 $ 1.78 Amount $ 72,834 $ 13,022 $ 85,856 Global Technology Fund--Class I Per Share $ 1.21 $ 0.17 $ 1.38 Amount $3,596,365 $ 503,577 $ 4,099,942 Global Technology Fund--Class N Per Share $ 1.21 $ 0.17 $ 1.38 Amount $1,306,678 $ 182,966 $ 1,489,644 Global Health Care Fund--Class N Per Share $ 1.55 $ 1.04 $ 2.59 Amount $ 658,016 $ 444,876 $ 1,102,892 International Fund--Class I Per Share $ 0.51 $ 1.06 $ 1.57 Amount $5,973,315 $12,437,317 $18,410,632 International Fund--Class N Per Share $ 0.50 $ 1.06 $ 1.56 Amount $ 32,521 $ 69,812 $ 102,333 Emerging Markets Fund--Class I Per Share $ 0.47 $ 0.00 $ 0.47 Amount $ 143,805 $ 0 $ 143,805
Page 118 TAX INFORMATION (CONTINUED)
ORDINARY LONG-TERM TOTAL FUND INCOME CAPITAL GAIN DISTRIBUTIONS - ----------------------------------- ---------- ------------ ------------- Emerging Markets Fund--Class N Per Share $ 0.47 $ 0.00 $ 0.47 Amount $ 5,526 $ 0 $ 5,526 Europe Fund--Class N Per Share $ 0.51 $ 2.17 $ 2.68 Amount $1,906,909 $ 8,143,016 $10,049,925 Global Equity Fund--Class I Per Share $ 0.35 $ 0.00 $ 0.35 Amount $ 35,164 $ 0 $ 35,164 Strategic Income Fund--Class I Per Share $ 0.18 $ 0.00 $ 0.18 Amount $ 55,107 $ 0 $ 55,107 Balanced Fund--Class I Per Share $ 0.00 $ 0.00 $ 0.00 Amount $ 0 $ 0 $ 0
During the taxable year ended December 31, 1999, the following Funds paid foreign taxes and recognized foreign source income as detailed in the following table.
FOREIGN SOURCE FUND FOREIGN TAXES INCOME - ---------------------------------------- ------------- ------------ International Fund $192,111 $1,633,685 Global Small Cap Fund $ 3,194 $ 15,619 Emerging Markets Fund $ 5,185 $ 46,202 Europe Fund $127,442 $1,034,248
Page 119 INVESTMENT MANAGER Dresdner RCM Global Investors LLC Four Embarcadero Center San Francisco, California 94111 TRANSFER AND REDEMPTION AGENT State Street Bank and Trust Company 225 Franklin Street Boston, Massachusetts 02110 DISTRIBUTOR Funds Distributor, Inc. 60 State Street, Suite 1300 Boston, Massachusetts 02109 CUSTODIAN State Street Bank and Trust Company 225 Franklin Street Boston, Massachusetts 02110 (Dresdner RCM Emerging Markets Fund Only) Brown Brothers Harriman & Company 40 Water Street Boston, Massachusetts 02109 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker LLP 555 South Flower Street Los Angeles, California 90071 (Dresdner RCM Europe Fund Only) Shaw Pittman 2300 N Street, N.W. Washington, DC 20037 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP 160 Federal Street Boston, Massachusetts 02110 Shareholders may obtain portfolio holdings by calling 1-800-726-7240. Additional information is available on our website at www.DRCMFunds.com. Page 120 This report is not authorized for distribution to prospective investors unless preceded or accompanied by a Dresdner RCM Global Funds prospectus, which contains complete information about the Funds, including expenses. Investors should read the prospectus carefully before they invest or send money, as it explains certain risks associated with investing in these Funds, including investments in international and emerging markets. These risks include social, economic and political instability, market illiquidity, and currency volatility. There are also special risks associated with investing in stocks of small companies, which tend to be more volatile and less liquid than stocks of large companies. There are additional risks associated with investing in Funds that lack industry diversification. Portfolio holdings are subject to change and should not be considered as a recommendation to purchase. Grassroots-SM- Research is a division of Dresdner RCM Global Investors LLC ("Dresdner RCM"). The information and opinions expressed represent the judgement of Dresdner RCM. Dresdner RCM and its affiliates, officers, employees or clients may effect or have effected transactions for their own account(s) in the securities mentioned here or in any related investments. Accordingly, information may be available to Dresdner RCM that is not reflected at this time. The information and opinions have been compiled or arrived at from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. Dresdner RCM accepts no liability whatsoever for any direct or consequential loss or damage arising from your use of this information. Research data used by Grassroots-SM- to generate Grassroots-SM- Research recommendations, is received from reporters who work as independent contractors for broker-dealers who supply research to Dresdner RCM in connection with broker services. DISTRIBUTOR: DRESDNER RCM DISTRIBUTORS, A DIVISION OF FUNDS DISTRIBUTOR INC. -----END PRIVACY-ENHANCED MESSAGE-----