-----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, D+GuNmi9zjl/0rHG9+5GVO8qdfa5+sgL4YGxrj0G9E00+kMCg+XxJRSql4uluW4i xnJOh45lzZ42tgkMVo11EQ== /in/edgar/work/20000829/0000912057-00-039476/0000912057-00-039476.txt : 20000922 0000912057-00-039476.hdr.sgml : 20000922 ACCESSION NUMBER: 0000912057-00-039476 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000829 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RCM CAPITAL FUNDS INC /MD/ CENTRAL INDEX KEY: 0000310619 STANDARD INDUSTRIAL CLASSIFICATION: [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: 712471 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.txt N-30D DRESDNER RCM CAPITAL FUNDS SEMI-ANNUAL REPORT JUNE 30, 2000 Own the World CAPITAL FUNDS DRESDNER RCM MIDCAP FUND DRESDNER RCM SMALL CAP FUND [GRAPHIC] [LOGO] DRESDNER RCM GLOBAL FUNDS August 20, 2000 Dear Shareholder: We are pleased to present the Dresdner RCM Capital Funds' Semi-Annual Shareholder Report for the six months ended June 30, 2000. Technology was the major story once again during the first half of 2000, although the results were much more volatile than in past years. The first 10 weeks of the year marked a continuation of 1999, in which the fastest-growing, highest-priced companies led the market upwards. The next 10 weeks, however, were extremely difficult, as investors became concerned about high valuations in the midst of aggressive Federal Reserve Board action to slow the U.S. economy. By late May, indications of an economic slowdown calmed the markets, and most technology companies -- particularly profitable ones -- returned to positive territory. Indeed, a major theme on Wall Street was investor approval of companies that could exceed earnings expectations. An exception was biotechnology, where stock prices once again performed extremely well without profits. In that case, a major factor was the groundbreaking announcement in human gene research that improved the future prospects of most biotech research companies working on the next generation of medications. Although biotechnology and the rest of health care posted very good results, the overall performance of the U.S. stock market was lackluster, with the Standard & Poor's 500 posting a -1% return. International stock markets were also weak, as the global interest rate climate remained bearish. Most fixed-income markets were under pressure from rising interest rates, with the notable exception of U.S. Treasury securities. These rallied after the government announced an aggressive buyback program made possible by the federal budget surplus. It is likely that the second half of 2000 will be a better period for bonds, as interest rates appear to be declining as the U.S. economy slows. However, the stock market's performance in the second half of the year depends in large measure on the Fed's ability to engineer a soft landing for the economy. Regardless of the macroeconomic environment, Dresdner RCM will continue to focus on a bottom-up approach to stock selection. 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 information from Grassroots Research-SM-, a unique adjunct to traditional research efforts, which uncovers and confirms marketplace demand for key products and services. Inside this report, you will find discussions of each mutual fund managed by Dresdner RCM Global Investors. The portfolio managers review, in detail, relevant market conditions, factors affecting the portfolios' performance, investment strategies employed in response to the first half of the year's economic and market conditions, and the outlook for the remainder of 2000. Each report also includes performance summaries, lists of holdings and portfolio weightings as of June 30, 2000. Despite the challenge of a difficult market environment, we are proud of the performance of the Dresdner RCM Capital Funds for the past six months, and thank you for your continued support. If you would like more information on a specific fund, or if you have any questions about the material in this report, please call 1-800-227-5183. Sincerely, [SIGNATURE] DeWitt F. Bowman Chairman Dresdner RCM Capital Funds, Inc. Dresdner RCM MidCap Fund Management's Performance Review The Dresdner RCM MidCap Fund's outperformance was a function of both superior stock selection and industry strategy. As of June 30, 2000, the Fund posted year-to-date total returns of 24.31% versus 12.15% for the Russell Midcap Growth Index, the Fund's performance benchmark. The MidCap Fund outperformed in both the up and down market periods of the first (+6.93% relative) and second quarters (+4.49% relative), respectively, a function of Dresdner RCM Global Investors' ("Dresdner RCM"), the investment manager of the Fund, quality growth stock investment style and their disciplined valuation approach. MARKET REVIEW The U.S. Federal Reserve continued its course of tightening and raised interest rates in May by 50 basis points to 6.50%. Governor Meyer of the Federal Reserve Bank presented the objective as simply slowing real growth from its current torrid 5.4% pace to 3.5-4.0%, well above the 2.0-2.5% real GDP secured for the 1985 and 1994 economic "soft landings." By cooling demand down, the Fed reasons inflation will stop accelerating and economic growth will be sustainable even though the level of growth remains high. By June, signs of economic slowing began to emerge with weaker numbers for employment, retail sales, housing, autos and manufacturing. As a result, the Fed refrained from raising rates at the June meeting, but left the door open for additional hikes in the future. Over the quarter, the U.S. equity market struggled back from its April and May downdrafts. New economy stocks related to the Internet fell 50-70% from peak to trough. It appeared that the more aggressive sectors of the Nasdaq had risen too far and too fast, pumped up by the combination of momentum buying, margin debt and on-line trading. Eventually the negative sentiment spread to the entire technology sector and the larger market as well. By June, the benign economic data gave investors encouragement and helped alleviate interest rate concerns. The S&P 500 Index recouped much of its losses and the Nasdaq rallied strongly, up over 20% from its lows. Investors sought the safety and quality of the most profitable technology companies, pushing many of the stock prices back up to old highs. For the second quarter, the Russell Midcap Growth Index fell 7.41% and the Russell Midcap Index fell 4.51%. FACTORS AFFECTING PERFORMANCE The Dresdner RCM MidCap Fund outperformed the Russell Midcap Growth Index total return of 12.15% by approximately 1,217 basis points. Stock selection was benefited by holdings in Check Point Software, Alza, and Art Technology Group. In addition, the Fund benefited from avoiding Citrix Systems, Novell, and Lexmark International, three significant underperformers in the benchmark. Industry strategy was most helped by underweighting the Internet software and services industry. Superior stock selection in technology was a key performance driver in the period. Dresdner RCM continued to follow an investment theme that worked in the first quarter -- demand for bandwidth and capacity in the telecommunications and networking end-markets. Two of Dresdner RCM's favorite telecommunications infrastructure companies, Redback Networks and SDL, soared in June when investors returned to the Nasdaq. Both companies benefited from being emerging leaders in a rapidly growing industry. Dresdner RCM has made Energy, specifically oil services, a core commitment based on fundamental research by Dresdner RCM's analyst team and positive feedback from Grassroots-SM- Research. Grassroots-SM- Research commissioned interviews with 20 chief financial officers, budget directors and executives at oil and gas companies to assess capital expenditure budgets for the year. Their conclusion was that higher natural gas and oil prices in combination with inadequate capital spending in prior years should result in higher spending from major Exploration & Production companies in the second half of this year and next year. The Fund owned Weatherford International, Smith International, Grant Prideco, and BJ Services during the period, with the belief that they will directly benefit from increased spending activity. While seeking out the most attractive growth companies, Dresdner RCM is always cognizant of valuation. Dresdner RCM's valuation discipline enabled the Fund to stay out of trouble when the market sold off in April and May. Increasing the Fund's exposure in health care and energy while lightening up in technology worked to the Fund's advantage, as it was able to outperform in a down market. Overall, Dresdner RCM Page 2 Dresdner RCM MidCap Fund Management's Performance Review turned in another solid period but positions in KLA-Tencor, Peregrine Systems, and NEXTLINK Communications negatively impacted the Fund. OUTLOOK Dresdner RCM believes that the current and expected economic environment will be supportive of growth stock investing in the second half of 2000. The combination of a moderating economic growth outlook and low inflation should create a positive backdrop for quality growth stock investing. Dresdner RCM remains committed to the core growth sectors of technology, health care, and communications. Dresdner RCM is also bullish on the oil services sector, given the positive supply/demand characteristics in the energy market. Page 3 Dresdner RCM MidCap Fund Total Return Index Comparison(c) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC $10,000 investment (11/6/79 - 6/30/00)(d)
FUND RUSSELL MIDCAP INDEX(B) 11/6/79 $10,000 $10,000 12/31/79 $10,719 $11,158 1/31/80 $11,210 $11,777 2/28/80 $10,792 $11,516 3/31/80 $9,599 $9,996 4/30/80 $10,028 $10,641 5/31/80 $10,856 $11,467 6/30/80 $11,315 $12,024 7/31/80 $12,980 $13,034 8/31/80 $13,656 $13,375 9/30/80 $14,396 $13,821 10/31/80 $14,878 $13,966 11/30/80 $15,935 $15,074 12/31/80 $15,665 $14,784 1/31/81 $15,304 $14,439 2/28/81 $15,725 $14,694 3/31/81 $17,588 $15,843 4/30/81 $18,134 $15,918 5/31/81 $19,279 $16,306 6/30/81 $18,560 $16,008 7/31/81 $18,247 $15,809 8/31/81 $17,371 $14,908 9/30/81 $16,587 $13,951 10/31/81 $18,157 $14,914 11/30/81 $18,503 $15,518 12/31/81 $18,211 $15,139 1/31/82 $17,929 $14,583 2/28/82 $17,527 $13,964 3/31/82 $17,476 $13,825 4/30/82 $18,682 $14,486 5/31/82 $18,511 $13,970 6/30/82 $18,441 $13,595 7/31/82 $18,512 $13,274 8/31/82 $20,047 $14,871 9/30/82 $20,666 $15,293 10/31/82 $23,233 $17,338 11/30/82 $25,235 $18,395 12/31/82 $25,710 $18,660 1/31/83 $27,172 $19,319 2/28/83 $28,967 $19,987 3/31/83 $30,108 $20,691 4/30/83 $32,700 $21,984 5/31/83 $34,645 $22,903 6/30/83 $36,064 $23,737 7/31/83 $34,391 $22,991 8/31/83 $33,610 $22,846 9/30/83 $34,935 $23,486 10/31/83 $33,413 $22,575 11/30/83 $34,930 $23,541 12/31/83 $34,348 $23,105 1/31/84 $32,764 $22,449 2/29/84 $31,089 $21,235 3/31/84 $31,709 $21,587 4/30/84 $31,839 $21,350 5/31/84 $30,674 $20,146 6/30/84 $32,051 $20,774 7/31/84 $31,196 $20,166 8/31/84 $34,191 $22,684 9/30/84 $33,648 $22,791 10/31/84 $33,611 $22,880 11/30/84 $32,993 $22,784 12/31/84 $33,496 $23,435 1/31/85 $37,254 $25,659 2/28/85 $38,042 $26,119 3/31/85 $37,399 $25,970 4/30/85 $36,747 $25,894 5/31/85 $39,165 $27,365 6/30/85 $39,965 $28,030 7/31/85 $40,928 $27,994 8/31/85 $40,385 $27,876 9/30/85 $38,429 $26,510 10/31/85 $40,118 $27,883 11/30/85 $42,578 $29,810 12/31/85 $44,235 $30,937 1/31/86 $45,046 $31,633 2/28/86 $48,307 $34,205 3/31/86 $49,783 $36,003 4/30/86 $50,541 $35,845 5/31/86 $52,554 $37,701 6/30/86 $51,571 $38,216 7/31/86 $47,374 $35,687 8/31/86 $49,140 $38,219 9/30/86 $45,601 $35,511 10/31/86 $48,335 $37,364 11/30/86 $48,946 $37,640 12/31/86 $48,361 $36,569 1/31/87 $54,951 $41,072 2/28/87 $59,189 $43,530 3/31/87 $60,968 $43,942 4/30/87 $60,390 $42,842 5/31/87 $62,092 $42,989 6/30/87 $64,592 $44,737 7/31/87 $67,740 $46,653 8/31/87 $70,486 $48,302 9/30/87 $68,483 $47,379 10/31/87 $49,455 $35,710 11/30/87 $47,006 $33,727 12/31/87 $53,665 $36,652 1/31/88 $53,930 $38,355 2/29/88 $58,780 $41,072 3/31/88 $60,415 $41,126 4/30/88 $61,386 $41,380 5/31/88 $60,234 $41,283 6/30/88 $64,720 $44,110 7/31/88 $63,335 $43,225 8/31/88 $61,789 $42,264 9/30/88 $64,192 $43,702 10/31/88 $63,486 $43,889 11/30/88 $62,127 $42,836 12/31/88 $64,859 $43,910 1/31/89 $68,192 $46,537 2/28/89 $67,612 $46,427 3/31/89 $68,994 $47,190 4/30/89 $73,125 $49,465 5/31/89 $77,254 $51,695 6/30/89 $74,440 $51,503 7/31/89 $79,915 $55,093 8/31/89 $83,387 $56,935 9/30/89 $83,428 $56,413 10/31/89 $79,787 $53,752 11/30/89 $80,873 $54,489 12/31/89 $82,292 $55,446 1/31/90 $75,120 $50,999 2/28/90 $77,825 $52,033 3/31/90 $80,029 $53,300 4/30/90 $78,163 $51,011 5/31/90 $86,194 $55,632 6/30/90 $87,034 $55,271 7/31/90 $84,425 $53,628 8/31/90 $75,868 $47,860 9/30/90 $71,033 $44,312 10/31/90 $69,568 $42,913 11/30/90 $75,112 $47,046 12/31/90 $78,902 $49,072 1/31/91 $85,003 $52,398 2/28/91 $92,631 $56,764 3/31/91 $97,028 $59,119 4/30/91 $96,459 $59,474 5/31/91 $101,948 $62,298 6/30/91 $96,909 $59,427 7/31/91 $102,335 $62,340 8/31/91 $105,602 $64,204 9/30/91 $105,329 $63,830 10/31/91 $108,557 $65,138 11/30/91 $104,724 $62,445 12/31/91 $116,960 $69,442 1/31/92 $119,326 $70,748 2/29/92 $120,948 $72,373 3/31/92 $115,847 $70,524 4/30/92 $113,545 $71,075 5/31/92 $114,312 $71,534 6/30/92 $108,991 $70,374 7/31/92 $112,618 $73,316 8/31/92 $110,272 $71,628 9/30/92 $113,146 $73,113 10/31/92 $117,301 $74,902 11/30/92 $122,190 $78,677 12/31/92 $125,186 $80,789 1/31/93 $125,594 $82,405 2/28/93 $121,886 $82,496 3/31/93 $124,822 $85,179 4/30/93 $121,150 $82,922 5/31/93 $126,171 $85,555 6/30/93 $126,630 $86,522 7/31/93 $125,543 $86,939 8/31/93 $131,747 $90,806 9/30/93 $134,398 $91,153 10/31/93 $135,795 $91,229 11/30/93 $131,931 $89,113 12/31/93 $138,604 $92,341 1/31/94 $143,687 $94,889 2/28/94 $142,568 $93,598 3/31/94 $134,622 $89,611 4/30/94 $135,889 $90,226 5/31/94 $134,603 $90,349 6/30/94 $130,975 $87,673 7/31/94 $132,730 $90,682 8/31/94 $141,423 $94,981 9/30/94 $140,120 $92,660 10/31/94 $142,420 $93,369 11/30/94 $137,052 $89,250 12/31/94 $139,650 $90,409 1/31/95 $140,145 $92,266 2/28/95 $146,023 $97,042 3/31/95 $151,805 $99,819 4/30/95 $152,385 $101,324 5/31/95 $155,053 $104,654 6/30/95 $162,810 $108,171 7/31/95 $174,821 $113,423 8/31/95 $177,454 $115,160 9/30/95 $183,158 $117,762 10/31/95 $179,789 $115,128 11/30/95 $185,416 $120,853 12/31/95 $187,880 $121,558 1/31/96 $190,835 $124,137 2/29/96 $200,326 $127,052 3/31/96 $203,882 $128,890 4/30/96 $212,394 $132,542 5/31/96 $215,917 $134,544 6/30/96 $206,821 $132,526 7/31/96 $188,917 $124,324 8/31/96 $198,795 $130,243 9/30/96 $211,760 $136,676 10/31/96 $211,966 $137,772 11/30/96 $222,461 $146,165 12/31/96 $223,710 $144,673 1/31/97 $229,653 $150,085 2/28/97 $218,817 $149,858 3/31/97 $204,835 $143,388 4/30/97 $209,029 $147,059 5/31/97 $236,993 $157,788 6/30/97 $243,285 $162,951 7/31/97 $260,762 $176,549 8/31/97 $257,966 $174,642 9/30/97 $275,443 $184,614 10/31/97 $259,015 $177,433 11/30/97 $257,966 $181,656 12/31/97 $262,848 $186,669 1/31/98 $259,895 $183,160 2/28/98 $287,741 $197,483 3/31/98 $303,773 $206,843 4/30/98 $309,680 $207,360 5/31/98 $291,960 $200,953 6/30/98 $302,508 $203,746 7/31/98 $285,210 $194,028 8/31/98 $224,033 $162,983 9/30/98 $233,315 $173,528 10/31/98 $256,520 $185,363 11/30/98 $273,396 $194,149 12/31/98 $302,435 $205,546 1/31/99 $309,133 $205,196 2/28/99 $293,161 $198,363 3/31/99 $314,801 $204,572 4/30/99 $331,803 $219,690 5/31/99 $328,711 $219,053 6/30/99 $352,451 $226,785 7/31/99 $346,744 $220,549 8/31/99 $341,591 $214,836 9/30/99 $340,561 $207,274 10/31/99 $372,505 $217,099 11/30/99 $409,601 $223,351 12/31/99 $484,429 $242,941 1/31/00 $491,863 $234,963 2/29/00 $642,068 $253,031 3/31/00 $632,219 $267,530 4/30/00 $566,966 $254,876 5/31/00 $531,261 $248,122 6/30/00 $613,751 $255,395
PERFORMANCE(d) June 30, 2000
Cumulative Since Since MIDCAP FUND YTD(f) 1 Year 3 Years 5 Years 10 Years Inception(d) Inception(d) Average Annual Total Return(c)(d) 24.31% 70.88% 35.27% 29.90% 21.34% 22.05% 6,037.51% Russell Midcap Growth Index Average Annual Total Return(a)(e) 12.15% 48.60% 30.40% 26.37% 19.77% N/A N/A Russell Midcap Index Average Annual Total Return(b) 5.13% 12.65% 16.16% 18.74% 16.54% 16.97% 2,453.95%
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 Russell Midcap Growth Index is composed of the securities in the Russell 1000 Index with highest price-to-book ratios and highest forecasted growth values. The Russell 1000 Index is made up of the 1,000 largest companies 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. The Russell Midcap Growth Index began on December 31, 1985. (b) The Russell Midcap Index is composed of the 800 smallest securities in the Russell 1000 Index. The Russell 1000 Index is made up of the 1,000 largest companies 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. (c) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (d) The Fund commenced operations on November 6, 1979. (e) Effective December 21, 1999, the Fund's performance benchmark changed from the Russell Midcap Index to the Russell Midcap Growth Index. (f) Unannualized. Page 4 Dresdner RCM MidCap Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------------ EQUITY INVESTMENTS COMMERCIAL GOODS & SERVICES SECTOR 6.7% CAPITAL GOODS 3.1% 258,000 US General Dynamics Corp. $ 13,480,500 334,100 US L-3 Communications Holdings Inc. * 19,064,581 217,000 US Molex Inc. (Class A) 7,595,000 -------------- 40,140,081 -------------- COMMERCIAL SERVICES & SUPPLIES 2.8% 383,000 US Calpine Corp. * 25,182,250 98,400 US CheckFree Holdings Corp. * 5,073,750 172,500 US Paychex Inc. 7,245,000 -------------- 37,501,000 -------------- TRANSPORTATION 0.8% 219,400 US Expeditors International of Washington Inc. 10,421,500 CONSUMER DISCRETIONARY SECTOR 7.0% CONSUMER DURABLES & APPAREL 1.7% 179,000 US Electronic Arts Inc. * 13,055,812 215,800 US Nike Inc. (Class B) 8,591,538 -------------- 21,647,350 -------------- HOTELS, RESTAURANTS & LEISURE 0.1% 49,000 US Starbucks Corp. * 1,871,187 MEDIA 0.9% 230,700 US Entercom Communications Corp. * 11,246,625 RETAILING 4.3% 194,600 US Best Buy Co. Inc. * 12,308,450 307,300 US Circuit City Stores Inc. 10,198,519 886,900 US Family Dollar Stores Inc. 17,349,981 325,000 US Nordstrom Inc. 7,840,625 276,500 US Williams-Sonoma Inc. * 8,968,969 -------------- 56,666,544 -------------- CONSUMER STAPLES SECTOR 0.2% HOUSEHOLD & PERSONAL PRODUCTS 0.2% 70,000 US Estee Lauder Cos. Inc. (Class A) 3,213,438 ENERGY SECTOR 7.3% ENERGY 7.3% 343,000 US BJ Services Co. * 21,437,500 118,500 FR Coflexip S.A. (ADR) 7,169,250
The accompanying notes are an integral part of the financial statements. Page 5 Dresdner RCM MidCap Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------------ EQUITY INVESTMENTS (CONTINUED) ENERGY (CONTINUED) 576,000 US Grant Prideco Inc. * $ 14,400,000 364,000 US Smith International Inc. * 26,503,750 650,500 US Weatherford International Inc. 25,898,031 -------------- 95,408,531 -------------- FINANCIAL SECTOR 1.8% DIVERSIFIED FINANCIALS 1.8% 290,200 US Capital One Financial Corp. 12,950,175 193,200 US Federated Investors Inc. (Class B) 6,774,075 107,800 US Franklin Resources Inc. 3,274,425 -------------- 22,998,675 -------------- HEALTH CARE SECTOR 15.8% HEALTH CARE EQUIPMENT & SUPPLIES 5.7% 34,900 US Allscripts Inc. * 802,700 75,100 US St. Jude Medical Inc. * 3,445,213 427,200 US Stryker Corp. 18,690,000 448,000 US VISX Inc. * 12,572,000 310,100 US Waters Corp. * 38,704,356 -------------- 74,214,269 -------------- HEALTH CARE PROVIDERS & SERVICES 0.2% 243,100 US Health Management Associates Inc. * 3,175,494 PHARMACEUTICALS & BIOTECHNOLOGY 9.9% 95,500 US Abgenix Inc. * 11,446,570 273,000 US Alkermes Inc. * 12,865,125 362,400 US Alza Corp. * 21,426,900 113,379 US Forest Laboratories Inc. * 11,451,279 51,900 US Human Genome Sciences Inc. * 6,922,163 116,500 US IDEC Pharmaceuticals Corp. * 13,666,906 157,300 US Medarex Inc. * 13,291,850 138,500 US MedImmune Inc. * 10,249,000 67,000 US Millennium Pharmaceuticals Inc. * 7,495,625 179,000 US Sepracor Inc. * 21,591,875 -------------- 130,407,293 --------------
The accompanying notes are an integral part of the financial statements. Page 6 Dresdner RCM MidCap Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------------ MATERIALS SECTOR 0.6% MATERIALS 0.6% 88,000 US Rohm & Haas Co. $ 3,036,000 99,000 US Sealed Air Corp. * 5,185,125 -------------- 8,221,125 -------------- TECHNOLOGY SECTOR 54.0% COMMUNICATIONS EQUIPMENT 13.2% 110,000 US Carrier Access Corp. * 5,816,250 47,500 US CIENA Corp. * 7,917,656 160,900 US Comverse Technology Inc. * 14,963,700 245,000 US Copper Mountain Networks Inc. * 21,590,625 182,300 US Ditech Communications Corp. * 17,238,744 197,000 US Foundry Networks Inc. * 21,768,500 191,302 US GlobeSpan Inc. * 23,353,785 226,000 US Netro Corp. * 12,966,750 99,100 US Redback Networks Inc. * 17,639,800 96,900 US RF Micro Devices Inc. * 8,490,863 76,800 US SDL Inc. * 21,902,400 -------------- 173,649,073 -------------- COMPUTERS & PERIPHERALS 5.1% 314,500 US Flextronics International Ltd. 21,602,219 688,000 US Jabil Circuit Inc. * 34,142,000 220,000 US Pinnacle Systems Inc. * 4,946,562 92,500 US QLogic Corp. * 6,110,781 -------------- 66,801,562 -------------- INTERNET SOFTWARE & SERVICES 4.1% 159,000 US Commerce One Inc. * 7,217,109 388,000 US Critical Path Inc. * 22,625,250 172,200 US Entrust Technologies Inc. * 14,249,550 139,001 US RSA Security Inc. * 9,625,882 -------------- 53,717,791 -------------- INFORMATION TECHNOLOGY CONSULTING & SERVICES 5.1% 94,600 US Amdocs Ltd. * 7,260,550 251,500 US BISYS Group Inc. * 15,467,250 94,200 IS Check Point Software Technologies Ltd. * 19,946,850 257,500 US Fiserv Inc. * 11,136,875 132,800 US ISS Group Inc. * 13,111,925 -------------- 66,923,450 --------------
The accompanying notes are an integral part of the financial statements. Page 7 Dresdner RCM MidCap Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------------ SEMICONDUCTORS & INSTRUMENTS 16.3% 160,000 US Altera Corp. * $ 16,310,000 103,504 US Applied Micro Circuits Corp. * 10,220,929 403,000 US Atmel Corp. * 14,860,625 162,500 US Burr-Brown Corp. * 14,086,719 256,700 US Credence Systems Corp. * 14,166,631 395,000 US Cypress Semiconductor Corp. * 16,688,750 143,100 DE Epcos AG (ADR) * 14,095,350 56,600 US KLA-Tencor Corp. * 3,314,638 31,500 US Kopin Corp. * 2,181,375 394,000 US Micrel Inc. * 17,114,375 323,550 US Microchip Technology Inc. * 18,851,843 316,700 US MIPS Technologies Inc. (Class A) * 13,459,750 174,000 US Semtech Corp. * 13,308,281 158,200 US Silicon Storage Technology Inc. * 13,971,037 111,000 US TriQuint Semiconductor Inc. * 10,621,313 272,000 US Vitesse Semiconductor Corp. * 20,009,000 -------------- 213,260,616 -------------- SOFTWARE 10.2% 344,500 US Agile Software Corp. * 24,351,844 338,100 US Art Technology Group Inc. * 34,126,969 237,800 US Mercury Interactive Corp. * 23,007,150 86,500 US Micromuse Inc. * 14,314,398 338,600 US Peregrine Systems Inc. * 11,745,188 495,000 US Vignette Corp. * 25,747,734 -------------- 133,293,283 -------------- TELECOMMUNICATION SERVICES SECTOR 5.8% TELECOMMUNICATION SERVICES 5.8% 1,184,000 US McLeodUSA Inc. (Class A) * 24,494,000 513,400 US Nextel Partners Inc. (Class A) * 16,717,588 675,000 US NEXTLINK Communications Inc. (Class A) * 25,607,812 75,000 US Western Wireless Corp. (Class A) 4,087,500 141,000 US WinStar Communications Inc. * 4,776,375 -------------- 75,683,275 -------------- TOTAL EQUITY INVESTMENTS (COST $1,102,521,034) 99.2% 1,300,462,162 --------------
The accompanying notes are an integral part of the financial statements. Page 8 Dresdner RCM MidCap Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------------ SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 0.6% 5,435,455 US SSgA Money Market Fund $ 5,435,455 2,407,923 US SSgA U.S. Government Money Market Fund 2,407,923 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $7,843,378) 0.6% 7,843,378 -------------- TOTAL INVESTMENTS (COST $1,110,364,412)** 99.8% 1,308,305,540 OTHER ASSETS LESS LIABILITIES 0.2% 2,410,341 -------------- NET ASSETS 100.0% $1,310,715,881 ==============
- -------------------------------- * Non-income producing security ADR American Depositary Receipt Tax Information: ** For Federal income tax purposes, cost is $1,118,262,864 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $ 222,403,174 Unrealized depreciation (32,360,498) -------------- Net unrealized appreciation $ 190,042,676 ==============
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at June 30, 2000 categorized by country:
% OF NET ASSETS ------------------------------ COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ----------------------------------------------------------------------- France FR 0.5% 0.5% Germany DE 1.1% 1.1% Israel IS 1.5% 1.5% United States US 96.1% 0.8% 96.9% ------ ------- ----- Total 99.2% 0.8% 100.0% ====== ======= =====
The accompanying notes are an integral part of the financial statements. Page 9 Dresdner RCM Small Cap Fund Management's Performance Review Small cap stocks as an asset class continued to outperform large caps through June 2000 in spite of a negative macro environment. A possible rationale for their behavior is that the asset class has underperformed large cap stocks over the last four years and now offers compelling relative valuations. Though growth stocks have historically been adversely affected by a rising interest rate environment, the Small Cap Fund was able to return more than four times its benchmark, the Russell 2000 Index. As of June 30, 2000, the Fund posted a year-to-date total return of 12.71%. In comparison, the Russell 2000 Index returned 3.03%. MARKET REVIEW With the economy still roaring, the stock market began the year strongly. Real growth, as represented by the Gross Domestic Product (GDP), was a torrid 5.4% for first quarter. Heeding the threat of inflation, economic growth and the supply/demand imbalance, the U.S. Federal Reserve increased rates for the fifth and sixth time within one year, in hopes of bringing down the economy to a "soft landing." The last increase in May brought the federal funds rate to 6.50%. Historically, this type of economic environment has been bearish for small-capitalization stocks. As the Fed hoped, by June, signs of economic slowing did begin to emerge with weaker numbers for employment, retail sales, housing, autos, and manufacturing. The investment debate between the Dow Jones old economy stocks and the new economy stocks of the Nasdaq continued heatedly through March with investors vacillating from one to the other; as a result, the Nasdaq experienced four corrections of 10% or more by the end of first quarter. In April and May the tech-heavy Nasdaq saw a large downdraft and dropped nearly 40% from its high. Especially hard hit were the small cap stocks. Many of these stocks had risen more than their fundamentals warranted, pumped up by the combination of momentum buying, margin debt and on-line trading. Numerous dot-com stocks fell 50%-70% from peak to trough. In addition, the severe rulings in the Microsoft antitrust case and the SEC's investigation of MicroStrategy's possible manipulation of revenue statements that pointed to serious flaws in new economy business models, caused investors to re-examine fundamentals and valuations. As a result, investors fled, causing a very oversold market in May. The climbing interest rate environment and subsequent investor flight to safety and liquidity in the second quarter had a particularly negative impact on the higher multiple growth stocks in the technology, biotechnology/medical devices sectors and telecommunications industry. Benign economic data gave investors hope that a "soft landing" might be a reality in the near future. Consequently, the Fed did not raise rates in June. With the alleviation of interest-rate concerns, small cap stocks staged an impressive rally in June, with the Fund gaining over 34% for that month versus 8.72% for the Russell 2000. For second quarter, the Russell 2000 was down 3.78%, the Nasdaq fell 13.27%, while the broader market of the S&P 500 fell only 2.66%. FACTORS AFFECTING PERFORMANCE An extremely volatile April and May followed a very strong first quarter. Fortunately, as the economic environment moderated and investors' interest-rate fears subsided, small cap stocks recovered strongly in June. The market's recovery was reflected in the performance of the Fund. Both stock selection and industry strategy accounted for the Fund's extraordinary outperformance. Dresdner RCM Global Investors LLC ("Dresdner RCM"), the Fund's investment manager, continued to pursue technology as an investment theme throughout the second quarter, despite volatility in the sector. This strategy has continued to work well since the beginning of the year, specifically those companies that are helping to build the Internet infrastructure, software and telecommunications equipment. Despite the negative market sentiment for growth stocks in April and May, the fundamentals for many of the companies in the Fund were simultaneously presenting a very strong backdrop. The market environment gave Dresdner RCM the opportunity to purchase high quality companies, whose recognized growth opportunities had previously moved them into the mid-cap asset class. Due to market volatility, the precipitous drop in valuation moved these sought-after stocks back into the small-cap arena. Though other areas such as financial services and the capital and consumer goods sectors were providing superior returns at the time, Dresdner RCM believed they were not as strong in relative growth Page 10 Dresdner RCM Small Cap Fund Management's Performance Review characteristics as the positions recently built. The Fund held course with its investment in technology stocks, despite fierce economic and market headwinds, and it paid off handsomely when the market reversed course in June. Some of the best software performers included Actuate, WatchGuard Technologies, and Critical Path. Stellar telecommunications performers were Centillium and Audiocodes. The Fund has also built positions in the life sciences sector. At the beginning of the year, the Fund was underweighted, but took advantage of the sector's weakness during the second quarter, moving to an overweight position. This proved to be a tactic that worked well, especially with stocks such as Intermune, Cell Genesys, and Inhale Therapeutic. Every year on June 30, Russell rebalances its indices. This year's move was particularly significant in that Dresdner RCM saw a reasonably large shift in the industry weightings, particularly with the decrease in the technology sector weighting and increase in the capital goods and financial services sectors. The Fund prepared for this rebalance and adjusted the portfolio to maintain the existing industry exposure relative to the Russell 2000 Index. Dresdner RCM continued to benefit from the Grassroots-SM- Research division -- dedicated to uncovering, quantifying and confirming marketplace demand for key products and services and anticipating new industry and market trends. The division has been following the Internet buildout for over five years, interviewing MIS and IT managers on a quarterly basis to inquire about technology spending and sentiment surrounding major vendors. Grassroots-SM- found that the recent downturn in opinion toward dot-com companies has not affected buildout strategies. Companies are aggressively pursuing an Internet presence and e-commerce capabilities, including B2B, B2C, and infrastructure to support the new digital economy. Reasons for focusing on e-commerce and the Internet included perceived customer demand for Internet services, the ability to streamline processes using B2B applications, and the fear of being left behind in the race to embrace a new technology. OUTLOOK A soft landing is the best hope for the equity market, for it can provide for prolonged sales growth with eventually lower interest rates in the year or two ahead. In that environment, earnings can grow and price/earnings multiples can once again expand, opening the door to possibly above-average returns in the market. Dresdner RCM plans to remain focused on many of the same investment themes currently built into the Fund's portfolio. Dresdner RCM believes that it will continue to overweight the Fund in the software, telecommunications equipment, and life sciences sectors that have been so successful in the first half of 2000. Page 11 Dresdner RCM Small Cap Fund Total Return Index Comparison(b) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC $10,000 Investment (1/3/92 - 6/30/00)(c)
FUND RUSSELL 2000 INDEX (A) 1/3/92 $10,000 $10,000 1/31/92 $10,786 $10,811 2/28/92 $11,118 $11,127 3/31/92 $10,850 $10,751 4/30/92 $10,613 $10,373 5/31/92 $10,703 $10,511 6/30/92 $10,165 $10,017 7/31/92 $10,530 $10,366 8/31/92 $10,336 $10,072 9/30/92 $10,603 $10,304 10/31/92 $11,002 $10,630 11/30/92 $11,807 $11,444 12/31/92 $12,214 $11,842 1/31/93 $12,212 $12,242 2/28/93 $11,792 $11,960 3/31/93 $12,082 $12,348 4/30/93 $11,636 $12,008 5/31/93 $12,102 $12,539 6/30/93 $12,134 $12,617 7/31/93 $12,126 $12,791 8/31/93 $12,580 $13,344 9/30/93 $13,037 $13,720 10/31/93 $13,186 $14,074 11/30/93 $12,728 $13,615 12/31/93 $13,337 $14,080 1/31/94 $13,592 $14,522 2/28/94 $13,431 $14,469 3/31/94 $12,712 $13,707 4/30/94 $12,637 $13,788 5/31/94 $12,411 $13,633 6/30/94 $11,990 $13,173 7/31/94 $12,173 $13,390 8/31/94 $13,095 $14,136 9/30/94 $13,073 $14,088 10/31/94 $13,240 $14,031 11/30/94 $12,765 $13,464 12/31/94 $13,049 $13,824 1/31/95 $12,958 $13,649 2/28/95 $13,392 $14,217 3/31/95 $13,900 $14,461 4/30/95 $14,064 $14,782 5/31/95 $14,030 $15,037 6/30/95 $14,728 $15,817 7/31/95 $15,706 $16,728 8/31/95 $16,245 $17,074 9/30/95 $16,900 $17,380 10/31/95 $16,330 $16,602 11/30/95 $16,882 $17,300 12/31/95 $17,496 $17,756 1/31/96 $17,973 $17,737 2/28/96 $18,914 $18,290 3/31/96 $19,374 $18,662 4/30/96 $20,684 $19,660 5/31/96 $21,660 $20,435 6/30/96 $20,993 $19,596 7/31/96 $18,958 $17,884 8/31/96 $20,592 $18,923 9/30/96 $22,457 $19,662 10/31/96 $22,226 $19,359 11/30/96 $22,488 $20,157 12/31/96 $23,514 $20,685 1/31/97 $23,754 $21,098 2/28/97 $22,335 $20,587 3/31/97 $20,877 $19,615 4/30/97 $20,357 $19,670 5/31/97 $23,953 $21,858 6/30/97 $25,312 $22,795 7/31/97 $26,750 $23,856 8/31/97 $27,350 $24,403 9/30/97 $29,867 $26,189 10/31/97 $28,508 $25,039 11/30/97 $28,329 $24,877 12/31/97 $28,098 $25,312 1/31/98 $27,929 $24,912 2/28/98 $30,435 $26,753 3/31/98 $31,520 $27,855 4/30/98 $31,496 $28,009 5/31/98 $29,688 $26,499 6/30/98 $30,700 $26,555 7/31/98 $28,339 $24,404 8/31/98 $20,989 $19,664 9/30/98 $22,531 $21,204 10/31/98 $24,290 $22,069 11/30/98 $26,483 $23,226 12/31/98 $28,411 $24,663 1/31/99 $27,925 $24,991 2/28/99 $24,283 $22,967 3/31/99 $24,010 $23,325 4/30/99 $24,738 $25,415 5/31/99 $25,861 $25,786 6/30/99 $27,197 $26,952 7/31/99 $27,318 $26,214 8/31/99 $25,770 $25,244 9/30/99 $25,133 $25,249 10/31/99 $24,010 $25,352 11/30/99 $28,229 $26,866 12/31/99 $31,934 $29,912 1/31/00 $31,372 $29,425 2/29/00 $38,208 $34,284 3/31/00 $37,116 $32,024 4/30/00 $31,185 $30,096 5/31/00 $26,846 $28,342 6/30/00 $35,992 $30,818
PERFORMANCE(b) June 30, 2000
Cumulative Since Since SMALL CAP FUND YTD(d) 1 Year 3 Years 5 Years Inception(c) Inception(c) Average Annual Total Return 12.71% 32.34% 12.45% 19.57% 16.26% 259.92% Russell 2000 Index Average Annual Total Return(a) 3.03% 14.33% 10.57% 14.27% 14.16% 208.18%
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 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. (b) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (c) The Fund commenced operations on January 3, 1992. (d) Unannualized. Page 12 Dresdner RCM Small Cap Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------------- EQUITY INVESTMENTS COMMERCIAL GOODS & SERVICES SECTOR 7.3% CAPITAL GOODS 1.9% 75,000 US Capstone Turbine Corp. * $ 3,379,687 69,500 US L-3 Communications Holdings Inc. * 3,965,844 ------------ 7,345,531 ------------ COMMERCIAL SERVICES & SUPPLIES 4.1% 119,800 US Choicepoint Inc. * 5,331,100 88,900 US Insight Enterprises Inc. * 5,272,882 130,400 US NCO Group Inc. * 3,015,500 354,000 US Personnel Group of America Inc. * 1,039,875 87,400 US Wackenhut Corrections Corp. * 655,500 ------------ 15,314,857 ------------ TRANSPORTATION 1.3% 66,900 US EGL Inc. * 2,057,175 56,200 US Expeditors International of Washington Inc. 2,669,500 ------------ 4,726,675 ------------ CONSUMER DISCRETIONARY SECTOR 7.4% HOTELS, RESTAURANTS & LEISURE 0.5% 76,300 US Speedway Motorsports Inc. * 1,754,900 MEDIA 3.3% 69,100 US Entercom Communications Corp. * 3,368,625 132,900 US MyPoints.com Inc. * 2,518,870 280,800 US Tickets.com Inc. * 956,475 114,500 US Wink Communications Inc. * 3,492,250 252,200 US Ziff-Davis Inc. - ZDNet * 2,269,800 ------------ 12,606,020 ------------ RETAILING 3.6% 219,900 US CSK Auto Corp. * 1,662,994 406,200 CA InterTAN Inc. * 4,772,850 184,400 US Trans World Entertainment Corp. * 2,235,850 127,100 US Ultimate Electronics Inc. * 3,405,883 43,300 US Williams-Sonoma Inc. * 1,404,544 ------------ 13,482,121 ------------ ENERGY SECTOR 11.7% ENERGY 11.7% 129,200 US Cal Dive International Inc. * 7,001,025 246,400 NL Core Laboratories N.V. * 7,145,600 329,600 US Grant Prideco Inc. * 8,240,000
The accompanying notes are an integral part of the financial statements. Page 13 Dresdner RCM Small Cap Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) ENERGY (CONTINUED) 237,400 US National-Oilwell Inc. * $ 7,804,525 120,300 US NS Group Inc. * 2,518,781 96,700 US Patterson Energy Inc. * 2,755,950 563,600 US Superior Energy Services Inc. * 5,847,350 95,700 US Veritas DGC Inc. * 2,488,200 ------------ 43,801,431 ------------ FINANCIAL SECTOR 1.4% BANKS 0.4% 30,400 US Silicon Valley Bancshares * 1,295,800 DIVERSIFIED FINANCIALS 1.0% 58,300 US Affiliated Managers Group Inc. * 2,652,650 31,000 US Investment Technology Group Inc. * 1,224,500 ------------ 3,877,150 ------------ HEALTH CARE SECTOR 21.4% HEALTH CARE EQUIPMENT & SUPPLIES 7.4% 56,400 US Aclara Biosciences Inc. * 2,872,875 212,000 US Charles River Laboratories International Inc. * 4,703,750 108,800 US INAMED Corp. * 3,984,800 56,800 US Inhale Therapeutic Systems Inc. * 5,763,425 90,700 US Invitrogen Corp. * 6,820,924 400 US Molecular Devices Corp. * 27,675 132,500 US VISX Inc. * 3,718,281 ------------ 27,891,730 ------------ HEALTH CARE PROVIDERS & SERVICES 0.5% 199,400 US MedicaLogic/Medscape Inc. * 1,844,450 PHARMACEUTICALS & BIOTECHNOLOGY 13.5% 319,700 US AVANT Immunotherapeutics Inc. * 3,376,831 309,800 US Cell Genesys Inc. * 8,674,400 114,000 US Cell Therapeutics Inc. * 3,491,250 91,600 US CuraGen Corp. * 3,486,525 89,300 US Gene Logic Inc. * 3,186,894 256,500 US Immunomedics Inc. * 6,284,250 110,400 US Intermune Pharmaceuticals Inc. * 4,560,900 42,100 US Medarex Inc. * 3,557,450 145,400 US OSI Pharmaceuticals Inc. * 4,189,337 62,900 US PRAECIS Pharmaceuticals Inc. * 1,753,338
The accompanying notes are an integral part of the financial statements. Page 14 Dresdner RCM Small Cap Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) PHARMACEUTICALS & BIOTECHNOLOGY (CONTINUED) 23,500 US Protein Design Labs Inc. * $ 3,876,398 97,000 US Titan Pharmaceuticals Inc. * 4,171,000 ------------ 50,608,573 ------------ TECHNOLOGY SECTOR 42.0% COMMUNICATIONS EQUIPMENT 6.4% 39,600 IS AudioCodes Ltd. * 4,752,000 34,900 US Carrier Access Corp. * 1,845,338 31,500 US Ditech Communications Corp. * 2,978,719 89,700 US Packeteer Inc. * 2,612,512 140,200 IS RADVision Ltd. * 3,916,837 142,100 US WatchGuard Technologies Inc. * 7,806,619 ------------ 23,912,025 ------------ COMPUTERS & PERIPHERALS 1.4% 230,200 US Pinnacle Systems Inc. * 5,175,903 INTERNET SOFTWARE & SERVICES 3.5% 35,500 US Clarus Corp. * 1,380,063 147,800 US Critical Path Inc. * 8,618,587 79,600 US Digital River Inc. * 611,925 30,100 US OnDisplay Inc. * 2,451,269 ------------ 13,061,844 ------------ INFORMATION TECHNOLOGY CONSULTING & SERVICES 2.3% 654,800 US kforce.com Inc. * 4,542,675 476,700 US Modis Professional Services Inc. * 4,230,712 ------------ 8,773,387 ------------ SEMICONDUCTORS & INSTRUMENTS 12.2% 63,100 US Actel Corp. * 2,878,938 66,500 US Advanced Energy Industries Inc. * 3,919,344 57,900 US Brooks Automation Inc. * 3,701,981 61,700 US Centillium Communications Inc. * 4,257,300 132,100 US Cymer Inc. * 6,307,775 96,000 US Cypress Semiconductor Corp. * 4,056,000 78,200 US Intersil Holding Corp. * 4,227,687 169,900 US Manufacturers' Services Ltd. * 3,493,569 140,300 US MIPS Technologies Inc. (Class A) * 5,962,750
The accompanying notes are an integral part of the financial statements. Page 15 Dresdner RCM Small Cap Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) SEMICONDUCTORS & INSTRUMENTS (CONTINUED) 20,600 US Silicon Laboratories Inc. * $ 1,094,375 102,000 US Virata Corp. * 6,081,750 ------------ 45,981,469 ------------ SOFTWARE 16.2% 106,600 US Accrue Software Inc. * 3,784,300 255,500 US Actuate Corp. * 13,637,313 89,200 US Advent Software Inc. * 5,753,400 76,700 US Agile Software Corp. * 5,421,731 107,400 US Allaire Corp. * 3,946,950 51,600 US Art Technology Group Inc. * 5,208,375 11,900 US Informatica Corp. * 975,056 145,300 US Mercator Software Inc. * 9,989,375 242,500 US ONYX Software Corp. * 7,199,219 91,700 CA Pivotal Corp. * 2,154,950 61,500 US Primus Knowledge Solutions Inc. * 2,767,500 ------------ 60,838,169 ------------ TELECOMMUNICATION SERVICES SECTOR 6.6% TELECOMMUNICATION SERVICES 6.6% 278,300 US Allied Riser Communications Corp. * 3,930,987 129,300 US CAIS Internet Inc. * 1,818,281 129,400 US Cypress Communications Inc. * 938,150 321,100 US DSL.net Inc. * 3,311,344 106,800 US Intermedia Communications of Florida Inc. * 3,177,300 272,500 US Net2000 Communications Inc. * 4,462,187 185,900 US Network Access Solutions Corp. * 1,777,669 175,600 US Network Plus Corp. * 2,491,325 183,100 US SoftNet Systems Inc. * 1,762,338 109,600 US Z-Tel Technologies Inc. * 1,315,200 ------------ 24,984,781 ------------ TOTAL EQUITY INVESTMENTS (COST $342,263,672) 97.8% 367,276,816 ------------
The accompanying notes are an integral part of the financial statements. Page 16 Dresdner RCM Small Cap Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 1.2% 1,710,432 US SSgA Money Market Fund $ 1,710,432 2,633,781 US SSgA U.S. Government Money Market Fund 2,633,781 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $4,344,213) 1.2% 4,344,213 ------------ TOTAL INVESTMENTS (COST $346,607,885)** 99.0% 371,621,029 OTHER ASSETS LESS LIABILITIES 1.0% 3,906,155 ------------ NET ASSETS 100.0% $375,527,184 ============
- -------------------------------- * Non-income producing security ADR American Depositary Receipt Tax Information: ** For Federal income tax purposes, cost is $350,046,245 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $82,228,030 Unrealized depreciation (60,653,246) ----------- Net unrealized appreciation $21,574,784 ===========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investment in securities at June 30, 2000 categorized by country:
% OF NET ASSETS ------------------------------ COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ----------------------------------------------------------------------- Canada CA 1.9% 1.9% Israel IS 2.3% 2.3% Netherlands NL 1.9% 1.9% United States US 91.7% 2.2% 93.9% ------ ------- ----- Total 97.8% 2.2% 100.0% ====== ======= =====
The accompanying notes are an integral part of the financial statements. Page 17 Dresdner RCM Capital Funds, Inc. Statements of Assets and Liabilities June 30, 2000 (Unaudited) (All numbers in thousands except net asset values)
MIDCAP SMALL CAP FUND FUND ---------- --------- ASSETS: Investments at cost $1,110,364 $346,608 ========== ======== Investments at value (Note 1) $1,308,306 $371,621 Collateral for securities on loan (Note 4) 37,166 32,926 Receivables: Investments sold 72,486 15,720 Fund shares sold 2,422 91 Dividends 176 22 Interest 84 26 Securities lending 152 56 ---------- -------- Total Assets 1,420,792 420,462 ---------- -------- LIABILITIES: Payables: Investments purchased 64,582 10,213 Collateral for securities on loan (Note 4) 37,166 32,926 Fund shares repurchased 7,500 1,500 Management fees (Note 2) 793 280 Other 35 16 ---------- -------- Total Liabilities 110,076 44,935 ---------- -------- NET ASSETS $1,310,716 $375,527 ========== ======== NET ASSETS CONSIST OF: Paid-in capital (Note 3) $ 551,860 $292,447 Accumulated net investment loss (3,015) (1,256) Accumulated net realized gain on investments and foreign currency transactions 563,929 59,323 Net unrealized appreciation on investments 197,942 25,013 ---------- -------- NET ASSETS $1,310,716 $375,527 ========== ======== SHARES OUTSTANDING 131,385 32,504 ========== ======== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 9.98 $ 11.55 ========== ========
The accompanying notes are an integral part of the financial statements. Page 18 Dresdner RCM Capital Funds, Inc. Statements of Operations For the Six Months Ended June 30, 2000 (Unaudited) (All numbers in thousands)
MIDCAP SMALL CAP FUND FUND --------- --------- INVESTMENT INCOME: (NOTE 1) Income: Dividends $ 1,017 $ 191 Interest 1,279 511 Foreign tax withheld (12) -- --------- -------- Total investment income 2,284 702 --------- -------- Expenses: Investment management fees (Note 2) 5,227 1,922 Custodian fees 72 36 --------- -------- Total expenses 5,299 1,958 --------- -------- Net investment loss (3,015) (1,256) --------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain on investments 512,911 100,233 Net change in unrealized depreciation on investments (212,128) (58,024) --------- -------- Net realized and unrealized gain during the period 300,783 42,209 --------- -------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 297,768 $ 40,953 ========= ========
The accompanying notes are an integral part of the financial statements. Page 19 Dresdner RCM Capital Funds, Inc. Statements of Changes in Net Assets (All numbers in thousands)
MIDCAP FUND SMALL CAP FUND ------------------------------ ------------------------------ (UNAUDITED) YEAR ENDED (UNAUDITED) YEAR ENDED SIX MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED DECEMBER 31, JUNE 30, 2000 1999 JUNE 30, 2000 1999 ---------------- ------------ ---------------- ------------ OPERATIONS: Net investment loss $ (3,015) $ (2,203) $ (1,256) $ (3,072) Net realized gain (loss) on investments 512,911 234,002 100,233 (32,599) Net change in unrealized appreciation (depreciation) on investments (212,128) 277,202 (58,024) 58,242 ---------- ---------- -------- --------- Net increase in net assets from operations 297,768 509,001 40,953 22,571 DISTRIBUTIONS TO SHAREHOLDERS FROM: Net realized gain on investments -- (180,650) -- -- In excess of realized gain on investments -- -- -- (10,485) ---------- ---------- -------- --------- Total distributions to shareholders -- (180,650) -- (10,485) NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS (344,541) 53,875 (70,119) (165,358) ---------- ---------- -------- --------- TOTAL INCREASE (DECREASE) IN NET ASSETS (46,773) 382,226 (29,166) (153,272) NET ASSETS: Beginning of period 1,357,489 975,263 404,693 557,965 ---------- ---------- -------- --------- End of period $1,310,716 $1,357,489 $375,527 $ 404,693 ========== ========== ======== ========= FUND SHARE TRANSACTIONS: DOLLAR AMOUNTS Sold $ 4,454 $ 155,687 $ 6,841 $ 48,161 Issued to shareholders in reinvestment of distributions -- 180,435 -- 10,459 Repurchased (348,995) (282,247) (76,960) (223,978) ---------- ---------- -------- --------- Net increase (decrease) $ (344,541) $ 53,875 $(70,119) $(165,358) ========== ========== ======== ========= SHARE AMOUNTS Sold 473 23,371 623 5,583 Issued to shareholders in reinvestment of distributions -- 24,616 -- 1,108 Repurchased (38,365) (44,732) (7,678) (26,739) ---------- ---------- -------- --------- Net increase (decrease) (37,892) 3,255 (7,055) (20,048) ========== ========== ======== ========= PURCHASES AND SALES OF INVESTMENT SECURITIES (EXCLUDING SHORT-TERM SECURITIES): Purchases of securities $1,391,130 $1,910,060 $368,533 $ 486,026 Proceeds from sales of securities 1,718,976 1,997,527 445,382 619,777
The accompanying notes are an integral part of the financial statements. Page 20 Dresdner RCM Capital Funds, Inc. Financial Highlights For a share outstanding throughout each fiscal year or period ended:
MIDCAP FUND (UNAUDITED) -------------------------------------------------------------- FOR THE SIX YEAR ENDED DECEMBER 31, MONTHS ENDED -------------------------------------------------------------- JUNE 30, 2000(2) 1999(2) 1998(2) 1997(2) 1996(1)(2) 1995 ---------------- -------- -------- -------- ---------- -------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 8.02 $ 5.87 $ 6.23 $ 6.40 $ 9.13 $ 7.89 ----------- ------ ------ ------ ------ ------ Income from investment operations: Net investment income (loss) (0.02) (0.01) -- (0.01) (0.01) 0.02 Net realized and unrealized gain on investments 1.98 3.42 0.81 1.08 1.59 2.66 ----------- ------ ------ ------ ------ ------ Total from investment operations 1.96 3.41 0.81 1.07 1.58 2.68 Less distributions: From net investment income -- -- -- -- -- (0.02) From net realized gain on investments -- (1.26) (1.17) (1.24) (4.31) (1.42) ----------- ------ ------ ------ ------ ------ Total distributions -- (1.26) (1.17) (1.24) (4.31) (1.44) ----------- ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 9.98 $ 8.02 $ 5.87 $ 6.23 $ 6.40 $ 9.13 ----------- ------ ------ ------ ------ ------ ----------- ------ ------ ------ ------ ------ TOTAL RETURN (3) 24.31% 60.18% 15.06% 17.50% 19.07% 34.53% ----------- ------ ------ ------ ------ ------ ----------- ------ ------ ------ ------ ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in millions) $ 1,311 $1,357 $ 975 $ 961 $ 896 $1,325 ----------- ------ ------ ------ ------ ------ ----------- ------ ------ ------ ------ ------ Ratio of expenses to average net assets 0.76%(4) 0.77% 0.76% 0.76% 0.84% 0.76% ----------- ------ ------ ------ ------ ------ ----------- ------ ------ ------ ------ ------ Ratio of net investment income (loss) to average net assets (0.43)%(4) (0.22)% (0.01)% (0.17)% (0.12)% 0.22% ----------- ------ ------ ------ ------ ------ ----------- ------ ------ ------ ------ ------ Portfolio turnover 101.71% 198.17% 168.24% 155.10% 115.89% 96.46% ----------- ------ ------ ------ ------ ------ ----------- ------ ------ ------ ------ ------
- ------------------------------------ (1) Stock split 25:1 at close of business on June 17, 1996. All prior period per share amounts were restated to reflect the stock split. (2) Calculated using the average share method. (3) Total return measures the change in value of an investment over the period indicated. (4) Annualized. The accompanying notes are an integral part of the financial statements. Page 21 Dresdner RCM Capital Funds, Inc. Financial Highlights For a share outstanding throughout each fiscal year or period ended:
SMALL CAP FUND (UNAUDITED) -------------------------------------------------------------- FOR THE SIX YEAR ENDED DECEMBER 31, MONTHS ENDED -------------------------------------------------------------- JUNE 30, 2000(2) 1999(2) 1998(2) 1997(2) 1996(1)(2) 1995 ---------------- -------- -------- -------- ---------- -------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 10.23 $ 9.36 $11.66 $11.77 $11.35 $ 9.42 ----------- ------ ------ ------ ------ ------ Income from investment operations: Net investment loss (0.04) (0.06) (0.07) (0.08) (0.08) (0.04) Net realized and unrealized gain on investments 1.36 1.20 --(3) 2.29 3.82 3.21 ----------- ------ ------ ------ ------ ------ Total from investment operations 1.32 1.14 (0.07) 2.21 3.74 3.17 Less distributions: From net realized gain on investments -- -- (2.23) (2.32) (3.32) (1.24) In excess of realized gain on investments -- (0.27) -- -- -- -- ----------- ------ ------ ------ ------ ------ Total distributions -- (0.27) (2.23) (2.32) (3.32) (1.24) ----------- ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 11.55 $10.23 $ 9.36 $11.66 $11.77 $11.35 ----------- ------ ------ ------ ------ ------ ----------- ------ ------ ------ ------ ------ TOTAL RETURN (4) 12.71% 12.40% 1.11% 19.49% 34.39% 34.08% ----------- ------ ------ ------ ------ ------ ----------- ------ ------ ------ ------ ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in millions) $ 376 $ 405 $ 558 $ 661 $ 569 $ 410 ----------- ------ ------ ------ ------ ------ ----------- ------ ------ ------ ------ ------ Ratio of expenses to average net assets 1.02%(5) 1.02% 1.01% 1.02% 1.00% 1.01% ----------- ------ ------ ------ ------ ------ ----------- ------ ------ ------ ------ ------ Ratio of net investment loss to average net assets (0.65)%(5) (0.71)% (0.61)% (0.68)% (0.58)% (0.22)% ----------- ------ ------ ------ ------ ------ ----------- ------ ------ ------ ------ ------ Portfolio turnover 98.97% 116.42% 131.85% 117.64% 117.00% 83.91% ----------- ------ ------ ------ ------ ------ ----------- ------ ------ ------ ------ ------
- ------------------------------------ (1) Stock split 12:1 at close of business on June 17, 1996. All prior period per share amounts were restated to reflect the stock split. (2) Calculated using the average share method. (3) The amount shown for a share outstanding does not correspond with the aggregate net gain on investments for the period due to timing of sales and repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund. (4) Total return measures the change in value of an investment over the period indicated. (5) Annualized. The accompanying notes are an integral part of the financial statements. Page 22 Dresdner RCM Capital Funds, Inc. Notes to Financial Statements June 30, 2000 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES The Dresdner RCM Capital Funds, Inc. ("Capital Company") is organized as a Maryland corporation and is registered as an open-end management investment company under the Investment Company Act of 1940 (the "1940 Act"), as amended. The Capital Company consists of three series. The Dresdner RCM MidCap Fund ("MidCap Fund") and the Dresdner RCM Small Cap Fund ("Small Cap Fund") are diversified, no-load series of the Capital Company (each, a "Fund" and collectively, the "Funds"). The Dresdner RCM International Growth Equity Fund is a non-diversified, no load series of the Capital Company. The International Fund's financial statements and financial highlights are included in the semi-annual report of the Dresdner RCM Global Funds. 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 in the financial statements. Actual results may differ from these estimates. A. PORTFOLIO VALUATION: 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 is valued at the closing bid price on such day. If no bid price is quoted on such day, then the security is valued by such method as the Board of Directors or a duly constituted committee of the Board of Directors of the Capital Company determines in good faith to reflect its fair market value. Readily marketable securities traded only in the over-the-counter market that are not listed on NASDAQ or similar foreign reporting service are valued at the mean bid price, or using such other comparable sources as the Board of Directors of the Capital Company in good faith deems appropriate to reflect their fair market value. Other portfolio securities held by the Funds are 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 are valued by whatever means the Board of Directors or a duly constituted committee of the Board of Directors of the Capital 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. 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. C. FOREIGN CURRENCY TRANSACTIONS AND FOREIGN INVESTMENTS: The books and records of each Fund is 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 upon foreign Page 23 Dresdner RCM Capital Funds, Inc. Notes to Financial Statements June 30, 2000 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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. 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 Small Cap Fund had a capital loss carryover of $29,437,870, which will expire on December 31, 2007. E. DISTRIBUTIONS: Income dividends and 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 in excess of 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 passive foreign investment companies. 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 Board of Directors. The MidCap Fund and Small Cap Fund pay investment management fees monthly at annualized rates of 0.75% and 1.00%, respectively, of each Fund's average daily net assets. Page 24 Dresdner RCM Capital Funds, Inc. Notes to Financial Statements June 30, 2000 (Unaudited) 2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED) The Funds are each responsible for the payment of certain of their operating expenses, including brokerage and commission expenses; taxes levied on the Funds; interest charges on borrowings (if any); charges and expenses of the custodian; and payment of investment management fees due to Dresdner RCM. Dresdner RCM is responsible for all other expenses incurred by the MidCap Fund and the Small Cap Fund. On June 30, 2000, the Dresdner RCM Profit Sharing Plan, participation in which is limited to employees of Dresdner RCM, owned 583,384 shares of the MidCap Fund and 429,068 shares of the Small Cap Fund. At June 30, 2000, 5 shareholders in the MidCap Fund and 3 shareholders in the Small Cap Fund each held more than 5% of the outstanding shares of the respective Funds. These shareholders, in aggregate, held approximately 55.63% of the MidCap Fund and 49.45% of the Small Cap Fund. 3. CAPITAL SHARES At June 30, 2000, there were 1,000,000,000 shares of the Capital Company's common stock authorized, at $0.0001 par value. Of this amount, 300,000,000 were classified as shares of the MidCap Fund and 100,000,000 were classified as shares of the Small Cap Fund. 4. SECURITIES LENDING Effective October 31, 1999, the MidCap Fund and the Small Cap Fund entered into a Securities Lending Agreement with Morgan Stanley & Co. Incorporated ("Morgan"). The Funds receive cash collateral equal to at least 102% of the current market value of the loaned securities. The Funds invest the cash collateral in repurchase agreements through State Street Bank & Trust Company pursuant to guidelines approved by the Capital Company's Board of Directors. Income earned on the collateral is paid to Morgan monthly. The Funds receive a fee, payable monthly, negotiated by the Funds and Morgan, based on the number and duration of the lending transactions. For the six months ended June 30, 2000, net securities lending income was $912,497 and $337,500 for the MidCap Fund and the Small Cap Fund, respectively, and is included in interest income. At June 30, 2000, securities with a market value of $36,437,194 and $32,280,250 were on loan to brokers for the MidCap Fund and the Small Cap Fund, respectively. The loans were collateralized by repurchase agreements of $37,165,934 and $32,925,852 for the MidCap Fund and the Small Cap Fund, respectively. As with other extensions of credit, the Fund may bear the risk of delay in the recovery of the loaned securities or in the event of foreclosure on collateral. 5. DIRECTORS' FEES Each Director who is not an interested person of the Capital Company (as defined in the 1940 Act, as amended) receives from the Capital Company an annual retainer of $9,000 (the retainer is evenly prorated among the three series of the Capital Company), plus $1,500 per series for each Board meeting attended, and $500 per series for each committee meeting attended. Each Director who is not an interested person of 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- Page 25 Dresdner RCM Capital Funds, Inc. Notes to Financial Statements June 30, 2000 (Unaudited) 5. DIRECTORS' FEES (CONTINUED) Interested Directors ("Directors' Plan"). Under the Directors' Plan, an eligible Director may elect to have his or her deferred fees deemed invested either in 90-day U.S. Treasury bills or shares of the Common Stock of the Capital Company or of the Dresdner RCM Global Funds, Inc., or a combination of these options, and 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. Page 26 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 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker LLP 555 South Flower Street Los Angeles, California 90071 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP 160 Federal Street Boston, Massachusetts 02110 Monthly portfolio holdings are available upon request. To obtain information, shareholders should call 1-800-726-7240. Page 27 This report is not authorized for distribution to prospective investors unless preceded or accompanied by a Dresdner RCM Capital 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. DRESDNER RCM GLOBAL FUNDS SEMI-ANNUAL REPORT JUNE 30, 2000 Own the World Domestic Funds DRESDNER RCM LARGE CAP GROWTH FUND DRESDNER RCM TAX MANAGED GROWTH FUND DRESDNER RCM BIOTECHNOLOGY FUND DRESDNER RCM BALANCED FUND Global Funds DRESDNER RCM GLOBAL SMALL CAP FUND DRESDNER RCM GLOBAL TECHNOLOGY FUND DRESDNER RCM GLOBAL HEALTH CARE FUND DRESDNER RCM GLOBAL EQUITY FUND DRESDNER RCM STRATEGIC INCOME FUND International Funds DRESDNER RCM INTERNATIONAL GROWTH EQUITY FUND DRESDNER RCM EMERGING MARKETS FUND DRESDNER RCM EUROPE FUND [GRAPHIC] [LOGO] DRESDNER RCM GLOBAL FUNDS Dresdner RCM Global Funds TABLE OF CONTENTS Shareholder's Letter 1 Performance and Portfolios of Investments: Dresdner RCM Large Cap Growth Fund 2 Dresdner RCM Biotechnology Fund 10 Dresdner RCM Tax Managed Growth Fund 16 Dresdner RCM Global Small Cap Fund 22 Dresdner RCM Global Technology Fund 31 Dresdner RCM Global Health Care Fund 37 Dresdner RCM International Growth Equity Fund 43 Dresdner RCM Emerging Markets Fund 52 Dresdner RCM Europe Fund 59 Dresdner RCM Global Equity Fund 67 Dresdner RCM Strategic Income Fund 75 Dresdner RCM Balanced Fund 81 Statements of: Assets and Liabilities 92 Operations 94 Changes in Net Assets 96 Financial Highlights 104 Notes to Financial Highlights 110 Notes to Financial Statements 111
August 20, 2000 Dear Shareholder: We are pleased to present the Dresdner RCM Global Funds' Semi-Annual Shareholder Report for the six months ended June 30, 2000. Technology was the major story once again during the first half of 2000, although the results were much more volatile than in past years. The first 10 weeks of the year marked a continuation of 1999, in which the fastest-growing, highest-priced companies led the market upwards. The next 10 weeks, however, were extremely difficult, as investors became concerned about high valuations in the midst of aggressive Federal Reserve Board action to slow the U.S. economy. By late May, indications of an economic slowdown calmed the markets, and most technology companies -- particularly profitable ones -- returned to positive territory. Indeed, a major theme on Wall Street was investor approval of companies that could exceed earnings expectations. An exception was biotechnology, where stock prices once again performed extremely well without profits. In that case, a major factor was the groundbreaking announcement in human gene research that improved the future prospects of most biotech research companies working on the next generation of medications. Although biotechnology and the rest of health care posted very good results, the overall performance of the U.S. stock market was lackluster, with the Standard & Poor's 500 posting a -1% return. International stock markets were also weak, as the global interest rate climate remained bearish. Most fixed-income markets were under pressure from rising interest rates, with the notable exception of U.S. Treasury securities. These rallied after the government announced an aggressive buyback program made possible by the federal budget surplus. It is likely that the second half of 2000 will be a better period for bonds, as interest rates appear to be declining as the U.S. economy slows. However, the stock market's performance in the second half of the year depends in large measure on the Fed's ability to engineer a soft landing for the economy. Regardless of the macroeconomic environment, Dresdner RCM will continue to focus on a bottom-up approach to stock selection. 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 information from Grassroots Research-SM-, a unique adjunct to traditional research efforts, which uncovers and confirms marketplace demand for key products and services. Inside this report, you will find discussions of each mutual fund managed by Dresdner RCM Global Investors. The portfolio managers review, in detail, relevant market conditions, factors affecting the portfolios' performance, investment strategies employed in response to the first half of the year's economic and market conditions, and the outlook for the remainder of 2000. Each report also includes performance summaries, lists of holdings and portfolio weightings as of June 30, 2000. Despite the challenge of a difficult market environment, we are proud of the performance of the Dresdner RCM Global Funds for the past six months, and thank you for your continued support. If you would like more information on a specific fund, or if you have any questions about the material in this report, please call 1-800-726-7240, or visit www.DRCMFunds.com. Sincerely, /s/ DeWitt F. Bowman /s/ Theodore J. Coburn DeWitt F. Bowman Chairman Theodore J. Coburn Dresdner RCM Global Funds, Inc. Chairman Dresdner RCM Capital Funds, Inc. Dresdner RCM Investment Funds Inc.
Page 1 Dresdner RCM Large Cap Growth Fund Management's Performance Review The ongoing threat of inflation, the Federal Reserve Bank's continued tightening of monetary policy and extreme volatility in the stock market created a somewhat negative backdrop for the Dresdner RCM Large Cap Growth Fund during the first two quarters of 2000. Despite the difficult period for stocks, the Fund posted total returns of 3.72% and 3.47% for Class I and Class N shares, respectively for the six month period ended June 30, 2000, substantially outperforming the S&P 500 Index that declined 0.42%. MARKET REVIEW With the economy still roaring, the stock market began the year strongly. Real growth, as represented by the Gross Domestic Product (GDP), was a torrid 5.4% for the first quarter. Cognizant of the continued acceleration of the economy and growing inflation numbers, the Fed increased rates for the fifth and sixth time within a year, in hopes of bringing the economy down to a "soft landing." The last increase in May brought the federal funds rate to 6.50%. The heated investment debate between the Dow Jones old economy stocks and the new economy stocks of the Nasdaq continued through March, with investors vacillating from one to the other. As a result, the Nasdaq experienced four corrections of 10% or more. In April and May, the tech-heavy Nasdaq saw a large downdraft and dropped nearly 40% from its high. It appeared that the more aggressive sectors of the index had risen too far and too fast, pumped up by the combination of momentum buying, margin debt and on-line trading. Many of the dot-com stocks fell 50%-70% from peak to trough. Fortunately, the damage was less severe to the broader market of the S&P 500, with the index down close to 11% from its previous high. Though growth stocks generally fared better during the first half of the year, value stocks did rally somewhat in March and held steady in April and May, gaining significant relative performance as growth stocks faltered. By June, signs of economic slowing began to emerge, and benign economic data gave investors hope that a soft landing might be in the future. The Fed did not raise rates in June, and with interest-rate concerns subsiding, the S&P 500 recouped much of its losses. The Nasdaq rebounded strongly as well, up over 20% from the bottom. Investors returned to the largest and most profitable technology companies, pushing many of the stock prices back up to old highs. Additionally, biotech stocks recovered dramatically from their lows. Dot-com stocks, however, remained under pressure, as investors questioned their valuations and longer-term viability. With the strong showing in June and notwithstanding the greater volatility, growth stocks outperformed value stocks, ending the second quarter down, though less so than value. FACTORS AFFECTING PERFORMANCE Dresdner RCM Global Investors LLC ("Dresdner RCM"), the Fund's investment manager, continued to pursue the investment theme of technology throughout the first half of 2000. Dresdner RCM believes that the Internet will have a material impact on the way most, if not all, companies do business. They specifically choose to participate in the Internet revolution through companies that provide the infrastructure to this concept. By design, there is very little direct exposure to dot-com companies in the Fund. The weakness in technology that began in late March, combined with the Fund's overweight to the sector, had a negative impact on performance in the second quarter. However, moving forward, Dresdner RCM remains confident that this sector has earnings potential. Therefore, the Fund owns companies in this group that have dominant franchises and are leaders in their respective markets. These companies include Cisco, Sun Microsystems and Oracle; which all possess the quality and growth characteristics that Dresdner RCM believes are critical to creating outstanding returns. The Fund's overweight in biotechnology and healthcare helped drive performance, despite the volatility in the second quarter. The technology sector's roller coaster returns proved too extreme for many investors, who instead sought the stability of the pharmaceutical sector, driving the stock prices higher. A number of the Fund's holdings in the biotech sector appreciated more than 50% in May and June, overcoming the significant weakness in the previous two months. Page 2 Dresdner RCM Large Cap Growth Fund Management's Performance Review Earlier in the year, the Fund reduced holdings in retail stocks, moving from a slight overweight to a small underweight position, because of the anticipated effects rising interest rates would have on consumer spending. By the second quarter, retail stocks had weakened as a number of companies reported sales numbers below expectations. Moreover, as Dresdner RCM had expected, with climbing interest rates, investors sold these stocks on the expectation of decreased consumer spending. Grassroots-SM- Research has been following the Internet buildout for over five years, interviewing MIS and IT managers on a quarterly basis to inquire about technology spending and sentiment surrounding major vendors. Grassroots-SM- Research found that the recent downturn in opinion towards dot-coms has not affected buildout strategies. Companies are aggressively pursuing an Internet presence and e-commerce capabilities, including B2B, B2C, and infrastructure to support the new digital economy. Reasons for focusing on e-commerce and the Internet included perceived customer demand for Internet service, the ability to streamline commerce, the ability to streamline processes using B2B applications, and the fear of being left behind in the race to embrace a new technology. OUTLOOK A soft landing is the best hope for the equity market, as it can provide for prolonged sales growth with eventually lower interest rates in the next year or two. In that environment, earnings can grow and price/earnings multiples can once again expand, opening the door to possibly above-average returns in the market. The questions that now face investors are how many more rate increases may follow and can the Fed successfully engineer another soft landing as it did in 1994 when stocks made an impressive and sustained rally? By raising interest rates and cooling interest-rate-sensitive demand such as home sales, the Fed hopes to lower inflation risk and continue the already record-breaking economic expansion. In this environment, Dresdner RCM remains bullish on technology and communications stocks. Even with the somewhat higher valuations and recent volatility, stocks in these sectors appear to offer outstanding long-term upside potential with growth prospects substantially higher than other sectors of the economy. Conversely, with the uncertainty in the economy and questions regarding the Fed's continuing to tighten monetary policy, Dresdner RCM plans to underweight the interest-sensitive and cyclical sectors. Dresdner RCM's short-term outlook for the market is cautious, as marked volatility in the stock market is expected to continue. In this scenario, investors may reevaluate their appetite for stocks similar to second-quarter's trend, and move into other asset classes. The longer term picture is much more optimistic. Although the economy is slowing, it is still strong and the prospect for corporate earnings remains positive. 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 - 6/30/00)(c)(d)(f)
CLASS I SHARES(C) S&P 500 INDEX(A) 12/31/96 $10,000 $10,000 1/31/97 $10,640 $10,625 2/28/97 $10,570 $10,708 3/31/97 $9,920 $10,268 4/30/97 $10,490 $10,881 5/31/97 $11,300 $11,544 6/30/97 $11,880 $12,061 7/31/97 $13,020 $13,021 8/31/97 $12,210 $12,292 9/30/97 $13,230 $12,965 10/31/97 $12,930 $12,532 11/30/97 $13,140 $13,113 12/31/97 $13,199 $13,338 1/31/98 $13,599 $13,486 2/28/98 $14,647 $14,458 3/31/98 $15,337 $15,199 4/30/98 $15,737 $15,352 5/31/98 $15,263 $15,088 6/30/98 $16,190 $15,701 7/31/98 $16,232 $15,533 8/31/98 $13,515 $13,287 9/30/98 $14,716 $14,139 10/31/98 $15,737 $15,288 11/30/98 $16,864 $16,215 12/31/98 $19,020 $17,148 1/31/99 $20,470 $17,865 2/28/99 $19,728 $17,310 3/31/99 $21,460 $18,002 4/30/99 $21,118 $18,699 5/31/99 $20,305 $18,257 6/30/99 $21,837 $19,271 7/31/99 $21,330 $18,670 8/31/99 $21,613 $18,577 9/30/99 $21,425 $18,068 10/31/99 $22,850 $19,211 11/30/99 $24,265 $19,601 12/31/99 $27,549 $20,756 1/31/00 $27,000 $19,714 2/29/00 $27,549 $19,341 3/31/00 $29,528 $21,233 4/30/00 $28,040 $20,594 5/31/00 $26,812 $20,171 6/30/00 $28,575 $20,668
PERFORMANCE(b) JUNE 30, 2000
CUMULATIVE SINCE SINCE LARGE CAP GROWTH FUND YTD(G) 1 YEAR 3 YEARS INCEPTION INCEPTION Class I Average Annual Total Return(c)(d) 3.72% 30.85% 33.98% 34.98% 185.75% Class N Average Annual Total Return(e)(f) 3.47% 30.34% 33.64% 34.64% 183.22% S&P 500 Index(a) Average Annual Total Return -0.42% 7.25% 19.67% 23.05% 106.68%
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 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all 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, 1996. (d) Returns from January 1, 1998 through December 31, 1998 reflect the deduction of Rule 12b-1 fees. On December 31, 1998, 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 do not reflect the deduction of Rule 12b-1 fees. (e) Class N shares were first issued on March 2, 1999, and pay Rule 12b-1 fees. Class N returns through March 2, 1999 are based on Class I returns and reflect the deduction of Rule 12b-1 fees applicable to Class N shares. (f) The value of a $10,000 investment for Class N is $28,322 for the period from December 31, 1996 to June 30, 2000. The performance of the Class N shares is lower than Class I shares due to the effects of 12b-1 fees. (g) Unannualized. Page 4 Dresdner RCM Large Cap Growth Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- EQUITY INVESTMENTS COMMERCIAL GOODS & SERVICES SECTOR 11.5% CAPITAL GOODS 9.6% 5,900 US General Dynamics Corp. $ 308,275 22,200 US General Electric Co. 1,176,600 4,100 US Honeywell International Inc. 138,119 26,000 BH Tyco International Ltd. 1,231,750 ----------- 2,854,744 ----------- COMMERCIAL SERVICES & SUPPLIES 1.9% 8,500 US Enron Corp. 548,250 CONSUMER DISCRETIONARY SECTOR 7.7% CONSUMER DURABLES & APPAREL 1.1% 8,000 US Nike Inc. (Class B) 318,500 MEDIA 2.7% 5,500 US Clear Channel Communications * 412,500 4,000 US The Walt Disney Co. 155,250 3,200 US Time Warner Inc. 243,200 ----------- 810,950 ----------- RETAILING 3.9% 3,000 US Circuit City Stores Inc. 99,563 3,000 US Costco Wholesale Corp. * 99,000 2,800 US Home Depot Inc. 139,825 3,700 US Target Corp. 214,600 10,300 US Wal-Mart Stores Inc. 593,537 ----------- 1,146,525 ----------- CONSUMER STAPLES SECTOR 6.3% FOOD & DRUG RETAILING 0.8% 5,300 US Safeway Inc. * 239,163 FOOD, BEVERAGE & TOBACCO 2.3% 4,300 US Anheuser-Busch Cos. Inc. 321,156 6,000 US Coca Cola Co. 344,625 ----------- 665,781 ----------- HOUSEHOLD & PERSONAL PRODUCTS 3.2% 4,700 US Avon Products Inc. 209,150 7,800 US Colgate Palmolive Co. 467,025
The accompanying notes are an integral part of the financial statements. Page 5 Dresdner RCM Large Cap Growth Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) HOUSEHOLD & PERSONAL PRODUCTS (CONTINUED) 4,500 US Gillette Co. $ 157,219 2,200 US Procter & Gamble Co. 125,950 ----------- 959,344 ----------- ENERGY SECTOR 1.9% ENERGY 1.9% 1,400 US Chevron Corp. 118,738 6,200 US Schlumberger Ltd. 462,675 ----------- 581,413 ----------- FINANCIAL SECTOR 8.4% BANKS 4.2% 8,000 US Bank of New York Inc. 372,000 2,700 US Chase Manhattan Corp. 124,369 10,800 US Citigroup Inc. 650,700 3,000 US Wells Fargo Co. 116,250 ----------- 1,263,319 ----------- DIVERSIFIED FINANCIALS 0.9% 5,200 US Federal National Mortgage Association 271,375 INSURANCE 3.3% 7,000 US American International Group Inc. 822,500 1,400 US Marsh & McLennan Cos. Inc. 146,212 ----------- 968,712 ----------- HEALTH CARE SECTOR 19.0% PHARMACEUTICALS & BIOTECHNOLOGY 19.0% 14,000 US Amgen Inc. * 983,500 6,700 US Bristol-Myers Squibb Co. 390,275 4,300 US Eli Lilly & Co. 429,462 1,600 US Genentech Inc. * 275,200 6,300 UK Glaxo Wellcome PLC (ADR) 364,219 1,300 US Human Genome Sciences Inc. * 173,388 2,100 US Johnson & Johnson 213,938 4,100 US Merck & Co. Inc. 314,162 1,800 US Millennium Pharmaceuticals Inc. * 201,375 6,600 US PE Corp. - PE Biosystems Group 434,775
The accompanying notes are an integral part of the financial statements. Page 6 Dresdner RCM Large Cap Growth Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) PHARMACEUTICALS & BIOTECHNOLOGY (CONTINUED) 32,500 US Pfizer Inc. $ 1,560,000 2,500 US Sepracor Inc. * 301,562 ----------- 5,641,856 ----------- MATERIALS SECTOR 0.9% MATERIALS 0.9% 9,200 US Alcoa Inc. 266,800 TECHNOLOGY SECTOR 34.8% COMMUNICATIONS EQUIPMENT 14.2% 22,500 US Cisco Systems Inc. * 1,430,156 5,600 US JDS Uniphase Corp. * 671,300 2,500 US Lucent Technologies Inc. 148,125 4,000 US Motorola Inc. 116,250 18,000 FI Nokia Oyj (ADR) 898,875 7,500 CA Nortel Networks Corp. 511,875 4,200 US QUALCOMM Inc. * 252,000 9,000 SE Telefonaktiebolaget (LM) Ericsson AB (ADR) 180,000 ----------- 4,208,581 ----------- COMPUTERS & PERIPHERALS 7.7% 6,500 US Dell Computer Corp. * 320,531 12,000 US EMC Corp. * 923,250 3,400 US Hewlett-Packard Co. 424,575 1,500 US International Business Machines 164,344 5,000 US Sun Microsystems Inc. * 454,687 ----------- 2,287,387 ----------- INTERNET SOFTWARE & SERVICES 2.0% 3,800 US America Online Inc. * 200,450 3,100 US Yahoo Inc. * 384,013 ----------- 584,463 ----------- INFORMATION TECHNOLOGY CONSULTING & SERVICES 0.4% 400 IS Check Point Software Technologies Ltd. * 84,700 600 US Computer Sciences Corp. * 44,813 ----------- 129,513 ----------- SEMICONDUCTORS & INSTRUMENTS 5.1% 5,000 US Intel Corp. 668,437 3,195 FR STMicroelectronics N.V. (N.Y. Registered Shares) 205,079
The accompanying notes are an integral part of the financial statements. Page 7 Dresdner RCM Large Cap Growth Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) SEMICONDUCTORS & INSTRUMENTS (CONTINUED) 2,800 US Texas Instruments Inc. $ 192,325 5,500 US Xilinx Inc. * 454,094 ----------- 1,519,935 ----------- SOFTWARE 5.4% 12,500 US Microsoft Corp. * 1,000,000 5,200 US Oracle Corp. * 437,125 1,500 US VERITAS Software Corp. * 169,523 ----------- 1,606,648 ----------- TELECOMMUNICATION SERVICES SECTOR 7.7% TELECOMMUNICATION SERVICES 7.7% 5,500 US GTE Corp. 342,375 6,000 US Nextel Communications Inc. * 367,125 10,000 US Qwest Communications International Inc. * 496,875 6,000 US SBC Communications Inc. 259,500 5,000 UK Vodafone AirTouch PLC (ADR) 207,188 13,500 US WorldCom Inc. * 619,312 ----------- 2,292,375 ----------- TOTAL EQUITY INVESTMENTS (COST $25,170,133) 98.2% 29,165,634 ----------- SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 2.0% 297,617 US SSgA Money Market Fund 297,617 300,989 US SSgA U.S. Government Money Market Fund 300,989 ----------- TOTAL SHORT-TERM INVESTMENTS (COST $598,606) 2.0% 598,606 ----------- TOTAL INVESTMENTS (COST $25,768,739) ** 100.2% 29,764,240 OTHER ASSETS LESS LIABILITIES (0.2)% (72,598) ----------- NET ASSETS 100.0% $29,691,642 ===========
- -------------------------------- * Non-income producing security ADR American Depositary Receipt The accompanying notes are an integral part of the financial statements. Page 8 Dresdner RCM Large Cap Growth Fund Portfolio of Investments June 30, 2000 (Unaudited) Tax Information: ** For Federal income tax purposes, cost is $25,821,767 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $4,960,490 Unrealized depreciation (1,018,017) ---------- Net unrealized appreciation $3,942,473 ==========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at June 30, 2000 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Bermuda BH 4.2% 4.2% Canada CA 1.7% 1.7% Finland FI 3.0% 3.0% France FR 0.7% 0.7% Israel IS 0.3% 0.3% Sweden SE 0.6% 0.6% United Kingdom UK 1.9% 1.9% United States US 85.8% 1.8% 87.6% ------ ------ ----- Total 98.2% 1.8% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 9 Dresdner RCM Biotechnology Fund Management's Performance Review A groundbreaking announcement in the field of human gene research, as well as a solid flow of new therapeutic products, created a positive backdrop for the biotechnology sector in the first half of 2000. Following a 111% return in 1999, the Dresdner RCM Biotechnology Fund achieved a total return of 73.68% during the first six months of 2000, compared to its benchmarks, the AMEX Biotechnology Index, which returned 64.58% and the Nasdaq Biotechnology Index which returned 37.99%. MARKET REVIEW The announcement in late June 2000 that Celera Genomics and the National Institute of Health's Human Genome Project had deciphered the genetic code for human life made banner headlines in major newspapers around the world. Several months earlier, investors, anticipating the announcement, had bid up the sector until early March, when a broad Nasdaq sell-off, caused in part by rising interest rates, caused biotechs to correct. Investors used the proceeds from these sales to purchase large-cap pharmaceutical stocks, which had been out of favor due to the political debate over expanding Medicare to cover prescription drugs. Uncharacteristically, biotechnology stocks have not performed in line with the Nasdaq since that time. During the second quarter of 2000, the Nasdaq Composite Index fell about 2.5% while the biotechnology sector rose about 38%. Investor demand for profitability, or at least a pathway to profitability in the Internet sector, has not yet become a concern in speculative biotechnology stocks. Dresdner RCM Global Investors LLC ("Dresdner RCM"), the investment manager of the Fund, believes that as long as biotechnology companies can continue to demonstrate clinical efficacy, it is just a matter of time before their drugs clear the FDA and other regulatory hurdles. In contrast, investors in "dot-coms" are speculating on a business model that may not be valid. Another unusual development is that the normally inverse correlation between the pharmaceutical sector and the biotechnology group did not take place. The conventional wisdom has been that there is a dedicated pool of health care investment funds that chooses one or the other sub-segment. Instead, the pharmaceutical sector also rose (over 20%) during the second quarter. One concern is that the source of funds has not come from large institutional investors, but rather from skittish momentum players who normally invest in other technologies. FACTORS AFFECTING PERFORMANCE The Fund began 2000 with a heavy emphasis on genomics companies that soared in price during the first six weeks of the year. As these stocks began to sell off in early March, Dresdner RCM diversified the portfolio by emphasizing more established companies such as Amgen, the largest biotechnology company in the world. The Fund also shifted assets to suppliers that tend to be less dependent on scientific discovery and more dependent on the level of research funding, which continues to increase. The new biotechnology rally, not expected to take place until late summer or early fall, took place midway through the second quarter instead, partly due to the impending genome announcement, as well as the positive results that were reported by a number of medical conferences. As a result, the Fund shifted out of more conservative stocks and into more speculative biotechnology companies such as Human Genome Sciences, Millennium Pharmaceuticals and Protein Design Labs -- stocks that tend to move up more sharply when there is a biotechnology rally. Still, the Fund continues to have a strong foothold in core biotechnology companies that continue to produce exciting new therapies. For example, in addition to its strong cancer and cardiology franchises, Genentech has developed a new treatment for asthma and allergy that Dresdner RCM believes is likely to produce strong profits for the company. Meanwhile, sales of existing products remain robust for Amgen, Biogen, Medimmune and Immunex, which have effective drugs that treat anemia, multiple sclerosis, RSV in premature babies, and rheumatoid arthritis, respectively. The Fund continued to benefit from the dual qualifications of its portfolio management team, who hold medical degrees as well as extensive financial training. This unique advantage helps them to conduct bottom-up stock research in a field requiring judgments about the commercial viability of breakthrough scientific discoveries. Dresdner RCM's Grassroots-SM- Research also assists in that endeavor, which, for example, led the Fund to purchase the initial public offering of PRAECIS Page 10 Dresdner RCM Biotechnology Fund Management's Performance Review Pharmaceuticals. In conjunction with Amgen, PRAECIS Pharmaceuticals has developed a new treatment for prostate cancer that has also been adapted to treat endometriosis in women. Before it became obvious to the investment community, Grassroots-SM- Research determined through interviews with physicians that the drug should be able to capture approximately 30% of the prostate cancer treatment market. The portfolio turnover in the Fund was high during the six month period ended June 30, 2000 (303.8%), in part due to market volatility and cash flows. A high portfolio turnover rate increases the Fund's brokerage commission expenses and other transaction costs, and may increase its taxable capital gains. OUTLOOK The biotechnology sector is among the most volatile on Wall Street. As a group, it can double in one year, as it did in 1999, or lose half its value in one month, as it did in March 2000. Typically, disappointing news has caused an over-reaction on Wall Street. Because Dresdner RCM's near-term outlook for biotechnology stocks is cautious, Dresdner RCM believes that it will continue to take advantage of sell-offs as they occur. However, the genome project announcement is only one indication that the long-term investment opportunities in this new technology are truly exciting. Page 11 Dresdner RCM Biotechnology Fund Total Return Index Comparison(d) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC $10,000 Investment (12/30/97 - 6/30/00)(e)
NASDAQ BIOTECH RUSSELL 2000 AMEX BIOTECH CLASS N SHARES INDEX (A) INDEX (B) INDEX (C) 12/31/1997 $10,000 $10,175 $10,071 $10,042 1/31/1998 $10,260 $10,140 $9,912 $9,734 2/28/1998 $10,490 $10,572 $10,644 $9,936 3/31/1998 $10,590 $11,363 $11,083 $10,793 4/30/1998 $10,470 $11,107 $11,144 $10,830 5/31/1998 $10,350 $10,719 $10,543 $9,971 6/30/1998 $10,030 $10,649 $10,565 $9,079 7/31/1998 $10,110 $10,971 $9,710 $8,531 8/31/1998 $7,930 $8,560 $7,824 $6,462 9/30/1998 $9,110 $10,692 $8,437 $8,618 10/31/1998 $9,880 $11,585 $8,781 $10,146 11/30/1998 $10,560 $11,987 $9,241 $10,116 12/31/1998 $11,776 $14,681 $9,813 $11,446 1/31/1999 $12,383 $16,183 $9,943 $12,147 2/28/1999 $11,776 $15,235 $9,138 $10,931 3/31/1999 $11,518 $16,728 $9,281 $11,558 4/30/1999 $11,261 $15,261 $10,112 $11,817 5/31/1999 $11,436 $16,436 $10,260 $12,434 6/30/1999 $12,795 $17,029 $10,724 $13,252 7/31/1999 $13,289 $19,230 $10,430 $15,487 8/31/1999 $15,049 $21,097 $10,044 $16,619 9/30/1999 $15,049 $19,789 $10,046 $15,626 10/31/1999 $15,605 $20,125 $10,087 $16,245 11/30/1999 $17,416 $22,730 $10,689 $17,812 12/31/1999 $24,893 $29,607 $11,899 $24,202 1/31/2000 $30,090 $34,108 $11,708 $26,796 2/29/2000 $50,656 $49,572 $13,641 $43,370 3/31/2000 $33,957 $36,807 $12,742 $30,910 4/30/2000 $32,527 $31,989 $11,975 $30,131 5/31/2000 $30,401 $31,097 $11,276 $28,995 6/30/2000 $43,233 $40,862 $12,259 $39,823
PERFORMANCE(d) JUNE 30, 2000
CUMULATIVE SINCE SINCE BIOTECHNOLOGY FUND YTD(F) 1 YEAR INCEPTION INCEPTION Class N Average Annual Total Return(e) 73.68% 237.90% 79.50% 332.33% NASDAQ Biotech Index Average Annual Total Return(a) 37.99% 139.91% 75.50% 308.62% Russell 2000 Index Average Annual Total Return(b) 3.03% 14.33% 8.48% 22.59% AMEX Biotech Index Average Annual Total Return(c) 64.58% 200.56% 73.70% 298.23%
The recent strong equity market performance has been especially favorable to technology and technology-related stocks and has helped the Fund. This performance may not be sustainable and as a result, the Fund may not continue achieving the same level of performance as in the past. In addition, market volatility can dramatically affect the Fund's short-term returns and pursuing these levels of return involves accepting increased risk of volatility of return. 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 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. (b) The Russell 2000 Index is composed of the 2,000 smallest securities in the Russell 3,000 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. (c) The American Stock Exchange Biotechnology Index is an equal dollar-weighted index designed 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. The index was developed with a base level of 200 stocks, as of October 18, 1991. (d) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (e) The Class N shares commenced operations on December 30, 1997. (f) Unannualized. Page 12 Dresdner RCM Biotechnology Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ----------------------------------------------------------------------------------- EQUITY INVESTMENTS COMMERCIAL GOODS & SERVICES SECTOR 0.7% COMMERCIAL SERVICES & SUPPLIES 0.7% 170,000 US Ventro Corp.* $ 3,208,750 HEALTH CARE SECTOR 87.8% HEALTH CARE EQUIPMENT & SUPPLIES 12.4% 213,000 US Aclara Biosciences Inc. * 10,849,687 17,300 US Aspect Medical Systems Inc. * 467,100 529,900 US Charles River Laboratories International Inc. * 11,757,156 29,700 US INAMED Corp. * 1,087,763 105,000 US Inhale Therapeutic Systems Inc. * 10,654,219 178,900 US Invitrogen Corp. * 13,453,839 1,400 US Molecular Devices Corp. * 96,863 74,800 US Waters Corp. * 9,335,975 ------------ 57,702,602 ------------ HEALTH CARE PROVIDERS & SERVICES 5.0% 143,300 US Community Health Care * 2,319,669 425,000 US Health Management Associates Inc. * 5,551,562 390,000 US Healtheon/WebMD Corp. * 5,776,875 655,000 US MedicaLogic/Medscape Inc. * 6,058,750 300,000 US SciQuest.com Inc. * 3,431,250 ------------ 23,138,106 ------------ PHARMACEUTICALS & BIOTECHNOLOGY 70.4% 95,000 US Abgenix Inc. * 11,386,641 300,000 US Akorn Inc. * 2,381,250 275,000 US Alkermes Inc. * 12,959,375 230,000 US Amgen Inc. * 16,157,500 664,600 US AVANT Immunotherapeutics Inc. * 7,019,837 60,000 US Aviron * 1,852,500 75,000 US Celera Genomics 7,012,500 400,000 US Cell Genesys Inc. * 11,200,000 244,700 US Cell Therapeutics Inc. * 7,493,937 275,000 UK Celltech Group PLC (ADR) * 10,415,625 125,000 US Cephalon Inc. * 7,484,375 55,000 US COR Therapeutics Inc. * 4,692,188 175,000 US CuraGen Corp. * 6,660,937 70,000 US Diversa Corp. * 2,318,750 125,000 US Gene Logic Inc. * 4,460,938 105,000 US Genentech Inc. * 18,060,000 162,500 US GenStar Therapeutics Corp. * 995,313 157,000 UK Glaxo Wellcome PLC (ADR) 9,076,562 81,100 US Human Genome Sciences Inc. * 10,816,712 111,500 US IDEC Pharmaceuticals Corp. * 13,080,344 210,000 US Immunex Corp. * 10,381,875 417,000 US Immunomedics Inc. * 10,216,500
The accompanying notes are an integral part of the financial statements. Page 13 Dresdner RCM Biotechnology Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ----------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) PHARMACEUTICALS & BIOTECHNOLOGY (CONTINUED) 172,500 US Intermune Pharmaceuticals Inc. * $ 7,126,406 30,800 US Johnson & Johnson 3,137,750 10,900 US La Jolla Pharmaceutical Co. * 44,963 106,000 US Maxygen Inc. * 6,017,156 153,700 US Medarex Inc. * 12,987,650 175,000 US MedImmune Inc. * 12,950,000 50,000 US MGI Pharma Inc. * 1,438,281 93,000 US Millennium Pharmaceuticals Inc. * 10,404,375 250,000 US OSI Pharmaceuticals Inc. * 7,203,125 150,000 US PE Corp. - PE Biosystems Group 9,881,250 100,000 US Pfizer Inc. 4,800,000 253,000 US PRAECIS Pharmaceuticals Inc. * 7,052,375 334,100 US Progenics Pharmaceuticals Inc. * 4,760,926 70,000 US Protein Design Labs Inc. * 11,546,719 26,000 NL QIAGEN N.V. (ADR) * 4,524,000 118,700 US Sepracor Inc. * 14,318,187 244,000 US Titan Pharmaceuticals Inc. * 10,492,000 100,000 US Transkaryotic Therapies Inc. * 3,675,000 400,000 US Trega Biosciences Inc. * 1,275,000 37,500 US Vertex Pharmaceuticals Inc. * 3,951,563 271,200 US Virologic Inc. * 4,034,100 ------------ 327,744,485 ------------ TECHNOLOGY SECTOR 1.2% SEMICONDUCTORS & INSTRUMENTS 1.2% 125,000 US Caliper Technologies Corp. * 5,750,000 ------------ TOTAL EQUITY INVESTMENTS (COST $364,840,563) 89.7% 417,543,943 ------------ SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 7.9% 18,430,601 US SSgA Money Market Fund 18,430,601 18,430,601 US SSgA U.S. Government Money Market Fund 18,430,601 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $36,861,202) 7.9% 36,861,202 ------------ TOTAL INVESTMENTS (COST $401,701,765) ** 97.6% 454,405,145 OTHER ASSETS LESS LIABILITIES 2.4% 11,277,370 ------------ NET ASSETS 100.0% $465,682,515 ============
- -------------------------------- * Non-income producing security ADR American Depositary Receipt The accompanying notes are an integral part of the financial statements. Page 14 Dresdner RCM Biotechnology Fund Portfolio of Investments June 30, 2000 (Unaudited) Tax Information: ** For Federal income tax purposes, cost is $401,767,517 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $79,505,743 Unrealized depreciation (26,868,115) ----------- Net unrealized appreciation $52,637,628 ===========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at June 30, 2000 categorized by country:
% OF NET ASSETS ------------------------------ COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ----------------------------------------------------------------------- Netherlands NL 0.9% 0.9% United Kingdom UK 4.2% 4.2% United States US 84.6% 10.3% 94.9% ------ ------- ----- Total 89.7% 10.3% 100.0% ====== ======= =====
The accompanying notes are an integral part of the financial statements. Page 15 Dresdner RCM Tax Managed Growth Fund Management's Performance Review The ongoing threat of inflation, the Federal Reserve Bank's continued tightening of monetary policy, and extreme volatility in the stock market created a somewhat negative backdrop for the Dresdner RCM Tax Managed Growth Fund during the first half of 2000. Despite the difficult period for stocks, the Fund achieved total returns of 3.80% and 3.75% for Class I and Class N shares, respectively for the six month period ended June 30, 2000, substantially outperforming the S&P 500 Index that declined 0.42%. MARKET REVIEW With the economy still roaring, the stock market began the year strongly. Real growth, as represented by the gross domestic product (GDP), was a torrid 5.4% for the first quarter. Cognizant of the continued acceleration of the economy and growing inflation numbers, the Fed increased rates for the fifth and sixth time within a year, in hopes of bringing the economy down to a "soft landing." The last increase in May brought the federal funds rate to 6.50%. The heated investment debate between the Dow Jones old economy stocks and the new economy stocks of the Nasdaq continued through March, with investors vacillating from one to the other. As a result, the Nasdaq experienced four corrections of 10% or more. In April and May, the tech-heavy Nasdaq saw a large downdraft and dropped nearly 40% from its high. It appeared that the more aggressive sectors of the index had risen too far and too fast, pumped up by the combination of momentum buying, margin debt and on-line trading. Many of the dot-com stocks fell 50%-70% from peak to trough. Fortunately, the damage was less severe to the broader market of the S&P 500, with the index down close to 11% from its previous high. Though growth stocks generally fared better during the first half of the year, value stocks did rally somewhat in March and held steady in April and May, gaining significant relative performance as growth stocks faltered. By June, signs of economic slowing began to emerge, and benign economic data gave investors hope that a soft landing might be in the future. The Fed did not raise rates in June, and with interest-rate concerns subsiding, the S&P 500 recouped much of its losses. The Nasdaq rebounded strongly as well, up over 20% from the bottom. Investors returned to the largest and most profitable technology companies, pushing many of the stock prices back up to old highs. Additionally, biotech stocks recovered dramatically from their lows. Dot-com stocks, however, remained under pressure, as investors questioned their valuations and longer-term viability. With the strong showing in June and notwithstanding the greater volatility, growth stocks outperformed value stocks, ending the second quarter down, though less so than value. FACTORS AFFECTING PERFORMANCE During the recent period of market volatility, Dresdner RCM Global Investors LLC ("Dresdner RCM"), the Fund's investment manager, implemented various tax strategies to maximize the impact of tax losses. Moving forward, this allows for increased flexibility to trim or eliminate stocks in the Fund that have appreciated without negatively impacting after-tax returns. Dresdner RCM continued to pursue the investment theme of technology throughout the first half of 2000. Dresdner RCM believes that the Internet will have a material impact on the way most, if not all, companies do business. They specifically choose to participate in the Internet revolution through companies that provide the infrastructure to this concept. By design, there is very little direct exposure to dot-com companies in the Fund. The weakness in technology that began in late March, combined with the Fund's overweight in the sector, had a negative impact on performance in the second quarter. However, Dresdner RCM remains confident that this sector has earnings potential, and consequently, the Fund owns companies in this group that have dominant franchises and are market leaders. Examples include Cisco and Qwest Communications, possessing the quality and growth characteristics that Dresdner RCM believes are critical to creating outstanding returns. The Fund's overweight in biotechnology and healthcare helped drive performance in 2000, despite the volatility in the second quarter. The technology sector's roller coaster returns proved too extreme for many investors, who instead sought the stability of the pharmaceutical stocks, driving the stock prices higher. A number of Page 16 Dresdner RCM Tax Managed Growth Fund Management's Performance Review the Fund's holdings in the biotech sector appreciated more than 50% in May and June, overcoming the significant weakness in the prior two months. Earlier in the year, the Fund reduced holdings in retail stocks, moving from a slight overweight to a small underweight position, because of the effects rising interest rates might have on consumer spending. By second quarter, retail stocks weakened as a number of companies reported sales numbers coming in below plan. Moreover, as Dresdner RCM anticipated, with rates climbing, investors sold these stocks on the expectation of decreased consumer spending. Grassroots-SM- Research has been following the Internet buildout for over five years, interviewing MIS and IT managers on a quarterly basis to inquire about technology spending and sentiment surrounding major vendors. Grassroots-SM- Research found that the recent downturn in opinion towards dot-coms has not affected buildout strategies. Companies are aggressively pursuing an Internet presence and e-commerce capabilities, including B2B, B2C, and infrastructure to support the new digital economy. Reasons for focusing on e-commerce and the Internet included perceived customer demand for Internet services, the ability to streamline commerce, the ability to streamline processes using B2B applications, and the fear of being left behind in the race to embrace a new technology. OUTLOOK A soft landing is the best hope for the equity market, for it can provide for prolonged sales growth with eventually lower interest rates in the year or two ahead. In that environment, earnings can grow and price/earnings multiples can once again expand, opening the door to possibly above-average returns in the market. The questions that now face investors are how many more rate increases may follow and can the Fed successfully engineer another soft landing as it did in 1994 when stocks made an impressive and sustained rally. By raising interest rates and cooling interest-rate-sensitive demand such as home sales, the Fed hopes to lower inflation risk and continue the already record-breaking economic expansion. Dresdner RCM remains bullish on technology and communications stocks. Even with the somewhat higher valuations and recent volatility, stocks in these sectors appear to offer outstanding long-term upside potential with growth prospects substantially higher than other sectors of the economy. Conversely, with the uncertainty in the economy and questions regarding the Fed's continuing to tighten monetary policy, the Fund plans to underweight interest-sensitive and cyclical sectors of the market. Dresdner RCM's short-term outlook for the market is cautious, as marked volatility in the stock market is expected to continue. In this scenario, investors may reevaluate their appetite for stocks similar to second-quarter's trend, and move into other asset classes. The longer term picture is much more optimistic. Although the economy is slowing, it is still strong and the prospect for corporate earnings remains positive. Page 17 Dresdner RCM Tax Managed Growth Fund Total Return Index Comparison(b) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC $10,000 Investment (12/30/98 - 6/30/00)(c)(e)
S&P 500 CLASS I SHARES INDEX (A) 12/30/98 $10,000 $10,000 1/31/99 $10,790 $10,418 2/28/99 $10,510 $10,094 3/31/99 $11,610 $10,498 4/30/99 $11,500 $10,904 5/31/99 $11,130 $10,647 6/30/99 $12,130 $11,238 7/31/99 $11,780 $10,887 8/31/99 $11,860 $10,833 9/30/99 $11,550 $10,536 10/31/99 $12,240 $11,203 11/30/99 $13,070 $11,430 12/31/99 $15,244 $12,104 1/31/00 $14,898 $11,496 2/29/00 $15,468 $11,279 3/31/00 $16,576 $12,382 4/30/00 $15,376 $12,009 5/31/00 $14,705 $11,763 6/30/00 $15,824 $12,053
PERFORMANCE(b) JUNE 30, 2000
CUMULATIVE SINCE SINCE TAX MANAGED GROWTH FUND YTD(F) 1 YEAR INCEPTION INCEPTION Class I Average Annual Total Return(c) 3.80% 30.45% 35.79% 58.24% Class N Average Annual Total Return(d)(e) 3.75% 30.14% 35.44% 57.69% S&P 500 Index Average Annual Total Return(a) -0.42% 7.25% 13.26% 20.53%
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 Standard & Poor's 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all 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 30, 1998. (d) Class N shares were first issued on February 12, 1999, and pay Rule 12b-1 fees. Class N returns through February 12, 1999 are based on Class I returns and reflect the deduction of Rule 12b-1 fees applicable to Class N shares. (e) The value of a $10,000 investment for Class N is $15,769 for the period from December 30, 1998 to June 30, 2000. The performance of the Class N shares is lower than Class I shares due to the effects of 12b-1 fees. (f) Unannualized. Page 18 Dresdner RCM Tax Managed Growth Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------- EQUITY INVESTMENTS COMMERCIAL GOODS & SERVICES SECTOR 7.9% CAPITAL GOODS 5.6% 26,200 US General Electric Co. $ 1,388,600 10,750 BH Tyco International Ltd. 509,281 ----------- 1,897,881 ----------- COMMERCIAL SERVICES & SUPPLIES 2.3% 11,850 US Enron Corp. 764,325 CONSUMER DISCRETIONARY SECTOR 10.1% CONSUMER DURABLES & APPAREL 2.1% 18,500 US Harley-Davidson Inc. 712,250 HOTELS, RESTAURANTS & LEISURE 1.6% 15,800 US McDonalds Corp. 520,412 MEDIA 3.4% 10,100 US Clear Channel Communications * 757,500 5,250 US Time Warner Inc. 399,000 ----------- 1,156,500 ----------- RETAILING 3.0% 17,750 US Costco Wholesale Corp. * 585,750 7,800 US Kohl's Corp. * 433,875 ----------- 1,019,625 ----------- CONSUMER STAPLES SECTOR 6.9% FOOD & DRUG RETAILING 2.8% 30,000 US Walgreen Co. 965,625 FOOD, BEVERAGE & TOBACCO 1.4% 8,000 US Coca Cola Co. 459,500 HOUSEHOLD & PERSONAL PRODUCTS 2.7% 18,400 US Estee Lauder Cos. Inc. (Class A) 909,650 ENERGY SECTOR 2.7% ENERGY 2.7% 22,800 US Weatherford International Inc. 907,725 FINANCIAL SECTOR 5.9% INSURANCE 5.9% 9,200 US American International Group Inc. 1,081,000 8,800 US Marsh & McLennan Cos. Inc. 919,050 ----------- 2,000,050 -----------
The accompanying notes are an integral part of the financial statements. Page 19 Dresdner RCM Tax Managed Growth Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) HEALTH CARE SECTOR 19.0% HEALTH CARE EQUIPMENT & SUPPLIES 1.8% 5,900 US Inhale Therapeutic Systems Inc. * $ 598,666 PHARMACEUTICALS & BIOTECHNOLOGY 17.2% 17,400 US Amgen Inc. * 1,222,350 3,600 US Genentech Inc. * 619,200 12,300 UK Glaxo Wellcome PLC (ADR) 711,094 3,700 US Johnson & Johnson 376,937 9,550 US Merck & Co. Inc. 731,769 3,000 US Millennium Pharmaceuticals Inc. * 335,625 37,675 US Pfizer Inc. 1,808,400 ----------- 5,805,375 ----------- TECHNOLOGY SECTOR 34.1% COMMUNICATIONS EQUIPMENT 12.4% 25,800 US Cisco Systems Inc. * 1,639,913 8,000 US JDS Uniphase Corp. * 959,000 29,500 FI Nokia Oyj (ADR) 1,473,156 2,200 US QUALCOMM Inc. * 132,000 ----------- 4,204,069 ----------- COMPUTERS & PERIPHERALS 4.3% 8,000 US Hewlett-Packard Co. 999,000 5,000 US Sun Microsystems Inc. * 454,687 ----------- 1,453,687 ----------- INTERNET SOFTWARE & SERVICES 1.9% 5,100 US Yahoo Inc. * 631,763 INFORMATION TECHNOLOGY CONSULTING & SERVICES 3.1% 4,950 IS Check Point Software Technologies Ltd. * 1,048,162 SEMICONDUCTORS & INSTRUMENTS 3.4% 8,500 US Intel Corp. 1,136,344 SOFTWARE 9.0% 13,500 US Microsoft Corp. * 1,080,000 11,800 US Oracle Corp. * 991,938 8,600 US VERITAS Software Corp. * 971,934 ----------- 3,043,872 -----------
The accompanying notes are an integral part of the financial statements. Page 20 Dresdner RCM Tax Managed Growth Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) TELECOMMUNICATION SERVICES SECTOR 11.4% TELECOMMUNICATION SERVICES 11.4% 7,150 JP NTT DoCoMo Inc. (ADR) * $ 993,850 20,800 US Qwest Communications International Inc. * 1,033,500 16,850 UK Vodafone AirTouch PLC (ADR) 698,222 13,250 US WinStar Communications Inc. * 448,844 15,000 US WorldCom Inc. * 688,125 ----------- 3,862,541 ----------- TOTAL EQUITY INVESTMENTS (COST $31,971,685) 98.0% 33,098,022 ----------- SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 2.8% 477,199 US SSgA Money Market Fund 477,199 477,256 US SSgA U.S. Government Money Market Fund 477,256 ----------- TOTAL SHORT-TERM INVESTMENTS (COST $954,455) 2.8% 954,455 ----------- TOTAL INVESTMENTS (COST $32,926,140) ** 100.8% 34,052,477 OTHER ASSETS LESS LIABILITIES (0.8)% (274,426) ----------- NET ASSETS 100.0% $33,778,051 ===========
- -------------------------------- * Non-income producing security ADR American Depositary Receipt Tax Information: ** For Federal income tax purposes, cost is $32,930,583 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $2,715,378 Unrealized depreciation (1,593,484) ---------- Net unrealized appreciation $1,121,894 ==========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at June 30, 2000 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Bermuda BH 1.5% 1.5% Finland FI 4.4% 4.4% Israel IS 3.1% 3.1% Japan JP 2.9% 2.9% United Kingdom UK 4.2% 4.2% United States US 81.9% 2.0% 83.9% ------ ------ ----- Total 98.0% 2.0% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 21 Dresdner RCM Global Small Cap Fund Management's Performance Review After producing a 105% return in 1999, the Dresdner RCM Global Small Cap Fund continued to outperform its benchmarks during the first half of 2000, despite the very challenging market environment. For the six-month period ended June 30, 2000, the Fund achieved a total return of 15.18% and 15.32% for the Class I and Class N shares, respectively. In comparison, the Salomon Brothers Extended Market Index produced a return of 3.77%, while the MSCI World Small Cap Index returned 6.31%. Effective May 1, 2000, the Fund's performance benchmark was changed from the Salomon Brothers Extended Market Index to the MSCI World Small Cap Index. The MSCI World Small Cap Index most accurately reflects the global small cap focus of the Fund and the market capitalization ranges of the securities in which the Fund is most likely to invest. MARKET REVIEW As a bottom-up investor, Dresdner RCM Global Investors LLC ("Dresdner RCM"), the investment manager of the Fund, has found that stock selection is the driving force for global small cap stock performance. The next most important factor is local supply-and-demand for small cap stocks, with the least most important being the macroeconomic environment. In the U.S., where nearly half the Fund is invested, the demand for small cap stocks was strong for the first 10 weeks of the year, and then diminished along with the rest of the market between March and late May. Rising interest rates and concerns about inflation created a bear market for stocks that lasted until there were signs of an economic slowdown and the market began to recover. However, throughout this volatility, fundamentals and earnings growth remained strong. As evidence that small cap markets around the world are not strongly correlated, the Japanese market for small caps, which soared in 1999, has been moribund since January 2000 with no pickup through June. The retail investor, not institutions, drives this market, buying aggressively when it is rising, and staying away when the market is weak. Europe's small cap market falls somewhere between Japan and the United States in terms of institutional demand. In addition, the rising interest rate environment in the United States and the chill associated with the Nasdaq during the first half poured cold water on any interest for emerging market small caps -- another asset class perceived to be associated with high risk. FACTORS AFFECTING PERFORMANCE While short-term performance is often dictated by supply-and-demand, more fundamental factors drive the Fund's stock selection. Dresdner RCM searches for high-quality companies whose profits are growing at least 15% per year, but preferably in the 30-40% range. Financial strength, market share, and strong management with stock ownership are other critical factors. Because of Dresdner RCM's global investment focus, every company must be reasonably valued not just within its geographical location, but also in comparison to other companies in the same industry throughout the world. Finally, it is very important for a company's management to communicate with the investment community in a challenging market environment. It is these fundamental factors that will drive performance over a longer investment horizon. The Fund's bottom-up stock selection process resulted in a portfolio that was significantly underweighted in Japan, a positive factor in the Fund's performance. Dresdner RCM believes that most Japanese small cap stocks fitting a desirable fundamental profile are far too expensive. However, there are attractive Japanese companies in the portfolio including Moritex, a manufacturer of fiber optic equipment; Yamada Denki, a consumer electronics distributor; and Yokowo, a manufacturer of electronic products, including spring connectors allowing batteries to fit in the back of cellular telephones. Nearly half of the portfolio includes U.S. small cap stocks, which meant exposure to the sharp correction that saw the Nasdaq fall nearly 2,000 points from a peak of about 5,000 in early March, then recover moderately by June 30. The portfolio's largest holding, San Francisco-based Actuate Software, which distributes corporate data electronically to users throughout the world, was similarly volatile. However, Dresdner RCM Page 22 Dresdner RCM Global Small Cap Fund Management's Performance Review remains committed to the company. Dresdner RCM's Grassroots-SM- Research examined Actuate's e.Reporting software in November 1999 and learned from current and potential customers that the product was considered powerful, flexible, and well suited to e-commerce. As of June 2000, nearly half of the Fund was invested in technology companies around the world -- three times the benchmark weighting. This is not because of any desire to reach an arbitrary percentage exposure, but because of their inherent power to produce future growth. Being able to diversify globally lowers the volatility and lessens the risk of the Fund. The portfolio represented a variety of industries and geographical locations. Examples include: Charles Voegele Holding, a Swiss family-oriented retailer; Remy Cointreau, a French maker of high-quality spirits; Impresa SGPS, a Portuguese media conglomerate; Star Micronics, a Japanese company that is the world's dominant supplier of ringing mechanisms for Nokia cell phones; Superior Energy Services, a U.S. oil service company; and Cell Genesys, a U.S. biotechnology firm. Very few of the Fund's assets have been invested in emerging markets, a positive factor in performance since these markets have been quite challenging in recent months. OUTLOOK The recent attempt by the Fed to orchestrate a slowdown in the U.S. economy could possibly have a secondary effect of moderating the interest-rate environment, making investors more willing to consider asset classes beyond blue-chip large cap stocks. That could rekindle interest in small caps in emerging markets as well as Europe. In Japan, the outlook may be more difficult, as local retail interest in small cap stocks remains sluggish. Regardless of the macroeconomic environment, Dresdner RCM believes that this portfolio is well positioned to capitalize on the firm's research strength, which is to search out great companies around the world. Many times, companies growing at 40-50% per year can be purchased at reasonable valuations. With patience, these stocks are likely to provide returns commensurate with that growth. Page 23 Dresdner RCM Global Small Cap Fund Total Return Index Comparison(d) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC $10,000 Investment (12/31/96 - 6/30/00)(f)(g)
MSCI WORLD SMALL CLASS I SHARES SALOMON EMI INDEX(A) CAP INDEX(B) 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 $13,000 $11,756 1/31/00 $31,992 $12,725 $11,847 2/29/00 $39,014 $13,965 $13,278 3/31/00 $37,547 $13,956 $12,784 4/30/00 $32,752 $13,095 $11,867 5/31/00 $29,451 $12,687 $11,639 6/30/00 $35,281 $13,491 $12,495
PERFORMANCE(d) JUNE 30, 2000
CUMULATIVE SINCE SINCE GLOBAL SMALL CAP FUND YTD(H) 1 YEAR 3 YEARS INCEPTION INCEPTION Class I Average Annual Total Return(f) 15.18% 105.91% 44.27% 43.36% 252.81% Class N Average Annual Total Return(f)(g) 15.32% 105.86% 44.10% 43.18% 251.19% Salomon EMI Average Annual Total Return(a) 3.77% 13.80% 8.07% 8.93% 34.91% MSCI World Small Cap Average Annual Total Return(b)(c) 6.31% 20.02% 5.55% 6.57% 24.95%
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 over 7,000 companies with a combined market capitalization currently in excess of $25 trillion. 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 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 $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 US dollars and local currencies. Page 24 Dresdner RCM Global Small Cap Fund Total Return Index Comparison (c) Effective May 1, 2000 the Fund's performance benchmark was changed from the Salomon EMI Index to the MSCI World Small Cap Index. The Fund's Board of Directors believes that the composition of the MSCI World Small Cap Index more accurately reflects the global small cap focus of the Fund and the market capitalization ranges of securities in which the Fund is most likely to invest. (d) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (e) Class N shares were first issued on March 10, 1999, and pay Rule 12b-1 fees. Class N returns through March 10, 1999 are based on Class I returns and reflect the deduction of Rule 12b-1 fees applicable to Class N shares. (f) Returns from January 1, 1998 through December 31, 1998 reflect the deduction of Rule 12b-1 fees. On December 31, 1998, 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 do not reflect the deduction of Rule 12b-1 fees. (g) The value of a $10,000 investment for Class N is $35,119 for the period from December 31, 1996 to June 30, 2000. The performance of the Class N shares is lower than Class I shares due to the effects of 12b-1 fees. (h) Unannualized. Page 25 Dresdner RCM Global Small Cap Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- EQUITY INVESTMENTS COMMERCIAL GOODS & SERVICES SECTOR 9.2% CAPITAL GOODS 5.4% 2,800 DE Aixtron AG $ 386,503 620 CH Kaba Holding AG 800,706 750 CH Mikron Holding AG 553,945 17,500 MX Tubos de Acero de Mexico S.A. (ADR) 242,813 14,600 DK Vesta Wind Systems A/S 538,437 ----------- 2,522,404 ----------- COMMERCIAL SERVICES & SUPPLIES 3.4% 51,185 NL Magnus Holding N.V. 296,845 13,000 JP Pasona Softbank Inc. 356,328 13,800 SE Proffice AB (B Shares) 371,326 45,733 NL Vedior N.V. 567,717 ----------- 1,592,216 ----------- TRANSPORTATION SERVICES 0.4% 5,200 US Forward Air Corp. * 208,000 CONSUMER DISCRETIONARY SECTOR 11.2% AUTOMOBILES & COMPONENTS 0.6% 9,300 FI Nokian Renkaat Oyj 258,531 CONSUMER DURABLES & APPAREL 4.5% 40,000 FI Eimo Oyj 245,399 18,000 JP Star Micronics Co. Ltd. 294,155 33,000 JP The Sailor Pen Co. Ltd. 592,619 38,000 JP Yokowo Co. Ltd. 971,536 ----------- 2,103,709 ----------- HOTELS, RESTAURANTS & LEISURE 1.0% 24,700 HU Danubius Hotel and Spa Rt. 478,019 MEDIA 2.0% 34,000 JP Aoi Advertising Promotion Inc. 514,170 31,200 PT Impresa SGPS S.A. * 343,942 3,100 US Wink Communications Inc. * 94,550 ----------- 952,662 ----------- RETAILING 3.1% 4,500 JP Aucnet Inc. 214,789 1,400 CH Charles Voegele Holding AG * 276,373 423,807 HK Giordano International Ltd. 644,271
The accompanying notes are an integral part of the financial statements. Page 26 Dresdner RCM Global Small Cap Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) RETAILING (CONTINUED) 6,300 JP Homac Corp. $ 162,559 2,000 JP Yamada Denki Co. Ltd. 179,770 ----------- 1,477,762 ----------- CONSUMER STAPLES SECTOR 2.8% FOOD, BEVERAGE & TOBACCO 2.1% 7,440 JP Hokuto Corp. 272,140 22,000 FR Remy Cointreau S.A. * 718,079 ----------- 990,219 ----------- HOUSEHOLD & PERSONAL PRODUCTS 0.7% 20,000 JP Mandom Corp. 334,589 ENERGY SECTOR 6.9% ENERGY 6.9% 12,500 NL Core Laboratories N.V. * 362,500 24,400 US Horizon Offshore Inc. * 378,200 30,300 US NS Group Inc. * 634,406 11,600 US Patterson Energy Inc. * 330,600 52,000 US Superior Energy Services Inc. * 539,500 19,000 NO TGS Nopec Geophysical Co. ASA * 252,297 13,100 US UTI Energy Corp. * 525,638 8,900 US Veritas DGC Inc. * 231,400 ----------- 3,254,541 ----------- FINANCIAL SECTOR 1.9% DIVERSIFIED FINANCIALS 1.9% 24,000 JP Mycal Card Inc. 900,554 HEALTH CARE SECTOR 15.2% HEALTH CARE EQUIPMENT & SUPPLIES 4.0% 22,200 US Charles River Laboratories International Inc. * 492,563 5,200 US Inhale Therapeutic Systems Inc. * 527,637 9,800 US Invitrogen Corp. * 736,991 3,600 JP Japan Medical Dynamic Marketing Inc. 111,945 ----------- 1,869,136 ----------- PHARMACEUTICALS & BIOTECHNOLOGY 11.2% 87,000 US AVANT Immunotherapeutics Inc. * 918,937 43,700 US Cell Genesys Inc. * 1,223,600 19,000 US Cell Therapeutics Inc. * 581,875 7,800 DK H Lundbeck A/S 387,888 25,700 US Immunomedics Inc. * 629,650 23,000 US OSI Pharmaceuticals Inc. * 662,688
The accompanying notes are an integral part of the financial statements. Page 27 Dresdner RCM Global Small Cap Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) PHARMACEUTICALS & BIOTECHNOLOGY (CONTINUED) 30,000 SE PyroSequencing AB * $ 348,888 11,600 US Titan Pharmaceuticals Inc. * 498,800 ----------- 5,252,326 ----------- MATERIALS SECTOR 3.0% MATERIALS 3.0% 31,900 SE SAPA AB 563,751 4,800 JP Taiyo Ink Manufacturing Co. Ltd. 285,818 23,000 JP Tanaka Chemical Corp. 554,340 ----------- 1,403,909 ----------- TECHNOLOGY SECTOR 44.5% COMMUNICATIONS EQUIPMENT 10.2% 26,000 SE Allgon AB (Series B) 311,263 22,200 FI Elcoteq Network (Class A) 488,391 12,000 JP Moritex Corp. 1,094,502 17,500 SE Nolato AB (B Shares) 510,790 15,300 US Packeteer Inc. * 445,613 13,500 FI Perlos Oyj 428,345 5,000 DK RTX Telecom A/S * 160,624 12,600 DE Suess MicroTec AG * 504,870 15,400 US WatchGuard Technologies Inc. * 846,038 ----------- 4,790,436 ----------- COMPUTERS & PERIPHERALS 2.6% 5,400 US DSP Group Inc. * 302,400 29,300 US Pinnacle Systems Inc. * 658,792 12,000 JP Woodland Corp. 250,658 ----------- 1,211,850 ----------- INTERNET SOFTWARE & SERVICES 2.3% 1,280 CH Distefora Holding AG 358,166 8,700 US OnDisplay Inc. * 708,506 ----------- 1,066,672 ----------- INFORMATION TECHNOLOGY CONSULTING & SERVICES 9.2% 4,200 JP ARGOTECHNOS 21 Corp. 140,527 21,700 IS BackWeb Technologies Ltd. * 496,388 9,500 PO ComArch S.A. * 458,110 20,300 NL Computer Services Solutions Holding N.V. 472,862 19,200 SE Framtidsfabriken AB * 265,976 27,000 SE HiQ International AB * 261,666 40,000 DE IDS Scheer AG 881,902
The accompanying notes are an integral part of the financial statements. Page 28 Dresdner RCM Global Small Cap Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) INFORMATION TECHNOLOGY CONSULTING & SERVICES (CONTINUED) 125,000 AU Securenet Ltd. * $ 691,984 36,300 US The InterCept Group Inc. * 617,100 ----------- 4,286,515 ----------- SEMICONDUCTORS & INSTRUMENTS 7.4% 6,700 DE ELMOS Semiconductor AG (144A) 340,395 800 UK International Quantum Epitaxy PLC (ADR) * 65,600 2,835 UK International Quantum Epitaxy PLC 232,470 29,400 SE Mandator AB 192,743 15,600 US Manufacturers' Services Ltd. * 320,775 3,350 IE Parthus Technologies PLC (ADR) * 95,475 21,000 IS Tower Semiconductor Ltd. * 685,125 25,000 CA Tundra Semiconductor Corp. Ltd. * 868,952 11,500 US Virata Corp. * 685,688 ----------- 3,487,223 ----------- SOFTWARE 12.8% 13,400 US Accrue Software Inc. * 475,700 37,900 US Actuate Corp. * 2,022,913 11,200 US Agile Software Corp. * 791,700 12,400 US Allaire Corp. * 455,700 16,200 US Mercator Software Inc. * 1,113,750 23,200 US ONYX Software Corp. * 688,750 92,180 NO VISMA ASA * 469,125 ----------- 6,017,638 ----------- TELECOMMUNICATION SERVICES SECTOR 4.0% TELECOMMUNICATION SERVICES 4.0% 49,500 US Allied Riser Communications Corp. * 699,187 8,300 US Cypress Communications Inc. * 60,175 13,100 RU Mobile Telesystems (ADR) * 281,650 11,100 US SoftNet Systems Inc. * 106,838 48,000 FI Tecnomen Oyj * 414,110 26,800 US Z-Tel Technologies Inc. * 321,600 ----------- 1,883,560 ----------- TOTAL EQUITY INVESTMENTS (COST $42,669,914) 98.7% 46,342,471 -----------
The accompanying notes are an integral part of the financial statements. Page 29 Dresdner RCM Global Small Cap Fund Portfolio of Investments June 30, 2000 (Unaudited)
FACE % OF MARKET VALUE AMOUNT COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- SHORT-TERM INVESTMENT COMMERCIAL PAPER 0.3% $ 117,000 US Associates First Capital Corp. 6.850%, maturing 07/03/00 $ 116,955 ----------- TOTAL SHORT-TERM INVESTMENTS (COST $116,955) 0.3% 116,955 ----------- TOTAL INVESTMENTS (COST $42,786,869) ** 99.0% 46,459,426 OTHER ASSETS LESS LIABILITIES 1.0% 474,256 ----------- NET ASSETS 100.0% $46,933,682 ===========
- -------------------------------- * Non-income producing security ADR American Depositary Receipt 144A Security is pursuant to Rule 144A of the Securities Act of 1933 and may be resold only to qualified institutional buyers. Tax information: ** For Federal income tax purposes, cost is $42,899,241 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows:
Unrealized appreciation $8,197,202 Unrealized depreciation (4,637,017) ---------- Net unrealized appreciation $3,560,185 ==========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at June 30, 2000 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Australia AU 1.5% 1.5% Canada CA 1.9% 1.9% Denmark DK 2.3% 2.3% Finland FI 3.9% 3.9% France FR 1.5% 1.5% Germany DE 4.5% 4.5% Hong Kong HK 1.4% 1.4% Hungary HU 1.0% 1.0% Ireland IE 0.2% 0.2% Israel IS 2.5% 2.5% Japan JP 15.4% 15.4% Mexico MX 0.5% 0.5% Netherlands NL 3.6% 3.6% Norway NO 1.6% 1.6% Poland PO 1.0% 1.0% Portugal PT 0.7% 0.7% Russia RU 0.6% 0.6% Sweden SE 6.0% 6.0% Switzerland CH 4.3% 4.3% United Kingdom UK 0.6% 0.6% United States US 43.7% 1.3% 45.0% ------ ------ ----- Total 98.7% 1.3% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 30 Dresdner RCM Global Technology Fund Management's Performance Review After rising 183% in 1999, the Dresdner RCM Global Technology Fund continued to outperform its benchmarks through the end of June 2000. By making decisive shifts in the portfolio, the Fund posted strong performance, achieving total returns of 17.92% and 17.81% for the Class I and Class N shares, respectively. By comparison, the Lipper Science & Technology Fund Index, returned 8.93% while the broad-based S&P 500 Index returned -0.42%. MARKET REVIEW As the year began, it was difficult to imagine how the performance of technology stocks in 2000 could match that of technology stocks in 1999, when the Lipper Science & Technology Fund Index was up over 110%. Remarkably, by March 10, the year was actually on track to beat 1999, as the high-valuation stocks continued to perform extremely well and the Nasdaq soared nearly 1,000 points. Unfortunately, the trend did not continue as the Nasdaq's flirtation with 5,000 was brief. Indeed, the period between early March and late May was one of the most severe corrections in technology stocks on record. A number of factors contributed to the decline, including the Federal Reserve Board's determination to raise interest rates to slow down the soaring economy, the U.S. Justice Department's aggressive antitrust case against Microsoft, and negative announcements by leading Wall Street analysts regarding the stock market, in general, and technology in particular. During this bear market, investors made it clear that they were uninterested in concept stocks with years of projected red ink -- instead, demanding profits, or at least a "path" to profitability. A slowdown in the U.S. economy and some moderate inflation data in late May eased the pressure on technology stocks, and the group staged a rally in June. FACTORS AFFECTING PERFORMANCE The key to performance during the first half of 2000 was the ability to shift from aggressive to defensive stocks and back again at key junctures. Dresdner RCM Global Investors LLC ("Dresdner RCM"), the investment manager of the Fund, remained invested in aggressive stocks with high valuations for much of the first quarter, perhaps staying a bit too long into March. Dresdner RCM re-examined the price/earnings (P/E) to growth ratios of companies in the portfolio and began trimming stocks with very high P/E to growth rate ratios. For example, a company with a P/E of 100 and a growth rate of 20 (an outlying ratio of 5) would not be purchased regardless of its future prospects. The concern was that rising interest rates puts more pressure on companies with high P/E to growth ratios. This analysis led the Fund to eliminate its exposure to QUALCOMM, a stock that rose more than 1,000% in 1999, and to lighten its exposure to Japanese technology companies. As the first quarter came to a close, some of these aggressive positions were swapped for more defensive stocks such as Cisco Systems, Dell Computer, Intel, and Sun Microsystems. By the end of May, the portfolio had a cash level of just over 20% and was in a position to buy back some of the more aggressive stocks that had fallen 50-80% from peak to trough. Throughout the six-month period, one of the portfolio's best performing stocks was Tyco International (diversified manufacturing), another company with its share of controversy. Despite an investigation by the Securities & Exchange Commission for alleged accounting irregularities, the accusations against the company were never proven. Meanwhile, management continued to invest in the company because of its strong cash flow and a belief that the stock was disproportionately punished. At the end of the second quarter, the Fund's international percentage was at the low end of the range, which is typically 15% to 35%. This reflects Dresdner RCM's belief that non-U.S. technology stocks became overvalued as less mature companies were bid up to a level that was ahead of their fundamental performance. OUTLOOK Technology stocks have undergone a significant correction during the first half of 2000. Although there was a meaningful recovery late in the period, stock prices are still far below the highs that were reached in early March this year. At the same time, many technology companies are producing excellent sales and profit growth. Page 31 Dresdner RCM Global Technology Fund Management's Performance Review The major questions now are whether the Federal Reserve Board has finished raising interest rates and whether the U.S. economy is in for a soft landing or something worse. The answers to these questions will help determine how technology stocks perform over the remainder of the year. In the meantime, Dresdner RCM believes that the fundamental strength of technology companies will likely enable them to outperform the broader markets over the coming years. Page 32 Dresdner RCM Global Technology Fund Total Return Index Comparison(c) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC $10,000 Investment (12/27/95-6/30/00) (d)(f)
LIPPER SCIENCE S&P 500 & TECHNOLOGY CLASS I SHARES INDEX(A) FUND INDEX(B) 12/27/95 $10,000 $10,000 $10,000 12/31/95 $10,040 $9,952 $10,023 1/31/96 $10,370 $9,897 $10,364 2/29/96 $10,660 $10,314 $10,460 3/31/96 $10,620 $9,857 $10,561 4/30/96 $11,580 $10,840 $10,717 5/31/96 $11,930 $11,098 $10,993 6/30/96 $11,380 $10,332 $11,035 7/31/96 $10,270 $9,565 $10,547 8/31/96 $10,770 $10,055 $10,770 9/30/96 $11,870 $10,987 $11,376 10/31/96 $11,700 $10,822 $11,690 11/30/96 $12,770 $11,837 $12,573 12/31/96 $12,692 $11,626 $12,324 1/31/97 $13,689 $12,542 $13,095 2/28/97 $12,359 $11,408 $13,197 3/31/97 $11,564 $10,549 $12,654 4/30/97 $11,715 $11,007 $13,410 5/31/97 $13,447 $12,317 $14,226 6/30/97 $13,860 $12,432 $14,864 7/31/97 $15,694 $14,157 $16,047 8/31/97 $15,764 $14,245 $15,148 9/30/97 $17,094 $14,849 $15,978 10/31/97 $15,986 $13,279 $15,445 11/30/97 $15,754 $13,166 $16,160 12/31/97 $16,129 $12,537 $12,578 1/31/98 $15,976 $12,759 $12,801 2/28/98 $17,837 $14,277 $14,324 3/31/98 $18,838 $14,394 $14,442 4/30/98 $20,452 $15,012 $15,061 5/31/98 $19,227 $13,911 $13,957 6/30/98 $21,065 $14,727 $14,775 7/31/98 $20,441 $14,588 $14,636 8/31/98 $17,095 $11,850 $11,889 9/30/98 $17,790 $13,248 $13,292 10/31/98 $19,463 $14,259 $14,306 11/30/98 $22,055 $15,858 $15,910 12/31/98 $25,891 $18,423 $18,484 1/31/99 $29,859 $22,018 $20,877 2/28/99 $26,956 $21,333 $18,698 3/31/99 $30,210 $22,186 $20,603 4/30/99 $31,807 $23,045 $20,861 5/31/99 $30,634 $22,501 $20,831 6/30/99 $34,166 $23,750 $23,538 7/31/99 $34,765 $23,009 $23,530 8/31/99 $37,103 $22,894 $24,825 9/30/99 $40,043 $22,267 $25,162 10/31/99 $46,141 $23,676 $27,812 11/30/99 $56,565 $24,157 $31,936 12/31/99 $73,499 $25,580 $39,408 1/31/00 $74,939 $24,296 $38,994 2/29/00 $103,453 $23,836 $49,499 3/31/00 $93,187 $26,168 $47,994 4/30/00 $82,896 $25,380 $42,393 5/31/00 $74,766 $24,860 $37,277 6/30/00 $86,670 $25,470 $43,068
PERFORMANCE JUNE 30, 2000
CUMULATIVE SINCE SINCE GLOBAL TECHNOLOGY FUND YTD 1 YEAR 3 YEARS INCEPTION INCEPTION Class I Average Annual Total Return(d) 17.92% 153.67% 84.23% 61.41% 766.70% Class N Average Annual Total Return(e)(f) 17.81% 153.28% 83.86% 61.06% 754.85% Lipper Science & Technology Fund Index Average Annual Total Return(b) 8.93% 82.98% 51.26% 38.23% 330.68% S&P 500 Index Average Annual Total Return(a) -0.42% 7.25% 19.67% 23.03% 154.70%
The recent strong equity market performance has been especially favorable to technology and technology-related stocks and has helped the Fund. This performance may not be sustainable and as a result, the Fund may not continue achieving the same level of performance as in the past. In addition, market volatility can dramatically affect the Fund's short-term returns and pursuing these levels of return involves accepting increased risk of volatility of return. 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 Index is a capitalization-weighted index of 500 stocks designed 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 30 largest U.S. science and technology mutual funds. (c) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (d) Class I shares commenced operations on December 27, 1995. (e) Class N shares were first issued on January 30, 1999, and pay Rule 12b-1 fees. Class N returns through January 30, 1999 are based on Class I returns and reflect the deduction of Rule 12b-1 fees applicable to Class N shares. (f) The value of a $10,000 investment for Class N is $85,485 for the period from December 27, 1995 to June 30, 2000. The performance of the Class N shares is lower than Class I shares due to the effects of 12b-1 fees. (g) Unannualized. Page 33 Dresdner RCM Global Technology Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ----------------------------------------------------------------------------------- EQUITY INVESTMENTS COMMERCIAL GOODS & SERVICES SECTOR 2.8% CAPITAL GOODS 2.8% 454,000 BH Tyco International Ltd. $ 21,508,250 HEALTH CARE SECTOR 0.8% PHARMACEUTICALS & BIOTECHNOLOGY 0.8% 82,500 US Amgen Inc. * 5,795,625 TECHNOLOGY SECTOR 91.6% COMMUNICATIONS EQUIPMENT 27.5% 60,000 FR Alcatel S.A. (ADR) 3,990,000 92,600 US Comverse Technology Inc. * 8,611,800 85,000 US Corning Inc. 22,939,375 103,200 US Ditech Communications Corp. * 9,758,850 72,600 US E-Tek Dynamics Inc. 19,152,788 192,000 US Foundry Networks Inc. * 21,216,000 263,400 JP Furukawa Electric Co. Ltd. 5,514,392 90,000 US GlobeSpan Inc. * 10,987,031 151,954 US JDS Uniphase Corp. * 18,215,438 107,200 US Juniper Networks Inc. * 15,604,300 308,000 FI Nokia Oyj (ADR) 15,380,750 14,500 US ONI Systems Corp. * 1,699,445 50,000 US QUALCOMM Inc. * 3,000,000 83,000 US SDL Inc. * 23,670,562 175,000 US Sycamore Networks Inc. * 19,315,625 545,000 SE Telefonaktiebolaget (LM) Ericsson AB (ADR) 10,900,000 ------------ 209,956,356 ------------ COMPUTERS & PERIPHERALS 6.9% 158,000 US Dell Computer Corp. * 7,791,375 108,000 US EMC Corp. * 8,309,250 106,800 US Flextronics International Ltd. 7,335,825 240,000 US Network Appliance Inc. * 19,320,000 108,000 US Sun Microsystems Inc. * 9,821,250 ------------ 52,577,700 ------------ INTERNET SOFTWARE & SERVICES 12.9% 264,000 US Ariba Inc. * 25,884,375 357,000 US BroadVision Inc. * 18,140,063 227,000 US Commerce One Inc. * 10,303,672 312,000 US Critical Path Inc. * 18,193,500 190,800 US Lycos Inc. * 10,303,200 18 JP Yahoo (Japan) Inc. * 7,153,962 67,000 US Yahoo Inc. * 8,299,625 ------------ 98,278,397 ------------
The accompanying notes are an integral part of the financial statements. Page 34 Dresdner RCM Global Technology Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ----------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) INFORMATION TECHNOLOGY CONSULTING & SERVICES 9.3% 180,000 US BEA Systems Inc. * $ 8,898,750 190,500 IS Check Point Software Technologies Ltd. * 40,338,375 325,000 UK CMG PLC * 4,605,281 62,500 SE Framtidsfabriken AB * 865,806 6,500 JP Itochu Techno-Science Corp. 1,047,480 13,000 JP Itochu Techno-Science Corp. * 1,935,228 190,000 UK Logica PLC 4,498,703 133,200 FR Transiciel S.A. 8,593,137 ------------ 70,782,760 ------------ SEMICONDUCTORS & INSTRUMENTS 23.2% 107,000 US Advanced Micro Devices Inc. * 8,265,750 133,000 US Altera Corp. * 13,557,687 215,000 US Applied Micro Circuits Corp. * 21,231,250 139,000 US Credence Systems Corp. * 7,671,063 201,100 US Manufacturers' Services Ltd. * 4,135,119 314,000 US Maxim Integrated Products Inc. * 21,332,375 244,000 US Micron Technology Inc. * 21,487,250 170,000 US MIPS Technologies Inc. (Class A) * 7,225,000 75,000 CA PMC-Sierra Inc. * 13,326,563 21,900 KR Samsung Electronics 7,247,700 273,000 FR STMicroelectronics N.V. (N.Y. Registered Shares) 17,523,187 277,500 US Vitesse Semiconductor Corp. * 20,413,594 165,000 US Xilinx Inc. * 13,622,812 ------------ 177,039,350 ------------ SOFTWARE 11.8% 159,700 US Agile Software Corp. * 11,288,794 186,000 US I2 Technologies Inc. * 19,393,406 144,500 US Numerical Technologies Inc. * 7,026,312 78,000 US Siebel Systems Inc. * 12,757,875 122,500 US VERITAS Software Corp. * 13,844,414 505,000 US Vignette Corp. * 26,267,891 ------------ 90,578,692 ------------ TOTAL EQUITY INVESTMENTS (COST $546,959,602) 95.2% 726,517,130 ------------
The accompanying notes are an integral part of the financial statements. Page 35 Dresdner RCM Global Technology Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ----------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 5.2% 19,869,788 US SSgA Money Market Fund $ 19,869,788 19,871,639 US SSgA U.S. Government Money Market Fund 19,871,639 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $39,741,427) 5.2% 39,741,427 ------------ TOTAL INVESTMENTS (COST $586,701,029) ** 100.4% 766,258,557 OTHER ASSETS LESS LIABILITIES (0.4)% (3,392,247) ------------ NET ASSETS 100.0% $762,866,310 ============
- -------------------------------- * Non-income producing security ADR American Depositary Receipt Tax Information: ** For Federal income tax purposes, cost is $587,408,624 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $190,037,072 Unrealized depreciation (11,187,139) ----------- Net unrealized appreciation $178,849,933 ===========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at June 30, 2000 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Bermuda BH 2.8% 2.8% Canada CA 1.7% 1.7% Finland FI 2.0% 2.0% France FR 3.9% 3.9% Israel IS 5.3% 5.3% Japan JP 2.1% 2.1% Korea KR 1.0% 1.0% Sweden SE 1.5% 1.5% United Kingdom UK 1.2% 1.2% United States US 73.7% 4.8% 78.5% ------ ------ ----- Total 95.2% 4.8% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 36 Dresdner RCM Global Health Care Fund Management's Performance Review During the first half of 2000, health care was one of the few bright spots in an otherwise difficult stock market environment, as large cap pharmaceutical and biotechnology companies posted strong returns. For the six months ended June 30, 2000, the Dresdner RCM Health Care Fund achieved a total return of 54.39% compared to its benchmarks, the Russell Mid Cap Health Care Index, which returned 13.67% and the S&P 500 Index, which returned -0.42%. MARKET REVIEW For much of the past year, pharmaceutical stocks have been under pressure due to U.S. Congressional proposals to expand Medicare coverage to include prescription drugs. Medicare reimbursement is typically very low and could squeeze profit margins. In recent weeks, however, a more moderate Republican plan has emerged that would be relatively favorable to the drug companies -- a plan that President Clinton, after some compromise, may likely sign before he leaves office. This development, along with some sector rotation out of technology and other growth stocks, has produced a positive environment for pharmaceutical companies. Meanwhile, a groundbreaking announcement by Celera Genomics and the National Institute of Health's Human Genome Project, stating that they had deciphered the genetic code for human life, created a positive backdrop for the biotechnology sector. True, biotechnology stocks sold off sharply in March when the Nasdaq's bear market dragged technology shares, particularly the unprofitable Internet companies, into sharply negative territory. However, biotechnology stocks recovered during the second quarter, while the "dot-coms" did not. In addition, the normally inverse correlation between the pharmaceutical sector and the biotechnology group did not occur. Beyond pharmaceuticals and biotechnology, the Dresdner RCM Global Health Care Fund, managed by Dresdner RCM Global Investors LLC ("Dresdner RCM"), concentrates in a wide range of e-health, medical device and hospital management companies. The e-health companies suffered along with the general Internet malaise. Hospital management offered investors some interesting value plays, while medical device performance was company-specific. FACTORS AFFECTING PERFORMANCE The Fund's superior performance can be explained, in part, by its timely exposure to the large cap pharmaceutical sector, which reached as high as 30% of total assets during the period. Pfizer and Schering-Plough were particularly strong performers during the six-month period ended June 30, 2000. The Fund took advantage of an April sell-off in Bristol-Myers Squibb when the FDA rejected one of its blood pressure drugs. However, the stock was eventually sold when Dresdner RCM's Grassroots-SM- Research revealed that the incidence of a serious side effect was quite high in elderly and African American patients. The Fund's allocation to pharmaceuticals and biotechnology was at the high end of its historical range, reaching about 46% of total assets as of June 30, 2000. The Fund began the year with a heavy emphasis on genomics companies that soared in price during the first six weeks of 2000. As these stocks began to sell off in early March, Dresdner RCM diversified the portfolio by emphasizing core biotechnology companies, such as Amgen, Biogen, Genentech, and Immunex, which continue to produce exciting new therapies. Within weeks, the biotech rally was back, partly due to the impending genome announcement as well as good results that were reported at a number of medical conferences. The Fund then shifted out of relatively more conservative stocks and into more aggressive biotechnology companies such as Human Genome Sciences, Millennium Pharmaceuticals and Protein Design Labs. Medical device stocks, such as Johnson & Johnson, Biomet, Waters, St. Jude Medical, Stryker, ORATEC Interventions, and Molecular Devices, performed quite well. The Fund also profited from its foray into hospital and HMO stocks -- more valuation-sensitive companies that produced profits when the companies reported respectable earnings, reflecting higher hospital admissions. However, the Fund's exposure to the troubled e-health sector was minimized. Such companies as Healtheon/WebMD, Medicalogic/Medscape, Page 37 Dresdner RCM Global Health Care Fund Management's Performance Review and SciQuest.com represented a total of about 3.5% of the portfolio as of June 30, 2000, and will likely stay small until the sector's fundamentals improve. The Fund continued to benefit from the dual qualifications of its portfolio management team, who hold medical degrees, as well as possess extensive financial training. This unique advantage helps them to conduct bottom-up stock research in fields requiring clinical judgments about the commercial viability of pharmaceutical products, medical devices, and breakthrough scientific discoveries. The portfolio turnover in the Fund was high during the six months ended June 30, 2000 (279.1%), in part due to market volatility and cash flows. A high portfolio turnover rate increases the Fund's brokerage commission expenses and other transaction costs, and may increase its taxable capital gains. OUTLOOK Dresdner RCM believes that pharmaceutical stocks should benefit from the passage of President Clinton's Medicare drug proposal plan in collaboration with a Republican Congress. Anything short of that is likely to put pressure on these companies. Indeed, if the Democrats retain the White House and hold a majority in the House of Representatives, then the pharmaceutical companies might face a much more negative scenario. The biotechnology area continues to be among the most volatile on Wall Street. Typically, disappointing news causes an over-reaction on Wall Street, which the Fund hopes to take advantage of. However, the recent run-up in biotechnology stocks makes the near-term outlook cautious. Meanwhile, the outlook for e-health and hospital management companies remains uncertain, while the performance of the medical device stocks will remain dependent on individual products rather than the overall sector. Longer term, Dresdner RCM believes that investors in the health care sector will continue to benefit from exciting breakthroughs in scientific knowledge. Mapping the human gene will enable researchers to develop new treatments for human illness. The challenge is to find the companies that can convert these discoveries into commercially viable products. Page 38 Dresdner RCM Global Health Care Fund Total Return Index Comparison(c) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC $10,000 Investment (12/31/96-6/30/00) (d)
RUSSELL MIDCAP CLASS N SHARES S&P 500 INDEX (A) HEALTH CARE INDEX (B) 12/31/96 $10,000 $10,000 $10,000 1/31/97 $10,700 $10,625 $10,353 2/28/97 $10,650 $10,708 $10,552 3/31/97 $9,910 $10,268 $9,637 4/30/97 $10,050 $10,881 $9,786 5/31/97 $11,140 $11,544 $10,712 6/30/97 $11,660 $12,061 $11,201 7/31/97 $11,990 $13,021 $11,904 8/31/97 $11,790 $12,292 $11,739 9/30/97 $13,110 $12,965 $12,373 10/31/97 $12,910 $12,532 $11,644 11/30/97 $13,110 $13,113 $11,886 12/31/97 $13,000 $13,338 $11,920 1/31/98 $13,189 $13,486 $11,938 2/28/98 $14,060 $14,458 $13,012 3/31/98 $14,584 $15,199 $13,725 4/30/98 $14,897 $15,352 $14,044 5/31/98 $14,261 $15,088 $13,805 6/30/98 $14,295 $15,701 $14,337 7/31/98 $14,216 $15,533 $13,961 8/31/98 $12,241 $13,287 $11,459 9/30/98 $13,659 $14,139 $13,170 10/31/98 $14,004 $15,288 $13,869 11/30/98 $15,109 $16,215 $14,571 12/31/98 $16,324 $17,148 $15,903 1/31/99 $16,482 $17,865 $15,117 2/28/99 $16,056 $17,310 $14,398 3/31/99 $15,813 $18,002 $14,287 4/30/99 $15,059 $18,699 $13,244 5/31/99 $14,937 $18,257 $13,466 6/30/99 $15,874 $19,271 $13,772 7/31/99 $15,777 $18,670 $13,446 8/31/99 $16,117 $18,577 $13,300 9/30/99 $15,071 $18,068 $11,845 10/31/99 $16,056 $19,211 $11,925 11/30/99 $17,334 $19,601 $12,625 12/31/99 $21,013 $20,756 $14,185 1/31/00 $24,184 $19,714 $14,290 2/29/00 $34,536 $19,341 $14,395 3/31/00 $26,042 $21,233 $14,071 4/30/00 $25,614 $20,594 $13,903 5/31/00 $25,231 $20,171 $14,171 6/30/00 $32,442 $20,668 $15,639
PERFORMANCE JUNE 30, 2000
CUMULATIVE SINCE SINCE GLOBAL HEALTH CARE FUND YTD 1 YEAR 3 YEARS INCEPTION INCEPTION Class N Average Annual Total Return(d) 54.39% 104.37% 40.65% 39.97% 224.42% S&P 500 Index Average Annual Total Return(a) -0.42% 7.25% 19.67% 23.05% 106.68% Russell Midcap Health Care Index Average Annual Total Return(b) 13.67% 13.57% 11.77% 13.63% 56.39%
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 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) Class N shares commenced operations on December 31, 1996. (e) Unannualized. Page 39 Dresdner RCM Global Health Care Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS COMMERCIAL GOODS & SERVICES SECTOR 0.7% COMMERCIAL SERVICES & SUPPLIES 0.7% 26,000 US Ventro Corp. * $ 490,750 HEALTH CARE SECTOR 80.9% HEALTH CARE EQUIPMENT & SUPPLIES 26.5% 17,500 US Aclara Biosciences Inc. * 891,406 10,000 US Allscripts Inc. * 230,000 23,600 US ArthroCare Corp. * 1,256,700 37,800 US Aspect Medical Systems Inc. * 1,020,600 29,700 US Biomet Inc. 1,141,594 74,900 US Charles River Laboratories International Inc. * 1,661,844 21,500 US INAMED Corp. * 787,438 10,400 US Inhale Therapeutic Systems Inc. * 1,055,275 67,200 US InnerDyne Inc. * 495,600 9,500 US Invitrogen Corp. * 714,430 42,700 US Mentor Corp. 1,160,906 14,200 US Molecular Devices Corp. * 982,462 32,900 US ORATEC Interventions Inc. * 1,098,037 37,300 US Stryker Corp. 1,631,875 64,600 US VISX Inc. * 1,812,837 11,500 US Waters Corp. * 1,435,344 ----------- 17,376,348 ----------- HEALTH CARE PROVIDERS & SERVICES 8.0% 13,300 US CareInsite Inc. * 237,738 33,200 US Community Health Care * 537,425 65,200 US E.Medsoft.com (Private Placement) * 463,572 80,000 US Health Management Associates Inc. * 1,045,000 87,300 US Healtheon/WebMD Corp. * 1,293,131 100,700 US MedicaLogic/Medscape Inc. * 931,475 55,000 US SciQuest.com Inc. * 629,062 14,300 US XCare.net Inc. * 76,863 ----------- 5,214,266 ----------- PHARMACEUTICALS & BIOTECHNOLOGY 46.4% 8,800 US Abgenix Inc. * 1,054,762 20,000 US Alkermes Inc. * 942,500 9,500 US American Home Products Corp. 558,125 22,000 US Amgen Inc. * 1,545,500 6,000 UK AstraZeneca Group PLC (ADR) 279,000 37,500 US AVANT Immunotherapeutics Inc. * 396,094 22,500 US Cell Genesys Inc. * 630,000 27,200 US Cell Therapeutics Inc. * 833,000 22,500 UK Celltech Group PLC (ADR) * 852,187 15,000 US Cephalon Inc. * 898,125
The accompanying notes are an integral part of the financial statements. Page 40 Dresdner RCM Global Health Care Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) PHARMACEUTICALS & BIOTECHNOLOGY (CONTINUED) 9,000 US Gene Logic Inc. * $ 321,188 8,300 US Genentech Inc. * 1,427,600 21,500 UK Glaxo Wellcome PLC (ADR) 1,242,969 7,000 US Human Genome Sciences Inc. * 933,625 9,200 US IDEC Pharmaceuticals Corp. * 1,079,275 33,000 US Immunomedics Inc. * 808,500 15,500 US Intermune Pharmaceuticals Inc. * 640,344 15,900 US Johnson & Johnson 1,619,812 1,600 US La Jolla Pharmaceutical Co. * 6,600 7,000 US Maxygen Inc. * 397,359 17,000 US Medarex Inc. * 1,436,500 8,000 US Merck & Co. Inc. 613,000 32,500 US MGI Pharma Inc. * 934,883 7,500 US Millennium Pharmaceuticals Inc. * 839,063 22,500 US OSI Pharmaceuticals Inc. * 648,281 7,100 US PE Corp. - PE Biosystems Group 467,713 31,500 US Pfizer Inc. 1,512,000 17,500 US Pharmacia Corp. 904,531 34,400 US PRAECIS Pharmaceuticals Inc. * 958,900 6,000 US Protein Design Labs Inc. * 989,719 62,500 SE PyroSequencing AB * 726,850 2,200 NL QIAGEN N.V. (ADR) * 382,800 22,900 US Schering-Plough Corp. 1,156,450 8,000 US Sepracor Inc. * 965,000 8,000 IS Teva Pharmaceutical Industries Ltd. (ADR) 443,500 13,000 US Titan Pharmaceuticals Inc. * 559,000 27,400 US Virologic Inc. * 407,575 ----------- 30,412,330 ----------- TOTAL EQUITY INVESTMENTS (COST $49,879,191) 81.6% 53,493,694 ----------- FACE AMOUNT - ---------- SHORT-TERM INVESTMENTS COMMERCIAL PAPER 9.2% $6,000,000 US American Express Credit Corp. 6.780% maturing 07/05/00 5,995,480 -----------
The accompanying notes are an integral part of the financial statements. Page 41 Dresdner RCM Global Health Care Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS (CONTINUED) MONEY MARKET FUNDS 7.2% 2,361,720 US SSgA Money Market Fund $ 2,361,720 2,361,720 US SSgA U.S. Government Money Market Fund 2,361,720 ----------- 4,723,440 ----------- TOTAL SHORT-TERM INVESTMENTS (COST $10,718,920) 16.4% 10,718,920 ----------- TOTAL INVESTMENTS (COST $60,598,111) ** 98.0% 64,212,614 OTHER ASSETS LESS LIABILITIES 2.0% 1,342,363 ----------- NET ASSETS 100.0% $65,554,977 ===========
- -------------------------------- * Non-income producing security ADR American Depositary Receipt Tax Information: ** For Federal income tax purposes, cost is $60,644,140 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows:
Unrealized appreciation $7,889,124 Unrealized depreciation (4,320,650) ---------- Net unrealized appreciation $3,568,474 ==========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at June 30, 2000 categorized by country:
% OF NET ASSETS ------------------------------ COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ----------------------------------------------------------------------- Israel IS 0.7% 0.7% Netherlands NL 0.6% 0.6% Sweden SE 1.1% 1.1% United Kingdom UK 3.6% 3.6% United States US 75.6% 18.4% 94.0% ------ ------- ----- Total 81.6% 18.4% 100.0% ====== ======= =====
The accompanying notes are an integral part of the financial statements. Page 42 Dresdner RCM International Growth Equity Fund Management's Performance Review The combination of higher interest rates in Europe along with a marked reversal in sector returns, presented a burdensome backdrop for the Dresdner RCM International Growth Equity Fund. The Fund posted total returns of -13.29% and - -13.40% for Class I and N shares, respectively, for the six months ended June 30, 2000. The Fund's primary benchmark, the Morgan Stanley Capital International Europe, Australasia, Far East Index (EAFE), returned -3.95% for the same period while the Fund's secondary benchmark, the Morgan Stanley Capital International All Country World Index Ex-U.S. (ACWIxU.S), returned -3.33%. MARKET REVIEW Market volatility continued throughout the first half of the year, driven primarily by rising interest rates. Heeding inflationary pressures, the European Central Bank raised short-term interest rates by 75 basis points during the second quarter. However, the Bank of Japan continued to uphold a benign interest rate environment, though it appears likely that it will move monetary policy from the current zero interest-rate in the near future. Higher interest rates during the second quarter translated into a higher cost of capital and higher discount rates, resulting in a compression of P/E multiples in many new economy stocks. In contrast to the first quarter when new economy stocks helped the technology, telecommunications, and media sectors soar, rising interest rates dampened valuations and investor enthusiasm creating a sharp sector reversal. The new economy sectors underperformed (telecom services was down 20.2%, technology was down 6.5%) versus historically safe-haven sectors (consumer staples up 8.6%, healthcare up 7.4%). The telecom services sector was particularly affected by the U.K. government's pioneering decision to auction next generation mobile phone licenses -- the auction resulted in a windfall to the government at the expense of the mobile telecom operators. The sector rotation to old economy stocks was also reflected in a 1.5% rise in the EAFE Value Index versus a 9.2% decline in the EAFE Growth Index. FACTORS AFFECTING PERFORMANCE Early in 2000 Dresdner RCM Global Investors LLC ("Dresdner RCM"), the investment manager of the Fund, had overweighted new economy sectors. The Fund was overweighted in the technology, telecommunications and media sectors as they offered extraordinary growth potential with attractive valuations relative to their U.S. counterparts. During the period of negative sentiment in April and May, when the market favored old economy stocks, Dresdner RCM did not alter its strategy of investing in new economy themes. The decision to stay invested in current themes negatively impacted the Fund's performance. An effective strategy of overweighting the communications equipment industry and underweighting the automotive industry offset sub-optimal sector selection. The overweights to Internet software & services, telecom services and IT consulting & services industry negatively impacted the portfolio along with the underweights to the pharmaceutical & biotechnology and the food, beverage & tobacco industries. During the second quarter, Dresdner RCM increased the Fund's weight to the consumer staples sector. The rationale was based upon Dresdner RCM's belief that these companies should grow as they become more efficient. Furthermore, in today's volatile market environment, the visible earnings of consumer staples companies make them very attractive. Finally, part of the investment process is predicated upon theme transfer-Dresdner RCM analyzes developments in one region or sector and examines the possibility of the theme eventually being repeated in other sectors or regions. Regarding retailers, the experience in the United States (particularly with Wal-Mart) is that companies are becoming increasingly efficient at securing products. As of June 30, 2000, the Fund's positions included exposure to retailers (e.g. Tesco in the U.K. and Carrefour in France), as well as to producers (e.g. Nestle in Switzerland, and Femsa in Mexico). Grassroots-SM- Research continued to add value to Dresdner RCM's overall investment approach. The department recently completed a study in which it surveyed 35 logistics and supply-chain managers at food and household goods producers and retailers in Europe Page 43 Dresdner RCM International Growth Equity Fund Management's Performance Review to determine the efficiency and sophistication of their supply-chain systems, and to evaluate relationships between the two groups. All surveyed sources are attempting to improve warehousing and delivery systems, thus providing supporting evidence for the consumer staples investment theme. Regarding retailers, one German logistics manager noted, "the future is the Wal-Mart system, where ordering runs automatically over the Internet, but Germany is far away from this model." OUTLOOK Dresdner RCM maintains the conviction that the current volatile market environment will continue, but that most of the technical correction within new economy stocks is generally over. The fundamentals of many technology stocks has not changed and with valuations even more compelling at this time, the Fund's overweight to new economy sectors remains in place. An economic soft-landing scenario, with inflation in check and less heated growth, will be a positive environment for growth stocks. Dresdner RCM's bottom-up investment philosophy seeks investments in high-quality companies possessing strong earnings growth potential and attractive valuations that are well positioned to take advantage of change in the global economy. In the current market environment, the Fund's portfolio managers are emphasizing visible earnings growth, guiding the Fund to overweight positions in technology, and telecom services, along with selective companies in other sectors. Given the supporting evidence by Grassroots-SM- Research along with additional analysis, the Fund has narrowed the underweight position to the consumer staples sector. Concern over the United Kingdom's mobile phone auction did lead to a slightly reduced overweight position to the telecom services sector. However, as telecom companies continue to strike alliances across borders (e.g., KPN of the Netherlands with NTT DoCoMo of Japan, France Telecom's purchase of Orange of the UK), the amount of competition bidding for future mobile licenses will shrink, thereby providing some relief to these companies. The characteristics of the Fund's portfolio are consistent with Dresdner RCM's bottom-up process and rigorous investment discipline of quality growth companies with outstanding valuations. Going forward, these strong, viable companies should provide value to investors in the International Growth Equity Fund. Page 44 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 $10,000 Investment (12/28/94 - 6/30/00)(d)(f)
CLASS I SHARES MSCI-EAFE INDEX(A) MSCI-ACWI FREE(B) 12/28/94 $10,000 $10,000 $10,000 1/31/95 $9,555 $9,616 $9,617 2/28/95 $9,577 $9,591 $9,592 3/31/95 $10,054 $10,192 $10,193 4/30/95 $10,492 $10,579 $10,579 5/31/95 $10,564 $10,455 $10,455 6/30/95 $10,847 $10,274 $10,275 7/31/95 $11,570 $10,916 $10,917 8/31/95 $11,420 $10,502 $10,503 9/30/95 $11,665 $10,710 $10,711 10/31/95 $11,489 $10,426 $10,426 11/30/95 $11,522 $10,719 $10,719 12/31/95 $11,799 $11,153 $11,153 1/31/96 $12,126 $11,201 $11,201 2/29/96 $12,271 $11,241 $11,241 3/31/96 $12,648 $11,483 $11,483 4/30/96 $13,096 $11,819 $11,820 5/31/96 $13,263 $11,604 $11,604 6/30/96 $13,353 $11,672 $11,673 7/31/96 $12,822 $11,334 $11,334 8/31/96 $13,108 $11,361 $11,362 9/30/96 $13,404 $11,666 $11,666 10/31/96 $13,302 $11,549 $11,549 11/30/96 $13,864 $12,011 $12,011 12/31/96 $14,078 $11,859 $11,860 1/31/97 $14,355 $11,447 $11,447 2/28/97 $14,477 $11,637 $11,637 3/31/97 $14,410 $11,682 $11,683 4/30/97 $14,654 $11,746 $11,747 5/31/97 $15,606 $12,513 $12,514 6/30/97 $16,502 $13,207 $13,207 7/31/97 $17,509 $13,423 $13,424 8/31/97 $16,292 $12,423 $12,424 9/30/97 $17,620 $13,121 $13,122 10/31/97 $16,458 $12,116 $12,117 11/30/97 $16,414 $11,995 $11,996 12/31/97 $16,603 $12,103 $12,071 1/31/98 $17,063 $12,660 $12,432 2/28/98 $17,924 $13,475 $13,261 3/31/98 $18,602 $13,893 $13,720 4/30/98 $18,954 $14,005 $13,818 5/31/98 $19,063 $13,941 $13,568 6/30/98 $19,123 $14,050 $13,517 7/31/98 $19,754 $14,196 $13,645 8/31/98 $17,063 $12,440 $11,721 9/30/98 $16,033 $12,062 $11,474 10/31/98 $16,869 $13,322 $12,675 11/30/98 $17,730 $14,008 $13,356 12/31/98 $18,895 $14,564 $13,816 1/31/99 $19,223 $14,525 $13,801 2/28/99 $18,429 $14,182 $13,492 3/31/99 $18,832 $14,778 $14,144 4/30/99 $19,160 $15,379 $14,851 5/31/99 $18,290 $14,590 $14,153 6/30/99 $19,804 $15,162 $14,804 7/31/99 $20,836 $15,617 $15,152 8/31/99 $21,050 $15,678 $15,205 9/30/99 $21,479 $15,840 $15,308 10/31/99 $23,232 $16,437 $15,878 11/30/99 $26,524 $17,012 $16,513 12/31/99 $30,357 $18,541 $18,088 1/31/00 $28,998 $17,366 $17,106 2/29/00 $31,077 $17,837 $17,568 3/31/00 $30,330 $18,532 $18,229 4/30/00 $27,639 $17,561 $17,211 5/31/00 $25,126 $17,136 $16,748 6/30/00 $26,321 $17,810 $17,485
PERFORMANCE FROM FIRST PUBLIC OFFERING $10,000 Investment (5/22/95 - 6/30/00)(d)(f)
CLASS I SHARES MSCI-EAFE INDEX(A) MSCI-ACWI FREE(B) 5/22/95 $10,000 $10,000 $10,000 5/31/95 $10,233 $9,984 $10,222 6/30/95 $10,508 $9,811 $10,081 7/31/95 $11,208 $10,424 $10,654 8/31/95 $11,063 $10,029 $10,284 9/30/95 $11,300 $10,228 $10,460 10/31/95 $11,130 $9,956 $10,180 11/30/95 $11,161 $10,236 $10,420 12/31/95 $11,430 $10,650 $10,831 1/31/96 $11,747 $10,696 $10,980 2/29/96 $11,887 $10,735 $10,980 3/31/96 $12,254 $10,965 $11,184 4/30/96 $12,686 $11,287 $11,523 5/31/96 $12,848 $11,081 $11,350 6/30/96 $12,935 $11,147 $11,408 7/31/96 $12,421 $10,823 $11,029 8/31/96 $12,698 $10,849 $11,094 9/30/96 $12,985 $11,140 $11,369 10/31/96 $12,886 $11,029 $11,256 11/30/96 $13,430 $11,470 $11,690 12/31/96 $13,638 $11,325 $11,554 1/31/97 $13,906 $10,931 $11,342 2/28/97 $14,024 $11,113 $11,549 3/31/97 $13,959 $11,156 $11,525 4/30/97 $14,195 $11,217 $11,622 5/31/97 $15,117 $11,950 $12,340 6/30/97 $15,986 $12,612 $13,021 7/31/97 $16,961 $12,819 $13,284 8/31/97 $15,782 $11,864 $12,239 9/30/97 $17,069 $12,530 $12,901 10/31/97 $15,943 $11,571 $11,803 11/30/97 $15,900 $11,455 $11,656 12/31/97 $16,083 $11,558 $11,790 1/31/98 $16,529 $12,090 $12,142 2/28/98 $17,363 $12,868 $12,952 3/31/98 $18,020 $13,267 $13,400 4/30/98 $18,361 $13,375 $13,497 5/31/98 $18,466 $13,313 $13,252 6/30/98 $18,525 $13,417 $13,202 7/31/98 $19,136 $13,556 $13,327 8/31/98 $16,529 $11,879 $11,448 9/30/98 $15,532 $11,518 $11,207 10/31/98 $16,342 $12,722 $12,380 11/30/98 $17,175 $13,377 $13,045 12/31/98 $18,304 $13,908 $13,495 1/31/99 $18,622 $13,871 $13,480 2/28/99 $17,852 $13,543 $13,178 3/31/99 $18,243 $14,112 $13,815 4/30/99 $18,561 $14,687 $14,580 5/31/99 $17,718 $13,933 $13,790 6/30/99 $19,184 $14,479 $14,459 7/31/99 $20,186 $14,914 $14,799 8/31/99 $20,394 $14,972 $14,851 9/30/99 $20,809 $15,126 $14,952 10/31/99 $22,508 $15,696 $15,508 11/30/99 $25,697 $16,246 $16,129 12/31/99 $29,407 $17,706 $17,667 1/31/00 $28,091 $16,584 $16,708 2/29/00 $30,105 $17,033 $17,159 3/31/00 $29,381 $17,697 $17,804 4/30/00 $26,775 $16,770 $16,811 5/31/00 $24,339 $16,364 $16,358 6/30/00 $25,498 $17,010 $17,018
PERFORMANCE(c) JUNE 30, 2000
INTERNATIONAL LIFE OF FUND LIFE OF FUND GROWTH EQUITY ANNUALIZED SINCE CUMULATIVE SINCE FUND YTD(G) 1 YEAR 3 YEARS 5 YEARS 12/28/94 5/25/95 12/28/94 5/25/95 Class I Average Annual Total Return(d) -13.29% 32.91% 16.84% 19.40% 19.21% 20.11% 163.21% 154.98% Class N Average Annual Total Return(e)(f) -13.40% 32.57% 16.55% 19.11% 18.91% 19.82% 159.65% 151.79% MSCI-EAFE Index Average Annual Total Return(a) -3.95% 17.46% 10.48% 11.63% 11.05% 11.02% 78.10% 70.10% MSCI-ACWI Ex-U.S. Free Average Annual Total Return(b) -3.33% 18.11% 9.46% 11.12% 10.68% 11.11% 74.85% 70.18%
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 MSCI-EAFE Index is arithmetic, market value-weighted average of the performance of over 900 securities listed on the stock exchanges of countries in Europe, Australia, 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 All Country World Free Ex-U.S. Index ("ACWI") 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 45 Dresdner RCM International Growth Equity Fund Total Return Index Comparison (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 March 10, 1999 are based on Class I returns and reflect the deduction of Rule 12b-1 fees applicable to Class N shares. (f) The value of a $10,000 investment for Class N is $25,965 and $25,179 for the Fund from December 28, 1994 to June 30, 2000 and from May 22, 1995 to June 30, 2000, respectively. The performance of the Class N shares is lower than Class I shares due to the effects of 12b-1 fees. (g) Unannualized. Page 46 Dresdner RCM International Growth Equity Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- EQUITY INVESTMENTS COMMERCIAL GOODS & SERVICES SECTOR 4.4% CAPITAL GOODS 3.7% 12,000 DE Aixtron AG $ 1,656,442 58,200 DE Siemens AG 8,814,800 131,000 JP Sumitomo Corp. 1,477,134 ------------ 11,948,376 ------------ COMMERCIAL SERVICES & SUPPLIES 0.7% 197,300 HK Hutchison Whampoa Ltd. 2,480,477 CONSUMER DISCRETIONARY SECTOR 9.5% AUTOMOBILES & COMPONENTS 0.7% 831 DE Porsche AG (Non-Voting Preferred Shares) 2,270,274 CONSUMER DURABLES & APPAREL 3.7% 11,180 FR LVMH (Louis Vuitton Moet Hennessy) 4,628,683 73,400 JP Sony Corp. 6,868,144 5,000 JP Sony Corp. (ADR) 471,563 ------------ 11,968,390 ------------ MEDIA 4.5% 46,900 JP Asatsu-DK Inc. 1,928,281 125,300 IT Mediaset S.p.A. 1,921,779 59,000 FR Societe Television Francaise 4,128,642 116,140 AU The News Corp. Ltd. 1,603,855 50,400 NL VNU N.V. 2,613,727 169,600 UK WPP Group PLC 2,477,708 ------------ 14,673,992 ------------ RETAILING 0.6% 14,401 JP Ryohin Keikaku Co. Ltd. 1,837,430 CONSUMER STAPLES SECTOR 3.8% FOOD & DRUG RETAILING 2.3% 70,800 FR Carrefour Supermarche S.A. 4,859,356 839,000 UK Tesco PLC 2,610,182 ------------ 7,469,538 ------------ FOOD, BEVERAGE & TOBACCO 1.5% 36,700 MX Fomento Economico Mexicano S.A. de C.V. (ADR) 1,580,394 20 JP Hokuto Corp. 731 1,550 CH Nestle S.A. * 3,112,268 ------------ 4,693,393 ------------
The accompanying notes are an integral part of the financial statements. Page 47 Dresdner RCM International Growth Equity Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) ENERGY SECTOR 5.8% ENERGY 5.8% 387,874 UK BP Amoco PLC $ 3,722,861 12,000 UK BP Amoco PLC (ADR) 678,750 723,500 UK Shell Transport & Trading Co. 6,040,613 55,100 FR Total Fina Elf S.A. (B Shares) 8,482,611 ------------ 18,924,835 ------------ FINANCIAL SECTOR 19.5% BANKS 7.1% 316,400 ES Banco Bilbao Vizcaya Argentaria S.A. 4,746,607 36,700 DE Bayerische Hypo-und Vereinsbank AG 2,380,293 293,600 IT Bipop-Carire S.p.A. * 2,319,080 50,800 FR BNP Paribas 4,908,589 71,100 DE Deutsche Bank AG 5,875,019 168,000 JP Industrial Bank of Japan Ltd. 1,276,655 175,000 UK Lloyds TSB Group PLC 1,653,178 ------------ 23,159,421 ------------ DIVERSIFIED FINANCIALS 5.3% 461,000 JP Daiwa Securities Group Inc. 6,100,102 275,810 UK HSBC Holdings PLC 3,157,914 196,000 JP Nikko Securities Co. Ltd. 1,945,152 250,000 JP Nomura Securities Co. Ltd. 6,131,765 ------------ 17,334,933 ------------ INSURANCE 7.1% 15,600 DE Allianz AG * 5,627,185 31,500 FR Axa S.A. 4,982,266 15,200 DE Muenchener Rueckversicherungs-Gesellschaft AG 4,793,712 158,611 UK Prudential Corp. PLC 2,324,372 114,900 SE Skandia Forsakrings AB * 3,052,393 4,300 CH Zurich Allied AG * 2,131,403 ------------ 22,911,331 ------------ HEALTH CARE SECTOR 4.8% PHARMACEUTICALS & BIOTECHNOLOGY 4.8% 144,400 UK Celltech Group PLC (ADR) 2,798,170 262,200 UK Glaxo Wellcome PLC 7,649,118 6,400 NL QIAGEN N.V. * 1,116,564
The accompanying notes are an integral part of the financial statements. Page 48 Dresdner RCM International Growth Equity Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) PHARMACEUTICALS & BIOTECHNOLOGY (CONTINUED) PHARMACEUTICALS & BIOTECHNOLOGY 4.8%:(Continued) 4,100 NL QIAGEN N.V. (ADR) * $ 713,400 47,900 JP Takeda Chemical Industries Ltd. 3,151,033 ------------ 15,428,285 ------------ MATERIALS SECTOR 1.2% MATERIALS 1.2% 769,000 JP Kawasaki Steel Corp. 1,104,786 57,000 JP Shin Etsu Chemical Co. Ltd. 2,898,446 ------------ 4,003,232 ------------ TECHNOLOGY SECTOR 28.7% COMMUNICATIONS EQUIPMENT 14.1% 3,000 DE ADVA AG Optical Networking * 1,711,081 61,000 FR Alcatel 4,017,159 162,000 JP Furukawa Electric Co. Ltd. 3,391,540 30,600 JP Matsushita Communications Industrial Co. 3,580,554 287,200 FI Nokia Oyj (ADR) 14,715,146 105,000 CA Nortel Networks Corp. 7,166,250 571,900 SE Telefonaktiebolaget LM Ericsson AB (B Shares) 11,378,369 ------------ 45,960,099 ------------ COMPUTERS & PERIPHERALS 1.6% 154,000 JP Fujitsu Ltd. 5,341,890 INTERNET SOFTWARE & SERVICES 1.7% 19,800 JP SOFTBANK Corp. 2,694,858 7 JP Yahoo (Japan) Inc. * 2,782,096 ------------ 5,476,954 ------------ INFORMATION TECHNOLOGY CONSULTING & SERVICES 1.2% 17,700 IS Check Point Software Technologies Ltd. * 3,747,975 SEMICONDUCTORS & INSTRUMENTS 9.8% 90,700 NL ASM Lithography Holding N.V. (N.Y. Registered Shares) * 4,002,137 29,200 DE Epcos AG * 2,924,758 21,900 JP Funai Electric Co. Ltd. 3,506,434 242,000 JP NEC Corp. 7,616,716 13,600 KR Samsung Electronics 4,500,855 144,000 FR STMicroelectronics N.V. (N.Y. Registered Shares) 9,243,000 ------------ 31,793,900 ------------
The accompanying notes are an integral part of the financial statements. Page 49 Dresdner RCM International Growth Equity Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) SOFTWARE 0.3% 7,500 UK Autonomy Corp. PLC * $ 922,500 TELECOMMUNICATION SERVICES SECTOR 16.4% TELECOMMUNICATION SERVICES 16.4% 217,171 UK British Telecom PLC 2,807,739 838,000 CI China Telecom (Hong Kong) Ltd. * 7,390,924 49,800 UK COLT Telecom Group PLC * 1,658,628 68,100 BR Embratel Participacoes S.A. (ADR) 1,608,863 19,900 UK Energis PLC 746,537 52,100 KR Korea Telecom Corp. (ADR) 2,520,338 40,000 NL KPN N.V. 1,796,396 314 JP NTT DoCoMo Inc. 8,517,648 5,300 KR SK Telecom Co. Ltd. 1,734,996 10,000 KR SK Telecom Co. Ltd. (ADR) 3,273,577 31,500 FI Sonera Oyj 1,441,838 269,200 ES Telefonica S.A. * 5,806,173 93,300 MX Telefonos de Mexico S.A. (ADR) 5,329,762 2,121,899 UK Vodafone AirTouch PLC 8,576,949 ------------ 53,210,368 ------------ UTILITIES SECTOR 1.5% UTILITIES 1.5% 398,500 UK Centrica PLC 1,330,252 40,900 FR Vivendi S.A. 3,624,621 ------------ 4,954,873 ------------ TOTAL EQUITY INVESTMENTS (COST $279,131,511) 95.6% 310,512,466 ------------ SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 3.5% 5,276,268 US SSgA Money Market Fund 5,276,268 6,041,378 US SSgA U.S. Government Money Market Fund 6,041,378 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $11,317,646) 3.5% 11,317,646 ------------ TOTAL INVESTMENTS (COST $290,449,157) ** 99.1% 321,830,112 OTHER ASSETS LESS LIABILITIES 0.9% 2,917,975 ------------ NET ASSETS 100.0% $324,748,087 ============
- -------------------------------- * Non-income producing security ADR American Depositary Receipt The accompanying notes are an integral part of the financial statements. Page 50 Dresdner RCM International Growth Equity Fund Portfolio of Investments June 30, 2000 (Unaudited) Tax Information: ** For Federal income tax purposes, cost is $292,811,547 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $42,132,591 Unrealized depreciation (13,114,026) ----------- Net unrealized appreciation $29,018,565 ===========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at June 30, 2000 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Australia AU 0.5% 0.5% Brazil BR 0.5% 0.5% Canada CA 2.2% 2.2% China CI 2.3% 2.3% Finland FI 5.0% 5.0% France FR 15.1% 15.1% Germany DE 11.4% 11.4% Hong Kong HK 0.7% 0.7% Israel IS 1.2% 1.2% Italy IT 1.3% 1.3% Japan JP 22.4% 22.4% Korea KR 3.7% 3.7% Mexico MX 2.1% 2.1% Netherlands NL 2.8% 2.8% Spain ES 3.3% 3.3% Sweden SE 4.4% 4.4% Switzerland CH 1.6% 1.6% United Kingdom UK 15.1% 15.1% United States US 0.0% 4.4% 4.4% ------ ------ ----- Total 95.6% 4.4% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 51 Dresdner RCM Emerging Markets Fund Management's Performance Review Following its 92% total return for 1999, the Dresdner RCM Emerging Markets Fund continued to outperform its benchmarks for the first half of 2000. However, returns for both were negative halfway through the calendar year 2000, as emerging markets continued to track the turbulent performance of the Nasdaq. For the six month period ended June 30, 2000, the Fund produced total returns of - -3.62% and -3.74% for the Class I and Class N shares, respectively. In comparison, the Morgan Stanley Capital International Emerging Markets Free Index returned -7.98% while the Standard & Poor's (formerly International Finance Corporation) Emerging Markets Index returned -9.22%. MARKET REVIEW Economic growth began to slow in the U.S., Europe, Latin America and Japan during the second quarter of 2000. Latin American gross domestic product (GDP) growth was below expectations, except in Mexico, which benefited from high exports to a strong U.S. economy, as capital inflows were very tentative. Japan continued to advance very modestly, although the rest of Asia continued to show strong growth from exports into the U.S. market. Slower economic growth translated into slower top-line growth for most companies, particularly economically cyclical stocks such as basic materials and chemicals. Meanwhile, rising interest rates in the U.S. and Europe negatively impacted bank stocks. On the political front, the leadership change in Russia, from Boris Yeltsin to Vladimir Putin, caused the Russian market to rally, although it is still unclear at this time whether the new Russian leader is a friend or foe of capitalism. South and North Korea made friendly overtures to one another, but any unification could be very taxing on a fragile economic system. Emerging markets continue to be very highly correlated with the Nasdaq, which began to correct in late March. As long as U.S. technology stocks falter, inflows into emerging markets are likely to remain subdued as investors' appetite for risk moderates. However, longer term trends such as the impact of technology, the privatization of government sectors and the globalization of finance remain positive influences. FACTORS AFFECTING PERFORMANCE The key to outperforming the benchmarks during the first half of 2000 was the ability to "dodge bullets," or avoid companies that missed their profit expectations. For example, Dresdner RCM Global Investors LLC ("Dresdner RCM"), the Fund's investment manager, was underweight in bank stocks, not just because of rising interest rates, but because banks are at the mercy of capital flows in being able to participate in syndicated bank loans from the developed markets. As a result, strong-performing banks in Mexico and other Latin American countries were sold at the end of the first quarter, while banks that had fallen in value were selectively added to the portfolio during the second quarter. In a slow-growth environment where unit profit growth would be difficult, a decision was made to avoid companies whose only profit gains would come from increased sales. That ruled out a number of companies such as consumer staples, dependent on accelerating consumer spending. Instead, the focus remained on companies that can continue to generate substantial cash flow, without having to produce heroic gains in revenues and market share. Management also avoided a number of Internet stocks, as well as smaller country markets, such as Colombia, Peru, Venezuela, Indonesia, Thailand, Greece and Turkey. Once again, investors in emerging market Internet companies mimicked the behavior of U.S. investors who fled money-losing "dot-coms." It also appears that emerging market investors increasingly preferred larger markets and larger cap stocks due to their liquidity advantages. To be sure, the Fund continued to benefit from its technology holdings, which generally posted positive first-half performance, despite a negative second quarter. The Fund's largest holding, Samsung Electronics, viewed as a safe haven by portfolio managers, advanced nearly 40% during the period while the Korean stock market fell 4.22%, relative to US dollars. The first half continued to be strong for Infosys Technologies, a leading software company in India, and Israeli-based Check Point Software Technologies, a global leader in Internet security. Dresdner RCM's Grassroots-SM- Research division Page 52 Dresdner RCM Emerging Markets Fund Management's Performance Review surveyed information technology managers and concluded that Check Point was gaining market share, providing confidence to add to the position when the stock fell sharply in April 2000. In addition, Asustek Computer, a Taiwanese manufacturer, and Taiwan Semiconductor benefited the portfolio. Another positive theme was cellular communications and infrastructure. The Fund's holding in China Telecom was confirmed by Dresdner RCM's Grassroots-SM- Research, which surveyed Chinese provinces and found that China Telecom had an edge in the marketplace over its chief rival. Outside of technology and telecom, success stories included Companhia Cervejaria Brahma, a Brazilian beverage company that is now the largest beer manufacturer in Latin America, and Hindustan Lever, the leading provider of health and beauty products in India, where personal beauty has been a national focus since the crowning of an Indian Miss Universe last year. The Fund was negatively impacted by its holdings in commodity companies such as South Africa-based Sappi, the largest producer of glossy paper used in magazines throughout Europe. Paper pricing was not as strong as expected, and the stock performance was disappointing. Another example, Norilsk Nickel, a Russian-based producer of platinum and other metals, generated three times the operating profit of the previous year, but was under pressure due to the political uncertainties in the former Soviet Union. OUTLOOK Dresdner RCM believes that the performance of emerging markets will likely be volatile over the next few months, as concerns over inflation, rising interest rates, and a soft economic landing in the United States continue to loom on the horizon. The environment for investment managers is expected to remain difficult, as the world seems to be curtailing capital flows towards these markets. Nevertheless, the emergence of world-class companies with strong management and high-quality products or technology is transcending the emerging markets asset class. These companies are now being included in global and MSCI-EAFE mandated portfolios. Although Dresdner RCM expects continued moderate economic growth, the Fund's strategy will continue to focus on high-quality, highly liquid stocks of companies with strong earnings that are likely to prevail regardless of the direction of the global economy. Page 53 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 - 06/30/00)(d)(e)(g)
MSCI -EMF S&P EMERGING CLASS I SHARES INDEX(A) MARKETS INDEX(B) 12/97 $9,990 $10,024 $10,015 1/98 $9,720 $9,238 $9,358 2/98 $10,530 $10,203 $10,314 3/98 $10,950 $10,645 $10,718 4/98 $11,120 $10,529 $10,747 5/98 $9,920 $9,087 $9,406 6/98 $9,170 $8,134 $8,441 7/98 $9,590 $8,391 $8,778 8/98 $7,660 $5,965 $6,311 9/98 $7,810 $6,344 $6,614 10/98 $8,660 $7,012 $7,374 11/98 $8,910 $7,595 $7,928 12/98 $9,151 $7,485 $7,810 1/99 $8,879 $7,364 $7,630 2/99 $8,839 $7,436 $7,765 3/99 $9,696 $8,416 $8,661 4/99 $10,715 $9,457 $9,843 5/99 $10,493 $9,402 $9,667 6/99 $11,644 $10,469 $10,719 7/99 $11,472 $10,184 $10,564 8/99 $11,855 $10,277 $10,680 9/99 $11,482 $9,930 $10,383 10/99 $12,098 $10,141 $10,563 11/99 $14,378 $11,051 $11,513 12/99 $17,562 $12,457 $13,056 1/00 $17,083 $12,531 $13,053 2/00 $20,050 $12,697 $13,040 3/00 $19,186 $12,759 $13,230 4/00 $16,635 $11,549 $11,861 5/00 $15,959 $11,072 $11,526 6/00 $16,927 $11,462 $11,852
PERFORMANCE(c) JUNE 30, 2000
CUMULATIVE SINCE SINCE EMERGING MARKETS FUND YTD(G) 1 YEAR INCEPTION INCEPTION Class I Average Annual Total Return(d) -3.62% 45.38% 23.41% 69.27% Class N Average Annual Total Return(e)(f) -3.74% 45.06% 23.11% 68.25% MSCI EMF Index Average Annual Total Return(a) -7.98% 9.48% 5.60% 14.62% S&P Emerging Markets Index Average Annual Total Return(b) -9.22% 10.56% 7.02% 18.52%
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 ("EMF") 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 $800 million. (b) The S&P Emerging Markets Index (formerly IFC Emerging Markets Index) represents the IFC Investable ("IFCI") regional total return composite. The term investable indicates that the stocks and the weights in the IFCI Index represent the amount that 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 10, 1999, and pay Rule 12b-1 fees. Class N returns through March 10, 1999 are based on Class I returns, and reflect the deduction of Rule 12b-1 fees applicable to Class N Shares. (f) The value of a $10,000 investment for Class N is $16,825 for the period from December 30, 1997 to June 30, 2000. The performance of the Class N shares is lower than Class I shares due to the effects of 12b-1 fees. (g) Unannualized. Page 54 Dresdner RCM Emerging Markets Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS COMMERCIAL GOODS & SERVICES SECTOR 1.8% CAPITAL GOODS 1.8% 29,000 MX Alfa S.A. de C.V. Class A $ 66,287 7,000 MX Tubos de Acero de Mexico S.A. (Sponsored ADR) 97,125 ---------- 163,412 ---------- CONSUMER DISCRETIONARY SECTOR 5.4% HOTELS, RESTAURANTS & LEISURE 0.4% 2,000 HU Danubius Hotel and Spa Rt. 38,705 MEDIA 2.6% 1,500 MX Grupo Televisa S.A. (GDR) 103,406 9,500 SA Johnnic Holdings Ltd. 130,310 ---------- 233,716 ---------- RETAILING 2.4% 79,000 HK Giordano International Ltd. 120,091 39,500 MX Wal-Mart de Mexico S.A. de C.V. 92,696 ---------- 212,787 ---------- CONSUMER STAPLES SECTOR 7.0% FOOD BEVERAGE & TOBACCO 3.3% 11,000 BR Companhia Cervejari Brahma (Sponsored ADR) 187,000 2,400 MX Fomento Economico Mexicano, S.A. de C.V. (ADR) 103,350 ---------- 290,350 ---------- FOOD & DRUG RETAILING 1.6% 1,400 BR Companhia Brasileira de Distribuicao Grupo Pao de Acucar 44,975 20,000 HK Li & Fung Ltd. 100,060 ---------- 145,035 ---------- HOUSEHOLD & PERSONAL PRODUCTS 2.1% 3,000 IN Hindustan Lever Ltd. (Demat Shares) 190,476 ENERGY SECTOR 3.9% ENERGY 3.9% 7,200 RU Lukoil Holding (Sponsored ADR) Pfd. 149,400 6,520 BR Petroleo Brasiliers S.A. (Petrobras) 196,973 ---------- 346,373 ---------- FINANCIALS SECTOR 11.2% BANKS 10.8% 1,600 GR Alpha Credit Bank 63,375 45,500 MY Commerce Asset Holdings Berhad 131,711
The accompanying notes are an integral part of the financial statements. Page 55 Dresdner RCM Emerging Markets Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) BANKS (CONTINUED) 8,000 IN ICICI Bank Ltd. $ 37,607 21,000 IN ICICI Bank Ltd. (Demat Shares) 99,400 3,600 IN ICICI Bank Ltd. (Sponsored ADR) 52,200 35,800 MY Malayan Banking Berhad 145,084 4,000 ZA Nedcor Ltd. 84,012 11,000 KR Shinhan Bank 103,585 4,830 BR Unibanco (Sponsored GDR) 138,863 9,897 TR Yapi Ve Kredi Bankasi (GDR)* 109,362 ---------- 965,199 ---------- DIVERSIFIED FINANCIALS 0.4% 11,300 LT Haci Omer Sabanci Holding A.S. (ADR) 33,053 HEALTHCARE SECTOR 1.1% PHARMACEUTICALS & BIOTECHNOLOGY 1.1% 1,600 IN Dr Reddy's Laboratories Ltd. 46,770 1,650 IN Dr Reddy's Laboratories Ltd. (Demat Shares) 48,232 ---------- 95,002 ---------- MATERIALS SECTOR 7.1% MATERIALS 7.1% 4,000 BR Companhia Vale do Rio Doce Pfd. 112,860 3,670 SA Impala Platinum Holdings Ltd. 136,515 30,000 MX Kimberly-Clark de Mexico S.A. 85,336 210 IN Madras Cements Ltd. (Demat Shares) 18,893 9,800 RU Norilisk Nickel 71,785 3,300 HU Pannonplast Rt. 71,709 675 KR Pohang Iron & Steel Co., Ltd. 57,268 6,000 HU Tiszai Vegyi Kombinat Rt. 83,049 ---------- 637,415 ---------- TECHNOLOGY SECTOR 31.3% COMMUNICATIONS EQUIPMENT 2.0% 1,890 US Comverse Technology Inc. 175,770 COMPUTERS & PERIPHERALS 3.1% 1,360 TW Asustek Computer Inc. 11,216 11,849 TW Asustek Computer Inc. (GDR) 108,715 1,230 US DSP Group, Inc. 68,880 90,000 HK Legend Holdings Ltd. 87,168 ---------- 275,979 ---------- INTERNET SOFTWARE & SERVICES 0.3% 2,500 TW Gigamedia Ltd. 30,313
The accompanying notes are an integral part of the financial statements. Page 56 Dresdner RCM Emerging Markets Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) INFORMATION TECHNOLOGY CONSULTING & SERVICES 9.2% 1,440 IS Check Point Software Tech $ 304,920 1,400 PO Comarch S.A. 64,937 500 IN Infosys Technologies Ltd. 93,109 1,410 IN Infosys Technologies Ltd. (ADR) 249,923 1,700 IN Satyam Computer Services Ltd. 113,490 ---------- 826,379 ---------- SEMICONDUCTORS & INSTRUMENTS 16.7% 25,000 TW Compeq Manufacturing Co., Ltd. 153,409 1,445 IS Orbotech Ltd. 134,204 1,270 KR Samsung Electronics Co. 420,286 25,600 TW Taiwan Semiconductor Manufacturing 121,351 4,285 TW Taiwan Semiconductor Manufacturing (ADR) 166,044 117,600 CI United Microelectronics Corp. Ltd. 326,455 11,000 TW Via Technologies Inc. 169,643 ---------- 1,491,392 ---------- TELECOMMUNICATIONS SERVICES SECTOR 22.1% TELECOMMUNICATIONS SERVICES 22.1% 1,200 CI China Telecom (Hong Kong) Ltd. 213,375 450 KR Dacom Corp. 65,178 8,625 BR Embratel Participacoes S.A. (ADR) 203,766 9,700 GR Hellenic Telecommunications Organization S.A. (ADR) 118,219 600 KR Korea Telecom Corp. 52,842 3,050 HU Magyar Tavkozlesi Rt. (Sponsored ADR) 105,034 8,000 MX Mobile Telesystems (Sponsored ADR) 189,000 210 KR SK Telecom Co., Ltd. 68,743 2,500 KR SK Telecom Co., Ltd. (Sponsored ADR) 90,781 7,500 BR Tele Centro Oeste Celular Participacoes S.A. 90,000 4,685 BR Tele Norte Leste Participacoes S.A. (ADR) 110,683 1,400 BR Telecommunicacoes Brasileiras S.A. (ADR) 135,975 6,600 MX Telefonos de Mexico (ADR) 377,025 12,000 PO Telekomunikacja Polska S.A. 84,592 2,500 IN Videsh Sanchar Nigam 67,704 ---------- 1,972,917 ---------- UTILITIES SECTOR 2.6% UTILITIES 2.6% 1,600 KR Korea Electric Power Corp. 49,649 10,000 KR Korea Electric Power Corp. (ADR) 184,375 ---------- 234,024 ---------- TOTAL EQUITY INVESTMENTS (COST $7,804,702)** 93.5% 8,358,297 ----------
The accompanying notes are an integral part of the financial statements. Page 57 Dresdner RCM Emerging Markets Fund Portfolio of Investments June 30, 2000 (Unaudited)
FACE % OF MARKET VALUE AMOUNT COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS TIME DEPOSITS 8.7% $ 773,957 US Brown Brothers Harriman Grand Cayman Time Deposit 5.50% maturing 07/03/00 $ 773,957 ---------- 773,957 TOTAL SHORT-TERM INVESTMENTS (COST $773,957) ---------- TOTAL INVESTMENTS (COST $8,578,659) ** 102.2% 9,132,254 OTHER ASSETS LESS LIABILITIES (2.2)% (194,821) ---------- NET ASSETS 100.0% $8,937,433 ==========
- -------------------------------- * Non-income producing security. ADR American Depositary Receipt GDR Global Depositary Receipt Pfd. Preferred Stock Tax information: ** For Federal income tax purposes, cost is $8,583,823 and the gross aggregate unrealized appreciation (depreciation) for all securities is as follows:
Unrealized appreciation $1,018,357 Unrealized depreciation (469,926) ---------- Net unrealized appreciation $ 548,431 ==========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at June 30, 2000, categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Brazil BR 13.7% 13.7% China CI 6.0% 6.0% Greece GR 2.0% 2.0% Hong Kong HK 3.4% 3.4% Hungary HU 3.3% 3.3% India IN 11.4% 11.4% Israel IS 4.9% 4.9% Korea KR 12.2% 12.2% Lithuania LT 0.4% 0.4% Malaysia MY 3.1% 3.1% Mexico MX 12.5% 12.5% Poland PO 1.7% 1.7% Russia RU 2.5% 2.5% South Africa SA 4.0% 4.0% Taiwan TW 8.5% 8.5% Turkey TR 1.2% 1.2% United States US 2.7% 6.5% 9.2% ------ ------ ----- Total 93.5% 6.5% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 58 Dresdner RCM Europe Fund Management's Performance Review Strong corporate profit growth and a halt in the euro's decline created a generally positive backdrop for the Dresdner RCM Europe Fund during the first half of 2000, despite the global sell-off in technology during March and April. For the six month period ended June 30, 2000, the Fund produced total returns of 1.61% and 1.55% for the Class I and Class N shares, respectively. That compares favorably to the Fund's primary benchmark, the Morgan Stanley Capital International Europe Index, which returned -2.95%. MARKET REVIEW Fundamentally, Europe's economies and companies continued to produce excellent results during the first half of 2000. Economic growth was about 3%, while corporate profit growth was in the 15-18% range, much of it export-driven. The European Central Bank raised interest rates from 3% to 3.5%, which immediately stemmed the nearly 18-month slide in the euro. Meanwhile, inflation remained below 3%. Still, there were short-term dislocations not dissimilar to the experience in the United States. The bear market in technology, telecommunications, and media that afflicted the U.S. last March was even more pronounced in Europe. FACTORS AFFECTING PERFORMANCE Despite the turbulence in technology and telecommunications, Dresdner RCM Global Investors LLC ("Dresdner RCM"), the investment manager of the Fund, continued to emphasize these areas during the past six month period. Indeed, these two groups comprised about 46% of the Fund's assets as of June 30, 2000, compared to 27% for the benchmark. Because Dresdner RCM compares stocks in these sectors relative to their U.S. counterparts, the European market did not seem particularly overvalued, which is one reason why these stocks were not sold during the market turbulence. Despite the difficulty generally experienced in these two sectors, the Fund's investments in these areas performed well. This is partly because approximately 12% of the portfolio was invested in two stocks that offered sturdy performance: Finland's Nokia, the largest provider of wireless handsets; and Ericsson, a leading provider of wireless infrastructure for the telecom sector. Nokia, with unsurpassed technological and market leadership, continues to perform well in terms of revenue growth and profit margin expansion. Ericsson's business is expected to boom as new generations of technology and data applications become available to cellular telephones. Indeed, Europe is far ahead of the U.S. in the launch of 'third-generation' cellular phones that will allow data as well as voice transmission. Other significant portfolio weightings include semiconductor stocks such as STMicroelectronics, which Dresdner RCM believes is Europe's highest quality semiconductor company, with strong revenue growth and excellent profit margins. Other strong performers within technology included Aixtron, a German company that manufactures the machines that fabricate compound semi-conductors. This sector has experienced significant growth rates because the majority of the end product benefits the optical components industry. Another strong performer was Bookham Technology, which designs, manufacturers and markets products for fiber- optic telecommunications networks. The Fund avoided telecommunications operators such as Deutsche Telecom, France Telecom, and British Telecom. The focus of these companies has been local and long-distance fixed-line service. In an effort to remain competitive, these companies are now spending billions of dollars to upgrade their networks to enable high-speed internet access and to be ready for data transmission. The European economy continues to be driven by exports and capital goods rather than consumer spending. Although there were pockets of consumer strength (for example, in France), the portfolio was underweighted in the consumer area. One exception was in luxury goods, where companies could take advantage of manufacturing costs in euros and revenues in dollars, yen or other strong currency. As a result, the portfolio added Italian-based Bulgari and French-based Louis Vuitton Moet Hennessy, two luxury goods producers. Generally, the Fund exposure was low in financial services, reflecting the rising interest rate environment. A notable exception was the portfolio's holding in Bipop Carire, an innovative Italian financial institution that recently acquired a German Internet bank. The company Page 59 Dresdner RCM Europe Fund Management's Performance Review has successfully made the transition from a regional bank to a pan-European financial services organization, capitalizing on new markets such as financial planning for wealthy individuals. Dresdner RCM's global research capability continued to uncover new investment opportunities. It also helped the Fund's managers avoid problems that would plague certain stocks. For example, Dresdner RCM's Grassroots(SM) Research alerted the Fund's portfolio managers to the problems that Roche Holdings, a large pharmaceutical company, was having with its anti-obesity drug. By interviewing physicians and patients, Dresdner RCM determined that there appeared to be a number of issues with the drug: medical insurance would not cover the cost for the drug; there was a high drop-off rate since there were no immediate results; and there appeared to be significant side effects. As a result, the stock was sold before the company announced that they were having difficulties with the product. OUTLOOK Although corporate profits in Europe are still likely to grow at a double-digit rate in 2000-2001, there is some indication that profit growth may slow due to the rising interest-rate environment and strengthening euro. When the European Central Bank raised short-term rates 50 basis points earlier this summer, the euro, which had been trading at 90 U.S. cents, immediately strengthened to 92-95 cents. A stronger euro reflects greater confidence in the European economy. Dresdner RCM will continue to evaluate and monitor the strength of the euro, as a strong euro has the potential to weaken exports. The longer-term outlook for Europe remains positive as interest rates and inflation still remain low, economic growth remains steady and the interest among individual investors in the stock market continues to spread. Page 60 Dresdner RCM Europe Fund Total Return Index Comparison(d) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC $10,000 Investment (4/5/90 - 06/30/00)(a)(e)(g)
CLASS N SHARES MSCI-EUROPE INDEX(B) DAX 100 INDEX(C) 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 1/00 $24,332 $36,388 $26,169 2/00 $29,177 $38,295 $28,982 3/00 $26,538 $39,230 $28,551 4/00 $25,047 $37,507 $26,311 5/00 $23,631 $37,207 $25,987 6/00 $24,406 $38,013 $25,865
PERFORMANCE(a)(d) JUNE 30, 2000
CUMULATIVE SINCE SINCE EUROPE FUND YTD(H) 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION INCEPTION Class I Average Annual Total Return(f)(g) 1.61% 51.32% 29.87% 23.03% 10.02% 9.12% 144.21% Class N Average Annual Total Return(e) 1.55% 51.23% 29.85% 23.02% 10.01% 9.11% 144.06% MSCI-Europe Index Average Annual Total Return(b) -2.95% 15.41% 16.41% 18.84% 13.30% 13.91% 280.13% DAX 100 Index Average Annual Total Return(c) -5.80% 16.34% 13.00% 14.83% 9.80% 9.73% 158.65%
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) Returns through February 2, 1999 reflect the performance of the Fund as a closed-end investment company that invested primarily in equity securities of German companies. Returns through May 3, 1999, reflect the performance of the Fund as a closed-end investment company. Beginning on February 9, 1999, the Fund's objective was expanded to permit investments in European companies. On May 3, 1999 the Fund converted from a closed-end to an open-end investment company. The expenses of the Fund as an open-end investment company may be higher than as a closed-end investment company due to additional fees, such as Rule 12b-1 fees. Since February 9, 1999, when the Fund's mandate was expanded, the Fund has been comparing its performance to the MSCI Europe Index. Before February 9, 1999, when the Fund invested primarily in equity securities of German companies, the Fund compared its performance to the DAX 100 Index, a German focused Index. (b) 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. Page 61 Dresdner RCM Europe Fund Total Return Index Comparison (c) The DAX 100 Index is a total 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 stocks as of December 30, 1987. The underlying stock prices are from XETRA. (d) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (e) Returns through May 3, 1999 do not reflect Rule 12b-1 fees. Class N returns through May 3, 1999 would be lower if Rule 12b-1 fees had been paid. (f) Class I shares were first issued on March 3, 2000, which do not pay Rule 12b-1 fees. Class I returns through March 3, 2000 are based on Class N returns and for the period from May 3, 1999 to March 3, 2000, reflect the deduction of Rule 12b-1 fees. Returns for periods after March 3, 2000 do not reflect the deduction of Rule 12b-1 fees. (g) The value of a $10,000 investment for Class I is $24,421 for the period from April 5, 1990 to June 30, 2000. The performance of the Class N shares is lower than Class I shares due to the effects of 12b-1 fees. (h) Unannualized. Page 62 Dresdner RCM Europe Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - -------------------------------------------------------------------------------- EQUITY INVESTMENTS COMMERCIAL GOODS & SERVICES SECTOR 9.0% CAPITAL GOODS 8.3% 13,000 DE Aixtron AG $ 1,794,478 130,000 FI JOT Automation Group Oyj 871,070 16,500 DE Siemens AG 2,499,041 27,500 NO Tomra Systems ASA * 731,943 3,300 CH Unaxis Holding AG 899,042 ----------- 6,795,574 ----------- COMMERCIAL SERVICES & SUPPLIES 0.7% 22,500 SE Proffice AB (B Shares) 605,423 CONSUMER DISCRETIONARY SECTOR 12.7% CONSUMER DURABLES & APPAREL 4.1% 3,500 FR LVMH (Louis Vuitton Moet Hennessy) 1,449,051 29,100 FR Thomson Multimedia 1,891,277 ----------- 3,340,328 ----------- MEDIA 4.9% 75,000 ES Grupo Prisa S.A. * 1,747,028 29,000 PT Impresa SGPS S.A. * 319,689 8,000 UK NDS Group PLC (ADR) * 488,000 11,500 FR Societe Television Francaise 804,736 13,000 NL VNU N.V. 674,176 ----------- 4,033,629 ----------- RETAILING 3.7% 70,000 IT Bulgari S.p.A. * 939,417 4,200 CH Charles Voegele Holding AG * 829,118 6,200 FR Galeries Lafayette 1,262,941 ----------- 3,031,476 ----------- CONSUMER STAPLES SECTOR 2.8% FOOD & DRUG RETAILING 1.8% 13,000 FR Carrefour Supermarche S.A. 892,255 200,000 UK Tesco PLC 622,212 ----------- 1,514,467 ----------- FOOD, BEVERAGE & TOBACCO 1.0% 400 CH Nestle S.A. * 803,166 ENERGY SECTOR 5.2% ENERGY 5.2% 43,000 NO Petroleum Geo-Services ASA (ADR) * 733,688
The accompanying notes are an integral part of the financial statements. Page 63 Dresdner RCM Europe Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - -------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) ENERGY (CONTINUED) 144,000 UK Shell Transport & Trading Co. $ 1,202,278 15,000 FR Total Fina Elf S.A. (B Shares) * 2,309,241 ----------- 4,245,207 ----------- FINANCIAL SECTOR 12.4% BANKS 5.6% 100,000 ES Banco Bilbao Vizcaya Argentaria S.A. 1,500,191 195,000 IT Bipop-Carire S.p.A. * 1,540,261 19,000 DE Deutsche Bank AG * 1,569,977 ----------- 4,610,429 ----------- INSURANCE 6.8% 5,750 DE Allianz AG * 2,074,123 55,500 UK Prudential Corp. PLC 813,327 73,200 SE Skandia Forsakrings AB * 1,944,606 1,400 CH Zurich Allied AG * 693,945 ----------- 5,526,001 ----------- HEALTH CARE SECTOR 6.5% PHARMACEUTICALS & BIOTECHNOLOGY 6.5% 90,000 UK Celltech Group PLC (ADR) 1,744,012 20,000 UK Glaxo Wellcome PLC (ADR) 1,156,250 16,000 DK H Lundbeck A/S 795,667 9,500 NL QIAGEN N.V. * 1,657,400 ----------- 5,353,329 ----------- TECHNOLOGY SECTOR 34.0% COMMUNICATIONS EQUIPMENT 21.0% 2,900 DE ADVA AG Optical Networking * 1,654,045 30,300 FR Alcatel 1,995,408 21,500 UK Bookham Technology PLC * 1,251,828 32,000 FI Elcoteq Network (Class A) 703,988 124,800 FI Nokia Oyj (ADR) 6,232,200 30,000 FI Perlos Oyj 951,879 17,000 DK RTX Telecom A/S * 546,121 193,000 SE Telefonaktiebolaget (LM) Ericsson AB (ADR) 3,860,000 ----------- 17,195,469 ----------- INFORMATION TECHNOLOGY CONSULTING & SERVICES 1.0% 87,000 SE HiQ International AB * 843,146
The accompanying notes are an integral part of the financial statements. Page 64 Dresdner RCM Europe Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - -------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) SEMICONDUCTORS & INSTRUMENTS 10.9% 44,500 NL ASM Lithography Holding N.V. (N.Y. Registered Shares) * $ 1,963,563 6,400 DE Epcos AG * 641,043 20,200 UK International Quantum Epitaxy PLC 1,656,400 11,100 IE Parthus Technologies PLC (ADR) * 316,350 67,500 FR STMicroelectronics N.V. (N.Y. Registered Shares) 4,332,656 ----------- 8,910,012 ----------- SOFTWARE 1.1% 7,000 UK Autonomy Corp. PLC * 861,000 TELECOMMUNICATION SERVICES SECTOR 11.5% TELECOMMUNICATION SERVICES 11.5% 37,300 UK COLT Telecom Group PLC * 1,242,306 29,500 UK Energis PLC 1,106,675 40,000 RU Mobile Telesystems (ADR) * 860,000 16,500 FI Sonera Oyj 755,248 78,940 ES Telefonica S.A. * 1,702,598 935,541 UK Vodafone AirTouch PLC 3,781,560 ----------- 9,448,387 ----------- TOTAL EQUITY INVESTMENTS (COST $66,733,133) 94.1% 77,117,043 ----------- FACE AMOUNT - -------- SHORT-TERM INVESTMENTS TIME DEPOSIT 0.7% $543,000 US State Street Cayman Islands, Time Deposit 3.000%, maturing 07/03/00 543,000 ----------- TOTAL SHORT-TERM INVESTMENTS (COST $543,000) 0.7% 543,000 ----------- TOTAL INVESTMENTS (COST $67,276,133) ** 94.8% 77,660,043 OTHER ASSETS LESS LIABILITIES 5.2% 4,284,128 ----------- NET ASSETS 100.0% $81,944,171 ===========
- -------------------------------- * Non-income producing security ADR American Depositary Receipt The accompanying notes are an integral part of the financial statements. Page 65 Dresdner RCM Europe Fund Portfolio of Investments June 30, 2000 (Unaudited) Tax Information: ** For Federal income tax purposes, cost is $67,480,448 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows:
Unrealized appreciation $13,535,117 Unrealized depreciation (3,355,522) ---------- Net unrealized appreciation $10,179,595 ==========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at June 30, 2000 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Denmark DK 1.6% 1.6% Finland FI 11.6% 11.6% France FR 18.2% 18.2% Germany DE 12.5% 12.5% Ireland IE 0.4% 0.4% Italy IT 3.0% 3.0% Netherlands NL 5.3% 5.3% Norway NO 1.8% 1.8% Portugal PT 0.4% 0.4% Russia RU 1.1% 1.1% Spain ES 6.0% 6.0% Sweden SE 8.9% 8.9% Switzerland CH 3.9% 3.9% United Kingdom UK 19.4% 19.4% United States US 0.0% 5.9% 5.9% ------ ------ ----- Total 94.1% 5.9% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 66 Dresdner RCM Global Equity Fund Management's Performance Review The combination of higher interest rates in the United States, Europe and Japan along with a marked reversal in sector returns presented a burdensome backdrop for Dresdner RCM's Global Equity Fund. The Fund achieved a total return of 0.44% for the six month period ended June 30, 2000, outperforming its benchmarks, the Morgan Stanley Capital International All Country World Free Index (ACWI Free) which returned -2.70% and the S&P 500 Index which returned - -0.42%. MARKET REVIEW Market volatility continued during the second quarter driven by rising interest rates. Heeding inflationary pressures, the U.S. Federal Reserve raised the federal funds rate 50 basis points to 6.50%, the sixth tightening in 11 months. The European Central Bank also raised short-term interest rates, by 75 basis points. Conversely, the Bank of Japan continues to uphold a benign interest rate environment, though it appears likely that in the near future, it will move monetary policy from the current zero interest-rate stance. Higher interest rates in the second quarter translated into a higher cost of capital and higher discount rates, resulting in a compression of P/E multiples in many new economy stocks. In contrast to the first quarter when the new economy stocks helped the technology, telecommunications, and media sectors soar, rising interest rates dampened valuations and investor enthusiasm, creating a violent sector reversal. The new economy sectors underperformed (telecom services was down 19.2%, technology was down 9.3%) versus historically safe-haven sectors (consumer staples up 12.4%, healthcare was up 15.9%). The telecom services sector was particularly affected by the U.K. government's pioneering decision to auction next generation mobile phone licenses. The auction resulted in a windfall to the government at the expense of the mobile telecom operators. The sector rotation to old economy stocks was also reflected in the 0.1% decline in the MCSI World Value Index versus the 6.9% decline in the MSCI World Growth Index. As the market began to anticipate a slowing of future interest-rate increases in the United States and Europe, the Growth Index rebounded sharply, up 6.1% in June. FACTORS AFFECTING PERFORMANCE Early in 2000, Dresdner RCM Global Investors LLC ("Dresdner RCM"), the Fund's investment manager, made the decision to overweight new economy sectors. The Fund was specifically overweighted in technology and telecommunications sectors that offered extraordinary growth potential, especially considering that the valuations of many of these companies outside the United States lagged their counterparts here. During the negative sentiment of April and May when the market favored old economy stocks, Dresdner RCM did not alter its strategy in an attempt to chase short-term performance and time a sector rotation. This decision negatively impacted the Fund's performance. However, Dresdner RCM effectively overweighted the pharmaceuticals & biotechnology industry and underweighted the retail sector, which helped to offset the negative impact of the sector selection. The Fund's exposure to the Japanese brokerage companies (i.e., Daiwa and Nikko) and to select Internet stocks (i.e. Yahoo! Japan, Softbank, Digital Island, and Exodus Communications) weakened overall stock selection. Positions in stocks within the communications equipment industry (i.e., SDL, Corning, and Ciena in the U.S.) helped to mitigate much of the underperformance. During the second quarter, Dresdner RCM increased the weight to the consumer staples sector. This rationale was based upon Dresdner RCM's belief that these companies should grow as they become more efficient. Furthermore, in today's volatile market environment, the visible earnings of consumer staples companies make them very attractive. Finally, part of the investment process is predicated upon theme transfer -- Dresdner RCM analyzes developments in one region or sector and examines the possibility of the theme eventually being repeated in other sectors or regions. Regarding retailers, the experience in the United States (particularly with Wal-Mart) is that companies are becoming increasingly efficient at securing products. The Fund's positions include exposure to retailers (i.e. Wal-Mart, Target, and Safeway in the U.S., Tesco in the U.K. and Carrefour in France), as well as to producers (i.e., Femsa in Mexico). Page 67 Dresdner RCM Global Equity Fund Management's Performance Review Grassroots-SM- Research continued to add value to Dresdner RCM's overall investment approach. The department recently completed a study in which it surveyed 35 logistics and supply-chain managers at food and household goods producers and retailers in Europe to determine the efficiency and sophistication of their supply-chain systems, and to evaluate relationships between the two groups. All surveyed sources are attempting to improve warehousing and delivery systems, thus providing supporting evidence for the consumer staples investment theme. Regarding retailers, one German logistics manager noted, "the future is the Wal-Mart system, where ordering runs automatically over the Internet, but Germany is far away from this model." OUTLOOK Dresdner RCM maintains the conviction that the current volatile market environment will continue, but believes that the majority of the technical correction within New Economy stocks is over. The fundamentals of many technology stocks have not changed and with valuations even more compelling, the Fund's overweight to New Economy sectors remains in place. Dresdner RCM believes that an economic soft-landing scenario, with inflation in check and less heated growth, will be a positive environment for growth stocks. In the current market environment, Dresdner RCM will continue to emphasize visible earnings growth, likely guiding the Fund to overweight positions in technology and telecom services along with selective companies in other sectors. Concern over the U.K.'s mobile phone auction has led Dresdner RCM to a slightly reduced overweight position to the telecom services sector. However, as telecom companies continue to strike alliances across borders (i.e., KPN of the Netherlands with NTT DoCoMo of Japan, France Telecom's purchase of Orange of the UK), the amount of competition bidding for future mobile licenses will shrink, thereby providing some relief to these companies. On a geographical basis, Dresdner RCM is overweighting the United States as the pace of future interest-rate increases is expected to slow when further signs of an economic slowdown emerge. The Fund's largest underweight position is in Europe, where interest rates are anticipated to continue to rise with a strengthening economy. The characteristics of the Fund's portfolio are consistent with Dresdner RCM's bottom-up process and rigorous investment discipline of holding quality growth companies with outstanding valuations. Going forward, these strong, viable companies should provide value to investors in the Global Equity Fund. Page 68 Dresdner RCM Global Equity Fund Total Return Index Comparison(c) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC $10,000 Investment (12/30/98 - 06/30/00)(d)
CLASS I SHARES S&P 500 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 1/00 $15,759 $11,496 $11,998 2/00 $17,266 $11,279 $12,039 3/00 $17,266 $12,382 $12,830 4/00 $15,934 $12,009 $12,254 5/00 $14,919 $11,763 $11,935 6/00 $16,292 $12,053 $12,340
PERFORMANCE(c) JUNE 30, 2000
CUMULATIVE SINCE SINCE GLOBAL EQUITY FUND YTD(E) 1 YEAR INCEPTION INCEPTION Class I Average Annual Total Return(d) 0.44% 48.11% 38.46% 62.92% S&P 500 Index Average Annual Total Return(a) -0.42% 7.25% 13.26% 20.53% MSCI-ACWI Free Average Annual Total Return(b) -2.70% 12.36% 15.05% 23.40%
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 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. (b) The MSCI All Country World Free Index ("ACWI") 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) Class I shares commenced operations on December 30, 1998. (e) Unannualized. Page 69 Dresdner RCM Global Equity Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) ----------------------------------------------------------------------------- EQUITY INVESTMENTS COMMERCIAL GOODS & SERVICES SECTOR 10.8% CAPITAL GOODS 7.0% 260 US General Dynamics Corp. $ 13,585 660 US General Electric Co. 34,980 150 DE Siemens AG 22,718 850 BH Tyco International Ltd. 40,269 ---------- 111,552 ---------- COMMERCIAL SERVICES & SUPPLIES 2.1% 300 US Enron Corp. 19,350 1,100 HK Hutchison Whampoa Ltd. 13,830 ---------- 33,180 ---------- TRANSPORTATION SERVICES 1.7% 445 US United Parcel Service Inc. (Class B) 26,255 CONSUMER DISCRETIONARY SECTOR 6.0% AUTOMOBILES & COMPONENTS 0.4% 2 DE Porsche AG (Non-Voting Preferred Shares) 5,464 CONSUMER DURABLES & APPAREL 2.7% 110 US Electronic Arts Inc. * 8,023 18 FR LVMH (Louis Vuitton Moet Hennessy) 7,452 350 US Nike Inc. (Class B) 13,935 150 JP Sony Corp. (ADR) 14,147 ---------- 43,557 ---------- MEDIA 2.4% 100 JP Asatsu-DK Inc. 4,112 160 FR Societe Television Francaise * 11,196 550 AU The News Corp. Ltd. 7,595 115 US Time Warner Inc. 8,740 450 UK WPP Group PLC 6,574 ---------- 38,217 ---------- RETAILING 0.5% 130 US Wal-Mart Stores Inc. 7,491 CONSUMER STAPLES SECTOR 5.6% FOOD & DRUG RETAILING 2.8% 160 FR Carrefour Supermarche S.A. * 10,982 410 US Safeway Inc. * 18,501 170 US SYSCO Corp. 7,161 2,300 UK Tesco PLC 7,156 ---------- 43,800 ----------
The accompanying notes are an integral part of the financial statements. Page 70 Dresdner RCM Global Equity Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) ----------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) FOOD, BEVERAGE & TOBACCO 0.6% 100 US Coca Cola Enterprises Inc. $ 1,631 200 MX Fomento Economico Mexicano S.A. de C.V. (ADR) 8,613 ---------- 10,244 ---------- HOUSEHOLD & PERSONAL PRODUCTS 2.2% 290 US Avon Products Inc. 12,905 135 US Colgate Palmolive Co. 8,083 410 US Gillette Co. 14,324 ---------- 35,312 ---------- ENERGY SECTOR 2.9% ENERGY 2.9% 90 US Exxon Mobil Corp. 7,065 1,670 UK Shell Transport & Trading Co. 13,943 165 FR Total Fina Elf S.A. (B Shares) 25,402 ---------- 46,410 ---------- FINANCIAL SECTOR 11.1% BANKS 3.9% 800 ES Banco Bilbao Vizcaya Argentaria S.A. 12,002 160 US Bank of New York Inc. 7,440 120 DE Bayerische Hypo-und Vereinsbank AG 7,783 110 FR BNP Paribas 10,629 125 US Citigroup Inc. 7,531 200 DE Deutsche Bank AG 16,526 ---------- 61,911 ---------- DIVERSIFIED FINANCIALS 1.6% 2,004 JP Daiwa Securities Group Inc. 26,510 INSURANCE 5.6% 500 BH ACE Ltd. 14,000 40 DE Allianz AG * 14,429 67 US American International Group Inc. 7,873 125 US Hartford Financial Services Group Inc. 6,992 130 US Marsh & McLennan Cos. Inc. 13,577 450 UK Prudential Corp. PLC 6,595 340 SE Skandia Forsakrings AB * 9,032 300 BH XL Capital Ltd. (Class A) 16,237 ---------- 88,735 ---------- HEALTH CARE SECTOR 11.0% HEALTH CARE EQUIPMENT & SUPPLIES 1.8% 230 US Waters Corp. * 28,707
The accompanying notes are an integral part of the financial statements. Page 71 Dresdner RCM Global Equity Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) ----------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES 1.8%:(Continued) EQUITY INVESTMENTS (CONTINUED) PHARMACEUTICALS & BIOTECHNOLOGY 9.2% 80 US Abgenix Inc. * $ 9,589 575 US Amgen Inc. * 40,394 115 US Genentech Inc. * 19,780 463 UK Glaxo Wellcome PLC 13,507 91 US Human Genome Sciences Inc. * 12,137 200 US Merck & Co. Inc. 15,325 94 US Millennium Pharmaceuticals Inc. * 10,516 140 US PE Corp. - PE Biosystems Group 9,222 340 US Pfizer Inc. 16,320 ---------- 146,790 ---------- MATERIALS SECTOR 0.5% MATERIALS 0.5% 170 US E. I. du Pont de Nemours & Co. 7,437 TECHNOLOGY SECTOR 38.0% COMMUNICATIONS EQUIPMENT 18.2% 115 US CIENA Corp. * 19,169 480 US Cisco Systems Inc. * 30,510 150 US Comverse Technology Inc. * 13,950 105 US Corning Inc. 28,337 330 US JDS Uniphase Corp. * 39,559 60 US Juniper Networks Inc. * 8,734 1,120 FI Nokia Oyj (ADR) 57,385 350 CA Nortel Networks Corp. 23,887 85 US SDL Inc. * 24,241 2,200 SE Telefonaktiebolaget LM Ericsson AB (B Shares) 43,771 ---------- 289,543 ---------- COMPUTERS & PERIPHERALS 6.0% 320 US Dell Computer Corp. * 15,780 240 US EMC Corp. * 18,465 185 JP Fujitsu Ltd. (ADR) 33,022 90 US Hewlett-Packard Co. 11,239 190 US Sun Microsystems Inc. * 17,278 ---------- 95,784 ---------- INFORMATION TECHNOLOGY CONSULTING & SERVICES 2.5% 300 US Amdocs Ltd. * 23,025 80 IS Check Point Software Technologies Ltd. * 16,940 ---------- 39,965 ---------- SEMICONDUCTORS & INSTRUMENTS 7.5% 350 NL ASM Lithography Holding N.V. (N.Y. Registered Shares) * 15,444 110 DE Epcos AG * 11,018
The accompanying notes are an integral part of the financial statements. Page 72 Dresdner RCM Global Equity Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) ----------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) SEMICONDUCTORS & INSTRUMENTS (CONTINUED) 120 US Intel Corp. $ 16,043 190 JP NEC Corp. (ADR) 30,115 70 KR Samsung Electronics 23,166 360 FR STMicroelectronics N.V. (N.Y. Registered Shares) 23,107 ---------- 118,893 ---------- SOFTWARE 3.8% 30 UK Autonomy Corp. PLC * 3,690 235 US Microsoft Corp. * 18,800 230 US Oracle Corp. * 19,334 65 US Siebel Systems Inc. * 10,632 65 US VERITAS Software Corp. * 7,346 ---------- 59,802 ---------- TELECOMMUNICATION SERVICES SECTOR 12.9% TELECOMMUNICATION SERVICES 12.9% 150 US Bell Atlantic Corp. 7,622 2,000 CI China Telecom (Hong Kong) Ltd. * 17,639 50 CI China Telecom (Hong Kong) Ltd. (ADR) * 8,891 250 UK COLT Telecom Group PLC * 8,326 120 UK Energis PLC * 4,502 250 KR Korea Telecom Corp. (ADR) 12,094 150 NL KPN N.V. 6,736 1 JP NTT DoCoMo Inc. 27,126 370 US Qwest Communications International Inc. * 18,384 250 US SBC Communications Inc. 10,813 155 FI Sonera Oyj 7,095 300 ES Telefonica S.A. * 6,470 300 MX Telefonos de Mexico S.A. (ADR) 17,138 4,848 UK Vodafone AirTouch PLC * 19,595 200 US VoiceStream Wireless Corp. * 23,259 200 US WorldCom Inc. * 9,175 ---------- 204,865 ---------- UTILITIES SECTOR 0.8% UTILITIES 0.8% 2,000 UK Centrica PLC 6,676 75 FR Vivendi S.A. * 6,647 ---------- 13,323 ---------- TOTAL EQUITY INVESTMENTS (COST $1,250,987) 99.6% 1,583,747 ----------
The accompanying notes are an integral part of the financial statements. Page 73 Dresdner RCM Global Equity Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) ----------------------------------------------------------------------------- SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 0.6% 7,545 US SSgA Money Market Fund $ 7,545 1,408 US SSgA U.S. Government Money Market Fund 1,408 ---------- TOTAL SHORT-TERM INVESTMENTS (COST $8,953) 0.6% 8,953 ---------- TOTAL INVESTMENTS (COST $1,259,940) ** 100.2% 1,592,700 OTHER ASSETS LESS LIABILITIES (0.2)% (2,552) ---------- NET ASSETS 100.0% $1,590,148 ==========
- -------------------------------- * Non-income producing security ADR American Depositary Receipt Tax Information: ** For Federal income tax purposes, cost is $1,263,196 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows: Unrealized appreciation $379,077 Unrealized depreciation (49,573) ------- Net unrealized appreciation $329,504 =======
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at June 30, 2000 categorized by country:
% OF NET ASSETS ------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------ Australia AU 0.5% 0.5% Bermuda BH 4.4% 4.4% Canada CA 1.5% 1.5% China CI 1.7% 1.7% Finland FI 4.1% 4.1% France FR 6.0% 6.0% Germany DE 4.9% 4.9% Hong Kong HK 0.8% 0.8% Israel IS 1.1% 1.1% Japan JP 8.5% 8.5% Korea KR 2.2% 2.2% Mexico MX 1.6% 1.6% Netherlands NL 1.4% 1.4% Spain ES 1.2% 1.2% Sweden SE 3.3% 3.3% United Kingdom UK 5.7% 5.7% United States US 50.7% 0.4% 51.1% ------ ------ ----- Total 99.6% 0.4% 100.0% ====== ====== =====
The accompanying notes are an integral part of the financial statements. Page 74 Dresdner RCM Strategic Income Fund Management's Performance Review A shift to emerging-market debt and the elimination of domestic high-yield bonds propelled Strategic Income Fund to outperform its benchmark during the first half of 2000. For the six month period ended June 30, 2000, the Dresdner RCM Strategic Income Fund returned 4.46% while the unmanaged Lehman Brothers U.S. Universal Index returned 3.79%. MARKET REVIEW Due to the growing federal budget surplus, the first half of 2000 marked the end of an era. U.S. Treasury bonds were no longer the appropriate benchmark upon which all other bonds were measured. Indeed, despite very strong economic growth, rising inflation, and the Federal Reserve Board's subsequent raising of short-term interest rates to slow the economy, U.S. Treasury bonds rallied, as the government began buying back bonds. Although the federal funds rate rose by 100 basis points during the period, 2-year U.S. Treasury bond yields rose by just 12 basis points while the 30-year Treasury bond fell by 58 basis points. By June 30, 2000, all U.S. Treasury bonds, regardless of maturity, yielded less than the fed funds rate. Meanwhile, yields on corporates and mortgage-backed bonds were relatively stable during the period. Still, Treasury bonds were not the best performing sector. While U.S. Treasury securities produced a 5.36% return, emerging-market debt returned 6.88%. These bonds performed very well partly because they were rebounding from very low valuations following the economic crises of 1997-1998. Also, economic fundamentals improved dramatically, as a number of markets received credit upgrades. In Russia, 1999 was the first year of sustainable economic growth above 3% since the breakup of the Soviet Union, thanks in part to higher oil and gas prices. Brazil's currency devaluation made its debt very attractive, with yields at one point about 12% above U.S. Treasury bonds. Brazil's central bank did an excellent job of reducing inflationary implications of the devaluation, causing domestic markets to stabilize, interest rates to fall and economic growth to return. At the other extreme, the worst performing sector was the domestic high-yield bond market, which returned -1.00% for the period while investment-grade corporate bonds returned 3.93%. Most corporate issuers represent "old economy" companies in such industries as automobiles and chemicals. With equities in these industries trading at relatively low levels, there was a significant amount of corporate restructuring designed to boost stock prices. However, these strategies, which often included taking on additional debt, were often detrimental to bondholders. In addition, the stock market's volatile performance and the Fed's goal of slowing the U.S. economy were negative factors for corporate bonds, as investors became more concerned about credit quality. Since U.S. Treasury bonds were no longer the benchmark upon which all other bonds were priced, investors began to buy government agency securities because of their implied government guarantee. However, agency bonds began to underperform when government officials made it clear that agency bonds were not in fact government-guaranteed. FACTORS AFFECTING PERFORMANCE The Fund's performance was positively affected by a major shift towards emerging-market debt and mortgage-backed securities, as well as an early shift away from domestic high-yield bonds. The portfolio's high-yield component fell from 32% on December 31, 1999 to zero on January 31, 2000, thereby avoiding most of that sector's underperformance during the period. Meanwhile during the first six months of 2000, mortgage-backed bonds increased from 20% to 36% of the portfolio, while emerging-market debt increased from 24% to 46%. The portfolio also eliminated all non-dollar debt from developed nations, such as Germany and Japan, thus neutralizing currency risk. The one negative during the period was the portfolio's light allocation to U.S. Treasury bonds. OUTLOOK The U.S. Office of Management and Budget recently revised its FY 2000 and FY 2001 estimated surplus to $211 billion and $228 billion, respectively. As a result, the U.S. Treasury will continue to pay down its Page 75 Dresdner RCM Strategic Income Fund Management's Performance Review debt. However, U.S. Treasury bonds do not appear attractive because these developments are already discounted in the market. Although many investment-grade corporate bonds yield in excess of 8%, they are not attractive because they remain subject to event risk, particularly if the Federal Reserve Board continues to raise short-term interest rates. Although the U.S. economy has slowed in the second quarter, the market seems to be projecting a longer and more sustainable slowdown than is anticipated by Dresdner RCM Global Investors LLC ("Dresdner RCM"), the investment manager of the Fund. Meanwhile, inflation pressures continue, and investors must be compensated for higher realized inflation as well as increased inflation risk. Therefore, the Fed's tightening cycle is probably not complete. As a result, mortgages continue to have a positive outlook because of their relatively high yields and minimal prepayment risk in a period of stable or moderately rising interest rates. Because global growth is likely to remain strong, Dresdner RCM continues to find debt in emerging markets attractive. Most emerging markets are currently better equipped to absorb external shocks such as volatility in the U.S. fixed-income markets, and to reduce their need to access the global capital markets. The peaceful transfers of power in Mexico and Russia are also very encouraging to investors, who traditionally consider political risk a major negative for these markets. As a result, the portfolio's substantial overweight in emerging markets is likely to continue. Page 76 Dresdner RCM Strategic Income Fund Total Return Index Comparison(b) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC $10,000 Investment (12/30/98 - 6/30/00)(c)
LEHMAN BROTHERS U.S. CLASS I SHARES UNIVERSAL INDEX(A) 12/30/98 $10,000 $10,000 1/31/99 $10,040 $10,067 2/28/99 $9,840 $9,905 3/31/99 $10,020 $9,984 4/30/99 $10,336 $10,043 5/31/99 $10,057 $9,942 6/30/99 $10,060 $9,924 7/31/99 $10,011 $9,883 8/31/99 $9,942 $9,872 9/30/99 $10,005 $9,979 10/31/99 $10,052 $10,021 11/30/99 $10,126 $10,037 12/31/99 $10,267 $10,018 1/31/00 $10,148 $9,971 2/29/00 $10,417 $10,098 3/31/00 $10,590 $10,216 4/30/00 $10,537 $10,184 5/31/00 $10,363 $10,166 6/30/00 $10,725 $10,401
PERFORMANCE(b) JUNE 30, 2000
CUMULATIVE SINCE SINCE STRATEGIC INCOME FUND YTD(D) 1 YEAR INCEPTION INCEPTION Class I Average Annual Total Return(c) 4.46% 6.61% 4.78% 7.25% Lehman Brothers U.S. Universal Index Average Annual Total Return(a) 3.79% 4.77% 2.65% 4.01%
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. Univeral Index is an unmanged market value weighted index that represents the broadest measure of the U.S. dollar denominated securities market. The Index combines the Lehman Brothers Aggregate Index, which is concentrated in AAA-rated and government quality issues, with the following sub-sectors: High Yield, Emerging Markets, Rule 144a and Eurobond Dollar. (b) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (c) Class I shares commenced operations on December 30, 1998. (d) Unannualized. Page 77 Dresdner RCM Strategic Income Fund Portfolio of Investments June 30, 2000 (Unaudited)
FACE % OF MARKET VALUE AMOUNT CURRENCY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- DEBT INVESTMENTS ARGENTINA 4.6% $ 38,000 ARS Republic of Argentina 2.834%, maturing 9/1/02, Floating Rate-Bocon Bond $ 23,223 19,000 USD Republic of Argentina 11.375%, maturing 1/30/17 17,005 -------- 40,228 -------- BRAZIL 17.0% 106,000 USD Federal Republic of Brazil 7.438%, maturing 10/15/00, Floating Rate 77,422 94,819 USD Federal Republic of Brazil, C Bond 8.000%, with 3.00% Interest Capitalization maturing 4/15/14 69,578 -------- 147,000 -------- BULGARIA 2.2% 24,000 USD National Republic of Bulgaria 7.063%, maturing 7/30/00, Floating Rate 18,931 KOREA 1.7% 15,000 USD Hanvit Bank 12.750%, maturing 3/1/10, (144A) 14,813 PHILIPPINES 1.7% 18,000 USD Republic of Philippines 9.875%, maturing 1/15/19 14,693 RUSSIA 8.2% 83,000 USD Russian Federation 12.750%, maturing 6/24/28, (144A) 71,073 TURKEY 4.8% 40,000 USD Republic of Turkey 11.875%, maturing 11/5/04 41,416 UNITED STATES 51.3% 15,000 USD American General Institutional Capital 7.570%, maturing 12/1/45, (144A) 13,262 40,000 USD Federal National Mortgage Association 7.125%, maturing 1/15/30 40,294 277,753 USD Federal National Mortgage Association 8.000%, maturing 4/1/30 278,881 40,000 USD Federal National Mortgage Association 8.000%, maturing 6/1/30 40,162 20,000 USD Lehman Brothers Holdings Inc. 7.000%, maturing 5/15/03 19,534
The accompanying notes are an integral part of the financial statements. Page 78 Dresdner RCM Strategic Income Fund Portfolio of Investments June 30, 2000 (Unaudited)
FACE % OF MARKET VALUE AMOUNT CURRENCY NET ASSETS (NOTE 1) - --------------------------------------------------------------------------------- DEBT INVESTMENTS (CONTINUED) UNITED STATES (CONTINUED) $ 60,000 USD Waste Management Inc. 6.875%, maturing 5/15/09 $ 52,963 -------- 445,096 -------- VENEZUELA 5.9% 78,000 USD Republic of Venezuela 9.250%, maturing 9/15/27 51,285 -------- TOTAL DEBT INVESTMENTS (COST $830,561) 97.4% 844,535 -------- SHARES - -------- SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 2.6% 11,357 USD SSgA Money Market Fund 11,357 11,085 USD SSgA U.S. Government Money Market Fund 11,085 -------- TOTAL SHORT-TERM INVESTMENTS (COST $22,442) 2.6% 22,442 -------- TOTAL INVESTMENTS (COST $853,003) ** 100.0% 866,977 OTHER ASSETS LESS LIABILITIES 0.0%* 186 -------- NET ASSETS 100.0% $867,163 ========
- -------------------------------- * Less than 0.1% of net assets. 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 79 Dresdner RCM Strategic Income Fund Portfolio of Investments June 30, 2000 (Unaudited) Tax Information: ** For Federal income tax purposes, cost is $877,779 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows:
Unrealized appreciation $27,580 Unrealized depreciation (38,382) ------- Net unrealized depreciation $(10,802) =======
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at June 30, 2000 categorized by country:
% OF NET ASSETS ------------------------------ COUNTRY SHORT-TERM COUNTRY CODE DEBT AND OTHER TOTAL - ----------------------------------------------------------------------- Argentina AR 4.6% 4.6% Brazil BR 17.0% 17.0% Bulgaria BG 2.2% 2.2% Korea KR 1.7% 1.7% Philippines PH 1.7% 1.7% Russia RU 8.2% 8.2% Turkey TR 4.8% 4.8% United States US 51.3% 2.6% 53.9% Venezuela VZ 5.9% 5.9% ---- ------ ----- Total 97.4% 2.6% 100.0% ==== ====== =====
The accompanying notes are an integral part of the financial statements. Page 80 Dresdner RCM Balanced Fund Management's Performance Review The Dresdner RCM Balanced Fund which was launched on December 15, 1999, produced a total return of 2.77% during the six month period ended June 30, 2000. In comparison, the unmanaged benchmark, a 60%/40% blend of the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond Index, returned 1.45%. For the same period, the S&P 500 Index returned -0.42% while the Lehman Brothers Aggregate Bond Index returned 3.98%. MARKET REVIEW As the year 2000 began, it seemed that nothing could stop the soaring U.S. economy. Despite five increases in short-term interest rates from June 1999 through March 2000, first quarter 2000 growth was 5.4%, while the unemployment rate in April was 3.9%, the lowest in 30 years. New economy technology and biotechnology stocks continued to deliver spectacular performance. In March, however, inflation data became more worrisome, and the Federal Reserve Board vowed to strengthen its hand. Evidence began to emerge that many of the stocks in the more speculative sectors of the technology market had risen too far and too fast, pumped up by the explosive combination of momentum buying, margin debt and on-line trading. Questions began to arise about "new economy" business models. As a result, investors chose to re-examine fundamentals and valuations. The "dot-com" stocks were the first to weaken. Eventually, the negative sentiment spread to biotech stocks, the entire technology sector, and the broader market as well. Meanwhile, the Fed boosted rates by 50 basis points in May, bringing the Fed Funds rate to 6.50%, the highest since 1991. Normally, such an environment would create a bear market for bonds. However, Treasury securities actually rallied. Due to the growing budget surplus, the government began buying back Treasury bonds, particularly longer-term securities, and vowed to continue to do so. Even though the Federal Funds rate increased from 5.50% to 6.50% during the first half of 2000, the 30-year bond yield actually fell by 58 basis points. Other positive performers included mortgage-backed securities, which offered significantly higher yields than U.S. Treasury bonds and very little prepayment risk in the current environment. However, corporate bonds, particularly lower credit-quality bonds, did not fare as well, as investors became concerned with the slowing economy and corporate restructurings designed to boost stock prices, often at the expense of bondholders. Finally, by June, signs of economic slowing began to emerge, as weaker numbers were recorded for employment, retail sales, housing starts, auto sales, and manufacturing. As a result, the Fed refrained from raising short-term rates again in June, but did leave the door open for more rate hikes in the future. Stock and bond markets generally rallied, but the S&P 500 Index was still down 0.42% for the first half of 2000, while most bond markets posted low single-digit gains. FACTORS AFFECTING PERFORMANCE Dresdner RCM Global Investors LLC ("Dresdner RCM"), the investment manager of the Fund, allocated approximated 56% of the portfolio to equities, 43% to fixed-income and the remaining portion to cash and equivalents as of June 30, 2000. The equity portion of the Fund benefited from its commitment to communications equipment stocks such as Cisco Systems, JDS Uniphase, and Motorola. In addition, the Fund was overweighted in health care, particularly biotechnology stocks, which benefited from the market's shift out of technology. Other positive factors for health care included reduced concerns that Congress would enact a draconian law expanding Medicare to cover prescription drugs. In addition, the biotechnology stocks rallied on news that scientists had made significant progress in genetic research. Meanwhile, the portfolio was underweighted in financial services due to the rising interest-rate environment and credit deterioration at some regional banks, and in the retail sector due to concerns about slower consumer spending and low returns on capital. In fixed-income, Dresdner RCM made a number of corrective actions in the second quarter that improved performance for the first half of 2000. First, the Fund's asset allocation in the first quarter assumed that corporate bonds would benefit from the fact that Y2K was a non-event and that inflation was still contained. It Page 81 Dresdner RCM Balanced Fund Management's Performance Review did not anticipate the Treasury buyback program or the significant event risk in the corporate bond market. The portfolio was adjusted in the second quarter, de-emphasizing corporate bonds in favor of mortgages, which offered attractive yields without the credit concerns. Second, Dresdner RCM managed the portfolio's exposure to government agency bonds. Early in 2000, investors assumed that these bonds would become the new benchmark for the bond market, since they carry an implied government guarantee. However, government officials publicly dispelled that notion, causing these bonds to weaken. The portfolio was heavily weighted in government agencies during the time when they were viewed as the new benchmark, and lightly weighted when they sold off, creating a positive result for performance. Dresdner RCM had positioned the fixed-income portfolio's duration longer than average at the start of the year, which was not appropriate given the initial rise in interest rates. By the second quarter, the portfolio's duration was shorter than the benchmark, which proved to be a negative as rates, on balance, declined during the quarter. OUTLOOK Although the U.S. economy has slowed, Dresdner RCM is concerned that it has not slowed enough to prevent the Federal Reserve Board from additional action. Due to inflation concerns, the market consensus of an economic soft landing could be optimistic. As a result, the fixed-income portion of the portfolio is employing a barbell strategy, preparing for additional increases in short-term rates and downward pressure on long-term yields. In addition, the portfolio continues to modestly weight corporate bonds, reflecting concerns about corporate event risk. More value is currently seen in mortgages and asset-backed securities, while Treasury bonds appear overvalued. The Fund's equity outlook is positive, as growth prospects over the long term remain positive for technology, telecommunications and health care companies. However, the short-term outlook for the stock market in general is cautious, as investors await the outcome of the Fed's strategy. Page 82 Dresdner RCM Balanced Fund Total Return Index Comparison(d) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC $10,000 Investment (12/15/99 - 06/30/00)(e)
BLENDED S&P 500 LEHMAN /LEHMAN BROTHERS BROTHERS CLASS I S&P 500 AGGREGATE BOND AGGREGATE SHARES INDEX(A) INDEX(B) BOND INDEX(C) 12/15/99 $10,000 $10,000 $10,000 $10,000 12/31/99 $10,650 $10,400 $9,938 $10,215 1/31/00 $10,500 $9,878 $9,905 $9,894 2/29/00 $10,670 $9,691 $10,025 $9,829 3/31/00 $11,240 $10,639 $10,157 $10,458 4/30/00 $10,875 $10,318 $10,128 $10,257 5/31/00 $10,584 $10,107 $10,123 $10,129 6/30/00 $10,945 $10,356 $10,333 $10,363
PERFORMANCE(d) JUNE 30, 2000
CUMULATIVE SINCE BALANCED FUND YTD(F) INCEPTION Class I Average Annual Total Return(e) 2.77% 9.45% S&P 500 Index Average Annual Total Return(a) -0.42% 3.56% Lehman Brothers Aggregate Bond Index Average Annual Total Return(b) 3.98% 3.33% Blended S&P 500 Index/Lehman Brothers Aggregate Bond Index Average Annual Total Return(c) 1.45% 3.63%
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 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all 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/Lehman Brothers Aggregate Bond Index is a blended index comprised of the performance of the two indexes weighted 60% S & P 500 Index and 40% Lehman Brothers Aggregate Bond Index. (d) Returns assume reinvestment of all dividends and capital gains distributions at net asset value. (e) Class I shares commenced operations on December 15, 1999. (f) Unannualized. Page 83 Dresdner RCM Balanced Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS COMMERCIAL GOODS & SERVICES SECTOR 6.4% CAPITAL GOODS 5.2% 1,100 US General Dynamics Corp. $ 57,475 9,000 US General Electric Co. 477,000 1,200 US Honeywell International Inc. 40,425 7,000 BH Tyco International Ltd. 331,625 ----------- 906,525 ----------- COMMERCIAL SERVICES & SUPPLIES 1.2% 3,100 US Enron Corp. 199,950 CONSUMER DISCRETIONARY SECTOR 4.8% CONSUMER DURABLES & APPAREL 0.6% 2,500 US NIKE Inc. (Class B) 99,531 HOTELS, RESTAURANTS & LEISURE 0.1% 700 US McDonald's Corp. 23,056 MEDIA 1.7% 1,800 US Clear Channel Communications Inc. * 135,000 1,400 US The Walt Disney Co. 54,338 1,400 US Time Warner Inc. 106,400 ----------- 295,738 ----------- RETAILING 2.4% 1,200 US Circuit City Stores Inc. 39,825 3,000 US Costco Wholesale Corp. * 99,000 500 US Home Depot Inc. 24,969 1,000 US Target Corp. 58,000 3,500 US Wal-Mart Stores Inc. 201,687 ----------- 423,481 ----------- CONSUMER STAPLES SECTOR 3.4% FOOD & DRUG RETAILING 0.6% 1,600 US Safeway Inc. * 72,200 1,200 US Walgreen Co. 38,625 ----------- 110,825 ----------- FOOD, BEVERAGE & TOBACCO 1.1% 1,400 US Anheuser-Busch Cos. Inc. 104,562 1,400 US Coca Cola Co. 80,413 ----------- 184,975 ----------- HOUSEHOLD & PERSONAL PRODUCTS 1.7% 1,000 US Avon Products Inc. 44,500
The accompanying notes are an integral part of the financial statements. Page 84 Dresdner RCM Balanced Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) HOUSEHOLD & PERSONAL PRODUCTS (CONTINUED) 2,000 US Colgate-Palmolive Co. $ 119,750 700 US Estee Lauder Cos. Inc. (Class A) 34,606 1,400 US Gillette Co. 48,913 1,000 US Procter & Gamble Co. 57,250 ----------- 305,019 ----------- ENERGY SECTOR 0.9% ENERGY 0.9% 600 US Chevron Corp. 50,887 200 US Grant Prideco Inc. * 5,000 1,000 US Schlumberger Ltd. 74,625 700 US Weatherford International Inc. 27,869 ----------- 158,381 ----------- FINANCIAL SECTOR 4.0% BANKS 2.5% 2,000 US Bank of New York Inc. 93,000 1,500 US Chase Manhattan Corp. 69,094 4,000 US Citigroup Inc. 241,000 700 US Wells Fargo Co. 27,125 ----------- 430,219 ----------- DIVERSIFIED FINANCIALS 0.3% 1,000 US Federal National Mortgage Association 52,187 INSURANCE 1.2% 1,800 US American International Group Inc. 211,500 HEALTH CARE SECTOR 10.5% PHARMACEUTICALS & BIOTECHNOLOGY 10.5% 5,000 US Amgen Inc. * 351,250 1,800 US Bristol-Myers Squibb Co. 104,850 1,200 US Eli Lilly & Co. 119,850 550 US Genentech Inc. * 94,600 1,600 UK Glaxo Wellcome PLC (ADR) 92,500 400 US Human Genome Sciences Inc. * 53,350 900 US Johnson & Johnson 91,687 1,800 US Merck & Co. Inc. 137,925 800 US Millennium Pharmaceuticals Inc. * 89,500 1,400 US PE Corp. - PE Biosystems Group 92,225 10,000 US Pfizer Inc. 480,000
The accompanying notes are an integral part of the financial statements. Page 85 Dresdner RCM Balanced Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) PHARMACEUTICALS & BIOTECHNOLOGY (CONTINUED) 1,100 US Pharmacia Corp. $ 56,856 500 US Sepracor Inc. * 60,313 ----------- 1,824,906 ----------- MATERIALS SECTOR 0.2% MATERIALS 0.2% 1,000 US Alcoa Inc. 29,000 TECHNOLOGY SECTOR 20.4% COMMUNICATIONS EQUIPMENT 8.3% 7,000 US Cisco Systems Inc. * 444,937 1,800 US JDS Uniphase Corp. * 215,775 1,000 US Lucent Technologies Inc. 59,250 2,700 US Motorola Inc. 78,469 7,000 FI Nokia Oyj (ADR) 349,563 2,000 CA Nortel Networks Corp. 136,500 1,100 US QUALCOMM Inc. * 66,000 4,500 SE Telefonaktiebolaget (LM) Ericsson AB (ADR) 90,000 ----------- 1,440,494 ----------- COMPUTERS & PERIPHERALS 3.9% 2,500 US Dell Computer Corp. * 123,281 3,000 US EMC Corp. * 230,813 1,200 US Hewlett-Packard Co. 149,850 2,000 US Sun Microsystems Inc. * 181,875 ----------- 685,819 ----------- INTERNET SOFTWARE & SERVICES 1.5% 1,600 US America Online Inc. * 84,400 1,400 US Yahoo Inc. * 173,425 ----------- 257,825 ----------- INFORMATION TECHNOLOGY CONSULTING & SERVICES 0.2% 500 US Computer Sciences Corp. * 37,344 SEMICONDUCTORS & INSTRUMENTS 3.1% 3,000 US Intel Corp. 401,062 800 FR STMicroelectronics N.V. (NY Registered Shares) 51,350 700 US Texas Instruments Inc. 48,081 600 US Xilinx Inc. * 49,538 ----------- 550,031 -----------
The accompanying notes are an integral part of the financial statements. Page 86 Dresdner RCM Balanced Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- EQUITY INVESTMENTS (CONTINUED) SOFTWARE 3.4% 4,000 US Microsoft Corp. * $ 320,000 2,500 US Oracle Corp. * 210,156 500 US VERITAS Software Corp. * 56,508 ----------- 586,664 ----------- TELECOMMUNICATION SERVICES SECTOR 5.2% TELECOMMUNICATION SERVICES 5.2% 1,200 US Bell Atlantic Corp. 60,975 1,200 US GTE Corp. 74,700 1,800 US Nextel Communications Inc. * 110,137 4,500 US Qwest Communications International Inc. * 223,594 3,500 US SBC Communications Inc. 151,375 2,500 UK Vodafone AirTouch PLC (ADR) 103,594 4,000 US WorldCom Inc. * 183,500 ----------- 907,875 ----------- TOTAL EQUITY INVESTMENTS (COST $9,368,770) 55.8% 9,721,345 ----------- FACE AMOUNT - ---------- DEBT INVESTMENTS ASSET-BACKED SECURITIES 2.5% $ 15,000 US Carco Auto Loan Master Trust 6.430%, maturing 11/15/04, Series 1999-4, Class A 14,747 100,000 US Citibank Credit Card Master Trust I 6.650%, maturing 11/15/06, Series 1999-7, Class A 97,750 100,000 US Citibank Credit Card Master Trust I 6.100%, maturing 5/15/08, Series 1999-5, Class A 94,600 25,000 US Discover Card Master Trust I 6.850%, maturing 7/17/07, Series 1999-6, Class A 24,590 100,000 US Ford Credit Auto Owner Trust 0.990%, maturing 10/15/04, Series 2000-C, Class B 105,131 20,000 US Green Tree Financial Corp. 6.270%, maturing 7/1/21, Series 1998-6, Class A6 18,137 15,000 US Green Tree Home Equity Loan Trust 6.130%, maturing 2/15/19, Series 1999-A, Class A5 14,222 60,000 US MBNA Master Credit Card Trust 6.801%, maturing 7/15/00, Series 1996-D, Class A 60,054 ----------- 429,231 ----------- COLLATERALIZED MORTGAGE OBLIGATIONS 0.8% 10,000 US Chase Commercial Mortgage Securities Corp. 7.198%, maturing 11/15/09, Series 1999-2, Class A2 9,818
The accompanying notes are an integral part of the financial statements. Page 87 Dresdner RCM Balanced Fund Portfolio of Investments June 30, 2000 (Unaudited)
FACE % OF MARKET VALUE AMOUNT COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- DEBT INVESTMENTS (CONTINUED) COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED) $ 35,000 US Chase Commercial Mortgage Securities Corp. 7.631%, maturing 6/15/10, Series 2000-2, Class A2 $ 36,654 10,000 US First Union National Bank Commercial Mortgage Corp. 7.390%, maturing 11/15/09, Series 1999-C4, Class A2 9,801 25,000 US First Union-Lehman Brothers Commercial Mortgage Securities Corp. 7.380%, maturing 4/18/07, Series 1997-C1, Class A3 24,743 55,000 US LB Commercial Conduit Mortgage Trust 6.480%, maturing 1/18/08, Series 1998-C1, Class A3 63,476 ----------- 144,492 ----------- CORPORATE BONDS 3.2% 30,000 US Boeing Co. 6.625%, maturing 2/15/38 25,850 49,603 US Continental Airlines Inc. 7.256%, maturing 3/15/20 47,213 40,000 DE Deutsche Telekom International Finance BV 8.000%, maturing 6/15/10 40,177 10,000 US Ford Motor Credit Co. 5.900%, maturing 2/23/01 9,925 45,000 US GTE Corp. 7.510%, maturing 4/1/09 44,253 40,000 UK HSBC Capital Funding LP 10.176%, maturing 12/31/00, Floating Rate (144A) 42,906 15,000 CA Hydro-Quebec 8.050%, maturing 7/7/24 15,909 15,000 US International Business Machines Corp. 8.375%, maturing 11/1/19 16,513 60,000 US International Paper Co. 8.125%, maturing 7/8/05 (144A) 60,409 10,000 US Merrill Lynch & Co. 6.060%, maturing 10/15/01 9,851 60,000 CA Quebec Province 8.625%, maturing 1/19/05 63,084 35,000 US Sprint Capital Corp. 6.875%, maturing 11/15/28 30,364 30,000 US Time Warner Inc. 10.150%, maturing 5/1/12 34,429 25,000 BH Tyco International Group S.A. 6.125%, maturing 11/1/08 22,317 25,000 BH Tyco International Group S.A. 6.875%, maturing 1/15/29 21,119 25,000 US Union Pacific Resources Group Inc. 7.500%, maturing 10/15/26 23,551 50,000 US Waste Management Inc. 6.875%, maturing 5/15/09 44,136 ----------- 552,006 ----------- U.S. GOVERNMENT AND AGENCY BONDS 26.5% 30,000 US Federal National Mortgage Association 7.250%, maturing 1/15/10 30,302 35,000 US Federal National Mortgage Association 6.250%, maturing 5/15/29 31,473 60,000 US Federal National Mortgage Association 7.125%, maturing 1/15/30 60,440 114,914 US Federal National Mortgage Association 7.500%, maturing 5/1/30 113,262 2,140,000 US Federal National Mortgage Association, 8.000%, 30 Year, TBA ** 2,148,688
The accompanying notes are an integral part of the financial statements. Page 88 Dresdner RCM Balanced Fund Portfolio of Investments June 30, 2000 (Unaudited)
FACE % OF MARKET VALUE AMOUNT COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- DEBT INVESTMENTS (CONTINUED) U.S. GOVERNMENT AND AGENCY BONDS (CONTINUED) $ 241,509 US Government National Mortgage Association 7.500%, maturing 11/15/29 $ 239,773 179,704 US Government National Mortgage Association 8.000%, maturing 4/15/30 181,612 1,135,000 US United States Treasury Bonds 6.250%, maturing 8/15/23 1,144,216 80,000 US United States Treasury Notes 6.500%, maturing 8/31/01 *** 80,000 600,000 US United States Treasury Notes 6.125%, maturing 8/15/07 *** 596,415 ----------- 4,626,181 ----------- TOTAL DEBT INVESTMENTS (COST $5,695,084) 33.0% 5,751,910 ----------- SHARES - ---------- PREFERRED STOCKS UNITED STATES 0.1% 550 US Citigroup Inc., Series M, 5.864% 22,550 ----------- TOTAL PREFERRED STOCKS (COST $21,981) 0.1% 22,550 ----------- FACE AMOUNT - ---------- SHORT-TERM INVESTMENTS U.S. GOVERNMENT AND AGENCY BONDS 9.5% $ 120,000 US Federal Farm Credit Banks 6.370%, maturing 7/12/00 119,767 350,000 US Federal Home Loan Bank 6.470%, maturing 9/20/00 344,905 180,000 US Federal Home Loan Mortgage Corp. 6.430%, maturing 7/18/00 179,453 600,000 US Federal Home Loan Mortgage Corp. 6.450%, maturing 7/18/00 598,173 415,000 US Tennessee Valley Authority 6.350%, maturing 7/14/00 414,048 ----------- 1,656,346 ----------- COMMERCIAL PAPER 3.7% 215,000 US American Express Credit Corp. 6.530%, maturing 7/14/00 214,493 215,000 US Associates Corp. of North America 6.530%, maturing 7/21/00 214,220 215,000 US General Electric Co. 6.530%, maturing 7/14/00 214,493 ----------- 643,206 -----------
The accompanying notes are an integral part of the financial statements. Page 89 Dresdner RCM Balanced Fund Portfolio of Investments June 30, 2000 (Unaudited)
% OF MARKET VALUE SHARES COUNTRY NET ASSETS (NOTE 1) - ---------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS (CONTINUED) MONEY MARKET FUNDS 6.4% 557,528 US SSgA Money Market Fund $ 557,528 556,527 US SSgA U.S. Government Money Market Fund 556,527 ----------- 1,114,055 ----------- TOTAL SHORT-TERM INVESTMENTS (COST $3,413,607) 19.6% 3,413,607 ----------- TOTAL INVESTMENTS (COST $18,499,442) **** 108.5% 18,909,412 OTHER ASSETS LESS LIABILITIES *** (8.5)% (1,480,722) ----------- NET ASSETS 100.0% $17,428,690 ===========
- -------------------------------- * Non-income producing security ADR American Depositary Receipt 144A Security is purchased pursuant to Rule 144A of the Securities Act of 1933 and may be resold only to qualified institutional buyers. ** Settlement of mortgage backed securities is on a delayed delivery basis with the final maturity to be announced (TBA) in the future. At June 30, 2000, the cost of the fund's forward commitment purchase was $2,131,288. *** A portion of this security and cash have been segregated to cover forward commitment purchase. Tax Information: **** For Federal income tax purposes, cost is $18,499,442 and gross aggregate unrealized appreciation (depreciation) for all securities is as follows:
Unrealized appreciation $685,415 Unrealized depreciation (275,445) -------- Net unrealized appreciation $409,970 ========
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund's investments in securities at June 30, 2000 categorized by country:
% OF NET ASSETS ------------------------------------------------- COUNTRY PREFERRED SHORT-TERM COUNTRY CODE STOCK EQUITIES DEBT AND OTHER TOTAL - ------------------------------------------------------------------------------------- Bermuda BH 1.9% 0.3% 2.2% Canada CA 0.8% 0.4% 1.2% Finland FI 2.0% 2.0% France FR 0.3% 0.3% Germany DE 0.2% 0.2% Sweden SE 0.5% 0.5% United Kingdom UK 1.1% 0.3% 1.4% United States US 0.1% 49.2% 31.8% 11.1% 92.2% ------ ------ ---- ------- ----- Total 0.1% 55.8% 33.0% 11.1% 100.0% ====== ====== ==== ======= =====
The accompanying notes are an integral part of the financial statements. Page 90 (THIS PAGE INTENTIONALLY LEFT BLANK) Page 91 Dresdner RCM Global Funds Statements of Assets and Liabilities June 30, 2000 (Unaudited) (All numbers in thousands except net asset values per share)
LARGE CAP TAX MANAGED GROWTH BIOTECHNOLOGY GROWTH FUND FUND FUND --------- ------------- ----------- ASSETS: Investments at cost $25,170 $364,841 $31,972 ======= ======== ======= Foreign currency at cost $ -- $ -- $ -- ======= ======== ======= Short-term investments at cost $ 599 $ 36,861 $ 954 ======= ======== ======= Investments at value (Note1) $29,165 $417,544 $33,098 Foreign currency at value (Note 1) -- -- -- Cash -- -- -- Short-term investments at value (Note 1) 599 36,861 954 Receivables: Investments sold 99 8,771 159 Fund shares sold 260 8,392 20 Forward foreign currency contracts (Note 1 and 6) -- -- -- Dividends 11 85 12 Interest 2 79 3 Investment Manager (Note 2) 18 -- -- Prepaid expenses -- 2 -- Organizational costs (Note 5) -- -- -- Miscellaneous assets -- -- -- ------- -------- ------- Total Assets 30,154 471,734 34,246 ------- -------- ------- LIABILITIES: Payables: Investments purchased 137 4,316 357 Delayed delivery investments purchased (Note 1) -- -- -- Fund shares repurchased 214 819 -- Accrued Expenses: Management fees (Note 2) -- 787 22 Distribution fees (Note 3) 1 77 1 Directors' fees (Note 7) 39 39 31 Other 71 13 57 ------- -------- ------- Total Liabilities 462 6,051 468 ------- -------- ------- NET ASSETS $29,692 $465,683 $33,778 ======= ======== ======= NET ASSETS CONSIST OF: Paid-in capital (Note 4) $24,336 $458,790 $33,930 Accumulated net investment income (loss) (38) (1,151) (68) Accumulated net realized gain (loss) on investments, options written and foreign currency transactions 1,399 (44,659) (1,210) Net unrealized appreciation (depreciation) on foreign currency translations -- -- -- Net unrealized appreciation on investments 3,995 52,703 1,126 ------- -------- ------- NET ASSETS $29,692 $465,683 $33,778 ======= ======== ======= CLASS I NET ASSETS $23,265 $ -- $29,972 ======= ======== ======= CLASS I SHARES OUTSTANDING 1,176 -- 1,926 ======= ======== ======= CLASS I NET ASSET VALUE PER SHARE, OFFERING AND REDEMPTION PRICE PER SHARE (NOTES 1 AND 4) $ 19.78 $ -- $ 15.56 ======= ======== ======= CLASS N NET ASSETS $ 6,427 $465,683 $ 3,806 ======= ======== ======= CLASS N SHARES OUTSTANDING 327 13,393 245 ======= ======== ======= CLASS N NET ASSET VALUE PER SHARE, OFFERING AND REDEMPTION PRICE PER SHARE (NOTES 1 AND 4) $ 19.67 $ 34.77 $ 15.51 ======= ======== =======
The accompanying notes are an integral part of the financial statements. Page 92 Dresdner RCM Global Funds Statements of Assets and Liabilities June 30, 2000 (Unaudited) (All numbers in thousands except net asset values per share)
GLOBAL GLOBAL GLOBAL INTERNATIONAL EMERGING SMALL CAP TECHNOLOGY HEALTH CARE GROWTH EQUITY MARKETS EUROPE FUND FUND FUND FUND FUND FUND --------- ---------- ----------- ------------- -------- ------- ASSETS: Investments at cost $42,670 $546,960 $49,879 $279,131 $ 7,804 $66,733 ======= ======== ======= ======== ======= ======= Foreign currency at cost $ 205 $ -- $ -- $ 5,295 $ 528 $ 1,190 ======= ======== ======= ======== ======= ======= Short-term investments at cost $ 117 $ 39,741 $10,719 $ 11,318 $ 774 $ 543 ======= ======== ======= ======== ======= ======= Investments at value (Note1) $46,342 $726,517 $53,494 $310,512 $ 8,358 $77,117 Foreign currency at value (Note 1) 206 -- -- 5,316 528 1,198 Cash 1 -- -- 2 1 -- Short-term investments at value (Note 1) 117 39,741 10,719 11,318 774 543 Receivables: Investments sold 367 4,396 2,076 335 185 4,738 Fund shares sold 1,197 6,991 1,752 5,527 123 2,784 Forward foreign currency contracts (Note 1 and 6) -- -- -- -- -- -- Dividends 14 118 16 375 25 94 Interest -- 95 11 39 20 2 Investment Manager (Note 2) -- -- -- -- 71 125 Prepaid expenses 1 -- 1 -- -- 18 Organizational costs (Note 5) -- 8 -- -- 10 -- Miscellaneous assets -- 8 -- -- -- -- ------- -------- ------- -------- ------- ------- Total Assets 48,245 777,874 68,069 333,424 10,095 86,619 ------- -------- ------- -------- ------- ------- LIABILITIES: Payables: Investments purchased 965 11,156 1,766 5,715 916 4,481 Delayed delivery investments purchased (Note 1) -- -- -- -- -- -- Fund shares repurchased 206 1,978 616 2,605 115 101 Accrued Expenses: Management fees (Note 2) 52 1,667 43 184 23 -- Distribution fees (Note 3) 3 74 10 1 2 15 Directors' fees (Note 7) 38 39 39 107 35 1 Other 47 94 40 64 67 77 ------- -------- ------- -------- ------- ------- Total Liabilities 1,311 15,008 2,514 8,676 1,158 4,675 ------- -------- ------- -------- ------- ------- NET ASSETS $46,934 $762,866 $65,555 $324,748 $ 8,937 $81,944 ======= ======== ======= ======== ======= ======= NET ASSETS CONSIST OF: Paid-in capital (Note 4) $38,423 $632,539 $59,298 $261,350 $ 7,726 $57,458 Accumulated net investment income (loss) (258) (2,322) (112) (876) 20 (416) Accumulated net realized gain (loss) on investments, options written and foreign currency transactions 5,096 (46,899) 2,754 32,921 637 14,506 Net unrealized appreciation (depreciation) on foreign currency translations 1 (9) -- (28) -- 12 Net unrealized appreciation on investments 3,672 179,557 3,615 31,381 554 10,384 ------- -------- ------- -------- ------- ------- NET ASSETS $46,934 $762,866 $65,555 $324,748 $ 8,937 $81,944 ======= ======== ======= ======== ======= ======= CLASS I NET ASSETS $29,486 $379,724 $ -- $319,619 $ 6,778 $ 1,092 ======= ======== ======= ======== ======= ======= CLASS I SHARES OUTSTANDING 1,094 5,438 -- 16,497 416 67 ======= ======== ======= ======== ======= ======= CLASS I NET ASSET VALUE PER SHARE, OFFERING AND REDEMPTION PRICE PER SHARE (NOTES 1 AND 4) $ 26.94 $ 69.82 $ -- $ 19.37 $ 16.29 $ 16.38 ======= ======== ======= ======== ======= ======= CLASS N NET ASSETS $17,448 $383,142 $65,555 $ 5,129 $ 2,159 $80,852 ======= ======== ======= ======== ======= ======= CLASS N SHARES OUTSTANDING 649 5,500 2,979 265 133 4,939 ======= ======== ======= ======== ======= ======= CLASS N NET ASSET VALUE PER SHARE, OFFERING AND REDEMPTION PRICE PER SHARE (NOTES 1 AND 4) $ 26.90 $ 69.66 $ 22.01 $ 19.32 $ 16.24 $ 16.37 ======= ======== ======= ======== ======= ======= GLOBAL STRATEGIC EQUITY INCOME BALANCED FUND FUND FUND ------ --------- -------- ASSETS: Investments at cost $1,251 $ 831 $15,085 ====== ====== ======= Foreign currency at cost $ 6 $ -- $ -- ====== ====== ======= Short-term investments at cost $ 9 $ 22 $ 3,414 ====== ====== ======= Investments at value (Note1) $1,584 $ 845 $15,496 Foreign currency at value (Note 1) 6 -- -- Cash -- -- 2,599 Short-term investments at value (Note 1) 9 22 3,414 Receivables: Investments sold 26 -- 270 Fund shares sold -- -- -- Forward foreign currency contracts (Note 1 and 6) -- 3 -- Dividends 1 -- 4 Interest -- 14 64 Investment Manager (Note 2) 53 46 45 Prepaid expenses -- -- -- Organizational costs (Note 5) -- -- -- Miscellaneous assets -- -- -- ------ ------ ------- Total Assets 1,679 930 21,892 ------ ------ ------- LIABILITIES: Payables: Investments purchased 12 -- 2,310 Delayed delivery investments purchased (Note 1) -- -- 2,137 Fund shares repurchased -- -- -- Accrued Expenses: Management fees (Note 2) 3 -- -- Distribution fees (Note 3) -- -- -- Directors' fees (Note 7) 31 30 11 Other 43 33 5 ------ ------ ------- Total Liabilities 89 63 4,463 ------ ------ ------- NET ASSETS $1,590 $ 867 $17,429 ====== ====== ======= NET ASSETS CONSIST OF: Paid-in capital (Note 4) $1,000 $1,000 $16,697 Accumulated net investment income (loss) (6) (11) 35 Accumulated net realized gain (loss) on investments, options written and foreign currency transactions 263 (139) 286 Net unrealized appreciation (depreciation) on foreign currency translations -- 3 -- Net unrealized appreciation on investments 333 14 411 ------ ------ ------- NET ASSETS $1,590 $ 867 $17,429 ====== ====== ======= CLASS I NET ASSETS $1,590 $ 867 $17,429 ====== ====== ======= CLASS I SHARES OUTSTANDING 100 89 1,595 ====== ====== ======= CLASS I NET ASSET VALUE PER SHARE, OFFERING AND REDEMPTION PRICE PER SHARE (NOTES 1 AND 4) $15.90 $ 9.72 $ 10.92 ====== ====== ======= CLASS N NET ASSETS $ -- $ -- $ -- ====== ====== ======= CLASS N SHARES OUTSTANDING -- -- -- ====== ====== ======= CLASS N NET ASSET VALUE PER SHARE, OFFERING AND REDEMPTION PRICE PER SHARE (NOTES 1 AND 4) $ -- $ -- $ -- ====== ====== =======
The accompanying notes are an integral part of the financial statements. Page 93 Dresdner RCM Global Funds Statements of Operations For the Six Months Ended June 30, 2000 (Unaudited) (All numbers in thousands)
LARGE CAP TAX MANAGED GROWTH BIOTECHNOLOGY GROWTH FUND FUND FUND --------- ------------- ----------- INVESTMENT INCOME: (NOTE 1) Income: Dividends $ 72 $ 322 $ 32 Interest 7 289 9 Foreign tax withheld (1) (4) -- ------ -------- ------- Total investment income 78 607 41 ------ -------- ------- Expenses: Investment management fees (Note 2) 82 1,172 64 Administration fees 32 32 32 Shareholder servicing fee, Class I 8 -- 6 Shareholder servicing fee, Class N 9 82 8 Registration and filing, Class I 18 -- 14 Registration and filing, Class N 9 19 10 Reports to shareholders 11 20 8 Accounting expense 24 14 16 Audit fees 11 11 11 Directors' fees and expenses (Note 7) 11 11 11 Legal fees 6 6 6 Custodian fees 4 16 5 Insurance expense -- -- -- Distribution fees (Note 3) 4 293 2 Amortization of organization costs (Note 5) -- -- -- Reimbursement of expenses previously assumed by Investment Manager (Note 2) -- 79 -- Miscellaneous expenses 4 3 2 ------ -------- ------- Total expenses before waivers and reimbursements 233 1,758 195 Less: Expenses waived and reimbursed by Investment Manager (Note 2) (117) -- (86) ------ -------- ------- Total net expenses 116 1,758 109 ------ -------- ------- Net investment income (loss) (38) (1,151) (68) ------ -------- ------- NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on investments 1,112 (45,625) (1,198) Net realized gain (loss) on foreign currrency transactions -- -- -- Net realized gain on options written -- -- -- ------ -------- ------- Net realized gain (loss) 1,112 (45,625) (1,198) ------ -------- ------- Net change in unrealized appreciation (depreciation) on investments (282) 48,778 511 Net change in unrealized appreciation (depreciation) on foreign currency translations -- -- -- ------ -------- ------- Net unrealized appreciation (depreciation) (282) 48,778 511 ------ -------- ------- Net realized and unrealized gain (loss) 830 3,153 (687) ------ -------- ------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 792 $ 2,002 $ (755) ====== ======== =======
The accompanying notes are an integral part of the financial statements. Page 94 Dresdner RCM Global Funds Statements of Operations For the Six Months Ended June 30, 2000 (Unaudited) (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 $ 145 $ 875 $ 65 $ 1,804 $ 56 $ 297 Interest 37 904 42 173 39 -- Foreign tax withheld (12) (32) (1) (248) (8) (55) ------- -------- ------ -------- ------- -------- Total investment income 170 1,747 106 1,729 87 242 ------- -------- ------ -------- ------- -------- Expenses: Investment management fees (Note 2) 206 2,989 145 1,156 42 396 Administration fees 32 32 32 32 15 32 Shareholder servicing fee, Class I 8 92 -- 18 8 14 Shareholder servicing fee, Class N 10 53 13 8 8 50 Registration and filing, Class I 10 37 -- 15 15 12 Registration and filing, Class N 9 29 12 14 8 19 Reports to shareholders 11 27 10 12 7 8 Accounting expense 23 26 12 29 19 23 Audit fees 12 13 10 22 9 26 Directors' fees and expenses (Note 7) 11 11 11 30 16 140 Legal fees 6 6 6 7 7 13 Custodian fees 28 46 6 136 42 16 Insurance expense -- 1 -- 3 -- -- Distribution fees (Note 3) 15 342 36 4 2 98 Amortization of organization costs (Note 5) -- 7 -- -- 2 -- Reimbursement of expenses previously assumed by Investment Manager (Note 2) -- 339 -- 77 -- -- Miscellaneous expenses 3 3 3 3 2 8 ------- -------- ------ -------- ------- -------- Total expenses before waivers and reimbursements 384 4,053 296 1,566 202 855 Less: Expenses waived and reimbursed by Investment Manager (Note 2) (60) -- (78) (21) (137) (214) ------- -------- ------ -------- ------- -------- Total net expenses 324 4,053 218 1,545 65 641 ------- -------- ------ -------- ------- -------- Net investment income (loss) (154) (2,306) (112) 184 22 (399) ------- -------- ------ -------- ------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on investments 4,534 (54,456) 2,166 25,182 324 15,486 Net realized gain (loss) on foreign currrency transactions (222) (458) 5 (5,541) (12) (2,570) Net realized gain on options written -- 2,665 -- -- -- -- ------- -------- ------ -------- ------- -------- Net realized gain (loss) 4,312 (52,249) 2,171 19,641 312 12,916 ------- -------- ------ -------- ------- -------- Net change in unrealized appreciation (depreciation) on investments (2,703) 72,935 2,455 (59,602) (1,278) (13,383) Net change in unrealized appreciation (depreciation) on foreign currency translations (1) (13) -- (23) -- 24 ------- -------- ------ -------- ------- -------- Net unrealized appreciation (depreciation) (2,704) 72,922 2,455 (59,625) (1,278) (13,359) ------- -------- ------ -------- ------- -------- Net realized and unrealized gain (loss) 1,608 20,673 4,626 (39,984) (966) (443) ------- -------- ------ -------- ------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,454 $ 18,367 $4,514 $(39,800) $ (944) $ (842) ======= ======== ====== ======== ======= ======== GLOBAL STRATEGIC EQUITY INCOME BALANCED FUND FUND FUND ------ --------- -------- INVESTMENT INCOME: (NOTE 1) Income: Dividends $ 6 $ 1 $ 14 Interest -- 46 57 Foreign tax withheld (1) -- -- ----- ---- ---- Total investment income 5 47 71 ----- ---- ---- Expenses: Investment management fees (Note 2) 6 4 18 Administration fees 32 32 32 Shareholder servicing fee, Class I -- -- -- Shareholder servicing fee, Class N -- -- 7 Registration and filing, Class I 4 5 -- Registration and filing, Class N -- -- 4 Reports to shareholders 6 5 14 Accounting expense 14 11 8 Audit fees 11 11 11 Directors' fees and expenses (Note 7) 11 11 11 Legal fees 6 6 7 Custodian fees 11 2 5 Insurance expense -- -- -- Distribution fees (Note 3) -- -- -- Amortization of organization costs (Note 5) -- -- -- Reimbursement of expenses previously assumed by Investment Manager (Note 2) -- -- -- Miscellaneous expenses 2 4 1 ----- ---- ---- Total expenses before waivers and reimbursements 103 91 118 Less: Expenses waived and reimbursed by Investment Manager (Note 2) (93) (84) (94) ----- ---- ---- Total net expenses 10 7 24 ----- ---- ---- Net investment income (loss) (5) 40 47 ----- ---- ---- NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on investments 161 (98) 215 Net realized gain (loss) on foreign currrency transactions (1) 12 -- Net realized gain on options written -- -- -- ----- ---- ---- Net realized gain (loss) 160 (86) 215 ----- ---- ---- Net change in unrealized appreciation (depreciation) on investments (149) 72 355 Net change in unrealized appreciation (depreciation) on foreign currency translations -- (3) -- ----- ---- ---- Net unrealized appreciation (depreciation) (149) 69 355 ----- ---- ---- Net realized and unrealized gain (loss) 11 (17) 570 ----- ---- ---- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 6 $ 23 $617 ===== ==== ====
The accompanying notes are an integral part of the financial statements. Page 95 Dresdner RCM Global Funds Statements of Changes in Net Assets (All numbers in thousands)
LARGE CAP GROWTH FUND BIOTECHNOLOGY FUND ----------------------------- ----------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2000 DEC. 31, 1999 JUNE 30, 2000 DEC. 31, 1999 -------------- ------------- -------------- ------------- OPERATIONS: Net investment income (loss) $ (38) $ (32) $ (1,151) $ (63) Net realized gain (loss) on investments, foreign currency transactions and options written 1,112 2,485 (45,625) 2,820 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations (282) 2,205 48,778 3,516 ------- ------- -------- ------- Net increase (decrease) in net assets resulting from operations 792 4,658 2,002 6,273 DISTRIBUTIONS TO SHAREHOLDERS FROM: Class I shares: Net investment income -- -- -- -- In excess of net investment income -- -- -- -- Net realized gain on investments -- (2,517) -- -- In excess of net realized gain on investments -- -- -- -- ------- ------- -------- ------- Total distributions, Class I -- (2,517) -- -- ------- ------- -------- ------- Class N shares: Net investment income -- -- -- -- In excess of net investment income -- -- -- -- Net realized gain on investments -- (46) -- (1,875) In excess of net realized gain on investments -- -- -- -- ------- ------- -------- ------- Total distributions, Class N -- (46) -- (1,875) ------- ------- -------- ------- Total distributions to shareholders -- (2,563) -- (1,875) NET INCREASE FROM CAPITAL SHARE TRANSACTIONS* 13,076 5,794 448,811 6,561 Redemption fees (Note 1) -- -- -- -- ------- ------- -------- ------- TOTAL INCREASE IN NET ASSETS 13,868 7,889 450,813 10,959 NET ASSETS: Beginning of period 15,824 7,935 14,870 3,911 ------- ------- -------- ------- End of period $29,692 $15,824 $465,683 $14,870 ======= ======= ======== ======= End of period net assets include accumulated net investment loss of: $ (38) $ -- $ (1,151) $ -- ======= ======= ======== =======
- ------------------------------------ * For detail on capital share transactions by class, see Statements of Changes in Net Assets (Capital Stock Activity) on pages 100-103. ** Class I Shares commenced operations on March 3, 2000. *** Period from December 15, 1999 (commencement of operations) to December 31, 1999. The accompanying notes are an integral part of the financial statements. Page 96 Dresdner RCM Global Funds Statements of Changes in Net Assets (All numbers in thousands)
TAX MANAGED GROWTH FUND GLOBAL SMALL CAP FUND ----------------------------- ----------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2000 DEC. 31, 1999 JUNE 30, 2000 DEC. 31, 1999 -------------- ------------- -------------- ------------- OPERATIONS: Net investment income (loss) $ (68) $ (10) $ (154) $ (82) Net realized gain (loss) on investments, foreign currency transactions and options written (1,198) 27 4,312 1,566 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations 511 615 (2,704) 5,654 ------- ------ ------- ------- Net increase (decrease) in net assets resulting from operations (755) 632 1,454 7,138 DISTRIBUTIONS TO SHAREHOLDERS FROM: Class I shares: Net investment income -- -- -- -- In excess of net investment income -- -- -- -- Net realized gain on investments -- (21) -- (868) In excess of net realized gain on investments -- (2) -- -- ------- ------ ------- ------- Total distributions, Class I -- (23) -- (868) ------- ------ ------- ------- 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) NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS* 32,270 655 19,977 13,840 Redemption fees (Note 1) 5 -- -- -- ------- ------ ------- ------- TOTAL INCREASE (DECREASE) IN NET ASSETS 31,520 1,258 21,431 20,024 NET ASSETS: Beginning of period 2,258 1,000 25,503 5,479 ------- ------ ------- ------- End of period $33,778 $2,258 $46,934 $25,503 ======= ====== ======= ======= End of period net assets include accumulated undistributed net investment income (loss) of: $ (68) $ -- $ (258) $ (104) ======= ====== ======= ======= GLOBAL TECHNOLOGY FUND GLOBAL HEALTH CARE FUND ----------------------------- ----------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2000 DEC. 31, 1999 JUNE 30, 2000 DEC. 31, 1999 -------------- ------------- -------------- ------------- OPERATIONS: Net investment income (loss) $ (2,306) $ (741) $ (112) $ (44) Net realized gain (loss) on investments, foreign currency transactions and options written (52,249) 10,634 2,171 1,311 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations 72,922 101,302 2,455 206 -------- -------- ------- ------- Net increase (decrease) in net assets resulting from operations 18,367 111,195 4,514 1,473 DISTRIBUTIONS TO SHAREHOLDERS FROM: Class I shares: Net investment income -- -- -- -- In excess of net investment income -- -- -- -- Net realized gain on investments -- (4,100) -- -- In excess of net realized gain on investments -- -- -- -- -------- -------- ------- ------- Total distributions, Class I -- (4,100) -- -- -------- -------- ------- ------- Class N shares: Net investment income -- -- -- -- In excess of net investment income -- -- -- -- Net realized gain on investments -- (1,490) -- (1,103) In excess of net realized gain on investments -- -- -- -- -------- -------- ------- ------- Total distributions, Class N -- (1,490) -- (1,103) -------- -------- ------- ------- Total distributions to shareholders -- (5,590) -- (1,103) NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS* 464,272 156,064 54,757 427 Redemption fees (Note 1) -- -- -- -- -------- -------- ------- ------- TOTAL INCREASE (DECREASE) IN NET ASSETS 482,639 261,669 59,271 797 NET ASSETS: Beginning of period 280,227 18,558 6,284 5,487 -------- -------- ------- ------- End of period $762,866 $280,227 $65,555 $ 6,284 ======== ======== ======= ======= End of period net assets include accumulated undistributed net investment income (loss) of: $ (2,322) $ (16) $ (112) $ -- ======== ======== ======= =======
- ------------------------------------ * For detail on capital share transactions by class, see Statements of Changes in Net Assets (Capital Stock Activity) on pages 100-103. ** Class I Shares commenced operations on March 3, 2000. *** Period from December 15, 1999 (commencement of operations) to December 31, 1999. The accompanying notes are an integral part of the financial statements. Page 97 Dresdner RCM Global Funds Statements of Changes in Net Assets (All numbers in thousands)
INTERNATIONAL GROWTH EQUITY FUND EMERGING MARKETS FUND ----------------------------- ----------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2000 DEC. 31, 1999 JUNE 30, 2000 DEC. 31, 1999 -------------- ------------- -------------- ------------- OPERATIONS: Net investment income (loss) $ 184 $ 196 $ 22 $ (5) Net realized gain (loss) on investments, foreign currency transactions and options written 19,641 36,900 312 930 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations (59,625) 65,058 (1,278) 1,662 -------- -------- ------- ------ Net increase (decrease) in net assets resulting from operations (39,800) 102,154 (944) 2,587 DISTRIBUTIONS TO SHAREHOLDERS FROM: Class I shares: Net investment income -- (854) -- -- In excess of net investment income -- (1,135) -- -- Net realized gain on investments -- (16,421) -- (144) In excess of net realized gain on investments -- -- -- -- -------- -------- ------- ------ Total distributions, Class I -- (18,410) -- (144) -------- -------- ------- ------ 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) -- (149) NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS* 77,249 81,682 4,428 281 Redemption fees (Note 1) -- -- -- -- -------- -------- ------- ------ TOTAL INCREASE (DECREASE) IN NET ASSETS 37,449 165,324 3,484 2,719 NET ASSETS: Beginning of period 287,299 121,975 5,453 2,734 -------- -------- ------- ------ End of period $324,748 $287,299 $ 8,937 $5,453 ======== ======== ======= ====== End of period net assets include accumulated undistributed net investment income (loss) of: $ (876) $ (1,060) $ 20 $ (2) ======== ======== ======= ======
- ------------------------------------ * For detail on capital share transactions by class, see Statements of Changes in Net Assets (Capital Stock Activity) on pages 100-103. ** Class I Shares commenced operations on March 3, 2000. *** Period from December 15, 1999 (commencement of operations) to December 31, 1999. The accompanying notes are an integral part of the financial statements. Page 98 Dresdner RCM Global Funds Statements of Changes in Net Assets (All numbers in thousands)
EUROPE FUND GLOBAL EQUITY FUND ------------------------------- ----------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2000** DEC. 31, 1999 JUNE 30, 2000 DEC. 31, 1999 ---------------- ------------- -------------- ------------- OPERATIONS: Net investment income (loss) $ (399) $ (110) $ (5) $ (3) Net realized gain (loss) on investments, foreign currency transactions and options written 12,916 34,049 160 140 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations (13,359) (21,415) (149) 482 -------- --------- ------ ------ Net increase (decrease) in net assets resulting from operations (842) 12,524 6 619 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 -- -- -- -- In excess of net investment income -- (336) -- -- Net realized gain on investments -- (16,858) -- -- In excess of net realized gain on investments -- -- -- -- -------- --------- ------ ------ Total distributions, Class N -- (17,194) -- -- -------- --------- ------ ------ Total distributions to shareholders -- (17,194) -- (35) NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS* 14,876 (119,298) -- -- Redemption fees (Note 1) -- 540 -- -- -------- --------- ------ ------ TOTAL INCREASE (DECREASE) IN NET ASSETS 14,034 (123,428) 6 584 NET ASSETS: Beginning of period 67,910 191,338 1,584 1,000 -------- --------- ------ ------ End of period $ 81,944 $ 67,910 $1,590 $1,584 ======== ========= ====== ====== End of period net assets include accumulated undistributed net investment income (loss) of: $ (416) $ (17) $ (6) $ (1) ======== ========= ====== ====== STRATEGIC INCOME FUND BALANCED FUND ----------------------------- -------------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2000 DEC. 31, 1999 JUNE 30, 2000 DEC. 31, 1999*** -------------- ------------- -------------- ---------------- OPERATIONS: Net investment income (loss) $ 40 $ 159 $ 47 $ 1 Net realized gain (loss) on investments, foreign currency transactions and options written (86) (28) 215 5 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations 69 (52) 355 56 ------- ------ ------- ------ Net increase (decrease) in net assets resulting from operations 23 79 617 62 DISTRIBUTIONS TO SHAREHOLDERS FROM: Class I shares: Net investment income (22) (159) (13) -- In excess of net investment income -- (54) -- -- Net realized gain on investments -- -- -- -- In excess of net realized gain on investments -- -- -- -- ------- ------ ------- ------ Total distributions, Class I (22) (213) (13) -- ------- ------ ------- ------ 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 (22) (213) (13) -- NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS* (2,000) -- 15,816 947 Redemption fees (Note 1) -- -- -- -- ------- ------ ------- ------ TOTAL INCREASE (DECREASE) IN NET ASSETS (1,999) (134) 16,420 1,009 NET ASSETS: Beginning of period 2,866 3,000 1,009 -- ------- ------ ------- ------ End of period $ 867 $2,866 $17,429 $1,009 ======= ====== ======= ====== End of period net assets include accumulated undistributed net investment income (loss) of: $ (11) $ (29) $ 35 $ 1 ======= ====== ======= ======
- ------------------------------------ * For detail on capital share transactions by class, see Statements of Changes in Net Assets (Capital Stock Activity) on pages 100-103. ** Class I Shares commenced operations on March 3, 2000. *** Period from December 15, 1999 (commencement of operations) to December 31, 1999. The accompanying notes are an integral part of the financial statements. Page 99 Dresdner RCM Global Funds Statements of Changes in Net Assets Capital Stock Activity (All numbers in thousands)
LARGE CAP GROWTH FUND BIOTECHNOLOGY FUND ----------------------------- ----------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2000 DEC. 31, 1999 JUNE 30, 2000 DEC. 31, 1999 -------------- ------------- -------------- ------------- FUND SHARE TRANSACTIONS DOLLAR AMOUNTS: Class I shares: Sold $ 9,071 $ 7,126 $ -- $ -- Issued to shareholders in reinvestment of distributions -- 2,468 -- -- Repurchased (1,353) (4,708) -- -- ------- ------- ---------- ------- Net increase, Class I $ 7,718 $ 4,886 $ -- $ -- ======= ======= ========== ======= Class N shares: Sold $ 7,520 $ 875 $ 680,566 $ 6,483 Issued to shareholders in reinvestment of distributions -- 40 -- 872 Repurchased (2,162) (7) (231,755) (794) ------- ------- ---------- ------- Net increase, Class N $ 5,358 $ 908 $ 448,811 $ 6,561 ======= ======= ========== ======= SHARE AMOUNTS Class I shares: Sold 465 414 -- -- Issued to shareholders in reinvestment of distributions -- 140 -- -- Repurchased (70) (265) -- -- ------- ------- ---------- ------- Net increase, Class I 395 289 -- -- ======= ======= ========== ======= Class N shares: Sold 389 47 20,103 401 Issued to shareholders in reinvestment of distributions -- 2 -- 55 Repurchased (111) -- (7,453) (55) ------- ------- ---------- ------- Net increase, Class N 278 49 12,650 401 ======= ======= ========== ======= PURCHASES AND SALES OF INVESTMENT SECURITIES: (EXCLUDING SHORT-TERM SECURITIES) Purchases of securities $17,584 $17,147 $1,047,407 $27,104 Proceeds from sales of securities 4,694 12,789 645,613 24,690
The accompanying notes are an integral part of the financial statements. Page 100 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 ----------------------------- ----------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2000 DEC. 31, 1999 JUNE 30, 2000 DEC. 31, 1999 -------------- ------------- -------------- ------------- FUND SHARE TRANSACTIONS DOLLAR AMOUNTS: Class I shares: Sold $29,845 $ -- $ 25,192 $13,423 Issued to shareholders in reinvestment of distributions -- -- -- 154 Repurchased (552) -- (22,486) (920) ------- ------ -------- ------- Net increase, Class I $29,293 $ -- $ 2,706 $12,657 ======= ====== ======== ======= Class N shares: Sold $ 3,019 $ 649 $ 36,116 $ 1,118 Issued to shareholders in reinvestment of distributions -- 6 -- 85 Repurchased (42) -- (18,845) (20) ------- ------ -------- ------- Net increase, Class N $ 2,977 $ 655 $ 17,271 $ 1,183 ======= ====== ======== ======= SHARE AMOUNTS Class I shares: Sold 1,861 -- 927 636 Issued to shareholders in reinvestment of distributions -- -- -- 7 Repurchased (35) -- (863) (56) ------- ------ -------- ------- Net increase, Class I 1,826 -- 64 587 ======= ====== ======== ======= Class N shares: Sold 197 51 1,316 58 Issued to shareholders in reinvestment of distributions -- -- -- 4 Repurchased (3) -- (728) (1) ------- ------ -------- ------- Net increase, Class N 194 51 588 61 ======= ====== ======== ======= PURCHASES AND SALES OF INVESTMENT SECURITIES: (EXCLUDING SHORT-TERM SECURITIES) Purchases of securities $36,793 $2,141 $ 59,569 $24,604 Proceeds from sales of securities 5,194 593 39,257 12,387 GLOBAL TECHNOLOGY FUND GLOBAL HEALTH CARE FUND ----------------------------- ----------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2000 DEC. 31, 1999 JUNE 30, 2000 DEC. 31, 1999 -------------- ------------- -------------- ------------- FUND SHARE TRANSACTIONS DOLLAR AMOUNTS: Class I shares: Sold $ 331,807 $125,712 $ -- $ -- Issued to shareholders in reinvestment of distributions -- 4,025 -- -- Repurchased (175,237) (31,266) -- -- ---------- -------- -------- ------- Net increase, Class I $ 156,570 $ 98,471 $ -- $ -- ========== ======== ======== ======= Class N shares: Sold $ 441,379 $ 64,142 $ 89,942 $ 748 Issued to shareholders in reinvestment of distributions -- 1,438 -- 67 Repurchased (133,677) (7,987) (35,185) (388) ---------- -------- -------- ------- Net increase, Class N $ 307,702 $ 57,593 $ 54,757 $ 427 ========== ======== ======== ======= SHARE AMOUNTS Class I shares: Sold 4,643 3,164 -- -- Issued to shareholders in reinvestment of distributions -- 76 -- -- Repurchased (2,547) (765) -- -- ---------- -------- -------- ------- Net increase, Class I 2,096 2,475 -- -- ========== ======== ======== ======= Class N shares: Sold 6,026 1,564 4,401 56 Issued to shareholders in reinvestment of distributions -- 27 -- 5 Repurchased (1,918) (199) (1,863) 29 ---------- -------- -------- ------- Net increase, Class N 4,108 1,392 2,538 32 ========== ======== ======== ======= PURCHASES AND SALES OF INVESTMENT SECURITIES: (EXCLUDING SHORT-TERM SECURITIES) Purchases of securities $1,133,180 $211,880 $118,433 $21,409 Proceeds from sales of securities 689,391 80,869 75,655 22,322
The accompanying notes are an integral part of the financial statements. Page 101 Dresdner RCM Global Funds Statements of Changes in Net Assets Capital Stock Activity (All numbers in thousands)
INTERNATIONAL GROWTH EQUITY FUND EMERGING MARKETS FUND ----------------------------- ----------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2000 DEC. 31, 1999 JUNE 30, 2000 DEC. 31, 1999 -------------- ------------- -------------- ------------- FUND SHARE TRANSACTIONS DOLLAR AMOUNTS: Class I shares: Sold $ 315,765 $ 182,299 $ 3,608 $ 56 Issued to shareholders in reinvestment of distributions -- 17,745 -- 2 Repurchased (242,457) (119,912) (1,270) (17) --------- --------- ------- ------ Net increase(decrease), Class I $ 73,308 $ 80,132 $ 2,338 $ 41 ========= ========= ======= ====== Class N shares: Sold $ 12,957 $ 2,341 $ 2,918 $ 253 Issued to shareholders in reinvestment of distributions -- 61 -- 5 Repurchased (9,016) (852) (828) (18) --------- --------- ------- ------ Net increase(decrease), Class N $ 3,941 $ 1,550 $ 2,090 $ 240 ========= ========= ======= ====== SHARE AMOUNTS Class I shares: Sold 15,488 10,871 186 5 Issued to shareholders in reinvestment of distributions -- 872 -- -- Repurchased (11,774) (7,103) (75) (1) --------- --------- ------- ------ Net increase(decrease), Class I 3,714 4,640 (111) 4 ========= ========= ======= ====== Class N shares: Sold 637 130 160 19 Issued to shareholders in reinvestment of distributions -- 3 -- -- Repurchased (450) (55) (45) (1) --------- --------- ------- ------ Net increase(decrease), Class N 187 78 115 18 ========= ========= ======= ====== PURCHASES AND SALES OF INVESTMENT SECURITIES: (EXCLUDING SHORT-TERM SECURITIES) Purchases of securities $ 243,649 $ 280,952 $10,118 $7,324 Proceeds from sales of securities 171,793 224,692 6,223 7,103
- ------------------------------------ * Class I Shares commenced operations on March 3, 2000. ** Period from December 15, 1999 (commencement of operations) to December 31, 1999. The accompanying notes are an integral part of the financial statements. Page 102 Dresdner RCM Global Funds Statements of Changes in Net Assets Capital Stock Activity (All numbers in thousands)
EUROPE FUND GLOBAL EQUITY FUND ------------------------------ ----------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2000* DEC. 31, 1999 JUNE 30, 2000 DEC. 31, 1999 --------------- ------------- -------------- ------------- FUND SHARE TRANSACTIONS DOLLAR AMOUNTS: Class I shares: Sold $ 1,495 $ -- $ -- $ -- Issued to shareholders in reinvestment of distributions -- -- -- -- Repurchased (241) -- -- -- --------- --------- ------ ------ Net increase(decrease), Class I $ 1,254 $ -- $ -- $ -- ========= ========= ====== ====== Class N shares: Sold $ 132,058 $ 10,001 $ -- $ -- Issued to shareholders in reinvestment of distributions -- 8,465 -- -- Repurchased (118,436) (137,764) -- -- --------- --------- ------ ------ Net increase(decrease), Class N $ 13,622 $(119,298) $ -- $ -- ========= ========= ====== ====== SHARE AMOUNTS Class I shares: Sold 80 -- -- -- Issued to shareholders in reinvestment of distributions -- -- -- -- Repurchased (13) -- -- -- --------- --------- ------ ------ Net increase(decrease), Class I 67 -- -- -- ========= ========= ====== ====== Class N shares: Sold 7,511 583 -- -- Issued to shareholders in reinvestment of distributions -- 535 -- -- Repurchased (6,784) (10,914) -- -- --------- --------- ------ ------ Net increase(decrease), Class N 727 (9,796) -- -- ========= ========= ====== ====== PURCHASES AND SALES OF INVESTMENT SECURITIES: (EXCLUDING SHORT-TERM SECURITIES) Purchases of securities $ 74,544 $ 202,304 $1,082 $2,077 Proceeds from sales of securities 65,083 362,350 1,083 1,617 STRATEGIC INCOME FUND BALANCED FUND ----------------------------- ------------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2000 DEC. 31, 1999 JUNE 30, 2000 DEC. 31, 1999** -------------- ------------- -------------- --------------- FUND SHARE TRANSACTIONS DOLLAR AMOUNTS: Class I shares: Sold $ -- $ -- $18,121 $ 947 Issued to shareholders in reinvestment of distributions -- -- 715 -- Repurchased (2,000) -- (3,020) -- ------- ------- ------- ------ Net increase(decrease), Class I $(2,000) $ -- $15,816 $ 947 ======= ======= ======= ====== Class N shares: Sold $ -- $ -- $ -- $ -- Issued to shareholders in reinvestment of distributions -- -- -- -- Repurchased -- -- -- -- ------- ------- ------- ------ Net increase(decrease), Class N $ -- $ -- $ -- $ -- ======= ======= ======= ====== SHARE AMOUNTS Class I shares: Sold -- -- 1,775 95 Issued to shareholders in reinvestment of distributions -- -- 1 -- Repurchased (211) -- (276) -- ------- ------- ------- ------ Net increase(decrease), Class I (211) -- 1,500 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 $ 1,297 $11,635 $18,520 $1,475 Proceeds from sales of securities 2,942 8,896 7,436 551
The accompanying notes are an integral part of the financial statements. Page 103 Dresdner RCM Global Funds Financial Highlights For a share outstanding throughout each fiscal year or period ended:
LARGE CAP GROWTH FUND -------------------------------------------------------------------- CLASS I -------------------------------------------------------------------- (UNAUDITED) YEAR ENDED DECEMBER 31, SIX MONTHS ENDED ----------------------------------------------- JUNE 30, 2000 1999 1998 1997 1996(3) ---------------- -------- -------- -------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 19.07 $ 16.14 $12.53 $10.00 $10.00 ------- ------- ------ ------ ------ Income from investment operations: Net investment income (loss) (0.03) (0.05) (0.02) 0.01 -- Net realized and unrealized gain on investments 0.74 6.95 5.51 3.17 -- ------- ------- ------ ------ ------ Total from investment operations 0.71 6.90 5.49 3.18 -- Less distributions: From net investment income -- -- (0.01) (0.01) -- From net realized gain on investments -- (3.97) (1.87) (0.64) -- ------- ------- ------ ------ ------ Total distributions -- (3.97) (1.88) (0.65) -- ------- ------- ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 19.78 $ 19.07 $16.14 $12.53 $10.00 ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ TOTAL RETURN (7) 3.72% 44.84% 44.11% 31.99% 0.00% ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $23,265 $14,898 $7,935 $5,025 $4,000 ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 0.95% 0.95% 0.95% 0.95% 0.00%(8) ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ Without waiver and reimbursement (15) 1.82% 2.45% 3.04% 2.63% --% ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) (0.28)% (0.26)% (0.11)% 0.10% 0.00%(8) ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ Without waiver and reimbursement (15) (1.15)% (1.76)% (2.20)% (1.58)% --% ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ Portfolio turnover 20.08% 109.29% 99.58% 119.87% 0.00% ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ LARGE CAP GROWTH FUND ---------------------------------- CLASS N ---------------------------------- (UNAUDITED) YEAR ENDED SIX MONTHS ENDED DECEMBER 31, JUNE 30, 2000 1999(9) ---------------- ------------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $19.00 $16.60 ------ ------ Income from investment operations: Net investment income (loss) (0.05) (0.08) Net realized and unrealized gain on investments 0.72 6.45 ------ ------ Total from investment operations 0.67 6.37 Less distributions: From net investment income -- -- From net realized gain on investments -- (3.97) ------ ------ Total distributions -- (3.97) ------ ------ NET ASSET VALUE, END OF PERIOD $19.67 $19.00 ------ ------ ------ ------ TOTAL RETURN (7) 3.47% 40.48% ------ ------ ------ ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $6,427 $ 926 ------ ------ ------ ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.20% 1.20% ------ ------ ------ ------ Without waiver and reimbursement (15) 2.88% 60.04% ------ ------ ------ ------ Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) (0.57)% (0.55)% ------ ------ ------ ------ Without waiver and reimbursement (15) (2.25)% (59.39)% ------ ------ ------ ------ Portfolio turnover 20.08% 109.29% ------ ------ ------ ------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights."
BIOTECHNOLOGY FUND ------------------------------------------------------- CLASS N ------------------------------------------------------- (UNAUDITED) YEAR ENDED DECEMBER 31, SIX MONTHS ENDED ---------------------------------- JUNE 30, 2000 1999 1998 1997(4) ---------------- -------- -------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 20.02 $ 11.44 $10.00 $10.00 -------- ------- ------ ------ Income from investment operations: Net investment loss (0.15) (0.15) (0.10) -- Net realized and unrealized gain on investments 14.90 12.03 1.86 -- -------- ------- ------ ------ Total from investment operations 14.75 11.88 1.76 -- Less distributions: From net investment income -- -- -- -- From net realized gain on investments -- (3.30) (0.32) -- -------- ------- ------ ------ Total distributions -- (3.30) (0.32) -- -------- ------- ------ ------ NET ASSET VALUE, END OF PERIOD $ 34.77 $ 20.02 $11.44 $10.00 -------- ------- ------ ------ -------- ------- ------ ------ TOTAL RETURN (7) 73.68% 111.39% 17.76% 0.00%(8) -------- ------- ------ ------ -------- ------- ------ ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $465,683 $14,870 $3,911 $3,000 -------- ------- ------ ------ -------- ------- ------ ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.50% 1.50% 1.50% 0.01%(8) -------- ------- ------ ------ -------- ------- ------ ------ Without waiver and reimbursement (15) 1.50% 4.53% 4.87% --% -------- ------- ------ ------ -------- ------- ------ ------ Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) (0.98)% (1.09)% (0.95)% 0.01%(8) -------- ------- ------ ------ -------- ------- ------ ------ Without waiver and reimbursement (15) (0.98)% (4.12)% (4.32)% --% -------- ------- ------ ------ -------- ------- ------ ------ Portfolio turnover 303.77% 431.27% 127.21% 0.00% -------- ------- ------ ------ -------- ------- ------ ------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights." The accompanying notes are an integral part of the financial statements. Page 104 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 ------------------------------------------ ---------------------------------- YEAR ENDED (UNAUDITED) DECEMBER 31, (UNAUDITED) YEAR ENDED SIX MONTHS ENDED --------------------- SIX MONTHS ENDED DECEMBER 31, JUNE 30, 2000 1999 1998(5) JUNE 30, 2000 1999(10) ---------------- -------- -------- ---------------- ------------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 14.99 $10.00 $10.00 $14.95 $10.34 ------- ------ ------ ------ ------ Income from investment operations: Net investment loss (0.06) (0.06) -- (0.08) (0.29) Net realized and unrealized gain on investments 0.63(16) 5.28 -- 0.64(16) 5.13 ------- ------ ------ ------ ------ Total from investment operations 0.57 5.22 -- 0.56 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 $ 15.56 $14.99 $10.00 $15.51 $14.95 ------- ------ ------ ------ ------ ------- ------ ------ ------ ------ TOTAL RETURN (7) 3.80% 52.44% 0.00% 3.75% 47.07% ------- ------ ------ ------ ------ ------- ------ ------ ------ ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $29,972 $1,499 $1,000 $3,806 $ 759 ------- ------ ------ ------ ------ ------- ------ ------ ------ ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.25% 1.25% 0.00%(8) 1.50% 1.50% ------- ------ ------ ------ ------ ------- ------ ------ ------ ------ Without waiver and reimbursement (15) 1.99% 14.36% --% 4.73% 35.08% ------- ------ ------ ------ ------ ------- ------ ------ ------ ------ Ratio of net investment income to average net assets: With waiver and reimbursement (15) (0.77)% (0.47)% 0.00%(8) (1.00)% (2.66)% ------- ------ ------ ------ ------ ------- ------ ------ ------ ------ Without waiver and reimbursement (15) (1.51)% (13.58)% --% (4.23)% (36.24)% ------- ------ ------ ------ ------ ------- ------ ------ ------ ------ Portfolio turnover 32.85% 43.35% 0.00% 32.85% 43.35% ------- ------ ------ ------ ------ ------- ------ ------ ------ ------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights."
GLOBAL SMALL CAP FUND -------------------------------------------------------------------- CLASS I -------------------------------------------------------------------- (UNAUDITED) YEAR ENDED DECEMBER 31, SIX MONTHS ENDED ----------------------------------------------- JUNE 30, 2000 1999 1998 1997 1996(3) ---------------- -------- -------- -------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 23.38 $ 12.37 $11.09 $10.00 $10.00 ------- ------- ------ ------ ------ Income from investment operations: Net investment loss (0.09) (0.17) (0.13) (0.13) -- Net realized and unrealized gain on investments 3.65 12.96 2.23 2.64 -- ------- ------- ------ ------ ------ Total from investment operations 3.56 12.79 2.10 2.51 -- Less distributions: From net realized gain on investments -- (1.78) (0.82) (1.42) -- ------- ------- ------ ------ ------ Total distributions -- (1.78) (0.82) (1.42) -- ------- ------- ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 26.94 $ 23.38 $12.37 $11.09 $10.00 ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ TOTAL RETURN (7) 15.18% 104.63% 19.29% 25.48% 0.00% ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $29,486 $24,073 $5,479 $4,456 $4,000 ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.50% 1.50% 1.75% 1.75% 0.00%(8) ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ Without waiver and reimbursement (15) 1.72% 4.10% 3.86% 3.09% --% ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) (0.72)% (1.13)% (1.03)% (1.14)% 0.00%(8) ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ Without waiver and reimbursement (15) (0.94)% (3.73)% (3.14)% (2.49)% --% ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ Portfolio turnover 102.60% 161.61% 184.38% 153.49% 0.00% ------- ------- ------ ------ ------ ------- ------- ------ ------ ------ GLOBAL SMALL CAP FUND ---------------------------------- CLASS N ---------------------------------- (UNAUDITED) YEAR ENDED SIX MONTHS ENDED DECEMBER 31, JUNE 30, 2000 1999(11) ---------------- ------------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 23.31 $11.63 ------- ------ Income from investment operations: Net investment loss (0.11) (0.21) Net realized and unrealized gain on investments 3.70 13.67 ------- ------ Total from investment operations 3.59 13.46 Less distributions: From net realized gain on investments -- (1.78) ------- ------ Total distributions -- (1.78) ------- ------ NET ASSET VALUE, END OF PERIOD $ 26.90 $23.31 ------- ------ ------- ------ TOTAL RETURN (7) 15.32% 116.97% ------- ------ ------- ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $17,448 $1,430 ------- ------ ------- ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.75% 1.75% ------- ------ ------- ------ Without waiver and reimbursement (15) 2.21% 16.71% ------- ------ ------- ------ Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) (0.83)% (1.49)% ------- ------ ------- ------ Without waiver and reimbursement (15) (1.29)% (16.44)% ------- ------ ------- ------ Portfolio turnover 102.60% 161.61% ------- ------ ------- ------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights." The accompanying notes are an integral part of the financial statements. Page 105 Dresdner RCM Global Funds Financial Highlights For a share outstanding throughout each fiscal year or period ended:
GLOBAL TECHNOLOGY FUND ------------------------------------------------------------------------------- CLASS I ------------------------------------------------------------------------------- (UNAUDITED) SIX MONTHS YEAR ENDED DECEMBER 31, ENDED ------------------------------------------------------------- JUNE 30, 2000 1999 1998 1997 1996 1995(2) ------------- --------- -------- -------- -------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 59.21 $ 21.40 $ 13.69 $12.60 $10.04 $10.00 -------- -------- ------- ------ ------ ------ Income from investment operations: Net investment loss (0.26) (0.35) (0.16) (0.16) (0.15) -- Net realized and unrealized gain (loss) on investments 10.87 39.54 8.44 3.46 2.80 0.04 -------- -------- ------- ------ ------ ------ Total from investment operations 10.61 39.19 8.28 3.30 2.65 0.04 Less distributions: From net realized gain on investments -- (1.38) (0.57) (2.21) (0.09) -- -------- -------- ------- ------ ------ ------ Total distributions -- (1.38) (0.57) (2.21) (0.09) -- -------- -------- ------- ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 69.82 $ 59.21 $ 21.40 $13.69 $12.60 $10.04 -------- -------- ------- ------ ------ ------ -------- -------- ------- ------ ------ ------ TOTAL RETURN (7) 17.92% 182.95% 60.53% 27.08% 26.41% 0.40% -------- -------- ------- ------ ------ ------ -------- -------- ------- ------ ------ ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $379,724 $197,897 $18,558 $6,950 $5,117 $ 954 -------- -------- ------- ------ ------ ------ -------- -------- ------- ------ ------ ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.32% 1.50% 1.75% 1.75% 1.73% 0.00%(8) -------- -------- ------- ------ ------ ------ -------- -------- ------- ------ ------ ------ Without waiver and reimbursement (15) 1.32% 1.50% 2.49% 2.45% 7.75% --% -------- -------- ------- ------ ------ ------ -------- -------- ------- ------ ------ ------ Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) (0.75)% (1.02)% (0.99)% (1.15)% (1.34)% (0.02)%(8) -------- -------- ------- ------ ------ ------ -------- -------- ------- ------ ------ ------ Without waiver and reimbursement (15) (0.75)% (1.02)% (1.73)% (1.86)% 7.36% --% -------- -------- ------- ------ ------ ------ -------- -------- ------- ------ ------ ------ Portfolio turnover 130.26% 119.32% 265.99% 189.41% 155.58% 0.00% -------- -------- ------- ------ ------ ------ -------- -------- ------- ------ ------ ------ GLOBAL TECHNOLOGY FUND ------------------------------- CLASS N ------------------------------- (UNAUDITED) SIX MONTHS YEAR ENDED ENDED DECEMBER 31, JUNE 30, 2000 1999(12) ------------- ------------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 59.13 $ 24.01 -------- ------- Income from investment operations: Net investment loss (0.27) (0.49) Net realized and unrealized gain (loss) on investments 10.80 36.99 -------- ------- Total from investment operations 10.53 36.50 Less distributions: From net realized gain on investments -- (1.38) -------- ------- Total distributions -- (1.38) -------- ------- NET ASSET VALUE, END OF PERIOD $ 69.66 $ 59.13 -------- ------- -------- ------- TOTAL RETURN (7) 17.81% 152.69% -------- ------- -------- ------- RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $383,142 $82,330 -------- ------- -------- ------- Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.39% 1.75% -------- ------- -------- ------- Without waiver and reimbursement (15) 1.39% 1.99% -------- ------- -------- ------- Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) (0.79)% (1.32)% -------- ------- -------- ------- Without waiver and reimbursement (15) (0.79)% (1.56)% -------- ------- -------- ------- Portfolio turnover 130.26% 119.32% -------- ------- -------- -------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights."
GLOBAL HEALTH CARE FUND -------------------------------------------------------------------- CLASS N -------------------------------------------------------------------- (UNAUDITED) YEAR ENDED DECEMBER 31, SIX MONTHS ENDED ----------------------------------------------- JUNE 30, 2000 1999 1998 1997 1996(3) ---------------- -------- -------- -------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 14.25 $13.42 $11.65 $10.00 $10.00 ------- ------ ------ ------ ------ Income from investment operations: Net investment loss (0.07) (0.11) (0.09) (0.06) -- Net realized and unrealized gain on investments 7.83 3.53 3.02 3.03 -- ------- ------ ------ ------ ------ Total from investment operations 7.76 3.42 2.93 2.97 -- Less distributions: From net realized gain on investments -- (2.59) (1.16) (1.32) -- ------- ------ ------ ------ ------ Total distributions -- (2.59) (1.16) (1.32) 10.00 ------- ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 22.01 $14.25 $13.42 $11.65 $ - ------- ------ ------ ------ ------ ------- ------ ------ ------ ------ TOTAL RETURN (7) 54.39% 28.74% 25.57% 30.00% 0.00% ------- ------ ------ ------ ------ ------- ------ ------ ------ ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $65,555 $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% 1.50% 0.00%(8) ------- ------ ------ ------ ------ ------- ------ ------ ------ ------ Without waiver and reimbursement (15) 2.04% 4.85% 3.65% 2.93% --% ------- ------ ------ ------ ------ ------- ------ ------ ------ ------ Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) (0.77)% (0.81)% (0.69)% (0.55)% 0.00%(8) ------- ------ ------ ------ ------ ------- ------ ------ ------ ------ Without waiver and reimbursement (15) (1.31)% (4.16)% (2.84)% (1.98)% --% ------- ------ ------ ------ ------ ------- ------ ------ ------ ------ Portfolio turnover 279.14% 393.83% 153.92% 157.65% 0.00% ------- ------ ------ ------ ------ ------- ------ ------ ------ ------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights." The accompanying notes are an integral part of the financial statements. Page 106 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 ------------------------------------------------------------ --------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS YEAR ENDED DECEMBER 31, SIX MONTHS YEAR ENDED ENDED --------------------------------------------- ENDED DECEMBER 31, JUNE 30, 2000 1999 1998 1997 1996(6) 1995 JUNE 30, 2000 1999(11) ------------- -------- -------- ------- ------- ------- ------------- ------------ PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 22.34 $ 14.98 $ 13.70 $ 12.72 $ 11.56 $ 10.00 $22.31 $14.78 -------- -------- -------- ------- ------- ------- ------ ------ Income from investment operations: Net investment income 0.01 0.02 0.06 0.06 0.04 0.12 0.01 0.01 Net realized and unrealized gain (loss) on investments (2.98) 8.91 1.80 2.22 2.16 1.68 (3.00) 9.08 -------- -------- -------- ------- ------- ------- ------ ------ Total from investment operations (2.97) 8.93 1.86 2.28 2.20 1.80 (2.99) 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 $ 19.37 $ 22.34 $ 14.98 $ 13.70 $ 12.72 $ 11.56 $19.32 $22.31 -------- -------- -------- ------- ------- ------- ------ ------ -------- -------- -------- ------- ------- ------- ------ ------ TOTAL RETURN (7) (13.29)% 60.66% 13.81% 17.93% 19.31% 17.98% (13.40)% 62.48% -------- -------- -------- ------- ------- ------- ------ ------ -------- -------- -------- ------- ------- ------- ------ ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $319,619 $285,561 $121,975 $98,443 $52,605 $34,347 $5,129 $1,738 -------- -------- -------- ------- ------- ------- ------ ------ -------- -------- -------- ------- ------- ------- ------ ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.00% 1.00% 1.00% 1.00% 0.99% 0.75% 1.25% 1.25% -------- -------- -------- ------- ------- ------- ------ ------ -------- -------- -------- ------- ------- ------- ------ ------ Without waiver and reimbursement (15) 1.00% 1.06% 1.06% 1.06% 1.25% 1.11% 2.50% 10.89% -------- -------- -------- ------- ------- ------- ------ ------ -------- -------- -------- ------- ------- ------- ------ ------ Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) 0.06% 0.12% 0.37% 0.41% 0.32% 1.19% 0.06% 0.07% -------- -------- -------- ------- ------- ------- ------ ------ -------- -------- -------- ------- ------- ------- ------ ------ Without waiver and reimbursement (15) 0.06% 0.06% 0.31% 0.35% 0.06% 0.83% (1.19)% (9.56)% -------- -------- -------- ------- ------- ------- ------ ------ -------- -------- -------- ------- ------- ------- ------ ------ Portfolio turnover 58.35% 139.69% 84.49% 122.43% 119.09% 87.40% 58.35% 139.69% -------- -------- -------- ------- ------- ------- ------ ------ -------- -------- -------- ------- ------- ------- ------ ------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights."
EMERGING MARKETS FUND ---------------------------------------------------------------------------------------- CLASS I CLASS N ---------------------------------------------------- ------------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS YEAR ENDED DECEMBER 31, SIX MONTHS YEAR ENDED ENDED ---------------------------------- ENDED DECEMBER 31, JUNE 30, 2000 1999 1998 1997(4) JUNE 30, 2000 1999(11) ------------- -------- -------- -------- ------------- ------------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $16.87 $ 9.06 $ 9.99 $10.00 $16.84 $ 9.13 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income (loss) 0.05 (0.01) 0.12 -- 0.03 (0.06) Net realized and unrealized gain (loss) on investments (0.63) 8.29 (0.97) (0.01) (0.63) 8.24 ------ ------ ------ ------ ------ ------ Total from investment operations (0.58) 8.28 (0.85) (0.01) 0.60 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 $16.29 $16.87 $ 9.06 $ 9.99 $16.24 $16.84 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ TOTAL RETURN (7) (3.62)% 92.12% (8.50)% --% (3.74)% 90.31% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $6,778 $5,154 $2,734 $2,996 $2,159 $ 299 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.50% 1.50% 1.50% 0.01%(8) 1.75% 1.75% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Without waiver and reimbursement (15) 4.46% 9.33% 8.29% --% 6.10% 79.18% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) 0.52% (0.13)% 1.23% --% 0.40% (0.68)% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Without waiver and reimbursement (15) (2.44)% (7.96)% (5.56)% --% (3.95)% (78.11)% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Portfolio turnover 81.45% 215.64% 279.25% --%(8) 81.45% 215.64% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights." The accompanying notes are an integral part of the financial statements. Page 107 Dresdner RCM Global Funds Financial Highlights For a share outstanding throughout each fiscal year or period ended:
EUROPE FUND -------------------------------------------------------------------- CLASS I CLASS N -------------------- ------------------------------------------- (UNAUDITED) (UNAUDITED) SIX MONTHS SIX MONTHS YEAR ENDED DECEMBER 31, ENDED ENDED ---------------------- JUNE 30, 2000(1)(14) JUNE 30, 2000(1) 1999(1) 1998(1) -------------------- ---------------- -------- --------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $20.58 $ 16.12 $ 13.66 $ 12.59 ------ ------- ------- -------- Income from investment operations: Net investment income (loss) (0.02) (0.09) (0.01) (0.05) Net realized and unrealized gain (loss) on investments (4.18) 0.34(16) 5.66 4.60 ------ ------- ------- -------- Total from investment operations (4.20) 0.25 5.65 4.55 Less distributions: From net investment income -- -- -- (0.17) In excess of net investment income -- -- (0.02) -- From net realized gain on investments -- -- (3.17) (3.31) ------ ------- ------- -------- Total distributions -- -- (3.19) (3.48) ------ ------- ------- -------- NET ASSET VALUE, END OF PERIOD $16.38 $ 16.37 $ 16.12 $ 13.66 ------ ------- ------- -------- ------ ------- ------- -------- TOTAL RETURN (7) 1.61% 1.55% 43.59% 37.23% ------ ------- ------- -------- ------ ------- ------- -------- RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $1,092 $80,852 $67,910 $191,338 ------ ------- ------- -------- ------ ------- ------- -------- Ratio of expenses to average net assets: (17) With waiver and reimbursement (15) 1.35% 1.60% 1.03% --% ------ ------- ------- -------- ------ ------- ------- -------- Without waiver and reimbursement (15) 10.25% 2.07% 2.01% 1.97% ------ ------- ------- -------- ------ ------- ------- -------- Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) (0.37)% (1.01)% (0.11)% --% ------ ------- ------- -------- ------ ------- ------- -------- Without waiver and reimbursement (15) (9.27)% (1.48)% (1.08)% (0.31)% ------ ------- ------- -------- ------ ------- ------- -------- Portfolio turnover 86.62% 86.62% 202.90% 114.00% ------ ------- ------- -------- ------ ------- ------- -------- EUROPE FUND ------------------------------------- CLASS N ------------------------------------- YEAR ENDED DECEMBER 31, ------------------------------------- 1997(1) 1996(1) 1995 --------- --------- --------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 10.66 $ 9.20 $ 9.20 -------- -------- -------- Income from investment operations: Net investment income (loss) 0.01 0.03 0.07 Net realized and unrealized gain (loss) on investments 2.70 1.45 (0.07) -------- -------- -------- Total from investment operations 2.71 1.48 0.00 Less distributions: From net investment income (0.06) (0.02) -- In excess of net investment income -- -- -- From net realized gain on investments (0.72) -- -- -------- -------- -------- Total distributions (0.78) (0.02) -- -------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 12.59 $ 10.66 $ 9.20 -------- -------- -------- -------- -------- -------- TOTAL RETURN (7) 25.70% 15.87% 1.33% -------- -------- -------- -------- -------- -------- RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $176,414 $149,299 $128,932 -------- -------- -------- -------- -------- -------- Ratio of expenses to average net assets: (17) With waiver and reimbursement (15) --% --% --% -------- -------- -------- -------- -------- -------- Without waiver and reimbursement (15) 1.30% 1.42% 1.51% -------- -------- -------- -------- -------- -------- Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) --% --% --% -------- -------- -------- -------- -------- -------- Without waiver and reimbursement (15) 0.06% 0.33% 0.76% -------- -------- -------- -------- -------- -------- Portfolio turnover 85.00% 51.00% 40.00% -------- -------- -------- -------- -------- --------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights."
GLOBAL EQUITY FUND ------------------------------------------ CLASS I ------------------------------------------ YEAR ENDED (UNAUDITED) DECEMBER 31, SIX MONTHS ENDED --------------------- JUNE 30, 2000 1999 1998(5) ---------------- -------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $15.84 $10.00 $10.00 ------ ------ ------ Income from investment operations: Net investment loss (0.05) (0.03) -- Net realized and unrealized gain on investments 0.11 6.22 -- ------ ------ ------ Total from investment operations 0.06 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 $15.90 $15.84 $10.00 ------ ------ ------ ------ ------ ------ TOTAL RETURN (7) 0.44% 62.20% 0.00% ------ ------ ------ ------ ------ ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $1,590 $1,584 $1,000 ------ ------ ------ ------ ------ ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.25% 1.25% 0.00%(8) ------ ------ ------ ------ ------ ------ Without waiver and reimbursement (15) 13.02% 14.59% --% ------ ------ ------ ------ ------ ------ Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) (0.57)% (0.27)% 0.00%(8) ------ ------ ------ ------ ------ ------ Without waiver and reimbursement (15) (12.34)% (13.61)% --% ------ ------ ------ ------ ------ ------ Portfolio turnover 68.58% 149.96% 0.00% ------ ------ ------ ------ ------ ------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights." The accompanying notes are an integral part of the financial statements. Page 108 Dresdner RCM Global Funds Financial Highlights For a share outstanding throughout each fiscal year or period ended:
STRATEGIC INCOME FUND ------------------------------------------ CLASS I ------------------------------------------ YEAR ENDED (UNAUDITED) DECEMBER 31, SIX MONTHS ENDED --------------------- JUNE 30, 2000 1999 1998(5) ---------------- -------- -------- PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 9.55 $10.00 $10.00 ------ ------ ------ Income from investment operations: Net investment income 0.31 0.53 -- Net realized and unrealized gain (loss) on investments 0.11(16) (0.27) -- ------ ------ ------ Total from investment operations 0.42 0.26 -- Less distributions: From net investment income (0.25) (0.53) -- In excess of net investment income -- (0.18) -- From net realized gain on investments -- -- -- ------ ------ ------ Total distributions (0.25) (0.71) -- ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 9.72 $ 9.55 $10.00 ------ ------ ------ ------ ------ ------ TOTAL RETURN (7) 4.46% 2.67% 0.00% ------ ------ ------ ------ ------ ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $ 867 $2,866 $3,000 ------ ------ ------ ------ ------ ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 1.25% 1.25% 0.00%(8) ------ ------ ------ ------ ------ ------ Without waiver and reimbursement (15) 15.30% 5.31% --% ------ ------ ------ ------ ------ ------ Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) 6.60% 5.38% 0.00%(8) ------ ------ ------ ------ ------ ------ Without waiver and reimbursement (15) (7.45)% 1.32% --% ------ ------ ------ ------ ------ ------ Portfolio turnover 122.78% 346.34% 0.00% ------ ------ ------ ------ ------ ------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights."
BALANCED FUND --------------------------------- CLASS I --------------------------------- (UNAUDITED) SIX MONTHS ENDED YEAR ENDED JUNE 30, 2000 DECEMBER 31, ---------------- ------------ 1999(13) ------------ PER SHARE OPERATING PERFORMANCE: (1) Net asset value, beginning of period $ 10.65 $10.00 ------- ------ Income from investment operations: Net investment income 0.09 0.01 Net realized and unrealized gain on investments 0.21 0.64 ------- ------ Total from investment operations 0.30 0.65 Less distributions: From net investment income (0.03) -- ------- ------ Total distributions (0.03) -- ------- ------ NET ASSET VALUE, END OF PERIOD $ 10.92 $10.65 ------- ------ ------- ------ TOTAL RETURN (7) 2.77% 6.50% ------- ------ ------- ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in 000's) $17,429 $1,009 ------- ------ ------- ------ Ratio of expenses to average net assets: With waiver and reimbursement (15) 0.90% 0.90% ------- ------ ------- ------ Without waiver and reimbursement (15) 4.35% 41.29% ------- ------ ------- ------ Ratio of net investment income (loss) to average net assets: With waiver and reimbursement (15) 1.62% 1.41% ------- ------ ------- ------ Without waiver and reimbursement (15) (1.83)% (38.97)% ------- ------ ------- ------ Portfolio turnover 145.11% 59.94% ------- ------ ------- ------
- ------------------------------------ For Footnote References, see "Notes to Financial Highlights." The accompanying notes are an integral part of the financial statements. Page 109 Dresdner RCM Global Funds Notes to Financial Highlights June 30, 2000 (Unaudited) 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 30, 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) Commencement of operations was December 15, 1999. (14) Commencement of operations was March 3, 2000. (15) Annualized for periods of less than one year. (16) The amount shown for a share outstanding does not correspond with the aggregate net gain on investments for the period due to timing of sales and repurchases of Fund shares in relation to fluctuating market values of the investment of the Fund. (17) 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 Decemebr 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. The accompanying notes are an integral part of the financial statements. Page 110 Dresdner RCM Global Funds Notes to Financial Statements June 30, 2000 (Unaudited) 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 for the other series of the Capital Company are reported in the Dresdner RCM Capital Funds' semi-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 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 June 30, 2000, the Large Cap Growth Fund, Tax Managed Growth Fund, Global Small Cap Fund, Global Technology Fund, International Fund, Europe 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. 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. Page 111 Dresdner RCM Global Funds Notes to Financial Statements June 30, 2000 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 is valued at the closing bid price on such day. If no bid price is quoted on such day, then the security is 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 market value. Readily marketable securities traded only in the over-the-counter market that are not listed on NASDAQ or similar foreign reporting service are valued at the mean bid price, or using such other comparable sources as the Board of Directors of the appropriate Company in good faith deems appropriate to reflect their fair market value. Other portfolio securities held by the Funds are 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, sale or maturity. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis and includes accretion of discount. 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 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 Page 112 Dresdner RCM Global Funds Notes to Financial Statements June 30, 2000 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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. SHORT SALES: Each Fund, except the International Fund, may engage in short sales transactions. A short sale that is not made "against the box" is a transaction in which a Fund sells a security it does not own in anticipation of a decline in market Page 113 Dresdner RCM Global Funds Notes to Financial Statements June 30, 2000 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) price. When a Fund makes a short sale, the proceeds it receives are retained by the broker until the Fund replaces the borrowed security. In order to deliver the security to the buyer, the Fund must arrange through a broker to borrow the security and, in doing so, the Fund becomes obligated to replace the security borrowed at its market price at the time of replacement, whatever that price may be. G. DOLLAR ROLL TRANSACTIONS: A dollar roll transaction involves a sale by a Fund of securities that it holds with an agreement by the Fund to repurchase similar securities at an agreed upon price and date. The securities repurchased will bear the same interest as those sold, but generally will be collateralized at time of delivery by different pools of mortgages with different prepayment histories than those securities sold. The Fund is paid a fee for entering into a dollar roll transaction, that is accrued as income over the life of the dollar roll contract. During the period of sale and repurchase, the Fund will not be entitled to receive interest and principal payments on the securities sold. Management anticipates that the proceeds of the sale will be invested in additional instruments for the Fund, and the income from these investments, together with any additional fee income received on the dollar roll transaction will generate income for the Fund exceeding the interest that would have been earned on the securities sold. Dollar roll transactions involve the risk that the market value of the securities sold by the Fund may decline below the repurchase price of those similar securities which the Fund is obligated to purchase or that the return earned by the Fund with the proceeds of a dollar roll may not exceed transaction costs. H. 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. I. 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 in excess of 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. Page 114 Dresdner RCM Global Funds Notes to Financial Statements June 30, 2000 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) J. SECURITIES LENDING: For the month of January 2000, the Europe Fund had a Securities Lending Agreement with State Street Global Advisors ("SSgA"). For international securities, cash collateral was 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 invested 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 was paid to SSgA monthly. The Fund received a fee, payable monthly, negotiated by the Fund and SSgA, based on the number and duration of the lending transactions. At June 30, 2000, the Europe Fund had no securities on loan to brokers. Effective February 1, 2000, the Fund terminated its lending agreement with SSgA. K. REDEMPTION FEES: The Tax Managed Growth Fund charges a 1.00% redemption fee to shareholders of both the Class I and the Class N 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 six months ended June 30, 2000, the redemption fee for the Fund amounted to $5,057, which is included in the Statement of Changes in Net Assets. 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 investment management fees 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, 2000, 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 in the following table 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. Dresdner RCM has 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 any such payments during a five-year period to the extent that operating expenses are otherwise below the expense cap. Page 115 Dresdner RCM Global Funds Notes to Financial Statements June 30, 2000 (Unaudited) 2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED) For the period ended June 30, 2000, Dresdner RCM reimbursed the Funds for operating expenses that exceeded their stated expense limits. MANAGEMENT FEES, EXPENSE CAPS AND EXPENSE REIMBURSEMENTS PERIOD ENDED JUNE 30, 2000
ANNUAL MANAGEMENT FEE PERCENTAGES EXPENSES ------------------------------------------ ----------------------- FIRST $500 NEXT $500 ABOVE $1 EXPENSE FUND FLAT RATE MILLION MILLION BILLION CAPS REIMBURSEMENTS - ------------------------- --------- ---------- --------- -------- ------- -------------- Large Cap Growth Fund--I -- 0.70% 0.65% 0.60% 0.95% $ 87,467 Large Cap Growth Fund--N -- 0.70% 0.65% 0.60% 1.20% 29,041 Biotechnology Fund--N -- 1.00% 0.95% 0.90% 1.50% -- Tax Managed Growth Fund--I -- 0.75% 0.70% 0.65% 1.25% 55,250 Tax Managed Growth Fund--N -- 0.75% 0.70% 0.65% 1.50% 31,024 Global Small Cap Fund--I -- 1.00% 0.95% 0.90% 1.50% 32,247 Global Small Cap Fund--N -- 1.00% 0.95% 0.90% 1.75% 27,428 Global Technology Fund--I 1.00% -- -- -- 1.50% -- Global Technology Fund--N 1.00% -- -- -- 1.75% -- Global Health Care Fund--N -- 1.00% 0.95% 0.90% 1.50% 77,916 International Fund--I 0.75% -- -- -- 1.00% -- International Fund--N 0.75% -- -- -- 1.25% 20,855 Emerging Markets Fund--I 1.00% -- -- -- 1.50% 101,399 Emerging Markets Fund--N 1.00% -- -- -- 1.75% 35,263 Europe Fund--I 1.00% * -- -- -- 1.35% 28,166 Europe Fund--N 1.00% * -- -- -- 1.60% 185,574 Global Equity Fund--I -- 0.75% 0.70% 0.65% 1.25% 92,755 Global Equity Fund--N -- 0.75% 0.70% 0.65% 1.50% -- Strategic Income Fund--I -- 0.75% 0.70% 0.65% 1.25% 83,689 Strategic Income Fund--N -- 0.75% 0.70% 0.65% 1.50% -- Balanced Fund--I -- 0.65% 0.60% 0.55% 0.90% 93,954
* 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 six months ended June 30, 2000, the Biotechnology Fund, Class N, the Global Technology Fund, Class I and Class N, and the International Growth Equity Fund, Class I reimbursed, Dresdner RCM $79,063, $305,346, $33,268, and $77,573, respectively, under the above Reimbursement Agreement. At June 30, 2000, the Biotechnology Fund, Class N, had a remaining contingent liability of $201,350. Of this contingent liability, $26,220 and $175,130 expires on December 31, 2003 and 2004, respectively. The Global Technology Fund, Class I and Class N had no remaining Page 116 Dresdner RCM Global Funds Notes to Financial Statements June 30, 2000 (Unaudited) 2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED) contingent liability. The International Growth Equity Fund, Class I had a remaining contingent liability of $421,110. Of this contingent liability, $98,606, $105,743, $52,016, $71,435 and $93,310 expires on December 31, 2000, 2001, 2002, 2003 and 2004, respectively. On June 30, 2000, the Dresdner RCM Profit Sharing Plan, participation in which is limited to employees of Dresdner RCM, owned 293,075 shares and 405,143 shares of the total 10,938,396 and 16,762,469 outstanding shares of the Global Technology Fund and the International Fund, respectively. As of June 30, 2000, certain Dresdner RCM employees individually owned the following shares of the Funds:
FUND SHARES OWNED OUTSTANDING SHARES - ---------------------------------------- ------------ ------------------ Large Cap Growth Fund 283 1,503,006 Global Small Cap Fund 181 1,742,922 Global Technology Fund 435,637 10,938,396 Global Health Care Fund 210 2,978,984
As of June 30, 2000, clients of Dresdner Bank AG/Investment Management/Institutional Asset Management Division owned the following shares of the Funds:
FUND SHARES OWNED OUTSTANDING SHARES - ---------------------------------------- ------------ ------------------ Tax Managed Growth Fund 100,000 2,171,895 Global Small Cap Fund 320,064 1,742,922 Emerging Markets Fund 300,000 548,925 Global Equity Fund 100,000 100,000 Strategic Income Fund 89,252 89,252
Page 117 Dresdner RCM Global Funds Notes to Financial Statements June 30, 2000 (Unaudited) 2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED) At June 30, 2000, 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 4 69.03% Biotechnology Fund 3 77.64% Tax Managed Growth Fund 1 80.98% Global Small Cap Fund 5 81.16% Global Technology Fund 4 57.22% Global Health Care Fund 3 85.35% International Fund 3 35.79% Emerging Markets Fund 4 86.93% Europe Fund 4 43.53% Global Equity Fund 1 100.00% Strategic Income Fund 1 100.00% Balanced Fund 2 96.79%
* The Global Equity and Strategic Income Fund's shares are owned exclusively by clients of Dresdner Bank AG. For the other listed funds, the number of shareholders represents various fund supermarket programs and/or brokers who hold Fund shares in their name for the benefit of their customers. 3. DISTRIBUTOR Funds Distributor, Inc. (the "Distributor") acts as distributor of shares of the Funds. The Global Company and the Capital Company have adopted a distribution and service plan (the "Global Plan" and the "Capital Plan") and the Investment Company has adopted a distribution plan (the "Investment Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Global Plan and the Capital 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. Under the Investment Plan, 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. Page 118 Dresdner RCM Global Funds Notes to Financial Statements June 30, 2000 (Unaudited) 4. CAPITAL SHARES At June 30, 2000, 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 common stock at $0.001 par value, 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. At June 30, 2000, the unamortized balance of such expenses amounted to $7,518 and $10,081 for the Global Technology Fund and the Emerging Markets Fund, respectively. Organization costs on all other Funds were fully amortized at June 30, 2000. 6. WRITTEN OPTIONS AND FORWARD FOREIGN CURRENCY CONTRACTS Transactions in written put and call options for the six months ended June 30, 2000 for the Global Technology Fund were as follows:
AMOUNT OF NUMBER OF PREMIUMS CONTRACTS ----------- --------- Options outstanding at December 31, 1999 $ -- -- Options sold 5,430,987 39,087 Options cancelled in closing purchase transactions (2,725,248) (38,400) Options expired prior to exercise (2,705,739) (687) Options exercised -- -- ----------- -------- Options outstanding at June 30, 2000 $ -- -- =========== ========
No written options were outstanding at June 30, 2000. Page 119 Dresdner RCM Global Funds Notes to Financial Statements June 30, 2000 (Unaudited) 6. WRITTEN OPTIONS AND FORWARD FOREIGN CURRENCY CONTRACTS (CONTINUED) Forward foreign currency contracts outstanding at June 30, 2000 are as follows:
IN CONTRACTS EXCHANGE SETTLEMENT NET UNREALIZED FUND SALES TO DELIVER FOR DATE VALUE APPRECIATION - ------------------------- ------ ---------- -------- ---------- -------- -------------- Strategic Income Fund EUD 135,000 $132,705 9/28/00 $129,595 $3,110 ======== ======== ======
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 per series for each Board meeting attended, and $250 per series for each committee meeting attended. Each Director who is not an interested person of the Capital Company (as defined in the 1940 Act) receives from the Capital Company an annual retainer of $9,000, plus $1,500 per series for each Board meeting attended, and $500 per series for each committee meeting attended. 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 per series for each Board meeting attended. The Europe Fund also pays each member of the strategic planning and communications subcommittee $1,500 for each meeting attended. Each Director of the Global Company and Capital 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 $15,723 at a weighted average interest rate of 6.96%. The maximum loan outstanding during the period ended June 30, 2000 was $4,116,376. Interest expense of $8,384 was recorded during the period and has been included in miscellaneous expense on the statement of operations. At June 30, 2000, there were no such borrowings outstanding. Page 120 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 monthly portfolio holdings by calling 1-800-726-7240. Additional information is available on our website at www.DRCMFunds.com. Page 121 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-----