-----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, DNiJR7dng81/VwD5FqNwNYGeT5ZD/bwTaOcSh55vcGJg/OxGLP412QaROUM6B7Wz BBwjbriOQE4hyAn+LbEfzg== 0001047469-98-033153.txt : 19980901 0001047469-98-033153.hdr.sgml : 19980901 ACCESSION NUMBER: 0001047469-98-033153 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980831 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RCM CAPITAL FUNDS INC /MD/ CENTRAL INDEX KEY: 0000310619 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 942564439 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-02913 FILM NUMBER: 98700991 BUSINESS ADDRESS: STREET 1: FOUR EMBARCADERO CTR STREET 2: STE 2900 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4159545474 FORMER COMPANY: FORMER CONFORMED NAME: RCM CAPITAL FUNDS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: RCM GROWTH EQUITY FUND INC DATE OF NAME CHANGE: 19920126 N-30D 1 N-30D | Dresdner RCM | Capital Funds June 30, 1998 | Semi-Annual Report ------------------------- [LOGO] Dresdner RCM Global Funds ------------------------- August 21, 1998 DEAR SHAREHOLDERS: Enclosed is the Dresdner RCM Capital Funds (the "Funds") Semi-Annual Shareholder Report for the six months ended June 30, 1998. Inside, you'll find an overview of the economic and market conditions that influenced stock prices during that time. Following this overview are reports from managers of the individual Funds that describe the types of investments that Dresdner RCM Global Investors LLC ("Dresdner RCM"), the Funds' investment manager, made in this environment. Included in each report is a summary of Fund performance and a list of Fund holdings at the end of the reporting period. In the first half of 1998, U.S. stocks continued to break new highs, buoyed by strong demand from investors at home and abroad. Stocks in Europe also advanced, as earnings expectations improved. Stocks in Japan and the emerging markets moved lower during this time. Although the economies of Asia seemed to stabilize in the first months of the year, it was soon apparent that the problems there, which contributed to a recession in Japan, were deeper than investors first realized. As stocks in Asia's emerging markets responded negatively to these conditions, investors fled stocks in other emerging markets as well. Throughout this time, Dresdner RCM maintained its consistent, disciplined "bottom-up" investment strategy. This helped identify attractive values in markets that had become increasingly overpriced--as well as opportunities in markets with weaker valuations. In choosing stocks for the individual Funds, we draw on the research of more than 175 investment professionals, using teams of analysts--many of whom have had professional industry experience in the sectors they follow. We also investigate company fundamentals through Grassroots Research, our proprietary research organization. From a network of more than 37,000 industry contacts in 50 countries, this organization gathers information on local market and industry conditions. To this research, our staff economists add assessments of regional and global trends. We use a host of unique research tools to give each investment idea a thorough reality check. This process provides portfolio managers with a continuous flow of industry and company information and helps them compare their ideas with those of other managers. Through a proprietary popularity measurement system, we also monitor the opinions of sell-side professionals. The companies we select have solid potential for sustained earnings growth due to unique market niches, proprietary products and services, and outstanding research and development capabilities. We make sure that the interests of company managers are aligned with those of their shareholders, and that the companies demonstrate well-capitalized balance sheets and sound accounting principles. From the firms that meet these criteria, we choose those whose stocks have attractive risk-adjusted valuations versus others in their sector. We believe this approach has served the Funds well in the first half of 1998. Thank you for your continued support. Sincerely, /s/ DeWitt Bowman DeWitt Bowman Chairman of the Board Economic and Market Overview World stock prices advanced further in the first half of 1998. During this time, strong gains in the United States and Europe far outpaced declines in Asia and other emerging markets. Prices remained volatile, however, as stock investors interpreted conflicting signals for economic growth and inflation. In the U.S., anticipated growth in corporate earnings and positive economic fundamentals helped stock prices reach new highs. Despite concerns that economic problems in Asia would trim U.S. exports, stock prices continued to climb. During the first half of 1998, the Standard & Poor's 500 Index earned a total return of 17.71% for the six months ended June 30, 1998. Meanwhile, ongoing price restraints and lower costs for Asian imports helped inflation fall--which kept interest rates and bond yields low. Subsequent to the close of the second quarter, earnings announcements signaled a collapse in growth as exports to Asia began to decline. Stocks in Europe advanced on further improvements in earnings expectations. Most European companies remained insulated from Asia's troubles due to strong inter-regional trade. Stocks also benefited from a positive balance of supply and demand, which resulted from a rising tide of corporate share buyback programs and the spread of stock ownership through private pension plans and equity mutual funds. ASIAN ECONOMIC CRISIS DEEPENS In the fourth quarter of 1997, the U.S. gross domestic product (GDP)--which measures the production of goods and services--rose at an annualized rate of 3.0%. With continued price restraints and gains in productivity, inflation had fallen to 1.7%. In the first quarter of 1998, with lower import prices and a flood of cash from overseas, GDP growth improved to 5.4%. Despite upward pressure on wages from tight employment, inflation fell to 1.4%, its lowest level since 1986. After correcting in the first weeks of the year, on concerns that Asia's economic woes would trim corporate profits, U.S. stock prices moved sharply higher in February and March. In addition to positive economic fundamentals, which included the strongest level of consumer confidence in decades, signs that Asian economies were stabilizing with support from the International Monetary Fund (IMF) helped increase stock demand. At the same time, corporate consolidations and stock buyback programs continued to reduce stock supplies. It soon became clear, however, that Asia's problems were getting worse and included the onset of a recession in Japan. Meanwhile, the prospect of lower earnings growth in the U.S., a federal budget surplus that will likely shrink Treasury bond supplies, and strong demand for Treasuries by foreign investors caused bond yields to continue to fall. Stock prices corrected briefly, but managed a modest gain for the second quarter--helped by positive economic fundamentals and a benign inflationary backdrop. The worsening of Asia's problems produced greater distinctions between the earnings outlooks for U.S. companies that sell to or compete with Asian firms and companies that import from Asia or have no Asian ties. Companies in the first group, largely industrial and basic materials firms, saw sharp drops in earnings expectations. Companies in the second group, typically service and consumer firms, saw little impact on earnings or are benefiting from reduced import costs. This "two-tiered" response to Asia's woes further narrowed the universe of stocks with strong price gains. Over the past six months, the market became even more focused on stocks with visible earnings streams and strong liquidity. As in 1997, this sentiment generally favored stocks of larger firms. Strong demand from foreign investors for familiar names further supported this trend. Large multinational firms benefited from strong European sales, which offset weakening Asian demand. In an environment of strong market liquidity and low inflation, the Funds have remained fully invested. By concentrating on companies with solid fundamentals and strong potential for earnings growth--through a "bottom-up" investment approach--the Funds made the most of recent market opportunities. This investment strategy led us to overweight health care, which benefited from the introduction of new products and strong pricing flexibility. We also maintained an overweight in the financial sector, which has benefited from low interest rates, as well as technology stocks, which have advanced on the long-term growth prospects for their sector. QUALITY GROWTH STOCKS SHOULD OUTPERFORM We believe the problems in Asia are likely to worsen further before they improve, as analysts are still trimming their economic and earnings forecasts. For this reason, we expect to remain underweighted in Japan and the emerging markets of Asia. Page 1 We currently expect to remain overweighted in Europe, because of companies' improving earnings through restructuring and domestic growth. Given our continued concern over Asia, we remain underweighted in the cyclicals and commodities sectors. On a global basis, our position in U.S. cyclical companies should also remain underweighted. We believe U.S. GDP growth will slow in the second half of 1998 to a rate of 2.0% to 2.5%. Although a tight labor market may keep pressure on wages, the inability of most companies to raise prices, combined with slower growth, should help keep inflation low. This should prevent the Federal Reserve from raising interest rates, but corporate profit margins may continue to shrink. The market should continue to reward companies that deliver solid earnings growth, given the scarcity of such companies. With emphasis on quality companies with strong earnings potential, the Dresdner RCM Capital Funds should perform well in this climate. Page 2 Dresdner RCM Growth Equity Fund Management's Performance Review Mid-cap stocks performed strongly in the first half of 1998, benefiting from the same positive economic fundamentals that stocks as a whole enjoyed. With the market looking for reliable earnings and strong liquidity, mid-cap stocks outperformed small-cap issues, but underperformed large-cap shares. As in other sectors, growth stocks outperformed value stocks. With strong returns from stocks in the telecommunications, technology services, and consumer sectors, the Dresdner RCM Growth Equity Fund (the "Fund") performed exceptionally well against its market benchmark, as well as against funds with similar investment objectives. For the six months ended June 30, 1998, the Fund earned a total return of 15.09%. Over the same time, the Russell Midcap Index earned a return of 9.13%, and mid-cap funds tracked by Lipper Analytical Services earned an average return of 10.66%. POSITIVE CONTRIBUTIONS FROM TELECOMMUNICATIONS, TECHNOLOGY SERVICES AND CONSUMER SHARES A large portion of this outperformance was due to the Fund's ongoing commitment to quality growth issues. Although the market temporarily sought value investments at times of stock price weakness, the prospect of a slowing economy and the continuation of low interest rates generally favored growth stocks. In the first quarter the Fund benefited from the early recognition of consolidation trends in the telecommunications sector, which led to an overweighting in competitive local exchange carriers and second-tier long-distance companies. In the second quarter, an overweighting in Internet service companies (e.g., America Online, Amazon.com, and Yahoo) contributed positively to performance. Stock selection in the technology-services area further improved returns--with strong gains from Citrix Systems, Visio, Network Associates and PeopleSoft. Individual medical device shares also performed well, including Sofamor/Danek Group (the Fund's largest position) and Boston Scientific. In the consumer area, retail growth stocks (e.g., Nordstrom, Lowes, and CKE Restaurants) made positive contributions. In addition to healthy consumer spending, mid-cap retail issues gained from the market's desire for domestic exposure in the face of the Asian crisis. Other contributions came from takeovers of Fund holdings such as Camco International, Dekalb Genetics and 360DEG. Communications. These gains offset disappointing performances from the health care services area--including PhyCor and Concentra Managed Care--due to uncertainty regarding federal health care cost reimbursement policies and other regulatory issues. Finally, several consumer durable stocks, such as Lear Corp. and Tower Automotive, lost ground due to the labor strike at General Motors. DEFENSIVE MEASURES At the start of the year, we realigned the Fund's portfolio to reduce its exposure to the economic crisis in Asia. In doing so, we gave greater emphasis to telecommunications and health care firms in an attempt to leverage consistent growth securities which were relatively insulated to problems overseas. During the spring, the Fund was somewhat more defensive on concerns about the deepening of Asia's crisis and the possibility of higher interest rates at home. We used the opportunity of an uncertain market to upgrade the quality of our portfolio, including the purchase of certain technology service companies. We increased investments in the retail sector, as well as shares of consumer nondurable firms--including Suiza Foods, Clorox, Revlon, Avon, and Coca-Cola Enterprises. With relative valuations and commodity prices at 10-year lows, we increased our exposure to the energy sector. Among the new positions we added were Burlington Resources, Stolt Comex Seaway, and Coflexip. MID-CAP VALUATIONS ATTRACTING INVESTORS Since the summer of 1997, year-over-year quarterly earnings comparisons for major mid-cap stocks have been stronger than those for stocks in the S&P 500 Index. The attractive valuations in the mid-cap area have been somewhat ignored, however, in the market's "flight to liquidity." This may be partly due to the fact that foreign investors often seek U.S. stocks of the most broadly recognized firms. Although the market will probably continue to prefer stocks of larger firms while liquidity demands remain, the attractive valuations in the mid-cap sector are now below the trough valuations levels experienced in the first quarter of 1998. These relative valuations bode well for a potential closing of the valuation gap with large cap securities as we look forward. Page 3 [EDGAR REPRESENTATION OF GRAPHIC]
FUND RUSSELL MIDCAP INDEX 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 2/28/92 $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 2/28/96 $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
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. The chart above shows the performance of the Dresdner RCM Growth Equity Fund since the Fund's inception versus the Russell Midcap Index.(a) The chart represents a cumulative return of 2,925.08%(b) for the Fund. The average annual total return from the Fund's inception was 20.05%.(b)(c) The chart assumes a hypothetical $10,000 initial investment in the Fund and reflects all Fund expenses. AVERAGE ANNUAL TOTAL RETURNS(b) JUNE 30, 1998
LIFE OF 1 YEAR 5 YEAR 10 YEAR FUND(c) 24.34% 19.03% 16.67% 20.05%
The data above represents past performance of the Fund and may not be indicative of 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 Index is composed of the smallest 800 companies 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 by 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 began operations on November 6, 1979. Page 4 Dresdner RCM Growth Equity Fund Investments in Securities and Net Assets June 30, 1998 (Unaudited)
% OF MARKET SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS VALUE CONSUMER DURABLES SECTOR 1.5% AUTOMOTIVE RELATED 1.3% 20,000 US Lear Corp. * $ 1,026,250 298,000 US Tower Automotive Inc. * 12,776,750 ------------- 13,803,000 ------------- CONSUMER DURABLES 0.2% 56,300 US Steelcase Inc. 1,463,800 CONSUMER NON-DURABLES SECTOR 17.9% BEVERAGE/TOBACCO 1.4% 378,700 US Coca-Cola Enterprises Inc. 14,863,975 FOOD/FOOD PROCESSING 2.1% 84,000 US Dekalb Genetics Corp. Class B 7,948,500 232,000 US Suiza Foods Corp. * 13,847,500 ------------- 21,796,000 ------------- HOUSEHOLD/RELATED NON-DURABLES 2.1% 127,000 US Avon Products Inc. 9,842,500 42,000 US Clorox Co. 4,005,750 153,000 US Revlon Inc. Class A * 7,860,375 ------------- 21,708,625 ------------- LEISURE TIME PRODUCTS/SERVICES 3.9% 277,000 US CKE Restaurants Inc. 11,426,250 540,000 US Host Marriott Corp. * 9,618,750 204,400 US Promus Hotel Corp. * 7,920,500 49,000 LI Royal Caribbean Cruises Ltd. 3,895,500 296,900 US Speedway Motorsports Inc. * 7,589,506 ------------- 40,450,506 ------------- RETAIL TRADE 8.4% 165,000 US Dollar Tree Stores Inc. * 6,703,125 872,000 US Family Dollar Stores Inc. 16,132,000 340,300 CA Hudsons Bay Co. 7,798,560 390,000 US Lowe's Companies Inc. 15,819,375 65,000 US Fred Meyer Inc. * 2,762,500 386,000 US Nordstrom Inc. 14,909,250 732,000 US Office Depot Inc. * 23,103,750 ------------- 87,228,560 -------------
The accompanying notes are an integral part of the financial statements. Page 5
% OF MARKET SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS VALUE CYCLICAL/CAPITAL GOODS SECTOR 7.1% AEROSPACE/DEFENSE 0.3% 51,600 US Sundstrand Corp. $2,954,100 CHEMICALS/TEXTILES 1.1% 246,000 US Praxair Inc. 11,515,875 ELECTRICAL EQUIPMENT 1.7% 110,000 US W. W. Grainger Inc. 5,479,375 148,000 US Honeywell Inc. 12,367,250 ------------- 17,846,625 ------------- INDUSTRIAL EQUIPMENT 1.3% 316,700 US Kennametal Inc. 13,222,225 TRANSPORTATION SERVICES 2.7% 207,700 US Air Express International Corp. 5,555,975 562,600 US Swift Transportation Co. Inc. * 11,146,513 577,000 US Werner Enterprises Inc. 10,999,063 ------------- 27,701,551 ------------- ENERGY SECTOR 5.1% ENERGY 5.1% 525,000 US Burlington Resources Inc. 22,607,813 25,000 US Camco International Inc. 1,946,875 205,000 FR Coflexip S.A. (ADR) 12,530,625 565,000 UK Stolt Comex Seaway S.A. * 10,946,875 282,500 UK Stolt Comex Seaway S.A. (ADR) * 4,943,750 ------------- 52,975,938 ------------- HEALTH CARE SECTOR 16.9% DRUGS AND HOSPITAL SUPPLIES 7.6% 498,200 US Alza Corp. * 21,547,150 182,000 US Bausch & Lomb Inc. 9,122,750 233,000 US Boston Scientific Corp. * 16,688,625 11,300 US Centocor Inc. * 409,625 189,000 US DePuy Inc. 5,339,250 82,400 FI Orion Yhtyma OY Series B 2,538,164 271,000 US Sofamor/Danek Group Inc. * 23,458,438 ------------- 79,104,002 -------------
The accompanying notes are an integral part of the financial statements. Page 6
% OF MARKET SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS VALUE HEALTH CARE SERVICES 9.3% 126,600 US AmeriSource Health Corp. * $8,316,038 217,050 US Bergen Brunswig Corp. 10,065,694 46,000 US Cardinal Health Inc. 4,312,500 230,662 US Concentra Managed Care Inc. * 5,997,212 378,000 US HBO & Co. 13,324,500 629,000 US Healthsouth Corp. * 16,786,438 342,000 US Health Care & Retirement Corp. * 13,487,625 301,500 US Orthodontic Centers of America Inc. * 6,312,656 194,000 US PhyCor Inc. * 3,213,125 362,000 US Tenet Healthcare Corp. * 11,312,500 59,000 US Universal Health Services Inc. ClassB * 3,444,125 ------------- 96,572,413 ------------- INTEREST-SENSITIVE SECTOR 10.9% BANKING 7.6% 61,000 US CCB Financial Corp. 6,481,250 378,400 US City National Corp. 13,977,150 242,000 US Compass Bancshares Inc. 10,920,250 333,000 US First Security Corp. 7,128,281 42,200 US National Commerce Bancorporation 1,767,125 527,500 US North Fork Bancorporation Inc. 12,890,781 260,000 US Southtrust Corp. 11,310,000 64,000 US Star Banc Corp. 4,088,000 324,900 US WestAmerica Bancorporation 10,437,413 ------------- 79,000,250 ------------- GENERAL FINANCE 2.3% 229,000 US AMRESCO Inc. * 6,669,625 385,000 US Charter One Financial Inc. 12,969,688 144,000 US TCF Financial Corp. 4,248,000 ------------- 23,887,313 ------------- INSURANCE 1.0% 131,300 US Life Re Corp. 10,766,600 TECHNOLOGY SECTOR 24.1% COMPUTERS/OFFICE EQUIPMENT 0.9% 231,500 US Network Appliance Inc. * 9,014,031
The accompanying notes are an integral part of the financial statements. Page 7
% OF MARKET SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS VALUE ELECTRONICS/NEW TECHNOLOGY 4.6% 313,400 US Advanced Fibre Communication * $12,555,588 103,000 US Altera Corp. * 3,044,938 131,502 US Analog Devices Inc. * 3,230,018 114,000 US Maxim Integrated Products Inc. * 3,612,375 461,000 CA Newbridge Networks Corp. * 11,035,188 122,000 US Sanmina Corp. * 5,291,750 148,500 US Uniphase Corp. * 9,323,016 ------------- 48,092,873 ------------- TECHNOLOGY SERVICES 18.6% 77,800 US Amazon.com Inc. * 7,760,550 79,800 US America Online Inc. 8,458,800 171,500 US Aspen Technologies Inc. * 8,660,750 229,500 IE CBT Group PLC (ADR) * 12,278,250 77,500 US CMG Information Services Inc. * 5,483,125 163,300 US Cambridge Technology Partners (Mass.) Inc. * 8,920,263 75,000 US Ceridian Corp. * 4,406,250 326,000 US Citrix Systems Inc. * 22,290,250 209,000 US E *Trade Group Inc. * 4,793,938 78,000 US Electronics Arts Inc. * 4,212,000 89,000 US HNC Software Inc. * 3,632,313 72,000 US I2 Technologies Inc. * 2,529,000 156,000 US National Data Corp. 6,825,000 347,300 US Network Associates Inc. * 16,626,988 280,800 US PeopleSoft Inc. * 13,197,600 366,800 IE Saville Systems PLC (ADR) * 18,385,850 122,000 US Sterling Commerce Inc. * 5,917,000 225,350 US VERITAS Software Co. * 9,323,856 347,000 US Visio Corp. * 16,569,250 236,000 US Wind River Systems Inc. * 8,466,500 27,350 US Yahoo Inc. * 4,307,625 ------------- 193,045,158 ------------- TELEMEDIA/SERVICES 15.0% BUSINESS SERVICES 2.6% 309,300 US American Disposal Services Inc. * 14,498,438 512,800 US Sybron International Corp. Wisconsin * 12,948,200 ------------- 27,446,638 -------------
The accompanying notes are an integral part of the financial statements. Page 8
% OF MARKET SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS VALUE COMMUNICATIONS SERVICES 10.1% 48,100 US 360DEG. Communications Co. * $2,080,000 110,000 US Global TeleSystems Group Inc. * 5,362,500 346,000 US ICG Communications Inc. * 12,650,625 218,000 US Intermedia Communications of Florida Inc. * 9,142,375 461,000 BE Loral Space & Communications * 13,023,250 184,000 US McLeod Inc. * 7,153,000 589,400 US Nextel Communications Inc. * 14,661,317 400,000 US Smartalk Teleservices Inc. * 5,825,000 305,500 US Snyder Communications Inc. * 13,442,000 571,600 US Tel-Save Holdings Inc. * 8,431,100 652,000 US Western Wireless Corp. Class A * 12,999,250 ------------- 104,770,417 ------------- MEDIA 2.3% 193,000 US Gartner Group Inc. Class A * 6,755,000 80,000 US General Motors Corp. Class H 3,770,000 402,000 US Sylvan Learning Systems Inc. * 13,165,500 ------------- 23,690,500 ------------- TOTAL EQUITY INVESTMENTS (COST $903,244,826) 98.6% 1,022,920,975 ------------- SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 2.8% 16,967,438 US SSgA U.S. Government Money Market Fund 16,967,438 12,132,606 US SSgA Money Market Fund 12,132,606 -------------- 29,100,044 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $29,100,044) 2.8% 29,100,044 TOTAL INVESTMENTS (COST $932,344,870) ** 101.4% 1,052,021,019 OTHER ASSETS LESS LIABILITIES (1.4%) (14,348,403) -------------- NET ASSETS 100.0% $1,037,672,616 -------------- --------------
* Non-income producing security Tax information: ** For Federal income tax purposes, cost is $939,025,116 and unrealized appreciation (depreciation) of equity securities is as follows: Unrealized appreciation $140,041,681 Unrealized depreciation (27,045,778) ------------ Net unrealized appreciation $112,995,903 ------------ ------------
The accompanying notes are an integral part of the financial statements. Page 9 Dresdner RCM Growth Equity Fund Investments in Securities and Net Assets June 30, 1998 (Unaudited) The Fund's investments in securities at June 30, 1998, categorized by country:
% OF NET ASSETS ----------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL Bermuda BE 1.3% 1.3% Canada CA 1.8% 1.8% Finland FI 0.2% 0.2% France FR 1.2% 1.2% Ireland IE 3.0% 3.0% Liberia LI 0.4% 0.4% United Kingdom UK 1.5% 1.5% United States US 89.2% 1.4% 90.6% ----------------------------------- Total 98.6% 1.4% 100.0% ----------------------------------- -----------------------------------
Page 10 Dresdner RCM Small Cap Fund Management's Performance Review Although large-cap stocks continued to dominate in the last six months, many small-cap stocks performed quite well. Within the small-cap sector, the market favored high-quality stocks with strong prospects for growth. By emphasizing individual issues that met these criteria, we helped the Dresdner RCM Small Cap Fund (the "Fund") make the most of this climate and outperform both its market benchmark and other funds with similar investment objectives. For the six months ended June 30, 1998, the Fund earned a total return of 9.26%. That compares to a return of 4.93% for the Russell 2000 Index and an average return of 6.48% for small-cap funds tracked by Lipper Analytical Services. STRONG INDIVIDUAL CONTRIBUTIONS During the reporting period, the Fund's industry weightings contributed slightly to returns. More important to performance was its selection of individual growth issues. Within the hospital supplies group, the Fund benefited from a sizable position in VISX, whose price doubled during the period. Lason Holdings and Eastern Environmental Services in the business services group and MICROS Systems and Engineering Animation in the technology-services group also made positive contributions. The strong returns from stocks like these far outweighed disappointing performances from issues such as Hadco and Artesyn Technologies in the electronics/ new technology group, Carbiner International in the business services group, and Smartalk in the communication services group. PORTFOLIO STRATEGIES In looking for stocks with strong growth potential, we remained committed to technology issues. After trimming technology holdings in the fall of 1997, we rebuilt investments there in the final months of the year. This left the Fund slightly overweighted in technology shares at the start of 1998. As the problems in Asia deepened in the months that followed, putting technology stocks under great pressure, we reduced the Fund's commitment there again. After prices had stabilized at more attractive levels, we then added to the sector. This left the Fund overweighted in technology stocks at the end of the period. As in other sectors, we looked for shares that offer strong potential for growth and good value. During the period, we trimmed investments in health care slightly. We became concerned that the sector's performance might lag, as the market fretted over a review of federal reimbursement policies for health care costs. Throughout the period, we maintained a large weighting in business services firms and technology services companies. SMALL-CAP STOCKS POISED TO RALLY With continued relative earnings growth, and valuations at all-time lows versus large-cap shares, small-cap stocks are quite attractive today. To draw the market from larger firms, however, the small-cap sector may need a longer period of earnings improvement. The market may also need reassurance that Asia's economic problems will not be a sustained threat to U.S. trade and growth. Once the market recognizes opportunities in the small-cap sector, growth stocks should outperform. In the meantime, we will continue to emphasize quality companies with strong earnings potential. Page 11 DRESDNER RCM SMALL CAP FUND PERFORMANCE SUMMARY [EDGAR REPRESENTATION OF GRAPHIC]
FUND RUSSELL 2000 INDEX 1/1/92 $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 6/31/94 $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 11/31/95 $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 8/30/96 $20,592 $18,923 9/29/96 $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 1/30/97 $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 1/30/98 $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
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. The chart above shows the performance of the Dresdner RCM Small Cap Fund since the Fund's inception versus the Russell 2000 Index.(a) The chart represents a cumulative return of 207.00%(b) for the Fund. The average annual total return from the Fund's inception was 18.84%.(b)(c) The chart assumes a hypothetical $10,000 initial investment in the Fund and reflects all Fund expenses. AVERAGE ANNUAL TOTAL RETURNS(b) JUNE 30, 1998
LIFE OF 1 YEAR 5 YEAR FUND(c) 21.29% 20.40% 18.84%
The data above represents past performance of the Fund and may not be indicative of 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 by 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 began operations on January 3, 1992. Page 12 Dresdner RCM Small Cap Fund Investments in Securities and Net Assets June 30, 1998 (Unaudited)
% OF MARKET SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS VALUE CONSUMER DURABLES SECTOR 6.2% AUTOMOTIVE RELATED 3.8% 224,000 US Dura Automotive Systems Inc. * $7,196,000 403,700 US Keystone Automotive Industries Inc. * 9,335,563 178,000 US Tower Automotive Inc. * 7,631,750 ------------- 24,163,313 ------------- CONSUMER DURABLES 2.4% 419,000 US Windmere Durable Holdings Inc. * 15,005,438 CONSUMER NON-DURABLES SECTOR 14.6% FOOD/FOOD PROCESSING 1.7% 714,000 US Omega Protein Corp. * 10,977,750 HOUSEHOLD/RELATED NON-DURABLES 4.5% 234,000 US Carson Inc. * 1,842,750 398,000 US Ocular Sciences Inc. * 12,935,000 129,400 US Rayovac Corp. * 2,935,763 281,000 US Scotts Co. * 10,467,250 ------------- 28,180,763 ------------- LEISURE TIME PRODUCTS/SERVICES 2.8% 234,800 US Ambassadors International Inc. * 7,117,375 430,000 US Dave & Buster's Inc. * 10,696,250 ------------- 17,813,625 ------------- RETAIL TRADE 5.6% 362,000 US CSK Auto Corp. * 9,140,500 391,400 US French Fragrances Inc. * 6,115,625 425,000 US Regis Corp. 12,564,063 196,400 IS Tefron Ltd. * 4,320,800 40,000 US United Stationers Inc. * 2,590,000 16,100 US Zale Corp. * 512,181 ------------- 35,243,169 -------------
The accompanying notes are an integral part of the financial statements. Page 13
% OF MARKET SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS VALUE CYCLICAL/CAPITAL GOODS SECTOR 12.4% BUILDING/CONSTRUCTION 4.4% 543,500 US Comfort Systems USA Inc. * $12,704,313 239,000 US Integrated Electrical Services * 4,809,875 55,000 US NCI Building Systems Inc. * 3,176,250 200,000 US Service Experts Inc. * 6,900,000 ------------- 27,590,438 ------------- RAW/BASIC MATERIALS 1.8% 100,000 US Commercial Metals Co. 3,075,000 254,200 US Metals USA Inc. * 4,384,950 203,100 US Oregon Steel Mills Inc. 3,782,738 ------------- 11,242,688 ------------- ` INDUSTRIAL EQUIPMENT 1.4% 371,500 US Tokheim Corp. * 7,615,750 173,000 US Transportation Components Inc. * 1,621,875 ------------- 9,237,625 ------------- TRANSPORTATION SERVICES 4.8% 120,000 US Air Express International Corp. 3,210,000 290,000 US Covenant Transport Inc. Class A * 5,655,000 100,000 US Hub Group Inc. * 2,112,500 189,600 US Knight Transportation Inc. * 3,626,100 344,000 US Mark VII Inc. * 6,192,000 292,000 US Swift Transportation Co. Inc. * 5,785,250 297,500 BE Virgin Express Holdings PLC (ADR) * 3,848,906 ------------- 30,429,756 ------------- ENERGY SECTOR 3.0% ENERGY 3.0% 295,000 US Forcenergy Gas Exploration Inc. * 5,254,688 110,000 US Hanover Compressor Co. * 2,976,875 292,000 US Houston Exploration Co. * 6,697,750 170,000 US Newfield Exploration Co. * 4,228,750 ------------- 19,158,063 -------------
The accompanying notes are an integral part of the financial statements. Page 14
% OF MARKET SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS VALUE HEALTH CARE SECTOR 11.3% DRUGS AND HOSPITAL SUPPLIES 5.4% 39,000 US Algos Pharmaceutical Corp. * $1,053,000 55,000 US Anesta Corp. * 794,063 150,000 US Bone Care International Inc. * 1,312,500 355,000 US CIMA Labs Inc. * 1,187,031 24,000 US Coulter Pharmaceuticals Inc. * 729,000 23,000 US GelTex Pharmaceuticals Inc. * 428,375 744,300 US Gensia Sicor Inc. * 2,977,200 383,600 US Heska Corp. * 4,243,575 25,000 US Icos Corp. * 478,125 39,000 US Inhale Therapeutic Systems * 965,250 28,000 US Ligand Pharmaceuticals Inc. Class B * 360,500 137,800 US NaPro BioTherapeutics Inc. * 172,250 127,000 US Novoste Corp. * 2,801,938 10,000 US PathoGensis Corp. * 290,000 38,900 US Penederm Inc. * (a) 778,000 29,000 US Progenics Pharmaceuticals Inc. * 431,375 283,400 US SangStat Medical Corp. * 8,891,675 16,000 US Sepracor Inc. * 664,000 19,000 UK Shire Pharmaceuticals Group PLC (ADR) * 406,125 16,000 US SUGEN Inc. * 260,000 42,000 US Triangle Pharmaceuticals Inc. * 624,750 13,000 US Vertex Pharmaceuticals Inc. * 292,500 65,000 US VISX Inc. * 3,867,500 ------------- - 34,008,732 ------------- HEALTH CARE SERVICES 5.9% 315,000 US American Retirement Corp. * 5,591,250 24,200 US Assisted Living Concepts Inc. * 417,450 391,100 US Centennial HealthCare Corp. * 7,088,688 68,200 US Curative Health Services Inc. * 1,943,700 162,600 US Horizon Health Corp. * 2,845,500 167,900 US Kendle International Inc. * 5,078,975 323,200 US Orthodontic Centers of America Inc. * 6,767,000 96,000 US ParExel International Corp. * 3,492,000 129,500 US Rural/Metro Corp. * 1,683,500 120,000 US Veterinary Centers of America Inc. * 2,257,500 ------------- 37,165,563 -------------
The accompanying notes are an integral part of the financial statements. Page 15
% OF MARKET SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS VALUE INTEREST-SENSITIVE SECTOR 7.7% BANKING 3.6% 150,000 US Community First Bankshares Inc. $3,928,125 215,000 US Silicon Valley Bancshares * 7,652,656 55,600 US Southwest Bancorporation of Texas * 1,045,975 100,000 US Texas Regional Bancshares Inc. Class A 3,275,000 210,000 US WestAmerica Bancorporation 6,746,250 ------------- 22,648,006 ------------- GENERAL FINANCE 4.1% 325,200 US American Capital Strategies Ltd. 7,438,950 28,400 US HealthCare Financial Partners Inc. * 1,741,275 234,000 US Sirrom Capital Corp. 6,084,000 571,200 US UniCapital Corp. * 10,924,200 ------------- 26,188,425 ------------- TECHNOLOGY SECTOR 23.1% COMPUTERS/OFFICE EQUIPMENT 3.7% 110,000 US Black Box Corp. * 3,650,625 436,800 US CHS Electronics Inc. * 7,807,800 353,800 US MICROS Systems Inc. * 11,708,569 ------------- 23,166,994 ------------- ELECTRONICS/NEW TECHNOLOGY 6.5% 469,800 US Artesyn Technologies Inc. * 7,516,800 329,900 US Burr-Brown Corp. * 6,927,900 100,000 US Credence Systems Corp. * 1,900,000 275,000 US EFTC Corp. * 3,575,000 463,500 US Hadco Corp. * 10,805,344 85,000 US Radisys Corp. * 1,827,500 128,800 US SDL Inc. * 3,075,100 299,900 US Semtech Corp. * 5,304,481 ------------- 40,932,125 -------------
The accompanying notes are an integral part of the financial statements. Page 16
% OF MARKET SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS VALUE TECHNOLOGY SERVICES 12.9% 157,900 US Aspen Technologies Inc. * $7,973,950 200,300 US BroadVision Inc. * 4,782,163 77,000 US Engineering Animation Inc. * 4,697,000 297,000 US HNC Software Inc. * 12,121,313 97,000 US INSpire Insurance Solutions Inc. * 3,225,250 528,000 US International Telecommunication Systems Inc. * 15,312,000 377,650 US Metzler Group Inc. * 13,831,431 11,900 US New Era of Networks Inc. * 362,950 407,000 US Technology Solutions Co. * 12,896,813 47,000 US Visio Corp. * 2,244,250 18,300 US Whittman-Hart Inc. * 885,263 84,500 US Wind River Systems Inc. * 3,031,438 ------------- 81,363,821 ------------- TELEMEDIA/SERVICES SECTOR 19.6% BUSINESS SERVICES 18.1% 145,000 US American Disposal Services Inc. * 6,796,875 93,000 US Boron, Lepore & Associates Inc. * 3,534,000 365,000 US Caribiner International Inc. * 6,387,500 367,700 US Eastern Environmental Services Inc. * 12,501,800 365,300 US F. Y. I. Inc. * 10,411,050 259,000 US Healthcare Recoveries Inc. * 5,115,250 186,900 US Industrial Distribution Group Inc. * 2,896,950 211,900 US Iron Mountain Inc. * 9,482,525 130,000 US Lamalie Associates Inc. * 2,388,750 156,000 US Lason Holdings Inc. * 8,502,000 345,700 US NCO Group Inc. * 7,605,400 609,000 US Personnel Group of America, Inc. * 12,180,000 290,820 US Renaissance Worldwide Inc. * 6,325,335 225,511 US Romac International Inc. * 6,849,890 196,700 US Vestcom International Inc. * 1,819,475 450,900 US Wilmar Industries Inc. * 11,497,950 ------------- 114,294,750 ------------- COMMUNICATIONS SERVICES 1.1% 460,000 US Smartalk Teleservices Inc. * 6,698,750
The accompanying notes are an integral part of the financial statements. Page 17
% OF MARKET SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS VALUE MEDIA 0.4% 14,200 US SFX Entertainment Inc. Class A * $651,425 55,500 US Sylvan Learning Systems Inc. * 1,817,625 ------------- 2,469,050 ------------- TOTAL EQUITY INVESTMENTS (COST $560,233,850) 98.0% 617,978,844 ------------- SHORT-TERM INVESTMENTS MONEY MARKET FUNDS 2.1% 3,268,901 US SSgA U.S. Government Money Market Fund 3,268,902 10,039,655 US SSgA Money Market Fund 10,039,655 ------------- 13,308,557 ------------- TOTAL SHORT-TERM INVESTMENTS (COST $13,308,557) 2.1% 13,308,557 ------------- TOTAL INVESTMENTS (COST $573,542,407) ** 100.1% 631,287,401 OTHER ASSSETS LESS LIABILITIES (0.1%) (381,780) ------------- NET ASSETS 100.0% $630,905,621 ------------- -------------
* Non-income producing security. (a) Shares purchased through a private placement. The Investment Manager is required to deliver the issuer's current Prospectus and financial reports upon resale of such shares. Tax Information: ** For Federal income tax purposes, cost is $576,678,609 and unrealized appreciation (depreciation) of equity securities is as follows: Unrealized appreciation $ 98,806,522 Unrealized depreciation (44,197,431) ------------ Net unrealized appreciation $ 54,609,091 ------------ ------------
The Fund's investments in securities at June 30, 1998, categorized by country:
% OF NET ASSETS --------------------------------------- COUNTRY SHORT-TERM COUNTRY CODE EQUITIES AND OTHER TOTAL - ------------------------------------------------------------------------------ Belgium BE 0.6% 0.6% Israel IS 0.7% 0.7% United Kingdom UK 0.1% 0.1% United States US 96.6% 2.0% 98.6% --------------------------------------- Total 98.0% 2.0% 100.0% --------------------------------------- ---------------------------------------
The accompanying notes are an integral part of the financial statements. Page 18 Dresdner RCM Capital Funds, Inc. Statements of Assets and Liabilities For the Six Months Ended June 30, 1998 (Unaudited)
DRESDNER RCM --------------------------------- GROWTH EQUITY SMALL CAP FUND FUND --------------- ------------ ASSETS: Investments at cost $ 932,344,870 $573,542,407 --------------- ------------ --------------- ------------ Foreign currency at cost $ 20,069 $ -- --------------- ------------ --------------- ------------ Investments at value (Note 1) $1,052,021,019 $631,287,401 Foreign currency at value (Note 1) 20,133 -- Receivables: Investments sold 12,077,707 9,385,374 Dividends and dividend reclaims 544,186 24,995 Interest 110,795 42,867 --------------- ------------ Total Assets 1,064,773,840 640,740,637 --------------- ------------ LIABILITIES: Payables: Investments purchased 13,646,124 5,869,210 Fund shares repurchased 12,798,707 3,441,051 Management fees (Note 5) 631,403 510,677 Custodian fees 24,990 14,078 --------------- ------------ Total Liabilities 27,101,224 9,835,016 --------------- ------------ NET ASSETS $1,037,672,616 $630,905,621 --------------- ------------ --------------- ------------ NET ASSETS CONSIST OF: Paid-in capital (Note 3) $ 746,028,870 $458,579,519 Accumulated net investment loss (746,396) (2,213,362) Accumulated net realized gain on investments and foreign currency transactions 172,714,175 116,794,470 Net unrealized depreciation on foreign currency transactions (182) -- Net unrealized appreciation on investments 119,676,149 57,744,994 --------------- ------------ NET ASSETS $1,037,672,616 $630,905,621 --------------- ------------ --------------- ------------ SHARES OUTSTANDING 144,740,520 49,521,772 --------------- ------------ --------------- ------------ NET ASSET VALUE PER SHARE $ 7.17 $ 12.74 --------------- ------------ --------------- ------------
The accompanying notes are an integral part of the financial statements. Page 19 Dresdner RCM Capital Funds, Inc. Statements of Operations For the Six Months Ended June 30, 1998 (Unaudited)
DRESDNER RCM ------------------------------ GROWTH EQUITY SMALL CAP FUND FUND ------------- ------------ INVESTMENT INCOME: Income: Dividends $ 2,503,850 $ 663,926 Interest 677,291 533,135 Foreign tax withheld (23,539) -- ------------- ------------ Total income 3,157,602 1,197,061 ------------- ------------ Expenses: Investment management fees (Note 5) 3,848,837 3,376,258 Custodian fees 54,361 33,365 Miscellaneous expenses 800 800 ------------- ------------ Total expenses 3,903,998 3,410,423 ------------- ------------ Net investment loss (746,396) (2,213,362) ------------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain on investments 128,828,793 95,782,981 Net realized loss on foreign currency transactions (24,718) -- ------------- ------------ Net realized gain 128,804,075 95,782,981 ------------- ------------ Net change in unrealized appreciation on foreign currency transactions 4,406 -- Net change in unrealized appreciation (depreciation) on investments 14,141,043 (32,332,842) ------------- ------------ Net unrealized appreciation (depreciation) 14,145,449 (32,332,842) ------------- ------------ Net realized and unrealized gain during the period 142,949,524 63,450,139 ------------- ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 142,203,128 $ 61,236,777 ------------- ------------ ------------- ------------
The accompanying notes are an integral part of the financial statements. Page 20 Dresdner RCM Capital Funds, Inc. Statements of Changes in Net Assets
DRESDNER RCM -------------------------------------------------------------------- GROWTH EQUITY FUND SMALL CAP FUND -------------------------------- -------------------------------- SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31, (UNAUDITED) 1997 (UNAUDITED) 1997 --------------- -------------- ------------- --------------- OPERATIONS: Net investment loss $ (746,396) $ (1,597,025) $ (2,213,362) $ (3,872,163) Net realized gain on investments and foreign currency transactions 128,804,075 193,067,561 95,782,981 131,224,372 Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions 14,145,449 (40,746,692) (32,332,842) (23,964,601) --------------- -------------- ------------- --------------- Net increase in net assets resulting from operations 142,203,128 150,723,844 61,236,777 103,387,608 DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (Note 1) -- -- -- -- Net realized gain on investments (Note 1) -- (161,794,250) -- (107,769,024) NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS (NOTE 3) (65,355,550) 75,575,294 (91,741,792) 97,190,936 --------------- -------------- ------------- --------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 76,847,578 64,504,888 (30,505,015) 92,809,520 NET ASSETS: Beginning of period 960,825,038 896,320,150 661,410,636 568,601,116 --------------- -------------- ------------- --------------- End of period $1,037,672,616 $960,825,038 $630,905,621 $ 661,410,636 --------------- -------------- ------------- --------------- --------------- -------------- ------------- --------------- End of period net assets include accumulated net investment income (loss) of: $ (746,396) $ -- $ (2,213,362) $ -- --------------- -------------- ------------- --------------- --------------- -------------- ------------- ---------------
The accompanying notes are an integral part of the financial statements. Page 21 Dresdner RCM Capital Funds, Inc. Dresdner RCM Growth Equity Fund Financial Highlights For a share outstanding during the six months ended June 30, 1998 (unaudited) or throughout each fiscal year ended December 31.
1998 1997 1996(1) 1995 1994 1993 ------- ------- ------- ------ ------- ------ PER SHARE OPERATING PERFORMANCE: (2) Net asset value, beginning of period $ 6.23 $ 6.40 $ 9.13 $ 7.89 $ 10.42 $10.97 ------- ------- ------- ------ ------- ------ Net investment income (loss) -- (0.01) (0.01) 0.02 0.03 0.04 Net realized and unrealized gain on investments 0.94 1.08 1.59 2.66 0.01 1.08 ------- ------- ------- ------ ------- ------ Net increase in net asset value resulting from investment operations 0.94 1.07 1.58 2.68 0.04 1.12 ------- ------- ------- ------ ------- ------ Distributions: Net investment income -- -- -- (0.02) (0.03) (0.04) Net realized gain on investments -- (1.24) (4.31) (1.42) (2.54) (1.63) ------- ------- ------- ------ ------- ------ Total distributions -- (1.24) (4.31) (1.44) (2.57) (1.67) ------- ------- ------- ------ ------- ------ NET ASSET VALUE, END OF PERIOD $ 7.17 $ 6.23 $ 6.40 $ 9.13 $ 7.89 $10.42 ------- ------- ------- ------ ------- ------ ------- ------- ------- ------ ------- ------ TOTAL RETURN (3) 15.09% 17.50% 19.07% 34.53% 0.76% 10.72% ------- ------- ------- ------ ------- ------ ------- ------- ------- ------ ------- ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in millions) $ 1,038 $ 961 $ 896 $1,325 $ 1,365 $2,049 ------- ------- ------- ------ ------- ------ ------- ------- ------- ------ ------- ------ Ratio of expenses to average net assets 0.76%(5) 0.76% 0.84% 0.76% 0.83% 0.80% ------- ------- ------- ------ ------- ------ ------- ------- ------- ------ ------- ------ Ratio of net investment income to average net assets (0.15)%(5) (0.17)% (0.12)% 0.22% 0.22% 0.30% ------- ------- ------- ------ ------- ------ ------- ------- ------- ------ ------- ------ Portfolio turnover 80.31% 155.10% 115.89% 96.50% 111.06% 67.00% ------- ------- ------- ------ ------- ------ ------- ------- ------- ------ ------- ------ Average commission rate paid per share (4) $0.0578 $0.0564 $0.0571 -- -- -- ------- ------- ------- ------ ------- ------ ------- ------- ------- ------ ------- ------
_________________________ (1) Stock split 25:1 at the 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) For fiscal years beginning on or after September 1, 1995, a fund is required to disclose its average commission rate per share for security trades on which commissions are charged. This amount may vary from period to period and fund to fund depending on the mix of trades executed in various markets where trading practices and commission rate structures may differ. (5) Annualized. The accompanying notes are an integral part of the financial statements. Page 22 Dresdner RCM Capital Funds, Inc. Dresdner RCM Small Cap Fund Financial Highlights For a share outstanding during the six months ended June 30, 1998 (unaudited) or throughout each fiscal year ended December 31.
1998 1997 1996(1) 1995 1994 1993 ------- ------- ------- ------ ------- ------ PER SHARE OPERATING PERFORMANCE: (2) Net asset value, beginning of period $ 11.66 $ 11.77 $ 11.35 $ 9.42 $ 10.41 $10.15 ------- ------- ------- ------ ------- ------ Net investment loss (0.04) (0.08) (0.08) (0.04) (0.04) 0.00 Net realized and unrealized gain (loss) on investments 1.12 2.29 3.82 3.21 (0.20) 0.91 ------- ------- ------- ------ ------- ------ Net increase (decrease) in net asset value resulting from investment operations 1.08 2.21 3.74 3.17 (0.24) 0.91 ------- ------- ------- ------ ------- ------ Distributions: Net investment income -- -- -- -- -- -- Net realized gain on investments -- (2.32) (3.32) (1.24) (0.75) (0.65) ------- ------- ------- ------ ------- ------ Total distributions -- (2.32) (3.32) (1.24) (0.75) (0.65) ------- ------- ------- ------ ------- ------ NET ASSET VALUE, END OF PERIOD $ 12.74 $ 11.66 $ 11.77 $11.35 $ 9.42 $10.41 ------- ------- ------- ------ ------- ------ ------- ------- ------- ------ ------- ------ TOTAL RETURN (3) 9.26% 19.49% 34.39% 34.08% (2.16)% 9.20% ------- ------- ------- ------ ------- ------ ------- ------- ------- ------ ------- ------ RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (in millions) $ 631 $ 661 $ 569 $ 410 $ 416 $ 660 ------- ------- ------- ------ ------- ------ ------- ------- ------- ------ ------- ------ Ratio of expenses to average net assets 1.01%(5) 1.02% 1.00% 1.00% 1.11% 0.90% ------- ------- ------- ------ ------- ------ ------- ------- ------- ------ ------- ------ Ratio of net investment income to average net assets (0.66)%(5) (0.68)% (0.58)% (0.20)% (0.33)% 0.00% ------- ------- ------- ------ ------- ------ ------- ------- ------- ------ ------- ------ Portfolio turnover 65.99% 117.64% 117.00% 83.90% 117.71% 80.00% ------- ------- ------- ------ ------- ------ ------- ------- ------- ------ ------- ------ Average commission rate paid per share (4) $0.0515 $0.0510 $0.0538 -- -- -- ------- ------- ------- ------ ------- ------ ------- ------- ------- ------ ------- ------
_________________________ (1) Stock split 12:1 at the 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) For fiscal years beginning on or after September 1, 1995, a fund is required to disclose its average commission rate per share for security trades on which commissions are charged. This amount may vary from period to period and fund to fund depending on the mix of trades executed in various markets where trading practices and commission rate structures may differ. (5) Annualized The accompanying notes are an integral part of the financial statements. Page 23 Dresdner RCM Capital Funds, Inc. Notes to Financial Statements June 30, 1998 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES Dresdner RCM Capital Funds, Inc. ("Capital Company"), previously RCM Capital Funds, Inc. is organized as a Maryland corporation and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Capital Company consists of three series: Dresdner RCM Growth Equity Fund ("Growth Fund") and Dresdner RCM Small Cap Fund ("Small Cap Fund") are diversified, no-load series of the Capital Company. These two series are collectively referred to as the "Funds." Dresdner RCM International Equity Fund ("International Fund") is a non-diversified, no load series of the Capital Company. International Fund financial information is included in the semi-annual report of 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 amount of assets and liabilities. Actual results may differ from these estimates. A. SECURITIES VALUATIONS: Investment securities are stated at fair market value. Equity securities traded on stock exchanges are valued at the last sale price on the exchange or in the principal over-the-counter market in which such securities are traded as of the close of business on the day the securities are being valued. If there has been no sale on such day, then the security will be valued at the closing bid price on such day. If no bid price is quoted on such day, then the security will be valued by such method as a duly constituted committee of the Board of Directors of the Capital Company shall determine 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 will be 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 will be valued at current market value, if current market quotations are readily available for such securities. To the extent that market quotations are not readily available, such securities will be valued by whatever means 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 AND RELATED INVESTMENT INCOME: Security transactions are recorded as of the date of purchase or sale. Realized gains and losses on security transactions are determined on the identified cost basis for both financial statement and federal income tax purposes. Interest income, foreign taxes and expenses are accrued daily. Dividends are recorded on the ex-dividend date. C. FOREIGN CURRENCY TRANSACTIONS: The records of the Funds are maintained in U.S. dollars. Foreign currencies, investments and other assets and liabilities are translated into U.S. dollars at current exchange rates. Purchases and sales of foreign securities and income and withholding taxes are translated 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 transactions. 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. Page 24 Dresdner RCM Capital Funds, Inc. Notes to Financial Statements June 30, 1998 (Unaudited) D. FEDERAL INCOME TAXES: It is the policy of the Funds 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 the Funds 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 or excise taxes on income and capital gains. E. DISTRIBUTIONS: Distributions to shareholders are recorded by the Funds on the ex-dividend date. Income and capital gain distributions are determined in accordance with Federal income tax regulations which may differ from generally accepted accounting principles. 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. INVESTMENT IN FOREIGN SECURITY AND CURRENCY Investing in foreign equity securities and currency transactions involves significant risks, some of which are not typically associated with investments of domestic origin. The Funds' investments in foreign and emerging markets will subject them to the risk of foreign currency exchange rate fluctuations, perceived credit risk and adverse economic and political developments. 3. CAPITAL SHARES At June 30, 1998, 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 Growth Fund; 100,000,000 were classified as shares of the Small Cap Fund, 100,000,000 were classified as shares of the International Fund; and 500,000,000 shares remain unclassified. CAPITAL SHARE TRANSACTIONS
GROWTH FUND SIX MONTHS ENDED JUNE 30, 1998 YEAR ENDED (UNAUDITED) DECEMBER 31, 1997 ------------------------------ ------------------------------- SHARES AMOUNT SHARES AMOUNT ----------- ------------ ----------- ------------- Shares sold 5,566,681 $ 39,101,931 8,822,435 $ 58,202,047 Shares issued in connection with reinvestment of distributions - - 26,780,241 160,413,64 Shares repurchased (14,981,568) (104,457,481) (21,422,817) (143,040,397) ----------- ------------ ----------- ------------- Net increase (decrease) (9,414,887) ($65,355,550) 14,179,859 $ 75,575,294 ----------- ------------ ----------- ------------- ----------- ------------ ----------- -------------
Page 25 Dresdner RCM Capital Funds, Inc. Notes to Financial Statements June 30, 1998 (Unaudited) 3. CAPITAL SHARES (CONTINUED)
SMALL CAP FUND SIX MONTHS ENDED JUNE 30, 1998 YEAR ENDED (UNAUDITED) DECEMBER 31, 1997 ------------------------------ ------------------------------- SHARES AMOUNT SHARES AMOUNT ----------- ------------ ----------- ------------- Shares sold 3,691,527 $44,996,201 7,791,481 $ 96,712,138 Shares issued in connection with reinvestment of distributions - - 9,386,666 105,599,978 Shares repurchased (10,884,933) (136,737,993) (8,781,376) (105,121,180) ----------- ------------ ----------- ------------- Net increase (decrease) (7,193,406) ($91,741,792) 8,396,771 $ 97,190,936 ----------- ------------ ----------- ------------- ----------- ------------ ----------- -------------
At June 30, 1998, seven shareholders in the Growth Fund and five 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 63% of the Growth Fund and 49% of the Small Cap Fund. 4. PURCHASES AND SALES OF SECURITIES The following summarizes purchases and sales of investment securities, other than short-term investments, by each Fund, for 6 months ended June 30, 1998. There were no purchases or sales of U.S. Government obligations during the period. PURCHASES AND SALES OF SECURITIES
PURCHASES ------------ Growth Fund $802,960,808 Small Cap Fund $433,731,335 SALES ------------ Growth Fund $854,103,979 Small Cap Fund $495,015,319
5. TRANSACTIONS WITH RELATED PARTIES Dresdner RCM Global Investors LLC (previously RCM Capital Management, L.L.C.) ("Dresdner RCM") manages the Funds' investments and provides various administrative services, subject to the authority of the Board of Directors. The Growth Fund and Small Cap Fund pay investment management fees monthly at an annualized rate of 0.75% and 1.00%, respectively, of the Funds' average daily net assets. For the six months ended June 30, 1998, investment management fees were $3,848,837 for the Growth Fund and $3,376,258 for the Small Cap Fund. 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 their custodian; and payment of investment management fees due to the Investment Manager. The Investment Manager is responsible for other expenses incurred by the Growth Fund and the Small Cap Fund. At June 30, 1998, the Dresdner RCM Profit Sharing Plan, participation in which is limited to employees of Dresdner RCM, owned 372,133 shares of the Growth Fund and 405,303 shares of the Small Cap Fund. Page 26 Dresdner RCM Capital Funds, Inc. Notes to Financial Statements June 30, 1998 (Unaudited) 6. DIRECTORS' FEES As of June 30,1998, each director receives from the Capital Company an annual retainer of $1,000 (the retainer is evenly prorated among each series of the Capital Company), plus $500 for each meeting of the Board attended and $250 for each committee meeting attended. These fees are paid by the Investment Manager as outlined in Note 5 above. 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-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 Equity Company, 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 27 INVESTMENT MANAGER Dresdner RCM Global Investors LLC Four Embarcadero Center San Francisco, California 94111 TRANSFER AND REDEMPTION AGENT State Street Bank and Trust Company 1776 Heritage Drive North Quincy, Massachusetts 02171 DISTRIBUTOR Funds Distributor, Inc. 60 State Street, Suite 1300 Boston, Massachusetts 02109 CUSTODIAN State Street Bank and Trust Company 1776 Heritage Drive North Quincy, Massachusetts 02171 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker LLP 555 South Flower Street Los Angeles, California 90071 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP One Post Office Square Boston, Massachusetts 02109 Page 28 This brochure 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 recommendation to purchase. Distributor: Dresdner RCM Distributors, a division of Funds Distributor Inc. -----END PRIVACY-ENHANCED MESSAGE-----