<PAGE>
February 22, 1999
DEAR SHAREHOLDERS:
We are pleased to present the Dresdner RCM Global Funds (the "Funds")
Annual Shareholder Report for the 12 months ended December 31, 1998. Inside, you
will find discussions from the individual fund managers that describe the
investment strategies they employed in response to last year's economic and
market conditions. Each report also includes performance summaries, and lists of
holdings and portfolio weightings as of the end of the reporting period.
In identifying possible fund holdings, the Funds' managers draw on the
research of more than 175 investment professionals. They also investigate market
and economic variables through Grassroots Research-SM-, a division of Dresdner
RCM Global Investors LLC. The Funds' managers believe that Grassroots
Research-SM- can be a valuable adjunct to their traditional research efforts by
providing a "second look" at companies or by checking marketplace assumptions
concerning market demands for particular products and services. A seasoned team
of staff economists supplements these reports with macroeconomics assessments of
regional and global trends.
While markets performed relatively well in the first half of the year,
the fragility of emerging markets in Asia and Latin America led to a market
downturn by the third quarter, after Russia announced it was defaulting on its
foreign debt. As the fourth quarter got underway, central banks in the U.S. and
elsewhere instituted a series of cuts in short-term interest rates in an effort
to reverse slowing economic growth. These measures reassured investors and the
markets rebounded dramatically toward year-end, leading the blue chip indices to
a record fourth consecutive year of strong returns.
Over this challenging period, the Funds continued to focus on a
bottom-up analysis of company fundamentals combined with a careful assessment of
projected earnings growth. The fund managers applied these criteria to selecting
attractive stocks with quality earnings and buying them at reasonable
valuations.
We would also like to take this opportunity to assure shareholders that
Dresdner RCM has committed considerable effort and resources to avoid
difficulties related to the so-called "Y2K" effect associated with the Year
2000. Beginning with a study initiated in 1996 that detailed the need to replace
the core portfolio accounting system with new Y2K-compliant technology, the
company has made Year 2000 readiness a priority.
A three-step process has been established to address Y2K dating issues.
Our first objective is to make critical in-house applications compliant by the
end of the first quarter of 1999, either through upgrading or the acquisition of
new technology. These applications include portfolio accounting and trade
support. Our second objective is to ensure critical vendor systems (including
Custody and Transfer Agent) are Y2K-compliant by mid-1999. The third objective
is to perform all other upgrades necessary to make the company's internal
environment fully compliant. As a result, no disruption to client services is
anticipated before, during or after the turn of the century.
However, while Dresdner RCM is taking all precautions as an
organization, Y2K problems could adversely affect companies in which the Fund
invests. For example, companies may incur substantial costs to address the
problem or they may suffer losses caused by corporate or governmental
data-processing errors. To the extent that the repercussion on a portfolio
holding is negative, it might impact the Fund's investment return.
We believe that our strong commitment to value and performance built on
a rigorous company-by-company approach has served the Funds well in 1998 and we
are looking forward to another successful year in 1999. If you have any
questions about the material in this report, or want more information on a
specific Fund, please call us at: 1-800-726-7240.
Sincerely,
[SIG]
DeWitt Bowman
Chairman of the Funds
<PAGE>
Dresdner RCM Global Technology Fund
Management's Performance Review
The Dresdner RCM Global Technology Fund (the "Fund") achieved a total
return of 22.91% for the six months ended December 31, 1998, and a total return
of 60.53% for the full year. For the year, the portfolio outperformed its
benchmark, the Lipper Science and Technology Fund Index, which delivered a total
return of 46.95%. This Index represents an equal weighting of the 10 largest
science and technology mutual funds in the United States. In comparison, the
general benchmark for blue chip companies, the Standard & Poor's 500 Stock
Index, returned 28.57% over the same period.
MARKET REVIEW
The year was characterized by an unusual degree of volatility both in
the U.S. and abroad. In the third and fourth quarters, we saw a number of stocks
- -- which began as strong performers in the first half of the year -- take a
downward turn in response to global liquidity concerns. As the summer unfolded,
fiscal events in Russia and currency weakness in Asia unsettled world financial
markets, creating a movement away from small to mid cap technology issues toward
the more liquid larger capitalization stocks.
In response to these global events, the Federal Reserve implemented the
first of three rate cuts in September that consequently bolstered investor
confidence. Numerous central banks around the world followed suit, restoring
confidence to troubled stock and bond markets. These actions set the stage for a
vigorous rebound in the markets in the fourth quarter, which was spearheaded by
a short list of technology companies, particularly in the U.S., but also in
Europe.
Almost all of 1998's advance was concentrated in the large cap growth
stocks, where earnings continued to grow, despite global uncertainty.
Fortunately, we owned many of the stocks that caused the S&P 500 to record its
fourth consecutive yearly gain of over 20% -- a first in its history. Within the
S&P 500, five technology stocks (Microsoft, Dell Computer, Intel, Lucent
Technologies and Cisco Systems) contributed more than 25% of the entire year's
gain.
INVESTMENT APPROACH
Central to Dresdner RCM's approach is the belief that rigorous
fundamental research of technology securities can be combined with a disciplined
methodology to uncover good companies that generate strong earnings and steady
growth. We look for growth at reasonable valuations through analysis and
original research of a company's earnings, product line, management capabilities
and market expectations.
Employing a bottom-up orientation in the selection process, we first
choose candidates with favorable company characteristics and then apply our
global economic perspective to stock selection.
SECTOR HIGHLIGHTS
In the first half of the year, the portfolio was heavily weighted with
software and communications companies such as Veritas Software, Visio Corp.,
Network Associates and Uniphase Corp., whose high growth potential contributed
to the Fund's posting a 30.61% return in the first six months.
Toward the second half of the year, as the economic environment became
less favorable, we put a greater emphasis on personal computer (PC),
semiconductor and Internet stocks. Due to their highly leveraged nature, prices
of small to mid cap growth stocks came under considerable pressure.
Consequently, by the latter half of the year, we trimmed a number of these
issues and added to other positions that we felt represented overlooked value in
the marketplace -- that is, the more liquid larger capitalization issues like
Microsoft, Intel and Dell, and other manufacturers.
By year-end, the strong performance of Internet stocks, which
represented 15% of the portfolio's assets, lifted the entire technology sector.
We participated significantly with such holdings as Amazon.com, Yahoo!,
InfoSeek, and America Online.
The computer/office equipment sector was also strongly represented. The
Fund's largest position was Network Appliances, which makes high-performance
network data storage devices. Other big contributors for the Fund were
telecommunications giant MCI-WorldCom; EMC,
Page 2
<PAGE>
Dresdner RCM Global Technology Fund
Management's Performance Review
which specializes in mass data storage; networking systems leader Cisco Systems;
Altera Corp., which makes programmable logic devices; and Micron Technologies,
which specializes in PCs and semiconductor memory products.
GEOGRAPHIC SUMMARY
With the depth of opportunities available in the U.S., it's not too
surprising we were less diversified abroad than in years past. There was
negligible exposure, less than 1%, to Asia because of continuing economic
uncertainties in that region. Valuation levels of technology issues in Europe,
particularly in information technology services, were well above anything seen
in the U.S., and consequently represented very little opportunity to the Fund.
However, we still were able to take advantage of profitable positions in such
companies as Nokia and Merkantildata.
OUTLOOK
We expect more of the same in the markets in 1999 -- more volatility and
greater performance by growth stocks compared to economically sensitive stocks,
although the gap should be considerably less. The surprises in 1999 could be the
continued strength of the U.S. economy and a gradual improvement in Asian
economies. As we look forward to 1999, we will proceed cautiously. The
technology sector's advance in the fourth quarter, particularly in the Internet
area, causes us to adopt a more conservative stance over the near term.
Consistent with Dresdner RCM's long-held viewpoint, however, it has never been
clearer that technology occupies a central role in the development and growth of
the global economy, presenting enormous investment opportunity throughout this
year and beyond.
Page 3
<PAGE>
Dresdner RCM Global Technology Fund
Performance Summary
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FUND LIPPER SCIENCE & TECHNOLOGY FUND INDEX S&P 500 STOCK INDEX
<S> <C> <C> <C>
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 $16,438
1/31/98 $15,976 $12,759 $16,620
2/28/98 $17,837 $14,277 $17,819
3/31/98 $18,838 $14,394 $18,731
4/30/98 $20,452 $15,012 $18,920
5/31/98 $19,227 $13,911 $18,595
6/30/98 $21,065 $14,727 $19,350
7/31/98 $20,441 $14,588 $19,143
8/31/98 $17,095 $11,850 $16,375
9/30/98 $17,790 $13,248 $17,425
10/31/98 $19,463 $14,259 $18,841
11/30/98 $22,055 $15,858 $19,983
12/31/98 $25,891 $18,423 $21,134
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The chart above shows the performance of the Dresdner RCM Global
Technology Fund since the Fund's inception versus the Standard & Poor's 500
Stock Index(a) and the Lipper Science & Technology Fund Index.(b) The chart
represents a cumulative return of 158.91%(c)(d) for the Fund. The average annual
return from the Fund's inception was 37.16%.(c)(d) The chart assumes a
hypothetical $10,000 initial investment in the Fund and reflects all Fund
expenses.
AVERAGE ANNUAL TOTAL RETURNS(C)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1 YEAR 3 YEAR FUND(D)
<S> <C> <C>
60.53% 37.13% 37.16%
</TABLE>
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 Standard & Poor's 500 Stock Index is a capitalization-weighted index
of 500 stocks that attempts to measure performance of the broad domestic
economy through changes in the aggregate market value of 500 stocks
representing major industries.
(b) The Lipper Science & Technology Fund Index is an equally weighted index of
the 10 largest U.S. science and technology mutual funds.
(c) Returns assume reinvestment of all dividends and capital gains
distributions at net asset value.
(d) The Fund commenced operations on December 27, 1995.
Page 4
<PAGE>
Dresdner RCM Global Technology Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
COMMUNICATION SERVICES 1.1%
2,810 US MCI WorldCom Inc. * $ 201,617
COMPUTERS/OFFICE EQUIPMENT 16.0%
13,730 US Compaq Computer Corp. 575,802
4,640 US Dell Computer Corp. 339,590
7,400 US E M C Corp. * 629,000
3,250 US Hewlett Packard Co. 222,016
15,300 US Network Appliance Inc. 688,500
10,000 US Seagate Technology * 302,500
2,350 US Sun Microsystems Inc. * 201,219
--------------
2,958,627
--------------
DRUGS AND HOSPITAL SUPPLIES 1.2%
4,590 US SangStat Medical Corp. * 97,537
950 US Sofamor/Danek Group Inc. * 115,662
--------------
213,199
--------------
ELECTRICAL EQUIPMENT 1.1%
6,000 US Oak Industries Inc. * 210,000
ELECTRONICS/NEW TECHNOLOGY 25.7%
800 JP Advantest Corp. 50,782
7,650 US Altera Corp. * 465,694
6,700 US Analog Devices Inc. * 210,212
7,900 US Ascend Communications Inc. * 519,425
4,087 US Cisco Systems Inc. 379,325
3,730 US Intel Corp. 442,238
2,050 US Linear Technology Corp. 183,603
10,600 US Microchip Technology Inc. * 392,200
11,000 US Micron Technologies Inc. * 556,187
10,510 CA Newbridge Networks Corp. * 319,241
3,545 FI Nokia Corp. (ADR A) 426,951
6,120 US STMicroelectronics N.V. NY Registry * 477,742
3,660 US Uniphase Corp. * 253,913
1,400 US Xilinx Inc. * 91,175
--------------
4,768,688
--------------
INDUSTRIAL EQUIPMENT 2.4%
5,950 US Tyco International Ltd. 448,853
TECHNOLOGY SERVICES 29.0%
790 US Amazon.com Inc. 253,787
2,240 US America Online Inc. 358,400
5,600 US Aspect Development Inc. 248,150
360 FR Atos S.A. * 86,101
5,920 US BMC Software Inc. * 263,810
25,500 IE CBT Group PLC (ADR) 379,312
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 5
<PAGE>
Dresdner RCM Global Technology Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
TECHNOLOGY SERVICES (CONTINUED)
3,325 US Citrix Systems Inc. $ 322,733
12,100 US I2 Technologies Inc. 367,538
2,625 US Infoseek Corp. * 129,609
5,700 US Macromedia Inc. * 192,019
20,030 NO Merkantildata ASA 197,178
2,110 US Microsoft Corp. 292,631
5,300 US MicroStrategy Inc. * 166,950
5,970 US Network Associates Inc. 395,513
1,350 US Network Solutions Inc. * 176,681
140 IE Saville Systems PLC (ADR) * 2,660
14,700 US Segue Software Inc. * 297,675
9,300 US VERITAS Software Co. 557,419
13,200 US Visio Corp. * 482,625
910 US Yahoo Inc. * 215,613
--------------
5,386,404
--------------
TOTAL EQUITY INVESTMENTS (COST $8,714,460) 76.5% 14,187,388
--------------
OPTIONS 0.9%
NO. OF
CONTRACTS
13 US Newbridge Networks Corp. Call *
January 2000 strike price $20 164,125
50 US AMEX Computer Technology Index Put *
January 1999 strike price $630 1,875
--------------
TOTAL OPTIONS (COST $314,415) 166,000
--------------
TOTAL EQUITY INVESTMENTS AND OPTIONS (COST $9,028,875) 77.4% 14,353,388
--------------
SHORT-TERM INVESTMENTS
SHARES
- ---------
MONEY MARKET FUNDS 7.5%
696,872 US SSgA U.S. Government Money Market Fund 696,872
696,872 US SSgA Money Market Fund 696,872
--------------
1,393,744
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $1,393,744) 7.5% 1,393,744
--------------
TOTAL INVESTMENTS (COST $10,422,619)** 84.9% 15,747,132
OTHER ASSETS LESS LIABILITIES 15.1% 2,811,035
--------------
NET ASSETS 100.0% $ 18,558,167
--------------
--------------
</TABLE>
- --------------------------------
* Non-income producing security.
ADR American Depository Receipt
The accompanying notes are an integral part of the financial statements.
Page 6
<PAGE>
Dresdner RCM Global Technology Fund
Portfolio of Investments
December 31, 1998
Tax Information:
** For Federal income tax purposes, cost is $10,807,208 and the gross
aggregate unrealized appreciation (depreciation) for all securities is as
follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 5,252,390
Unrealized depreciation (312,466)
-------------
Net unrealized
appreciation $ 4,939,924
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's investments in securities at December 31, 1998, categorized by
country:
<TABLE>
<CAPTION>
% OF NET ASSETS
------------------------------------------
COUNTRY SHORT-TERM
COUNTRY CODE EQUITIES AND OTHER TOTAL
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Canada CA 1.7% 1.7%
Finland FI 2.3% 2.3%
France FR 0.5% 0.5%
Ireland IE 2.1% 2.1%
Japan JP 0.3% 0.3%
Norway NO 1.1% 1.1%
United States US 83.6% 8.4% 92.0%
--- --- ----------
91.6% 8.4% 100.0%
--- --- ----------
--- --- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 7
<PAGE>
Dresdner RCM Global Small Cap
Management's Performance Review
The Dresdner RCM Global Small Cap (the "Fund") earned a total return of
19.29% for the 12 months ended December 31, 1998, versus a return of 4.12% for
the Fund's benchmark, the Salomon Brothers Extended Market Index. The Fund's
performance ranked it first among the 38 global small cap funds tracked by
Lipper Analytical Services for the second consecutive year.
MARKET OVERVIEW
This strong absolute performance was achieved despite the gulf between
small cap and large cap stocks, which continued to widen in 1998 as nervous
investors sought the liquidity and familiarity of blue chip growth stocks,
particularly in the second and third quarters. During the third quarter retreat
from equities brought on by turmoil in the world's financial markets, we
remained committed to staying fully invested in strong business franchises with
the financial wherewithal to grow. Opportunistic positioning of the portfolio,
particularly in electronics and technology, allowed the Fund to take full
advantage of the fourth quarter rally that occurred in the wake of interest rate
cuts by the Federal Reserve. The Fund also benefited last year from an
international climate of declining interest rates, which favors growth stocks
over cyclical issues.
INVESTMENT APPROACH
As bottom-up investors, we focus on company specifics such as
distinguishing products, market positioning, proven management and steady
earnings. Industry exposure plays a secondary role in the investment process,
particularly in the U.S. portion of the portfolio. We achieve the desired degree
of diversification by being able to invest in markets around the world.
Underscoring our basic meet-the-management company-by-company analytical
approach, almost all of the Fund's performance in 1998 can be attributed to
excellent stock selection.
SECTOR HIGHLIGHTS
Throughout the year, we identified attractive investment opportunities
in technology, telecommunications and, to a lesser extent, business and
communications services. In addition, our low exposure to companies in most
cyclical or economically sensitive industries, such as financial services and
consumer durables, also contributed to our superior performance.
We favored technology throughout the year for its growth potential,
taking advantage of steep price declines in the third quarter to aggressively
add to the Fund's holdings. Four of the biggest contributors to performance in
this area were Veritas Software, Citrix Systems, Engineering Animation and
Rational Software.
The Fund's overweighting in telecommunications and media services -- the
Fund's third-largest sector exposure -- also improved total return last year.
Investments in Metronet Communications, SFX Entertainment and Global TeleSystems
added to our performance.
Winners in the business services segment included Quanta Services, which
provides service and maintenance outsourcing to the utilities industry, NCO
Group, Iron Mountain, Boron Lepore & Associates and Lason Inc. The Canadian
company Open Text Corp., a technology services company which specializes in
document management for large corporations, also had a positive impact on the
portfolio.
In addition, we concentrated on leisure-related products and services.
We focused on this segment to capitalize on the wealth effect that has
conditioned consumers with less time but more money to spend on recreation and
vacation-related activities. One excellent investment in this area was the
restaurant chain of Cheesecake Factory.
GEOGRAPHIC SUMMARY
In 1998, the Fund's U.S. weighting remained approximate at 47%. In part,
this reflected our belief that U.S. small cap stocks were badly oversold in the
market contraction that occurred in the third quarter, and that we felt
positively about their valuations and relative earnings growth. Although the
market continued to favor the liquidity of large cap stocks, we were rewarded by
a fourth-quarter resurgence of 19.36% for U.S. small cap stocks.
We increased the Fund's U.S. weighting, in part, because we believed the
introduction of the Euro, the new currency of the European Monetary Union (EMU),
could diminish the demand for small cap stocks in Europe. Specifically, a
substantial reallocation of European institutional portfolios, which are
significantly influenced by index
Page 8
<PAGE>
Dresdner RCM Global Small Cap
Management's Performance Review
benchmarks, will tend to favor large cap stocks. Diversification within
countries was previously achieved by adding small cap stocks to larger cap
holdings. That diversification could now be accomplished by buying other large
caps in different countries within the EMU.
Our best performance in a non-U.S. market was in Germany, the Fund's
second-largest country weighting at about 6%. This market presented a favorable
small cap environment. The Neuer Markt exchange, which focuses on smaller,
high-growth stocks, saw 40 companies go public in 1998 and nearly tripled in
value. Among the Fund's top German performers last year were Sixt AG, the auto
rental and leasing company; Pfeiffer Vacuum; and Brokat Infosystem, which
produces Internet software. Another standout was EM TV Merchandising, which
focuses on children's television programming. The stock climbed 72.5% in the
fourth quarter.
We significantly underweighted Asia because we were concerned about the
declining economic environment and the fact that exports have not increased.
Uncertainty relating to China's possible devaluation of the Yuan was also an
issue. Although we thought devaluation was a remote possibility, it did put
downward pressure on regional stock prices.
OUTLOOK
Looking forward to 1999, we believe high quality small cap stocks could
post significant gains. As in 1998, we expect continued outperformance for
growth stocks compared to economically sensitive stocks, although the
discrepancy should narrow. Given the extreme disparity between valuations of
small and large caps, we believe small caps should show relative strength in
performance. We believe small caps are being overlooked by investors and are due
to catch up if the market continues to hold its course, especially in light of
their higher expected earnings growth relative to larger cap stocks. We remain
confident that our application of fundamental analysis will allow us to continue
identifying high-quality investments in the global small-cap arena. We are
likely to increase our very limited exposure in Japan because we believe small
caps in this market are becoming more attractive.
Page 9
<PAGE>
Dresdner RCM Global Small Cap Fund
Performance Summary
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FUND SALOMON EMI
<S> <C> <C>
12/31/96 10,000 10,000
1/31/97 10,290 10,021
2/28/97 10,010 10,005
3/31/97 9,410 9,665
4/30/97 9,320 9,620
5/31/97 10,730 10,370
6/30/97 11,750 10,689
7/31/97 12,280 10,978
8/31/97 12,320 10,846
9/30/97 13,260 11,313
10/31/97 12,440 10,838
11/30/97 12,410 10,645
12/31/97 12,548 10,647
1/31/98 12,446 10,711
2/28/98 13,827 11,501
3/31/98 15,071 11,980
4/30/98 15,705 12,039
5/31/98 15,388 11,799
6/30/98 15,784 11,645
7/31/98 15,524 11,152
8/31/98 12,197 9,366
9/30/98 12,096 9,589
10/31/98 12,707 10,162
11/30/98 14,144 10,599
12/31/98 14,968 11,084
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The chart above shows the performance of the Dresdner RCM Global Small
Cap Fund since the Fund's inception versus the Salomon EMI's Index.(a) The chart
represents a cumulative return of 49.68%(b)(c) for the Fund. The average annual
total return from the Fund's inception was 22.34%.(b)(c) The chart assumes a
hypothetical $10,000 initial investment in the Fund and reflects all Fund
expenses.
AVERAGE ANNUAL TOTAL RETURNS(B)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1 YEAR FUND(C)
<S> <C>
19.29% 22.34%
</TABLE>
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 Salomon Brothers Extended Market Index ("EMI") is a component of the
Salomon Brothers Broad Market Index ("BMI") which includes listed shares of
5,409 companies with a total available market capitalization of at least the
local equivalent of US$100 million on the last business day of May each
year. The BMI consists of two components: the Primary Market Index ("PMI")
is the large capitalization stock component and the EMI is the small
capitalization stock component. The PMI universe is defined as those stocks
falling within the top 80% of the cumulative available capital level in each
country. The EMI includes the bottom 20% of the cumulative available capital
level in each country.
(b) Returns assume reinvestment of all dividends and capital gains
distributions at net asset value.
(c) The Fund commenced operations on December 31, 1996.
Page 10
<PAGE>
Dresdner RCM Global Small Cap Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
CONSUMER DURABLES SECTOR 0.9%
CONSUMER DURABLES 0.9%
2,700 NL Samas Groep N.V. $ 48,341
CONSUMER NON-DURABLES SECTOR 22.6%
BEVERAGE AND TOBACCO 1.1%
1,000 ES Banco Pastor S.A. 62,813
FOOD AND FOOD PROCESSING 0.5%
1,140 JP Hokuto Corp. 27,793
GENERAL RETAIL 6.8%
3,200 IS Blue Square-Israel Ltd. (ADR) 33,200
2,000 US CSK Auto Corp. * 53,375
1,100 US Regis Corp. 44,000
295 CH Selecta Group - Registered Shares 81,617
3,400 ES Superdiplo S.A. 95,863
3,500 US Trans World Entertainment Corp. 66,719
--------------
374,774
--------------
HOUSEHOLD/RELATED NON-DURABLES 2.0%
4,000 US Ocular Sciences Inc. * 107,000
LEISURE TIME PRODUCTS/SERVICES 12.2%
1,200 US Cheesecake Factory Inc. 35,588
2,200 FR Compagnie des Alpes * 78,335
6,900 ES Corp Financiera Reunida S.A. * 100,560
2,200 US Dave & Buster's Inc. * 50,738
1,800 US Family Golf Centers Inc. 35,550
7,000 IE Jurys Hotel Group PLC 52,410
1,000 FR Leon de Bruxelles S.A. 75,188
800 US Speedway Motorsports Inc. * 22,800
5,000 SE Ticket Travel Group 76,799
2,000 US Travel Services International Inc. 61,000
285 CH Valora Holding AG 77,087
--------------
666,055
--------------
CYCLICAL/CAPITAL GOODS SECTOR 10.4%
BUILDING AND CONSTRUCTION 3.0%
3,600 US Comfort Systems USA Inc. * 64,350
12,500 IT Gruppo Ceramiche Ricchetti SpA * 3,176
24,000 IT Gruppo Ceramiche Ricchetti * 28,237
3,200 US Integrated Electrical Services * 71,200
--------------
166,963
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 11
<PAGE>
Dresdner RCM Global Small Cap Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
INDUSTRIAL EQUIPMENT 4.5%
300 DE Aixtron AG $ 55,208
14,000 IT Interpump Group SpA 68,773
87 CH SIG Schweizerische Industrie-G 51,308
2,200 NO Tomra Systems A/S 72,190
--------------
247,479
--------------
RAW/BASIC MATERIALS 0.7%
3,000 US Oregon Steel Mills Inc. 35,625
TRANSPORTATION SERVICES 2.2%
2,100 DE Sixt AG Non-Voting Pfd. 119,530
ENERGY SECTOR 0.8%
ENERGY 0.8%
1,665 CA Ballard Power Systems Inc. 45,529
HEALTH CARE SECTOR 10.1%
DRUGS AND HOSPITAL SUPPLIES 5.7%
1,800 US Anesta Corp. * 47,925
2,200 FR Genset S.A. (Sponsored ADR) * 60,775
2,000 US Inhale Therapeutic Systems * 66,000
1,500 SE Nobel Biocare AB 20,356
3,400 US Shire Pharmaceuticals Group PLC (ADR) * 68,850
3,000 US Transgene S.A. (ADR) * 46,125
--------------
310,031
--------------
HEALTH CARE SERVICES 4.4%
1,800 US Assisted Living Concepts Inc. * 23,625
500 CH Gretag Imaging Holdings * 42,957
1,000 US Kendle International Inc. * 23,375
800 US Pharmaceutical Product Development Inc. * 24,050
1,600 US Province Healthcare Co. 57,400
2,500 US Renal Care Group Inc. 72,031
--------------
243,438
--------------
INTEREST SENSITIVE SECTOR 6.7%
BANKING 2.9%
2,600 ES Baron de Ley S.A. * 85,235
80 CH Banca del Gottardo Class B * 72,633
--------------
157,868
--------------
GENERAL FINANCE 3.8%
3,500 US Correctional Properties Trust 63,219
3,500 US Federated Investors Inc. Class B 63,438
11,000 US UniCapital Corp. * 81,125
--------------
207,782
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 12
<PAGE>
Dresdner RCM Global Small Cap Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
TECHNOLOGY SECTOR 21.1%
COMPUTERS AND OFFICE EQUIPMENT 2.6%
3,500 US CHS Electronics Inc. * $ 59,281
4,000 SE Maldata AB Series B 80,932
--------------
140,213
--------------
ELECTRONICS AND NEW TECHNOLOGY 1.9%
800 US Artesyn Technologies Inc. * 11,200
1,400 US Microchip Technology Inc. * 51,800
3,000 US MMC Networks Inc. * 39,750
--------------
102,750
--------------
TECHNOLOGY SERVICES 16.6%
16,000 UK Autonomy Corporation PLC * 58,080
2,200 US BindView Development Corp. * 60,500
300 DE Brokat Infosystems AG * 45,031
300 US Citrix Systems Inc. 29,119
1,600 US HNC Software Inc. * 64,700
600 US Infoseek Corp. * 29,625
348 FR Jet Multimedia 48,032
31 FR Jet Multimedia Warrants 12/31/99 * 415
6,000 NO Merkantildata ASA 59,065
4,000 US Micromuse Inc. * 78,000
1,000 JP Nippon System Development 31,029
4,700 CA Open Text Corp. * 114,269
3,000 US Rational Software Corp. * 79,500
4,500 UK Smallworld PLC * 56,250
300 US VERITAS Software Co. 17,981
2,200 US Visio Corp. * 80,438
1,600 US Visual Networks Inc. * 60,000
--------------
912,034
--------------
TELEMEDIA/SERVICES SECTOR 20.1%
BUSINESS SERVICES 8.5%
200 FR Altran Technologies S.A. 48,263
600 US Choicepoint Inc. * 38,700
900 DE DIS Deutscher Industrie Service AG 42,149
2,400 US Education Management Corp. 56,700
2,000 US F. Y. I. Inc. * 64,000
3,500 US Romac International Inc. * 77,875
4,500 US School Specialty Inc. * 96,188
2,000 UK Select Appointments Holdings PLC 43,000
--------------
466,875
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 13
<PAGE>
Dresdner RCM Global Small Cap Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
COMMUNICATION SERVICES 7.2%
5,000 UK Freepages Group PLC * $ 30,625
1,400 US Global TeleSystems Group Inc. * 78,050
2,300 US ICG Communications Inc. * 49,450
1,100 US International Telecommunication Systems Inc. 16,225
4,150 CA Metronet Communications Corp. * 139,025
750 FR Omnicom S.A. * 82,975
--------------
396,350
--------------
MEDIA 4.4%
2,000 US Bright Horizons Family Solutions * 54,000
75 DE EM TV & Merchandising AG 43,049
1,200 US SFX Entertainment Inc. Class A * 65,850
2,500 US Sylvan Learning Systems Inc. 76,249
--------------
239,148
--------------
TOTAL EQUITY INVESTMENTS (COST $4,354,687) 92.7% 5,078,391
--------------
SHORT-TERM INVESTMENTS
MONEY MARKET FUNDS 0.0%
49 US SSgA U.S. Government Money Market Fund 49
28 US SSgA Money Market Fund 28
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $77) 0.0% 77
--------------
TOTAL INVESTMENTS (COST $4,354,764)** 92.7% 5,078,468
OTHER ASSETS LESS LIABILITIES 7.3% 400,726
--------------
NET ASSETS 100.0% $ 5,479,194
--------------
--------------
</TABLE>
- --------------------------------
* Non-income producing security.
ADR American Depository Receipt
Tax Information:
** For Federal income tax purposes, cost is $4,361,492 and the gross aggregate
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 935,125
Unrealized depreciation (218,149)
---------
Net unrealized
appreciation $ 716,976
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 14
<PAGE>
Dresdner RCM Global Small Cap Fund
Portfolio of Investments
December 31, 1998
The Fund's investments in securities at December 31,1998, categorized by
country:
<TABLE>
<CAPTION>
% OF NET ASSETS
------------------------------------------
COUNTRY SHORT-TERM AND
COUNTRY CODE EQUITIES OTHER TOTAL
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Canada CA 5.5% 5.5%
France FR 7.2% 7.2%
Germany DE 5.6% 5.6%
Ireland IE 1.0% 1.0%
Israel IS 0.6% 0.6%
Italy IT 1.8% 1.8%
Japan JP 1.1% 1.1%
Netherlands NL 0.9% 0.9%
Norway NO 2.4% 2.4%
Spain ES 6.3% 6.3%
Sweden SE 3.2% 3.2%
Switzerland CH 5.9% 5.9%
United Kingdom UK 3.4% 3.4%
United States US 47.8% 7.3% 55.1%
--- -- ----------
Total 92.7% 7.3% 100.0%
--- -- ----------
--- -- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 15
<PAGE>
Dresdner RCM Global Health Care Fund
Management's Performance Review
A strong stock price surge in the latter part of 1998 helped the
Dresdner RCM Global Health Care Fund (the "Fund") provide investors with an
attractive, competitive return for the year. In the 12 months ended December 31,
1998, the Fund earned a total return of 25.57%. That compares with returns of
33.41% for the Russell Midcap Health Care Index, and 28.58% for the Standard &
Poor's 500 Stock Index.
MARKET OVERVIEW
The year was characterized by an unusual degree of volatility in global
markets. The first quarter started out very strongly, but gradually started to
decline in the second quarter, as investors became concerned about slowing
corporate earnings. As the summer unfolded, the collapse of the Russian ruble
and continuing weakness in Japan and the rest of Asia led to a sell-off in
global markets. Investors moved away from small and mid capitalization issues,
in favor of the more liquid large caps. In response to these global events, the
Federal Reserve implemented the first of three rate cuts in September -- which
consequently bolstered investor confidence. Numerous central banks around the
world followed suit, eventually restoring confidence to troubled stock and bond
markets and setting the stage for a vigorous fourth quarter rebound.
The Fund's performance paralleled these developments. Concentrating
primarily in large-capitalization companies for most of the year, the Fund
benefited from investors' flight to quality. Believing that confidence would be
restored to the equity markets, we selectively added mid-sized companies to the
portfolio, which contributed a strong supporting role to portfolio performance
in the latter half of the year.
INVESTMENT APPROACH
Central to Dresdner RCM's approach is the belief that rigorous
fundamental research of health care securities can be combined with a
disciplined methodology to uncover quality companies that generate strong
earnings and solid growth prospects. We look for growth at reasonable valuations
through the analysis of a company's earnings, product line, management
capabilities and market expectations.
Employing a bottom-up orientation in the selection process, we first
choose candidates with favorable company characteristics and then apply our
global economic perspective to stock selection. With focus on the changing
market dynamics, we choose selective market weighting of the portfolio coupled
with the potential for significant price appreciation through undiscovered and
under-appreciated names in the sector.
SECTOR HIGHLIGHTS
In 1998, major sector movements for the Fund included a reduction in
exposure to health care services, and an increase in the weightings of large
pharmaceuticals, mid cap specialty pharmaceuticals and medical devices.
Our optimistic stance on health care services in 1997 was simply not
borne out this year, a key reason for the portfolio's underperformance relative
to its benchmark. Earlier in the year, we were attracted to health care services
stocks because their valuations seemed more favorable than a number of the
pharmaceutical and technology companies we were reviewing. One reason for
underperformance in this sector was the difficulty many health maintenance
organizations (HMOs) had in making accurate quarterly earnings reports, due to
uncertainty over reimbursable expenses. We reduced our exposure to this sector
in the second half of the year, but did not avoid the fact that health care
services in general, and in almost every subsector, underperformed in 1998.
Other areas that underperformed the market were biotechnology and
medical device companies in the small- to mid-capitalization range, which were
out of favor with investors for the first half of the year, as noted above.
In the fourth quarter, the mid cap biotechnology companies in the
portfolio received a significant boost, primarily as a result of the rapid,
significant advances among technology and Internet stocks. Another reason for
the biotechnology rally was the sector's extreme underperformance through the
summer that spurred, in effect, a technical correction on the upside by the
fall. With the flattening performance of some of the larger cap health care
issues, funds flowed into the "high quality" mid-cap
Page 16
<PAGE>
Dresdner RCM Global Health Care Fund
Management's Performance Review
pharmaceutical and larger-cap biotechnology stocks. Two examples of this mid-cap
push include the performances of Sepracor and Sangstat Medical.
We did, however, manage to find selected investment opportunities in the
area of larger medical device companies. Contributing to the portfolio's total
return were Bausch & Lomb, which benefited from growing attention by analysts,
and Stryker (a surgery device company), due to outstanding growth prospects, a
highly respected management team and manufacturing improvements. In the second
half of the year, our large sector position in Amgen (the world's largest
biotechnology company) appreciated dramatically, following the successful
outcome of a product arbitration.
GEOGRAPHIC SUMMARY
Generally, we believed that better valuations could be found closer to
home than abroad in 1998. Only 15% of the portfolio was invested in Europe, with
the remainder in the U.S. The opportunities to be found in Europe were
concentrated where there were flurries of merger and acquisition activity,
mimicking the merger frenzy that swept the U.S. pharmaceutical industry in the
1980's. Alza Corp. and Zeneca Group PLC are just two examples of companies in
the portfolio that may benefit from merger activity, with Zeneca already in the
final stages of a European consolidation with Sweden's Astra. We believe that
the larger European pharmaceutical firms will continue to consolidate their
positions in the marketplace in 1999 through acquisitions and the establishment
of strategic alliances, and that the recent merger activity witnessed thus far
(Zeneca/Astra, Synethelabo/Sanofi, Rhone-Poulenc/Hoechst) is likely to continue.
OUTLOOK
We believe the current environment is characterized by historically high
valuations across the health care sector, especially in the larger-cap U.S.
issues. In keeping with our bottom-up investing style, however, we will continue
to look carefully for reasonable valuations. This search is made more difficult
because there are no specific sectors that we perceive as representing good
value that are not also extraordinarily out of favor. Therefore, for the
present, we are not contemplating anything like a sector rotation strategy that
would presumably take advantage of the valuation discrepancies between sectors.
Looking ahead, we believe mid-cap pharmaceutical firms are marginally
more attractive than large caps on a relative basis. While large cap
pharmaceuticals performed well in 1998, we do not believe they have a sufficient
line-up of new products to sustain their long-term growth, and will need to
increase their licensing activity to enhance profits. Our strategy will
therefore focus on increased market weightings of those more optimistic large-
and mid-cap issues along with the high growth prospect small- and mid-cap health
care stocks. We will also maintain a close watch on general market appreciation
and its inevitable inclusion of the core pharmaceuticals. And despite their
continued underperformance, we will keep keen watch for the best growth
prospects in the health care service arena and will stand poised to potentially
re-enter this market should dynamics reverse.
Page 17
<PAGE>
Dresdner RCM Global Health Care Fund
Performance Summary
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FUND RUSSELL MIDCAP HEALTH CARE INDEX S&P 500 STOCK INDEX
<S> <C> <C> <C>
12/31/96 $10,000 $10,000 $10,000
1/31/97 $10,700 $10,353 $10,625
2/28/97 $10,650 $10,552 $10,708
3/31/97 $9,910 $9,637 $10,268
4/30/97 $10,050 $9,786 $10,881
5/31/97 $11,140 $10,712 $11,544
6/30/97 $11,660 $11,201 $12,061
7/31/97 $11,990 $11,904 $13,021
8/31/97 $11,790 $11,739 $12,292
9/30/97 $13,110 $12,373 $12,965
10/31/97 $12,910 $11,644 $12,532
11/30/97 $13,110 $11,886 $13,113
12/31/97 $13,000 $11,920 $13,338
1/31/98 $13,189 $11,938 $13,486
2/28/98 $14,060 $13,012 $14,458
3/31/98 $14,584 $13,725 $15,199
4/30/98 $14,897 $14,478 $15,352
5/31/98 $14,261 $14,231 $15,088
6/30/98 $14,295 $14,779 $15,701
7/31/98 $14,216 $14,392 $15,533
8/31/98 $12,241 $11,813 $13,287
9/30/98 $13,659 $13,577 $14,139
10/31/98 $14,004 $14,298 $15,288
11/30/98 $15,109 $15,021 $16,215
12/31/98 $16,324 $16,394 $17,148
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The chart above shows the performance of the Dresdner RCM Global Health
Care Fund since the Fund's inception versus the Standard & Poor's 500 Stock
Index(a) and the Russell Midcap Health Care Index.(b) The chart represents a
cumulative return of 63.24%(c)(d) for the Fund. The average annual total return
from the Fund's inception was 27.77%.(c)(d) The chart assumes a hypothetical
$10,000 initial investment in the Fund and reflects all Fund expenses.
AVERAGE ANNUAL TOTAL RETURNS(C)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1 YEAR FUND(D)
<S> <C>
25.57% 27.77%
</TABLE>
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 Standard & Poor's 500 Stock Index is a capitalization-weighted index
of 500 stocks that attempts to measure performance of the broad domestic
economy through changes in the aggregate market value of 500 stocks
representing major industries.
(b) The Russell Midcap Health Care Index is composed of all medium and
medium/small health care companies in the Russell 1000 Index. The Russell
1000 Index measures the performance of the 1,000 largest companies in the
Russell 3000 Index, which represents approximately 90% of the total market
capitalization of the Russell 3000 Index.
(c) Returns assume reinvestment of all dividends and capital gains
distributions at net asset value.
(d) The Fund commenced operations on December 31, 1996.
Page 18
<PAGE>
Dresdner RCM Global Health Care Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
DRUGS AND HOSPITAL SUPPLIES 85.5%
2,200 US Algos Pharmaceutical Corp. * $ 57,200
1,588 DE Altana AG 123,949
6,200 US Alza Corp. * 323,950
4,300 US American Home Products Corp. 242,144
3,800 US Amgen Inc. * 397,337
4,400 US Bausch & Lomb Inc. 264,000
1,100 US Bristol Myers Squibb Co. 147,194
13,300 US CIMA Labs Inc. * 34,913
2,500 US Eli Lilly & Co. * 222,187
9,300 US Gensia Sicor Inc. * 42,141
8,000 US Inhale Therapeutic Systems * 264,000
2,100 US Johnson & Johnson 176,138
1,700 US Medtronic Inc. 126,225
8,000 US Monsanto Co. 380,000
14,700 US NaPro BioTherapeutics Inc. * 20,672
161 CH Novartis AG 316,495
465 DK Novo Nordisk A/S B shares 61,373
5,500 US Novoste Corp. * 156,062
700 US Pfizer Inc. 87,806
14 CH Roche Holdings Ltd. 170,836
10,100 US SangStat Medical Corp. * 214,625
430 DE Schering AG 54,023
1,200 US Sepracor Inc. * 105,750
7,600 US Stryker Corp. 418,475
2,300 US Warner Lambert Co. 172,931
2,500 UK Zeneca Group PLC (ADR) 112,188
--------------
4,692,614
--------------
HEALTH CARE SERVICES 14.5%
2,700 US Allegiance Corp. 125,887
4,400 US American Dental Partners * 50,875
3,150 US Bergen Brunswig Corp. 109,856
1,800 US Cardinal Health Inc. 136,575
1,800 US Covance Inc. * 52,425
1,500 US HCR Manor Care Inc. * 44,062
5,500 US Health Management Associates Inc. 118,938
3,000 US Universal Health Services Inc. Class B * 155,636
--------------
794,254
--------------
TOTAL EQUITY INVESTMENTS (COST $4,533,224) 100.0% 5,486,868
--------------
TOTAL INVESTMENTS (COST $4,533,224) ** 100.0% 5,486,868
OTHER ASSETS LESS LIABILITIES 0.0% 137
--------------
NET ASSETS 100.0% $ 5,487,005
--------------
--------------
</TABLE>
- --------------------------------
* Non-income producing security.
ADR American Depository Receipt
The accompanying notes are an integral part of the financial statements.
Page 19
<PAGE>
Dresdner RCM Global Health Care Fund
Portfolio of Investments
December 31, 1998
Tax Information:
** For Federal income tax purposes, cost is $4,536,398 and the gross aggregate
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 1,111,909
Unrealized depreciation (161,439)
-------------
Net unrealized
appreciation $ 950,470
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's investments in securities at December 31, 1998, categorized by
country:
<TABLE>
<CAPTION>
% OF NET ASSETS
------------------------------------------
COUNTRY SHORT-TERM
COUNTRY CODE EQUITIES AND OTHER TOTAL
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Denmark DK 1.1% 1.1%
Germany DE 3.2% 3.2%
Switzerland CH 8.9% 8.9%
United Kingdom UK 2.0% 2.0%
United States US 84.8% 84.8%
------ -- ----------
Total 100.0% -- 100.0%
------ -- ----------
------ -- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 20
<PAGE>
Dresdner RCM Large Cap Growth Fund
Management's Performance Review
The Dresdner RCM Large Cap Growth Fund (the "Fund") posted a total
return of 44.11% for the 12 months ended December 31, 1998, versus a return of
28.58% for the Standard & Poor's 500 stock index (S&P 500).
MARKET OVERVIEW
In an unusually volatile year, large cap growth stocks led the market
once again, particularly in the areas of drugs and technology. Within the S&P
500, five technology stocks (Microsoft, Dell Computer, Intel, Lucent
Technologies, and Cisco Systems) contributed more than 25% of the entire year's
gain.
Milder-than-anticipated repercussions from Asia's currency and economic
problems buoyed the markets in the first quarter, which saw the S&P 500 register
its 11th- best one-quarter advance since World War II. Weak commodity prices,
particularly for oil, continued to generate downward pressure on both inflation
and interest rates, further bolstering equities.
In the second quarter, the markets cooled in response to persistent
concerns about Asia's economies and a declining trend in corporate earnings. The
collapse of the Russian ruble in late August further eroded investor confidence
and equity markets in the U.S. and Europe experienced a sharp sell-off. The S&P
500 declined by 9.95% in the third quarter.
Responding to prospects of a global economic slowdown, the Federal
Reserve instituted the first of three cuts in short-term interest rates late in
September. Over the next several months, central banks around the world followed
the U.S. lead, resulting in a total of 66 rate cuts. This concerted effort to
ease credit set the stage for a dramatic rebound in the markets, reflected in
the S&P 500's 21% gain in the fourth quarter.
INVESTMENT APPROACH
Our assessment of fundamental value and growth potential persuaded us to
stay with a number of strong franchise stocks that had reached historically high
valuations -- and which subsequently rose to even higher levels. Ongoing market
concern about the Asian recession put a greater emphasis on companies with a
high degree
of earnings certainty, even if that sometimes meant paying a premium for quality
and liquidity.
While macroeconomic and industry factors play a role in our investment
process, our approach is based on bottom-up stock selection. The focus is on
company fundamentals such as industry leadership, sound management and superior
products. We try to buy these companies at reasonable valuations, but the most
crucial determinant is earnings certainty.
SECTOR HIGHLIGHTS
Throughout 1998, our emphasis on stocks with limited Asian exposure and
substantial domestic sales led us to overweight the portfolio in drugs, health
care services, technology, and electronics. Relative to our benchmark, being
underweighted or uninvested in sectors such as energy and chemical/textiles also
enhanced portfolio performance.
Health care was our most consistent sector. Holdings that contributed
strongly to performance included Amgen, Pfizer and Sofamor/Danek Group. Our
holdings in this sector met our earnings growth forecasts and comprised 18% of
the portfolio versus 13% for the S&P 500.
As the markets declined in late summer, our research convinced us that
significant upward momentum remained in a number of technology companies.
Recognizing that these companies declined on market concerns rather than
fundamentals, we proceeded to add to our positions in America Online, Cisco
Systems, Dell, EMC, Nokia and Microsoft. Together, these moves had the most
positive single impact on portfolio performance in 1998.
Responding to warnings from our economists about developing problems in
the global financial markets related to currency instability, we cut back on our
exposure to the interest-sensitive sector in the third quarter by reducing our
weighting in Citigroup and the sub-prime lender Amresco, and selling Household
International and BankAmerica. That helped us avoid some serious losses in the
third-quarter downdraft that engulfed the equity markets.
OUTLOOK
As we look ahead to 1999, we see an investment landscape that has many
similarities with the world in early 1998. Tech-driven volatility, in part due
to Y2K concerns,
Page 21
<PAGE>
Dresdner RCM Large Cap Growth Fund
Management's Performance Review
will again be a factor. Following the pattern of the last several years, growth
stocks should outperform cyclicals. If the U.S. economy continues strongly into
a record ninth year -- and earnings follow -- share prices of economically
sensitive stocks could well regain some ground at the expense of growth stocks.
However the markets evolve, we will continue to carefully evaluate company
fundamentals to determine basic value and growth potential, regardless of sector
or country.
Page 22
<PAGE>
Dresdner RCM Large Cap Growth Fund
Performance Summary
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FUND S&P 500 STOCK INDEX
<S> <C> <C>
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
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The chart above shows the performance of the Dresdner RCM Large Cap
Growth Fund since the Fund's inception versus the Standard & Poor's 500
Index.(a) The chart represents a cumulative return of 90.20%(b)(c) for the Fund.
The average annual total return from the Fund's inception was 37.91%.(b)(c) The
chart assumes a hypothetical $10,000 initial investment in the Fund and reflects
all Fund expenses.
AVERAGE ANNUAL TOTAL RETURNS(B)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1 YEAR FUND(C)
<S> <C>
44.11% 37.91%
</TABLE>
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 Standard & Poor's 500 Stock Index is a capitalization-weighted index
of 500 stocks that attempts to measure performance of the broad domestic
economy through changes in the aggregate market value of 500 stocks
representing major industries.
(b) Returns assume reinvestment of all dividends and capital gains
distributions at net asset value.
(c) The Fund commenced operations on December 31, 1996.
Page 23
<PAGE>
Dresdner RCM Large Cap Growth Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
CONSUMER NON-DURABLES SECTOR 14.6%
BEVERAGE AND TOBACCO 4.3%
1,100 US Coca Cola Co. $ 73,563
2,400 US Coca Cola Enterprises Inc. 85,800
1,100 US PepsiCo Inc. 45,031
2,500 US Philip Morris Co. Inc. 133,750
--------------
338,144
--------------
GENERAL RETAIL 5.2%
1,000 US Costco Cos. Inc. * 72,188
1,400 US Dayton Hudson Corp. 75,950
1,500 US Home Depot Inc. 91,781
1,000 US Lowe's Companies Inc. 51,188
1,000 US Nordstrom Inc. 34,687
1,100 US Wal Mart Stores Inc. 89,581
--------------
415,375
--------------
HOUSEHOLD/RELATED NON-DURABLES 3.3%
500 US Clorox Co. 58,406
700 US Colgate Palmolive Co. 65,013
1,200 US Gillette Co. 57,975
900 US Procter & Gamble Co. 82,181
--------------
263,575
--------------
LEISURE TIME PRODUCT/SERVICES 1.8%
700 US McDonalds Corp. 53,637
1,800 US Tricon Global Restaurants Inc. 90,225
--------------
143,862
--------------
CAPITAL GOODS SECTOR 7.8%
AEROSPACE/DEFENSE 0.7%
900 US General Dynamics Corp. * 52,763
ELECTRICAL EQUIPMENT 3.3%
2,600 US General Electric Co. 265,362
INDUSTRIAL EQUIPMENT 3.8%
4,000 US Tyco International Ltd. 301,750
ENERGY SECTOR 0.8%
ENERGY 0.8%
1,700 US Burlington Resources Inc. 60,881
HEALTH CARE SECTOR 17.8%
DRUGS AND HOSPITAL SUPPLIES 16.9%
1,900 US Alza Corp. * 99,275
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 24
<PAGE>
Dresdner RCM Large Cap Growth Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
DRUGS AND HOSPITAL SUPPLIES (CONTINUED)
1,200 US American Home Products Corp. $ 67,575
2,300 US Amgen Inc. * 240,494
800 US Johnson & Johnson 67,100
2,400 US Eli Lilly & Co. * 213,300
400 US Medtronic Inc. 29,700
1,600 US Monsanto Co. 76,000
2,200 US Pfizer Inc. 275,962
1,700 US SangStat Medical Corp. * 36,125
500 US Sofamor/Danek Group Inc. * 60,875
2,300 US Warner Lambert Co. 172,931
--------------
1,339,337
--------------
HEALTH CARE SERVICES 0.9%
900 US Cardinal Health Inc. 68,288
INTEREST SENSITIVE SECTOR 8.0%
BANKING 3.1%
2,400 US Bank of New York Inc. 96,600
1,500 US Citigroup Inc. 74,250
800 US Firstar Corp. Wisconsin 74,600
--------------
245,450
--------------
GENERAL FINANCE 3.1%
3,500 US AMRESCO Inc. * 30,625
800 US Associates First Capital Corp. Class A 33,900
2,800 US Federal Home Loan Mortgage Corp. 180,425
--------------
244,950
--------------
INSURANCE 1.8%
1,500 US American International Group Inc. * 144,938
TECHNOLOGY SECTOR 22.6%
COMPUTERS AND OFFICE EQUIPMENT 5.7%
1,700 US Compaq Computer Corp. 71,294
1,500 US Dell Computer Corp. 109,781
1,500 US E M C Corp. * 127,500
800 US International Business Machines 147,800
--------------
456,375
--------------
ELECTRONICS AND NEW TECHNOLOGY 9.4%
1,100 US Ascend Communications Inc. * 72,325
2,000 US Cisco Systems Inc. 185,625
1,200 US Intel Corp. 142,275
900 US Lucent Technologies Inc. 99,000
1,700 FI Nokia Corp. (ADR A) 204,744
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 25
<PAGE>
Dresdner RCM Large Cap Growth Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
ELECTRONICS AND NEW TECHNOLOGY (CONTINUED)
500 US Texas Instruments Inc. $ 42,781
--------------
746,750
--------------
TECHNOLOGY SERVICES 7.5%
1,800 US America Online Inc. 288,000
700 US BMC Software Inc. 31,194
2,000 US Microsoft Corp. 277,375
--------------
596,569
--------------
TELEMEDIA/SERVICES SECTOR 9.1%
COMMUNICATION SERVICES 7.8%
600 US Airtouch Communications Inc. 43,275
1,200 US GTE Corp. 78,000
1,600 US Intermedia Communications of Florida Inc. 27,600
4,400 US MCI WorldCom Inc. * 315,700
3,100 US Nextel Communications Inc. * 73,238
1,500 US SBC Communications Inc. 80,437
--------------
618,250
--------------
MEDIA 1.3%
1,300 US Clear Channel Communications 70,850
800 US General Motors Corp. 31,750
--------------
102,600
--------------
TOTAL EQUITY INVESTMENTS (COST $4,333,675) 80.7% 6,405,219
--------------
SHORT-TERM INVESTMENTS
MONEY MARKET FUNDS 8.1%
320,009 US SSgA U.S. Government Money Market Fund 320,009
320,010 US SSgA Money Market Fund 320,010
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $640,019) 8.1% 640,019
--------------
TOTAL INVESTMENTS (COST $4,973,694) ** 88.8% 7,045,238
OTHER ASSETS LESS LIABILITIES 11.2% 889,964
--------------
NET ASSETS 100.0% $ 7,935,202
--------------
--------------
</TABLE>
- --------------------------------
* Non-income producing security.
ADR American Depository Receipt
The accompanying notes are an integral part of the financial statements.
Page 26
<PAGE>
Dresdner RCM Large Cap Growth Fund
Portfolio of Investments
December 31, 1998
Tax Information:
** For Federal income tax purposes, cost is $5,036,277 and the gross aggregate
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 2,110,561
Unrealized depreciation (101,600)
-------------
Net unrealized
appreciation $ 2,008,961
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's investments in securities at December 31, 1998, categorized by
country:
<TABLE>
<CAPTION>
% OF NET ASSETS
------------------------------------------
COUNTRY SHORT-TERM
COUNTRY CODE EQUITIES AND OTHER TOTAL
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Finland FI 2.6% 2.6%
United States US 78.1% 19.3% 97.4%
--- --- ----------
Total 80.7% 19.3% 100.0%
--- --- ----------
--- --- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 27
<PAGE>
Dresdner RCM Biotechnology Fund
Management's Performance Review
An equity market rally toward the end of last year helped the Dresdner
RCM Biotechnology Fund (the "Fund") provide investors with a solid, positive
return for 1998. In the 12 months ended December 31, 1998, the Fund earned a
total return of 17.76%. While considered an attractive return in most
environments, the Fund significantly underperformed its benchmark. The
NASDAQ/Biotechnology Index had a return of 44.30%, while the Standard & Poor's
500 Stock Index rose 28.58%. It should be noted that these indices are heavily
weighted toward the larger capitalization biotechnology companies, of which
there are few.
MARKET OVERVIEW
The markets exhibited an unusual degree of volatility through 1998,
largely reflecting unease with continuing economic weakness in Asia and Latin
America, as well as a pattern of declining corporate earnings. In August, the
decline of the Russian ruble precipitated a sharp contraction of U.S. and
European markets as investors fled equities for the relative safety of bonds.
The convergence of these events created a movement away from small- to mid-cap
issues -- which comprise the majority of companies in the biotechnology sector
- -- toward larger capitalization stocks as investors sought out more liquid
issues. The outstanding performance of these issues precipitated the exodus out
of the small- and mid-cap names thus further depressed pricing of this sector.
In response to economic uncertainties, we gradually moved about 10% of
assets into a cash position by summer. By the third quarter, central banks
around the world had moved to ease credit by instituting a series of 66
short-term rate reductions. The goal was to relieve deflationary pressure,
stimulate growth and restore investor confidence worldwide. In response, the
markets rebounded dramatically in the fourth quarter, and the climate for
biotechnology began to brighten considerably. Becoming less defensive, we
increased our equity weighting and also bought undervalued medical devices
stocks -- an area that rebounded sharply as we neared year-end. The rally in
biotechnology stocks was due, in part, to the group's underperformance through
the summer. In effect, we saw a technical correction for this sector on the
upside throughout the Fall.
INVESTMENT APPROACH
Central to Dresdner RCM's approach is the belief that rigorous
fundamental research of biotechnology securities can be combined with a
disciplined methodology to uncover high-quality companies that generate strong
earnings and have solid growth prospects. We look for growth at reasonable
valuations through the analysis of a company's earnings, product line,
management capabilities and market expectations. With a portion of the portfolio
representing relative market weighting, the investment thrust is to benefit from
both market performance and individual issue outperformance, many of which can
be quite dramatic.
Employing a bottom-up orientation in the selection process, we first
choose candidates with favorable company characteristics and then apply our
global economic perspective to stock selection. The prices of these companies'
shares are largely driven by information flow relating to development-stage
products. Our team endeavors to understand the essence of this information flow,
whether scientific, clinical, regulatory, or market-related, well before wide
dissemination and understanding.
SECTOR HIGHLIGHTS
Our underweighting in large cap pharmaceuticals was a key reason for the
portfolio's underperformance versus its benchmark last year. The market shift to
larger companies was in direct response to the market's volatility around the
world and a flight to quality by investors. With a conscious degree of small cap
diversification, our performance lacked the strongly large cap weighting of the
indices and did not recognize the outstanding profit potential of many of the
smaller development-stage companies.
In the large company sector, we had also purchased pharmaceutical
stocks, in anticipation of two impending mergers. One major merger activity
involved Smithkline Beecham PLC and Glaxo Wellcome PLC; a second concerned the
merger of American Home Products and Monsanto. After their announcements, the
proposed mergers came undone, primarily because of the incompatibility of the
corresponding senior management teams. Once the merger talks ended, the
valuations for these stocks declined as well. We estimate these failed mergers
contributed as much as 18% of the underperformance.
Page 28
<PAGE>
Dresdner RCM Biotechnology Fund
Management's Performance Review
Toward year-end, the mid cap biotechnology companies in the portfolio
received a significant boost, primarily as a result of the "halo effect" that
accompanied the advances among technology and Internet stocks. Investors who
liked technology stocks in the last quarter of 1998 paid attention to
biotechnology as well. The relatively flat performance of the large cap
pharmaceuticals additionally contributed to an investor shift into the
biotechnology issues.
OUTLOOK
As we look forward to 1999, there are many companies under review that
continue to fit within our investment themes. The first theme, identifying firms
with significant earnings potential from specific products, can be illustrated
by two examples. We think Amgen, Inc (the world's largest biotechnology
company), which appreciated dramatically last year following the successful
outcome of a product arbitration for its superior NESP product, has more room to
grow from significant market expansion opportunities.
We have a significant position in Forest Laboratories. The launch of
Celebrex, an antidepressant similar to Lilly's Prozac, has gone much better than
expected largely due to a better product profile, lower pricing and the
marketing muscle of Warner-Lambert. With the anti-depressant market so robust,
any incremental penetration into the market has tremendous revenue potential for
Forest and extraordinary earnings leverage for a mid-cap company.
Inhale Therapeutic System's line of nasally delivered drugs provides a
good example of our second biotech theme, which favors "platform technologies"
that can support a range of products. With late stage clinical trials on insulin
currently ongoing with Pfizer, Inhale has proven that their platform technology
will truly revolutionize medicine and potentially change the way every diabetic
is treated. A recent collaboration with biotech company Biogen on an inhaled
version of a very successful multiple sclerosis drug confirms the promise and
broad applicability of the Inhale technology.
Overall, we remain very positive on the long-term outlook for
biotechnology companies, especially since smaller cap issues continue to offer
attractive returns while mid- and large-cap names appear more fairly valued as
we move forward in 1999. Over the long-term, we believe the fundamentals
underpinning growth in this sector are still profound. Demographic pressures and
technological advances will support the increasing demand for biotechnology
products for many years to come. As funds flow out of some of the large-cap
holdings, the natural recipient is the undervalued and highly promising
small-cap technology stocks.
Page 29
<PAGE>
Dresdner RCM Biotechnology Fund
Performance Summary
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FUND NASDAQ BIOTECH INDEX RUSSELL 2000 INDEX AMEX BIOTECH INDEX
<S> <C> <C> <C> <C>
12/97 $10,000 $10,175 $10,071 $10,042
1/98 $10,260 $10,140 $9,912 $9,734
2/98 $10,490 $10,572 $10,644 $9,936
3/98 $10,590 $11,363 $11,083 $10,791
4/98 $10,470 $11,107 $11,144 $10,830
5/98 $10,350 $10,719 $10,543 $9,971
6/98 $10,040 $10,649 $10,565 $9,079
7/98 $10,110 $10,971 $9,710 $8,531
8/98 $7,930 $8,560 $7,824 $6,462
9/98 $9,110 $10,692 $8,437 $8,618
10/98 $9,880 $11,585 $8,781 $10,146
11/98 $10,560 $11,987 $9,241 $10,116
12/98 $11,776 $14,681 $9,813 $11,446
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The chart above shows the performance of the Dresdner RCM Biotechnology
Fund since the Fund's inception versus the American Stock Exchange Biotechnology
Index,(a) the NASDAQ Biotechnology Index,(b) and the Russell 2000 Index.(c) The
chart represents a cumulative return of 17.76%(d)(e) for the Fund. The chart
assumes a hypothetical $10,000 initial investment in the Fund and reflects all
Fund expenses.
AVERAGE ANNUAL TOTAL RETURNS(D)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1 YEAR FUND(E)
<S> <C>
17.76% 17.70%
</TABLE>
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 American Stock Exchange Biotechnology Index is an equal-dollar
weighted index that attempts to measure the performance of a cross section
of companies in the biotechnology industry that are primarily involved in
the use of biological processes to develop products or provide services.
This Index was developed with a base level of 200 stocks as of October 18,
1991.
(b) The NASDAQ Biotechnology Index is a capitalization-weighted index that
attempts to measure the performance of all NASDAQ stocks in the
biotechnology sector. This Index was developed with a base value of 200
stocks as of November 1, 1993.
(c) The Russell 2000 Index is composed of the 2,000 smallest securities in the
Russell 3000 Index, which is composed of the 3,000 largest U.S. companies
based on market capitalization and represents approximately 98% of the
investable U.S. equity market.
(d) Returns assume reinvestment of all dividends and capital gains
distributions at net asset value.
(e) The Fund began operations on December 30, 1997.
Page 30
<PAGE>
Dresdner RCM Biotechnology Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
DRUGS AND HOSPITAL SUPPLIES 98.4%
6,000 US Algos Pharmaceutical Corp. * $ 156,000
1,035 DE Altana AG 80,785
4,800 US Alza Corp. * 250,800
1,900 US American Home Products Corp. 106,994
2,655 US Amgen Inc. * 277,613
3,000 US Anesta Corp. * 79,875
2,400 US Bausch & Lomb Inc. 144,000
1,400 CA BioChem Pharma Inc. 40,075
3,000 US Chiron Corp. * 78,563
5,700 US Dura Pharmaceuticals Inc. * 86,569
1,500 US Genentech Inc. 119,531
2,500 US Gilead Sciences Inc. * 102,656
1,500 US Hyseq Inc. * 7,875
6,700 US Inhale Therapeutic Systems * 221,100
1,000 US Johnson & Johnson 83,875
11,000 US Ligand Pharmaceuticals Inc. Class B * 127,875
1,100 US Medtronic Inc. 81,675
5,500 US Monsanto Co. 261,250
6,000 US NaPro BioTherapeutics Inc. * 8,438
39 CH Novartis AG 76,666
581 DK Novo Nordisk A/S B shares 76,683
4,600 US Novoste Corp. * 130,525
5,000 US NPS Pharmaceuticals Inc. * 38,437
400 US Perkin Elmer Corp. 39,025
4,500 US Pharmacyclics Inc. * 114,750
5,500 US Progenics Pharmaceuticals Inc. * 68,062
9,600 US SangStat Medical Corp. * 204,000
130 DE Schering AG 16,333
1,700 US Sepracor Inc. * 149,813
4,500 US St. Jude Medical Inc. * 124,594
4,000 US Stryker Corp. 220,250
4,000 US SUGEN Inc. * 59,000
2,200 US Synaptic Pharmaceutical Corp. * 33,000
8,000 US Triangle Pharmaceuticals Inc. * 109,000
1,600 UK Zeneca Group PLC (ADR) 71,800
--------------
3,847,487
--------------
TOTAL EQUITY INVESTMENTS (COST $3,438,783) 98.4% 3,847,487
--------------
SHORT-TERM INVESTMENTS
MONEY MARKET FUNDS 1.5%
30,165 US SSgA U.S. Government Money Market Fund 30,165
30,185 US SSgA Money Market Fund 30,185
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $60,350) 1.5% 60,350
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 31
<PAGE>
Dresdner RCM Biotechnology Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
TOTAL INVESTMENTS (COST $3,499,133) ** 99.9% $ 3,907,837
OTHER ASSETS LESS LIABILITIES 0.1% 3,135
--------------
NET ASSETS 100.0% $ 3,910,972
--------------
--------------
</TABLE>
- --------------------------------
* Non-income producing security.
ADR American Depository Receipt
Tax Information:
** At December 31, 1998, the aggregate cost of investments for book and
Federal income tax was the same.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's investments in securities at December 31, 1998, categorized by
country:
<TABLE>
<CAPTION>
% OF NET ASSETS
--------------------------------------------
COUNTRY SHORT-TERM
COUNTRY CODE EQUITIES AND OTHER TOTAL
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Canada CA 1.0% 1.0%
Denmark DK 1.9% 1.9%
Germany DE 2.5% 2.5%
Switzerland CH 1.9% 1.9%
United Kingdom UK 1.8% 1.8%
United States US 89.3% 1.6% 90.9%
--- -- ----------
Total 98.4% 1.6% 100.0%
--- -- ----------
--- -- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 32
<PAGE>
Dresdner RCM Emerging Markets Fund
Management's Performance Review
The Dresdner RCM Emerging Markets Fund (the "Fund") had a total return
of -8.50% for the 12 months ended December 31, 1998, versus a return of -25.34%
for the Morgan Stanley Capital International (MSCI) Emerging Markets Free Index
and -26.87% for the average emerging markets fund tracked by Lipper Analytical.
MARKET REVIEW
Despite the volatility and global turmoil in 1998 that roiled the world
markets, we are pleased to report that we navigated the treacherous environment
successfully. The currency crisis precipitated in Asia one year ago continued to
shake global credit markets throughout the year, threatening the economies and
equity markets around the world. Russia defaulted on its debt, Malaysia imposed
capital controls, and Japan's banks continued to sink under the weight of bad
debts, reviving investor fears of systemic financial risk and provoking a flight
to quality.
INVESTMENT APPROACH
Throughout the year, we continued to manage the portfolio on the basis
of our fundamental investment philosophy -- that is, rigorous evaluation of
securities combined with a disciplined valuation methodology and below average
risk profile.
Relying on our global research capabilities, we endeavored to identify
and invest in companies with sound fundamentals, including focused management,
strong franchises, sustained earnings growth and free cash flow. This philosophy
led us to maintain our position in secular, long-term growth industries such as
telecommunications and technology.
SECTOR HIGHLIGHTS
We concentrated on franchise businesses -- such as Argentina's largest
company, the oil driller YPF Sociedad, and the Peruvian precious metals company,
Buenaventura. Both are good examples of companies with strong management and
ample free cash flows. Companies with the resources to generate adequate
internal cash flow tend to prevail over their competition in a scenario like
last year's, where investors encountered shrinking global liquidity and rising
risk premiums.
We also focused opportunistically on utilities, such as Mexico's Telmex,
a telephone company in a strong domestic franchise and stable cash flow.
Focusing on telecommunications is the inherent characteristic of free cash flow
generation to the Fund's internal growth during difficult economic environments.
In the tech sector, the Korean electronics giant Samsung represents the
Fund's largest position. Additional exposure in this sector included DiData and
New Dimension Software, given emerging market companies' needs to outsource
projects for Y2K.
GEOGRAPHIC SUMMARY
Over the course of the year, we increased our positions in Eastern
Europe, specifically Poland, Hungary and Greece. We believe the European
Monetary Union will create a favorable financial and trading environment that
will promote opportunity in these markets as well as in Portugal.
As the Yen began a strong rally against the U.S. dollar in October, we
reversed our first-half strategy of underweighting in Asia and selectively moved
to overweight the region. We particularly liked South Korea and Taiwan. We
believed that the South Korean government was adopting the reforms needed to
restore growth, including the restructuring of the country's bloated industrial
conglomerates. South Korea's stock index rose 141.15% in dollar terms almost
entirely during the fourth quarter of 1998. With regard to Taiwan, we expect
this market to benefit from a resurgence in the U.S. technology sector.
Expecting that its economy will benefit from a decline in interest rates, we
also overweighted the portfolio in the Philippines.
At the same time, we significantly reduced our exposure to Latin
America, as we expected Brazil to devalue early in the first quarter of 1999,
and we were concerned over the effect it would have on regional markets.
OUTLOOK
Looking forward to 1999, we expect a continuation of volatility in the
world's emerging markets. We believe that stock selection will continue to be
critical to outperformance. In Europe, we anticipate maintaining our current
investments in the developing markets, which will benefit from proximity to
Euroland. In Latin America, we're likely to maintain an underweight position in
response to continuing weakness in commodity prices.
Page 33
<PAGE>
Dresdner RCM Emerging Markets Fund
Performance Summary
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FUND MSCI EMERGING FREE IFC EMERGING MARKETS
<S> <C> <C> <C>
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 $8,444
7/98 $9,590 $8,391 $8,779
8/98 $7,660 $5,965 $6,311
9/98 $7,810 $6,344 $6,615
10/98 $8,660 $7,012 $7,375
11/98 $8,910 $7,595 $7,812
12/98 $9,141 $7,485 $7,930
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The chart above shows the performance of the Dresdner RCM Emerging
Markets Fund since the Fund's inception versus the MSCI Emerging Markets Free
Index(a) and the IFC Index of Investable Emerging Markets.(b) The chart
represents a cumulative return of -8.59%(c)(d) for the Fund. The chart assumes a
hypothetical $10,000 initial investment in the Fund and reflects all Fund
expenses.
AVERAGE ANNUAL TOTAL RETURNS(C)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1 YEAR FUND(D)
<S> <C>
-8.50% -8.56%
</TABLE>
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 MSCI Emerging Markets Free Index is a market capitalization-weighted
index composed of 981 companies in 26 emerging market countries. The average
market capitalization size of the listed companies is US$800 million.
(b) The IFC Index of Investable Emerging Markets represents the IFC Investable
regional total return composite. The term investable indicates that the
stocks and the weights in the IFCI index represent the amount that the
foreign institutional investors might buy by the virtue of the 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 Fund began operations on December 30, 1997.
Page 34
<PAGE>
Dresdner RCM Emerging Markets Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
CONSUMER NON-DURABLES SECTOR 13.5%
BEVERAGE/TOBACCO 6.5%
2,700 MX Coca Cola FEMSA S.A. de C.V. (ADR) $ 35,775
20,000 MX Grupo Modelo SA de CV Series C 42,366
850 GR Hellinic Bottling Co. S.A. 26,239
3,000 CL Quilmes Industrial S.A. (Quinsa) 27,937
2,700 SA South African Breweries Inc. 45,530
--------------
177,847
--------------
FOOD AND FOOD PROCESSING 1.0%
33,000 MX Grupo Industrial Maseca S.A. de CV Class B 26,694
GENERAL RETAIL 5.4%
1,000 IS Blue Square-Israel Ltd. (ADR) 10,375
21,800 MX Cifra SA de CV Series V 26,451
3,800 BR Companhia Brasileira De Distribuicao Grupo Pao de
Acucar (ADR) * 58,900
600 PT Jeronimo Martins 32,823
3,800 MX Organizacion Soriana S.A. B shares 12,257
1,000 IS Tefron Ltd. * 6,562
--------------
147,368
--------------
HOUSEHOLD/RELATED NON-DURABLES 0.6%
5,000 MX Kimberly-Clark de Mexico-A 15,925
CYCLICALS/CAPITAL GOODS SECTOR 10.9%
BUILDING/CONSTRUCTION 3.6%
78,000 CI China Resources Beijing Land 19,633
18,000 CI China Resources Enterprise Ltd. 27,997
5,000 MX Corporacion GEO S.A. de CV 13,903
4,000 HK Sun Hung Kai Properties Ltd. 29,172
600 HU Zalakeramia Rt 7,274
--------------
97,979
--------------
CONSUMER DURABLES 0.4%
86,000 CI IDT International Ltd. 11,545
ELECTRICAL EQUIPMENT 1.7%
4,450 PO Elektrim S.A. 48,177
RAW/BASIC MATERIALS 5.2%
3,000 SG Asia Pulp & Paper Co. Ltd. (Sponsored ADR) * 24,563
10,100 SA Billiton PLC 20,088
5,000 PE Compania De Minas Buenaventura S.A. (Sponsored
ADR) 65,000
2,322 SA Impala Platinum Holdings Ltd. 31,577
--------------
141,228
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 35
<PAGE>
Dresdner RCM Emerging Markets Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
ENERGY SECTOR 6.3%
ENERGY 6.3%
1,300 RU Lukoil Holding (Sponsored ADR) $ 20,312
1,850 HU MOL Magyar Olaj-Es Gazipari Rt 50,741
310,000 BR Petroleo Brasiliers S.A. (Petrobras) * 35,150
2,350 AR YPF S.A. (Sponsored ADR) 65,653
--------------
171,856
--------------
INTEREST SENSITIVE SECTOR 27.5%
BANKING 18.1%
450 GR Alpha Credit Bank 46,952
800 PT Banco Comercial Portugues S.A. 24,595
1,050 PT Banco Commercial Portugues S.A. 31,894
1,526 AR Banco de Galicia y Buenos Aires 26,896
8,500 SG Development Bank of Singapore 76,758
430 GR Ergo Bank S.A. 49,748
15,400 KR Kookmin Bank 125,633
16,000 PH Philippine Commercial International Bank 66,632
9,090 SA Standard Bank Investment Corp. 27,814
1,200 BR Unibanco (Sponsored GDR) 17,325
--------------
494,247
--------------
INSURANCE 0.3%
10,000 HK National Mutual Asia Ltd. * 7,422
UTILITIES 9.1%
273,000 CI Beijing Datang Power Generation Co. Ltd. 81,929
600 CL Chilectra S.A. (Sponsored ADR) 13,059
3,200,000 BR Cia Paranaense De Energie Pfd. * 23,042
1,190 PT Electricidade De Portugal SP (ADR) 53,029
546,000 BR Eletropaulo Metropolitana Pref 25,306
800 CL Gener S.A. (Sponsored ADR) 12,800
200 KR Korea Electric Power Corp. 4,956
2,300 KR Korea Electric Power Corp. (Sponsored ADR) 36,081
--------------
250,202
--------------
TECHNOLOGY SECTOR 15.2%
COMPUTERS/OFFICE EQUIPMENT 1.9%
3,000 TW Asustek Computer Inc. (GDR) 27,840
5,538 SA Dimension Data Holdings Ltd. 23,535
--------------
51,375
--------------
ELECTRONICS/NEW TECHNOLOGY 10.0%
1,950 TW ASE Test Ltd. 63,131
2,363 KR Samsung Electronics Co. 158,581
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 36
<PAGE>
Dresdner RCM Emerging Markets Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
ELECTRONICS/NEW TECHNOLOGY (CONTINUED)
4,844 TW Siliconware Precision Industries (GDR) $ 50,862
--------------
272,574
--------------
TECHNOLOGY SERVICES 3.3%
1,900 IS New Dimension Software Ltd. * 91,438
TELEMEDIA/SERVICES SECTOR 14.1%
COMMUNICATIONS SERVICES 12.7%
11,500 CI China Telecom (Hong Kong) * 19,891
4,900 IN Mahanagar Telephone Nigam (GDR) 59,780
4,800 HU Matav Rt. 27,445
1,350 HU Matav Rt. (Sponsored ADR) 40,247
150 PT Telecel-Comunicacaoes Pessoais 30,662
2,330 AR Telecom Argentina S.A. (ADR) 64,075
98,000 BR Telecomunicacoes de Sao Paulo (Telesp) Pfd. 13,359
1,100 MX Telefonos De Mexico (ADR L) 53,556
1,400,000 BR Telesp Participacoes S.A. Pfd. 31,864
500 RU Vimpel-Communications (Sponsored ADR) * 6,469
--------------
347,348
--------------
MEDIA 1.4%
6,800 TH BEC World Public Co. Ltd. Foreign Shares 37,429
--------------
TOTAL EQUITY INVESTMENTS (COST $2,220,657) 87.5% 2,390,654
--------------
TOTAL INVESTMENTS (COST $2,220,657) ** 87.5% 2,390,654
OTHER ASSETS LESS LIABILITIES 12.5% 343,513
--------------
NET ASSETS 100.0% $ 2,734,167
--------------
--------------
</TABLE>
- --------------------------------
* Non-income producing security.
ADR American Depository Receipt
GDR Global Depository Receipt
Pfd. Preferred Stock
Tax information:
** For Federal income tax purposes, cost is $2,263,780 and the gross aggregate
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 312,684
Unrealized depreciation (185,810)
-------------
Net unrealized
appreciation $ 126,874
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 37
<PAGE>
Dresdner RCM Emerging Markets Fund
Portfolio of Investments
December 31, 1998
The Fund's investments in securities at December 31, 1998, categorized by
country:
<TABLE>
<CAPTION>
% OF NET ASSETS
------------------------------------------
COUNTRY SHORT-TERM
COUNTRY CODE EQUITIES AND OTHER TOTAL
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Argentina AR 5.7% 5.7%
Brazil BR 7.5% 7.5%
China CI 5.9% 5.9%
Chile CL 2.0% 2.0%
Greece GR 4.5% 4.5%
Hong Kong HK 1.3% 1.3%
Hungary HU 4.6% 4.6%
India IN 2.2% 2.2%
Israel IS 4.0% 4.0%
Korea KR 12.0% 12.0%
Mexico MX 8.3% 8.3%
Peru PE 2.4% 2.4%
Philippines PH 2.4% 2.4%
Poland PO 1.7% 1.7%
Portugal PT 6.3% 6.3%
Russia RU 1.0% 1.0%
Singapore SG 3.7% 3.7%
South Africa SA 5.4% 5.4%
Taiwan TW 5.2% 5.2%
Thailand TH 1.4% 1.4%
United States US -- 12.5% 12.5%
--- --- ----------
Total 87.5% 12.5% 100.0%
--- --- ----------
--- --- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 38
<PAGE>
Dresdner RCM Tax Managed Growth Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
PAR COUNTRY SHORT-TERM INVESTMENTS NET ASSETS (NOTE 1)
- ------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
U.S. GOVERNMENT AGENCY
1,000,000 US Federal Home Loan Mortgage Corp.
4.55% maturing 1/5/99 $ 999,494
--------------
TOTAL INVESTMENTS (COST $999,494) * 99.9% 999,494
OTHER ASSETS LESS LIABILITIES 0.1% 597
--------------
NET ASSETS 100.0% $ 1,000,091
--------------
--------------
</TABLE>
- --------------------------------
Tax Information:
* At December 31, 1998, the aggregate cost of investments for book and
Federal income tax was the same.
The accompanying notes are an integral part of the financial statements.
Page 39
<PAGE>
Dresdner RCM Global Equity Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
CONSUMER NON-DURABLES SECTOR 8.6%
BEVERAGE/TOBACCO 4.0%
180 US Coca Cola Co. $ 12,030
210 US Coca Cola Enterprises Inc. 7,446
300 MX Coca Cola FEMSA S.A. de C.V. (ADR) 3,984
300 US Philip Morris Cos. Inc. 16,397
--------------
39,857
--------------
GENERAL RETAIL 1.7%
160 US Costco Cos. Inc. * 11,490
150 US Office Depot Inc. * 5,487
--------------
16,977
--------------
HOUSEHOLD/RELATED NON-DURABLES 2.4%
80 US Clorox Co. 9,342
190 US Gillette Co. 9,169
60 US Procter & Gamble Co. 5,514
--------------
24,025
--------------
LEISURE TIME PRODUCT/SERVICES 0.5%
100 US Tricon Global Restaurants Inc. 5,085
CYCLICAL/CAPITAL GOODS SECTOR 4.8%
AEROSPACE/DEFENSE 1.3%
230 US General Dynamics Corp. * 13,454
BUILDING/CONSTRUCTION 1.0%
170 US Martin Marietta Materials Inc. 9,757
ELECTRICAL EQUIPMENT 1.5%
150 US General Electric Co. 15,375
INDUSTRIAL EQUIPMENT 1.0%
140 US Tyco International Ltd. 10,389
ENERGY SECTOR 0.6%
ENERGY 0.6%
270 US Conoco Inc. * 5,642
HEALTH CARE SECTOR 10.1%
DRUGS AND HOSPITAL SUPPLIES 9.1%
180 US American Home Products Corp. 9,944
200 US Amgen Inc. * 20,650
170 US Bausch & Lomb Inc. 9,874
160 US Eli Lilly & Co. * 14,513
100 US Johnson & Johnson 8,358
70 US Medtronic Inc. 5,212
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 40
<PAGE>
Dresdner RCM Global Equity Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
DRUGS & HOSPITAL SUPPLIES (CONTINUED)
50 US Perkin Elmer Corp. $ 4,767
140 US Pfizer Inc. 17,783
--------------
91,101
--------------
HEALTH CARE SERVICES 1.0%
130 US Cardinal Health Inc. 9,787
INTEREST SENSITIVE SECTOR 4.0%
BANKING 2.5%
300 US Bank of New York Inc. 12,100
80 US Bankamerica Corp. 4,837
170 US Citigroup Inc. 8,535
--------------
25,472
--------------
GENERAL FINANCE 0.5%
80 US Federal Home Loan Mortgage Corp. 5,112
INSURANCE 1.0%
100 US American International Group Inc. * 9,646
TECHNOLOGY SECTOR 13.7%
COMPUTERS/OFFICE EQUIPMENT 1.9%
140 US Compaq Computer Corp. 5,865
70 US Dell Computer Corp. 5,211
40 US International Business Machines Inc. 7,472
--------------
18,548
--------------
ELECTRONICS/NEW TECHNOLOGY 4.3%
240 US Cisco Systems Inc. 22,470
130 US Intel Corp. 15,608
60 US Texas Instruments Inc. 5,199
--------------
43,277
--------------
TECHNOLOGY SERVICES 7.5%
250 US America Online Inc. 36,061
150 US Microsoft Corp. 20,963
200 US Network Associates Inc. 12,700
210 US Whittman-Hart Inc. 5,591
--------------
75,315
--------------
TELEMEDIA/SERVICES SECTOR 7.3%
COMMUNICATIONS SERVICES 7.3%
60 US AT&T Corp. 4,520
320 US Bell Atlantic Corp. 18,266
370 US MCI Worldcom Inc. * 27,010
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 41
<PAGE>
Dresdner RCM Global Equity Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
COMMUNICATIONS SERVICES (CONTINUED)
340 US SBC Communications Inc. $ 17,899
100 MX Telefonos De Mexico (ADR L) 4,878
--------------
72,573
--------------
TOTAL EQUITY INVESTMENTS (COST $491,392) 49.1% 491,392
--------------
TOTAL INVESTMENTS (COST $491,392) ** 49.1% 491,392
OTHER ASSETS LESS LIABILITIES 50.9% 508,573
--------------
NET ASSETS 100.0% $ 999,965
--------------
--------------
</TABLE>
- --------------------------------
* Non-income producing security.
ADR American Depository Receipt
Tax Information:
** At December 31, 1998, the aggregate cost of investments for book and
Federal income tax was the same.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's investments in securities at December 31, 1998, categorized by
country:
<TABLE>
<CAPTION>
% OF NET ASSETS
------------------------------------------
COUNTRY SHORT-TERM
COUNTRY CODE EQUITIES AND OTHER TOTAL
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mexico MX 0.9% 0.9%
United States US 48.2% 50.9% 99.1%
--- --- ----------
Total 49.1% 50.9% 100.0%
--- --- ----------
--- --- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 42
<PAGE>
Dresdner RCM Strategic Income Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
PAR COUNTRY SHORT-TERM INVESTMENTS NET ASSETS (NOTE 1)
- ------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
U.S. GOVERNMENT AGENCY
1,000,000 US Federal Home Loan Bank $ 999,086
4.7% maturing 1/8/99
1,000,000 US Federal Home Loan Mortgage Corp. 998,172
4.7% maturing 1/15/99
1,000,000 US Federal National Mortgage Association 999,217
4.7% maturing 1/7/99
--------------
TOTAL INVESTMENTS (COST $2,996,475) * 99.9% 2,996,475
OTHER ASSETS LESS LIABILITIES 0.1% 3,814
--------------
NET ASSETS 100.0% $ 3,000,289
--------------
--------------
</TABLE>
- --------------------------------
Tax Information:
* At December 31, 1998, the aggregate cost of investments for book and
Federal income tax was the same.
The accompanying notes are an integral part of the financial statements.
Page 43
<PAGE>
Dresdner RCM International Growth Equity Fund
Management's Performance Review
The Dresdner RCM International Growth Equity Fund (the "Fund") earned a
total return of 13.81% for the 12 months ended December 31, 1998, versus a
return of 20.34% for the Morgan Stanley Capital International Europe, Australia,
Far East Index (EAFE) and 14.46% for the MSCI All Country World Free Ex-U.S.
Index (ACWI), the Fund's secondary benchmark.
MARKET REVIEW
Global equity markets exhibited an unusual degree of volatility
throughout 1998. The first quarter started out on a very positive note, with the
EAFE Index rising 14.78%. During the second quarter and into the third, however,
a growing unease about continuing economic weakness in Asia and Latin America,
as well as a general pattern of declining corporate earnings, caused a slow
decline in the markets. The collapse of the Russian Ruble in the third quarter
heightened the level of investor concern, and precipitated a sharp contraction
of U.S. and European markets. The EAFE Index lost 14.2% in the third quarter.
To relieve global deflationary pressures, stimulate growth and restore
investor confidence, central banks around the world moved to ease credit by
instituting a series of 66 short-term interest rate reductions. Investors
responded positively, and global markets rebounded sharply in the fourth quarter
with the EAFE Index gaining 20.8%.
INVESTMENT APPROACH
Throughout the year, we continued to manage the portfolio on the basis
of our fundamental investment philosophy -- that is, rigorous evaluation of
securities combined with a disciplined valuation methodology and below average
risk profile.
Relying on our global research capabilities, we endeavored to identify
and invest in companies with sound fundamentals, including focused management,
strong franchises, sustained earnings growth and improving cash flow. This
philosophy led us to maintain our position in secular, long-term growth
industries such as business services, technology and health care.
For example, during the third quarter, many believed that Europe was on
the verge of a cyclical recovery, and investor sentiment shifted to a preference
for stocks in those sectors. Despite the fact that those sectors posted a strong
return in the quarter, we were not convinced that a true recovery was underway.
We believed that central bankers would have to ease policy in the fourth quarter
to maintain any semblance of global growth. This is, in fact, what happened.
While we did not participate in the third quarter run-up of the cyclical stocks,
by the fourth quarter investors were realizing that growth in the cyclicals was
not going to continue. The focus again shifted to the growth sectors. Because we
had not changed our long-term view and remained true to our fundamental beliefs,
the Fund was well-positioned to participate in the fourth quarter rally.
Maintaining our discipline as bottom-up investors involves disregarding
short-term market movements and focusing on long-term performance. This
discipline resulted in the Fund achieving a total return of 16.99% for the
three-year period ended December 31,1998, versus a total return of 9.29% for the
EAFE Index over the same period.
SECTOR HIGHLIGHTS
The portfolio was overweight in the European financial sector, which
includes banks, financial services and insurance companies. To take advantage of
the positive developments surrounding the European Monetary Union (EMU) and
increased equity participation by retail investors, we took positions in
AXA-UAP, Deutsche Bank, UBS and Allianz which are likely to increase their
market share in the new and evolving European economy.
European pharmaceuticals constituted our largest overweight sector,
where we anticipate that new product introductions by Roche Holdings, Novartis,
Astra and Glaxo Wellcome will provide strong support for earnings growth well
into the next century.
Within the telemedia/business services sector, we broadened our holdings
to include new entrants into the market which have gained prominence. The
portfolio benefited from the wave of mergers in European cellular and wireless
communications companies, and from the deregulation of the telecommunications
sector in Japan. Nokia performed well as investors paid a premium for its
Page 44
<PAGE>
Dresdner RCM International Growth Equity Fund
Management's Performance Review
consistent growth. The portfolio also benefited from the performance of
Vodaphone, the leading European wireless firm, and a number of U.K. cable
holdings.
Within the technology sector, we focused on service firms like
Getronics, Cap Gemini and Atos, which are likely to benefit from an increased
need to enhance European companies' competitive positions through the use of
advanced technologies.
GEOGRAPHIC SUMMARY
Throughout 1998, the Fund remained primarily overweight in Europe, as we
believed that the introduction of the EMU, and the general global competitive
environment would force the restructuring, merger and consolidation of European
industry.
Outside of Europe, the international equity markets continued to be
burdened by weakness in Asia and Latin America, which were particularly hard hit
by liquidity problems, currency instability and a decline in commodity prices.
The Fund's exposure to Japan was very low throughout the year, particularly in
light of its government's continuing inability to implement a meaningful reform
package aimed at the country's troubled banks. In the rest of Asia, we continued
to limit our already low exposure for most of the year. We did not increase our
weighting until we saw reductions in global interest rates late in the year,
when we added to our positions in Southeast Asia.
OUTLOOK
As we look forward to 1999, the Fund's primary focus remains on Europe,
and continental Europe in particular. We continue to find attractively priced
growth stocks in this region as it continues to benefit from the launch of the
Euro at the start of 1999.
We also maintain a cautious view of the Asian markets. Despite the fact
that some of these markets posted strong returns in the fourth quarter, we are
not convinced that policymakers have acted sufficiently in addressing
significant structural problems -- or that an economic recovery has begun.
Moreover, our bottom-up stock research points to relatively poor prospects for
most Asian companies relative to those for European companies.
We were concerned about the Latin America region leading up to the
Brazilian crisis. While we still have concerns about select markets, we have
been able to invest in companies that possess relatively low risk profiles.
To summarize, we expect to remain overweight in Europe with a continued
focus on high-quality, attractively priced companies with visible earnings
growth. We believe European equity markets will continue to benefit from a
benign inflationary climate and a strong possibility of further short-term
interest rate cuts later in the year.
Page 45
<PAGE>
Dresdner RCM International Growth Equity Fund
Performance Summary
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PERFORMANCE FROM COMMENCEMENT OF OPERATIONS (D)
<S> <C> <C> <C>
Fund MSCI-EAFE MSCI-ACWI
12/28/94 50,000 50,000 50,000
47,772 48,090 48,146
47,881 47,965 47,881
3/31/95 50,264 50,972 50,586
52,453 52,904 52,559
52,815 52,285 52,328
6/30/95 54,230 51,381 51,605
57,845 54,590 54,537
57,095 52,520 52,644
9/30/95 58,320 53,560 53,544
57,440 52,140 52,115
57,605 53,605 53,340
12/31/95 58,995 55,770 55,446
60,630 56,010 56,206
61,355 56,215 56,206
3/31/96 63,240 57,420 57,251
65,480 59,105 58,986
66,315 58,030 58,101
6/30/96 66,766 58,370 58,398
64,611 56,677 56,459
65,541 56,813 56,792
9/30/96 67,021 58,336 58,200
66,510 57,753 57,618
69,318 60,063 59,843
12/31/96 70,391 59,306 59,148
71,775 57,242 58,060
72,383 58,192 59,123
3/31/97 72,051 58,419 58,998
73,269 58,740 59,494
78,028 62,576 63,171
6/30/97 82,510 66,043 66,658
87,546 67,126 68,004
81,459 62,125 62,653
9/30/97 88,100 65,617 66,042
82,289 60,591 60,422
82,068 59,985 59,667
12/31/97 83,015 60,524 60,353
85,316 63,308 62,158
89,619 67,385 66,303
3/31/98 93,012 69,474 68,598
94,769 70,037 69,091
95,314 69,715 67,841
6/30/98 95,617 70,695 67,583
98,768 71,763 68,225
85,316 61,192 58,605
9/30/98 80,166 60,060 57,369
84,347 66,727 63,375
88,649 70,410 66,779
12/31/98 94,477 72,832 69,082
Performance from first public offering (d)
Fund MSCI-EAFE MSCI-ACWI
5/22/95 50,000 50,000 50,000
52,900 49,800 52,775
51,160 49,920 51,110
6/30/95 52,535 49,054 50,405
56,035 52,122 53,268
55,310 50,146 51,419
9/30/95 56,495 51,138 52,299
55,645 49,777 50,902
55,805 51,175 52,098
12/31/95 57,150 53,250 54,156
58,735 53,481 54,898
59,435 53,675 54,898
3/31/96 61,270 54,829 55,919
63,430 56,436 57,614
64,240 55,411 56,749
6/30/96 64,677 55,737 57,039
62,105 54,120 55,145
63,490 54,250 55,471
9/30/96 64,924 55,704 56,846
64,429 55,147 56,278
67,149 57,353 58,450
12/31/96 68,189 59,303 57,772
69,529 57,239 56,709
70,119 58,189 57,747
3/31/97 69,797 58,416 57,626
70,976 58,738 58,110
75,587 62,573 61,701
6/30/97 79,929 66,040 65,107
84,807 67,123 66,422
78,910 62,122 61,195
9/30/97 85,343 65,613 64,505
79,714 60,587 59,016
79,500 59,982 58,278
12/31/97 80,415 60,521 58,948
82,647 63,305 60,711
86,814 67,382 64,760
3/31/98 90,102 69,471 67,001
91,804 70,033 67,483
92,332 69,711 66,262
6/30/98 92,626 70,556 66,010
95,678 71,622 66,637
82,647 61,072 57,241
9/30/98 77,658 59,942 56,033
81,708 66,596 61,900
85,875 70,272 65,224
12/31/98 91,521 72,828 67,474
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The charts above show the performance of the Dresdner RCM International
Growth Equity Fund versus the Morgan Stanley Capital International Europe,
Australia, Far East Index (MSCI-EAFE)(a) and the Morgan Stanley Capital
International All Country World Free Ex-US Index (MSCI-ACWI).(b) The charts
represent cumulative returns of 88.95%(c) and 83.04%(c) for the Fund from
December 28, 1994 to December 31, 1998(d) and from May 22, 1995 to December 31,
1998,(d) respectively. The charts assume a hypothetical $50,000 initial
investment in the Fund and reflect all Fund expenses.
AVERAGE ANNUAL TOTAL RETURNS(C)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF FUND
ANNUALIZED SINCE
1 YEAR 3 YEAR 12/28/94(D) 5/22/95(D)
<S> <C> <C> <C>
13.81% 16.99% 17.21% 18.24%
</TABLE>
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 MSCI-EAFE Index is an arithmetic, market value-weighted average of the
performance of over 900 securities listed on the stock exchanges of
countries in Europe, 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-ACWI Index is a market capitalization-weighted index composed of
companies representative of the market structure of 47 developed and
emerging market countries excluding the United States. Stock selection
excludes securities which are not purchasable by foreigners. The Index is
calculated on a total return basis, which includes reinvestment of gross
dividends before deduction of withholding taxes.
(c) Returns assume reinvestment of all dividends and capital gains
distributions at net asset value.
(d) The Fund's 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 ("first
public offering"). For the convenience of our long-term shareholders,
performance information is also provided for the period beginning on
December 28, 1994 ("commencement of operations").
Page 46
<PAGE>
Dresdner RCM International Growth Equity Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
CONSUMER DURABLES SECTOR 2.4%
AUTOMOTIVE RELATED 0.9%
14,000 DE Volkswagen AG $ 1,117,966
CONSUMER DURABLES 1.5%
76,000 SE Electrolux AB 1,307,994
8,000 JP Sony Corp. 583,705
--------------
1,891,699
--------------
CONSUMER NON-DURABLES SECTOR 16.3%
BEVERAGE/TOBACCO 0.6%
51,000 MX Coca Cola FEMSA S.A. de C.V. (ADR) 675,750
FOOD AND FOOD PROCESSING 3.8%
7,800 FR Groupe Danone * 2,234,154
20 JP Hokuto Corp. 488
34,416 NL Koninklijke Numico N.V. * 1,641,330
19,064 NL Nutreco Holding N.V. 751,724
--------------
4,627,696
--------------
HOUSEHOLD/RELATED NON-DURABLES 1.9%
16,400 NL Benckiser N.V. 1,074,884
54,000 JP Kao Corp. 1,220,781
--------------
2,295,665
--------------
LEISURE TIME PRODUCTS/SERVICES 1.6%
19,700 JP Nintendo Co. Ltd. 1,912,425
RETAIL TRADE 8.4%
71,000 UK Boots Co. PLC 1,215,555
1,550 FR Carrefour Supermarche S.A. 1,170,684
58,000 ES Centros Comerciales Continente S.A. * 1,968,928
58,000 CA Hudsons Bay Co. 730,692
55,753 NL Koninklijke Ahold N.V. 2,061,770
28,300 CA Loblaw Cos. Ltd. 689,102
2,350 FR Promodes S.A. 1,709,700
17,000 CA Weston George Ltd. 647,485
--------------
10,193,916
--------------
CYCLICAL/CAPITAL GOODS SECTOR 3.6%
BUILDING/CONSTRUCTION 1.3%
42,000 IE CRH PLC 726,412
1,689,000 IT Unione Immobiliare SpA * 882,967
--------------
1,609,379
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 47
<PAGE>
Dresdner RCM International Growth Equity Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
INDUSTRIAL EQUIPMENT 1.5%
148,000 UK Hanson PLC $ 1,179,501
19,000 NO Tomra Systems A/S 623,461
--------------
1,802,962
--------------
TRANSPORTATION SERVICES 0.8%
37,323 UK Railtrack Group PLC 974,938
ENERGY SECTOR 1.6%
ENERGY 1.6%
9,500 FR Elf Aquitaine S.A. 1,098,638
9,000 FR Total S.A. B shares 911,921
--------------
2,010,559
--------------
HEALTH CARE SECTOR 14.7%
DRUGS AND HOSPITAL SUPPLIES 14.7%
84,214 UK Glaxo Wellcome PLC 2,903,187
3,500 UK Glaxo Wellcome PLC (ADR) 243,250
1,590 CH Novartis AG 3,125,633
24,000 FI Orion Yhtyma OY Series B 580,176
310 CH Roche Holdings Ltd. 3,782,794
27,000 UK Smithkline Beecham PLC (ADR) 1,876,500
12,300 FR Synthelabo 2,604,883
60,100 UK Zeneca Group PLC 2,621,852
4,800 UK Zeneca Group PLC (ADR) 215,400
--------------
17,953,675
--------------
HEALTH CARE SERVICES 0.0%
800 JP Nichii Gakken Co. 33,334
INTEREST SENSITIVE SECTOR 25.9%
BANKING 10.7%
99,000 ES Banco Central Hispanoamericano S.A. 1,177,313
56,041 PT Banco Comercial Portugues S.A. 1,722,981
66,001 IE Bank of Ireland 1,446,224
18,000 IE Bank of Ireland (Dublin) 401,226
117,816 UK Bank of Scotland 1,411,360
17,000 DE Bayerische Vereinsbank AG 1,332,012
388,000 IT Credito Italiano SpA * 2,304,856
14,500 DE Deutsche Pfandbrief- und Hypothekenbank AG 1,271,071
298 UK HSBC Holdings PLC 7,424
141,400 SE Nordbanken Holding AB 907,132
86,600 UK Standard Chartered PLC 1,005,713
--------------
12,987,312
--------------
GENERAL FINANCE 1.1%
10,000 JP Takefuji Corp. 731,405
10,000 JP Acom Co. Ltd. 643,636
--------------
1,375,041
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 48
<PAGE>
Dresdner RCM International Growth Equity Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
INSURANCE 8.6%
4,762 DE Allianz AG Holding * $ 1,746,946
165,000 UK Allied Zurich AG PLC * 2,483,096
18,900 FR AXA-UAP S.A. 2,740,598
614,000 IT INA - Instituto Nazionala delle Assianzioni 1,625,400
4,000 DE Munchener Ruckversicherungs-Gesellschaft * 1,938,128
--------------
10,534,168
--------------
UTILITIES 5.5%
13,000 PT Electricidade de Portugal S.A. * 286,229
14,000 PT Electricidade de Portugal SP (ADR) * 623,875
13,000 ES Gas Natural SDG 1,417,518
104,000 ES Iberdrola S.A. 1,948,743
21,000 DE RWE AG 1,150,538
4,800 FR Vivendi 1,245,970
--------------
6,672,873
--------------
TECHNOLOGY SECTOR 17.5%
COMPUTERS/OFFICE EQUIPMENT 0.0%
700 JP Canon Sales Co. Inc. 9,923
ELECTRONICS/NEW TECHNOLOGY 7.8%
33,000 JP Alps Electric Co. Ltd. 607,066
23,000 SE Ericsson (LM) Telefonaktiebolaget 547,650
104,000 JP Fujitsu Ltd. 1,387,630
36,000 JP Ibiden Co. Ltd. 574,485
42,000 JP Matsushita Communications Industrial Co. 1,984,634
4,600 FI Nokia Corp. (ADR A) 554,013
24,100 FI Nokia Corp. Series A 2,951,046
10,000 JP TDK Corp. 915,808
--------------
9,522,332
--------------
TECHNOLOGY SERVICES 9.7%
8,640 FR Atos S.A. * 2,066,420
13,000 FR Cap Gemini 2,087,537
23,600 IE CBT Group PLC (ADR) 351,050
69,862 NL Getronics N.V. 3,462,075
379 JP NTT Data Corp. 1,884,977
4,600 DE SAP AG 1,988,562
--------------
11,840,621
--------------
TELEMEDIA/BUSINESS SERVICES SECTOR 16.7%
BUSINESS SERVICES 1.1%
24,000 NL Randstad Holding N.V. 1,291,651
COMMUNICATIONS SERVICES 13.3%
122,000 UK British Telecom PLC * 1,849,180
338,000 HK China Telecom (Hong Kong) * 584,637
14,000 US Global TeleSystems Group Inc. * 780,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 49
<PAGE>
Dresdner RCM International Growth Equity Fund
Portfolio of Investments
December 31, 1998
<TABLE>
<CAPTION>
% OF MARKET VALUE
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS (NOTE 1)
- -----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
COMMUNICATIONS SERVICES (CONTINUED)
18,200 DE Mannesmann AG * $ 2,087,150
127 JP Nippon Telephone & Telegraph Corp. 981,803
28 JP NTT Mobile Communications (a) 1,154,290
27,000 NL Royal KPN N.V. 1,352,397
14,981 FI Sonera Group PLC * 266,287
3,400 CH Swisscom AG 1,423,390
278,200 IT Telecom Italia SpA 2,378,942
39,000 ES Telefonica S.A. 1,736,804
39,000 ES Telefonica S.A. (bonus rights) * 34,681
12,500 MX Telefonos De Mexico (ADR L) 608,594
59,000 UK Vodafone Group PLC 960,046
--------------
16,198,701
--------------
MEDIA 2.3%
245,000 IT Mediaset SpA 1,991,032
298,300 UK TeleWest Communications PLC 858,621
--------------
2,849,653
--------------
TOTAL EQUITY INVESTMENTS (COST $93,459,411) 98.7% 120,382,239
--------------
SHORT-TERM INVESTMENTS
MONEY MARKET FUNDS 3.5%
2,161,565 US SSgA U.S. Government Money Market Fund 2,161,565
2,161,565 US SSgA Money Market Fund 2,161,565
--------------
4,323,130
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $4,323,130) 3.5% 4,323,130
--------------
TOTAL INVESTMENTS (COST $97,782,541) ** 102.2% 124,705,369
OTHER ASSETS LESS LIABILITIES (2.2%) (2,730,118)
--------------
NET ASSETS 100.0% $121,975,251
--------------
--------------
</TABLE>
- --------------------------------
* Non-income producing security.
ADR American Depository Receipt
(a) Security is purchased 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 $98,236,218 and gross aggregate
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 28,784,543
Unrealized depreciation (2,315,392)
------------
Net unrealized
appreciation $ 26,469,151
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 50
<PAGE>
Dresdner RCM International Growth Equity Fund
Portfolio of Investments
December 31, 1998
The Fund's investments in securities at December 31, 1998, categorized by
country:
<TABLE>
<CAPTION>
% OF NET ASSETS
-------------------------------------------
COUNTRY SHORT-TERM
COUNTRY CODE EQUITIES AND OTHER TOTAL
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Canada CA 1.7% 1.7%
Finland FI 3.6% 3.6%
France FR 14.6% 14.6%
Germany DE 10.4% 10.4%
Hong Kong HK 0.5% 0.5%
Ireland IE 2.4% 2.4%
Italy IT 7.5% 7.5%
Japan JP 12.0% 12.0%
Mexico MX 1.1% 1.1%
Netherlands NL 9.5% 9.5%
Norway NO 0.5% 0.5%
Portugal PT 2.2% 2.2%
Spain ES 6.8% 6.8%
Sweden SE 2.3% 2.3%
Switzerland CH 6.8% 6.8%
United Kingdom UK 16.2% 16.2%
United States US 0.6% 1.3% 1.9%
--- --- ----------
Total 98.7% 1.3% 100.0%
--- --- ----------
--- --- ----------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1998
<TABLE>
<CAPTION>
UNREALIZED
DELIVERY CONTRACT APPRECIATION
FACE VALUE DATE PRICE (DEPRECIATION)
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Sale:
Japanese Yen 825,258,057 1/5/99 134.3900 $(1,164,015)
Buy:
Japanese Yen 825,258,057 1/5/99 115.4100 154,121
-------------
Total open forward foreign currency contracts (Note 1) $(1,009,894)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 51
<PAGE>
Dresdner RCM Global Funds
Statements of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
GLOBAL GLOBAL GLOBAL
TECHNOLOGY SMALL HEALTH CARE
FUND CAP FUND FUND
------------ ----------- -----------
ASSETS:
<S> <C> <C> <C>
Investments at cost $ 9,028,875 $ 4,354,687 $4,533,224
------------ ----------- -----------
------------ ----------- -----------
Foreign currency at cost $ 169 $ 7,089 $ --
------------ ----------- -----------
------------ ----------- -----------
Short-term investments at cost $ 1,393,744 $ 77 $ --
------------ ----------- -----------
------------ ----------- -----------
Investments at value (Note 1) $ 14,353,388 $ 5,078,391 $5,486,868
Foreign currency at value (Note 1) 165 7,119 --
Cash -- 129,919 5,057
Short-term investments at value (Note 1) 1,393,744 77 --
Receivables:
Investments sold 2,508,127 431,536 --
Fund shares sold 394,880 5,000 5,000
Dividends and dividend reclaims 3,851 7,510 3,404
Interest -- -- --
Investment Manager (Note 2) -- 22,621 20,457
Prepaid expenses -- 1,316 8,342
Organizational costs (Note 7) 30,000 -- --
------------ ----------- -----------
Total Assets 18,684,155 5,683,489 5,529,128
------------ ----------- -----------
LIABILITIES:
Payables:
Investments purchased 59,364 159,733 --
Fund shares repurchased 2,667 -- --
Forward foreign currency contracts (Note 1) -- -- --
Management fees (Note 2) 13,333 -- --
Audit fees 17,250 17,250 17,250
Directors' fees and expenses (Note 8) 8,515 8,578 8,580
Legal fees 4,822 4,822 4,822
Transfer agent fees 3,430 3,184 3,176
Accounting fees 1,250 1,250 1,250
Printing expense 3,142 3,142 3,142
Custodian fees 855 1,466 532
Distribution fees (Note 3) -- 1,132 1,138
Insurance expense 2,470 1,235 1,235
Registration and filing fees -- -- --
Miscellaneous expenses 8,890 2,503 998
------------ ----------- -----------
Total Liabilities 125,988 204,295 42,123
------------ ----------- -----------
NET ASSETS $ 18,558,167 $ 5,479,194 $5,487,005
------------ ----------- -----------
------------ ----------- -----------
NET ASSETS CONSIST OF:
Paid-in capital (Note 4) $ 12,202,712 $ 4,605,688 $4,113,840
Accumulated net investment income (loss) -- (1,356) --
Accumulated net realized gain (loss) on investment and foreign currency
transactions 1,030,946 152,000 419,521
Net unrealized depreciation on foreign currency translations (4) (842) --
Net unrealized appreciation on investments 5,324,513 723,704 953,644
------------ ----------- -----------
NET ASSETS $ 18,558,167 $ 5,479,194 $5,487,005
------------ ----------- -----------
------------ ----------- -----------
CLASS I SHARES OUSTANDING 867,303 443,085 409,006
------------ ----------- -----------
------------ ----------- -----------
CLASS I NET ASSET VALUE PER SHARE, OFFERING AND REDEMPTION PRICE PER
SHARE (NOTES 1 AND 4) $ 21.40 $ 12.37 $ 13.42
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 52
<PAGE>
Dresdner RCM Global Funds
Statements of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
LARGE CAP BIO- EMERGING TAX MANAGED GLOBAL STRATEGIC INTERNATIONAL
GROWTH TECHNOLOGY MARKETS GROWTH EQUITY INCOME GROWTH EQUITY
FUND FUND FUND FUND FUND FUND FUND
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,333,675 $3,438,783 $ 2,220,657 $ -- $ 491,392 $ -- $ 93,459,411
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
$ -- $ -- $ 26,928 $ -- $ -- $ -- $ 28,742
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
$ 640,019 $ 60,350 $ -- $ 999,494 $ -- $ 2,996,475 $ 4,323,130
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
$ 6,405,219 $3,847,487 $ 2,390,654 $ -- $ 491,392 $ -- $120,382,239
-- -- 26,887 -- -- -- 28,626
802,207 40,302 374,134 632 1,000,000 3,917 --
640,019 60,350 -- 999,494 -- 2,996,475 4,323,130
110,741 152,875 -- -- -- -- 33
-- -- -- -- -- -- 100,000
4,163 1,906 2,624 -- -- -- 152,126
-- -- 5,553 -- -- -- 30,415
30,658 22,316 44,301 -- -- -- --
-- 3,715 -- -- -- -- --
-- 2,900 16,000 -- -- -- --
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
7,993,007 4,131,851 2,860,153 1,000,126 1,491,392 3,000,392 125,016,569
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
14,990 179,642 63,284 -- 491,392 -- 240,935
-- -- -- -- -- -- 1,645,506
-- -- -- -- -- -- 1,009,894
-- -- -- 21 21 62 36,679
17,250 17,250 17,250 -- -- -- 33,350
8,580 8,624 8,626 -- -- -- 37,927
4,822 4,822 4,822 -- -- -- 2,791
3,187 3,310 3,166 -- -- -- 2,406
-- 1,250 5,329 -- -- -- 4,381
3,142 3,142 3,143 -- -- -- 3,142
146 452 18,295 -- -- -- 12,300
832 771 -- -- -- -- --
1,235 618 618 -- -- -- 4,323
1,111 -- 340 -- -- -- 6,684
2,510 998 1,113 14 14 41 1,000
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
57,805 220,879 125,986 35 491,427 103 3,041,318
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
$ 7,935,202 $3,910,972 $ 2,734,167 $ 1,000,091 $ 999,965 $ 3,000,289 $121,975,251
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
$ 5,466,482 $3,419,906 $ 3,016,505 $ 1,000,000 $ 1,000,000 $ 3,000,000 $102,418,992
-- -- (1,285) 91 (35) 289 662,233
397,176 82,362 (450,977) -- -- -- (7,025,719)
-- -- (73) -- -- -- (1,003,083)
2,071,544 408,704 169,997 -- -- -- 26,922,828
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
$ 7,935,202 $3,910,972 $ 2,734,167 $ 1,000,091 $ 999,965 $ 3,000,289 $121,975,251
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
491,614 341,957 301,654 100,000 100,000 300,000 8,143,327
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
$ 16.14 $ 11.44 $ 9.06 $ 10.00 $ 10.00 $ 10.00 $ 14.98
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
- ----------- ----------- ----------- ------------- ----------- ----------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 53
<PAGE>
Dresdner RCM Global Funds
Statements of Operations
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
GLOBAL GLOBAL GLOBAL
TECHNOLOGY SMALL HEALTH CARE
FUND CAP FUND FUND
----------- ----------- -----------
INVESTMENT INCOME: (NOTE 1)
<S> <C> <C> <C>
Income:
Dividends $ 43,150 $ 40,542 $ 42,265
Interest 36,488 84 --
Foreign tax withheld (440) (2,837) (1,413)
----------- ----------- -----------
Total investment income 79,198 37,789 40,852
----------- ----------- -----------
Expenses:
Investment management fees (Note 2) 104,008 52,418 50,736
Transfer agent expense 26,346 19,414 18,898
Registration and filing 26,688 24,925 24,780
Printing expense 16,995 19,098 18,478
Accounting expense 13,741 15,000 15,000
Audit fees 17,087 17,674 17,675
Directors' fees and expenses (Note 8) 12,657 11,057 11,057
Amortization of organizational costs (Note 7) 15,000 468 468
Legal fees 8,748 4,723 4,161
Custodian fees 11,137 16,360 4,510
Insurance expense 7,084 6,742 6,742
Distribution fees (Note 3) -- 13,111 12,687
Miscellaneous expenses -- 1,157 --
----------- ----------- -----------
Total expenses before waivers and reimbursements 259,491 202,147 185,192
Less: Expenses waived and reimbursed by
investment manager (Note 2) (77,476) (110,415) (109,088)
----------- ----------- -----------
Total net expenses 182,015 91,732 76,104
----------- ----------- -----------
Net investment income (loss) (102,817) (53,943) (35,252)
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments 1,682,862 555,061 853,660
Net realized gain (loss) on foreign currency transactions 6,331 1,929 518
----------- ----------- -----------
Net realized gain (loss) 1,689,193 556,990 854,178
----------- ----------- -----------
Net change in unrealized appreciation (depreciation) on foreign currency
translations (3) (5) 414
Net change in unrealized appreciation (depreciation) on investments 4,071,748 297,563 365,588
----------- ----------- -----------
Net unrealized appreciation 4,071,745 297,558 366,002
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments 5,760,938 854,548 1,220,180
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $5,658,121 $ 800,605 $1,184,928
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 54
<PAGE>
Dresdner RCM Global Funds
Statements of Operations
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
INTERNATIONAL
LARGE CAP EMERGING TAX MANAGED GLOBAL STRATEGIC GROWTH
GROWTH BIOTECHNOLOGY MARKETS GROWTH EQUITY INCOME EQUITY
FUND FUND FUND FUND FUND FUND FUND
- ----------- -------------- --------- ----------------- ----------- ----------- ------------
<C> <C> <C> <C> <C> <C> <C> <S>
$ 49,419 $ 15,078 $ 43,038 $ -- $ -- $ -- $1,761,106
-- 2,116 34,763 126 -- 392 41,438
(153) -- -- -- -- -- (195,213)
- ----------- -------------- --------- ----- --- ----- ------------
49,266 17,194 77,801 126 -- 392 1,607,331
- ----------- -------------- --------- ----- --- ----- ------------
40,991 31,260 28,446 21 21 62 878,692
20,419 21,472 21,242 -- -- -- 17,100
25,188 24,876 39,801 -- -- -- 28,282
19,984 12,982 25,840 -- -- -- 13,941
15,000 7,500 20,004 -- -- -- 50,228
17,675 20,815 21,479 -- -- -- 34,702
11,057 10,057 10,057 -- -- -- 49,664
468 2,000 4,000 -- -- -- --
4,722 9,331 9,698 -- -- -- 9,940
4,960 2,402 53,693 -- -- -- 143,555
6,742 618 618 -- -- -- 16,781
8,792 7,820 -- -- -- -- --
2,079 1,040 1,048 14 14 41 --
- ----------- -------------- --------- ----- --- ----- ------------
178,077 152,173 235,926 35 35 103 1,242,885
(122,447) (105,283) (193,127) -- -- -- (70,445)
- ----------- -------------- --------- ----- --- ----- ------------
55,630 46,890 42,799 35 35 103 1,172,440
- ----------- -------------- --------- ----- --- ----- ------------
(6,364) (29,696) 35,002 91 (35) 289 434,891
- ----------- -------------- --------- ----- --- ----- ------------
1,043,967 219,328 (446,482) -- -- -- (4,398,589)
-- 5 (16,473) -- -- -- (200,413)
- ----------- -------------- --------- ----- --- ----- ------------
1,043,967 219,333 (462,955) -- -- -- (4,599,002)
- ----------- -------------- --------- ----- --- ----- ------------
-- -- (22) -- -- -- (1,926,862)
1,180,703 408,704 173,907 -- -- -- 20,368,296
- ----------- -------------- --------- ----- --- ----- ------------
1,180,703 408,704 173,885 -- -- -- 18,441,434
- ----------- -------------- --------- ----- --- ----- ------------
2,224,670 628,037 (289,070) -- -- -- 13,842,432
- ----------- -------------- --------- ----- --- ----- ------------
$ 2,218,306 $ 598,341 $(254,068) $ 91 $ (35) $ 289 $14,277,323
- ----------- -------------- --------- ----- --- ----- ------------
- ----------- -------------- --------- ----- --- ----- ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 55
<PAGE>
<TABLE>
<CAPTION>
Dresdner RCM Global Funds
Statements of Changes in Net Assets
GLOBAL TECHNOLOGY GLOBAL SMALL CAP GLOBAL HEALTH CARE
FUND FUND FUND
--------------------- -------------------- --------------------
YEAR YEAR YEAR YEAR YEAR
YEAR ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1998 1997 1998 1997 1998 1997
---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ (102,817) $ (70,515) $ (53,943) $ (51,716) $ (35,252) $ (25,624)
Net realized gain (loss) on
investments and
foreign currency transactions 1,689,193 792,152 556,990 629,901 854,178 626,824
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translations 4,071,745 517,549 297,558 425,304 366,002 587,642
---------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations 5,658,121 1,239,186 800,605 1,003,489 1,184,928 1,188,842
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Note 1) -- -- -- -- -- --
Net realized gain on investments
(Note 1) (463,770) (947,092) (361,941) (570,126) (473,111) (528,991)
NET INCREASE FROM CAPITAL SHARE
TRANSACTIONS (NOTE 4) 6,413,482 1,541,401 584,948 22,219 104,252 11,085
---------- --------- --------- --------- --------- ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS 11,607,883 1,833,495 1,023,612 455,582 816,069 670,936
NET ASSETS:
Beginning of period 6,950,334 5,116,839 4,455,582 4,000,000 4,670,936 4,000,000
---------- --------- --------- --------- --------- ---------
End of period $18,558,167 $6,950,334 $5,479,194 $4,455,582 $5,487,005 $4,670,936
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------
End of period net assets include
undistributed (overdistributed) net
investment income of: -- -- $ (1,356) -- -- --
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------
</TABLE>
- ------------------------------------
* Commencement of investment operations.
The accompanying notes are an integral part of the financial statements.
Page 56
<PAGE>
<TABLE>
<CAPTION>
Dresdner RCM Global Funds
Statements of Changes in Net Assets
TAX MANAGED GLOBAL
LARGE CAP GROWTH FUND BIOTECHNOLOGY FUND EMERGING MARKETS FUND GROWTH FUND EQUITY FUND
- --------------------- ---------------------- ---------------------- ----------------- ------------
DEC. 30, DEC. 30, DEC. 31,
YEAR YEAR 1997* YEAR 1997* 1998*
YEAR ENDED ENDED ENDED TO ENDED TO DEC. 31, 1998* TO
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, TO DEC. 31,
1998 1997 1998 1997 1998 1997 DEC. 31, 1998 1998
- ---------- --------- --------- ----------- --------- ----------- ----------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ (6,364) $ 4,754 $ (29,696) $ 236 $ 35,002 $ 87 $ 91 $ (35)
1,043,967 374,542 219,333 -- (462,955) (372) -- --
1,180,703 890,841 408,704 -- 173,885 (3,961) -- --
- ---------- --------- --------- ----------- --------- ----------- ----------------- ------------
2,218,306 1,270,137 598,341 236 (254,068) (4,246) 91 (35)
(4,049) (4,011) -- -- (24,028) -- -- --
(757,103) (256,705) (108,529) -- -- -- -- --
1,452,814 15,813 420,924 3,000,000 16,509 3,000,000 1,000,000 1,000,000
- ---------- --------- --------- ----------- --------- ----------- ----------------- ------------
2,909,968 1,025,234 910,736 3,000,236 (261,587) 2,995,754 1,000,091 999,965
5,025,234 4,000,000 3,000,236 -- 2,995,754 -- -- --
- ---------- --------- --------- ----------- --------- ----------- ----------------- ------------
$7,935,202 $5,025,234 $3,910,972 $3,000,236 $2,734,167 $2,995,754 $1,000,091 $ 999,965
- ---------- --------- --------- ----------- --------- ----------- ----------------- ------------
- ---------- --------- --------- ----------- --------- ----------- ----------------- ------------
-- $ 3,472 -- $ 236 $ (1,285) $ 87 $ 91 $ (35)
- ---------- --------- --------- ----------- --------- ----------- ----------------- ------------
- ---------- --------- --------- ----------- --------- ----------- ----------------- ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 57
<PAGE>
<TABLE>
<CAPTION>
Dresdner RCM Global Funds
Statements of Changes in Net Assets
STRATEGIC INTERNATIONAL GROWTH
INCOME FUND EQUITY FUND
--------------- -----------------------
DEC. 31, 1998* YEAR ENDED YEAR ENDED
TO DEC. 31, DEC. 31,
DEC. 31, 1998 1998 1997
--------------- ----------- ----------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 289 $ 434,891 $ 335,703
Net realized gain (loss) on investments and foreign currency
transactions -- (4,599,002) 10,197,416
Net change in unrealized appreciation (depreciation) on
investments and foreign currency translations -- 18,441,434 (43,121)
--------------- ----------- ----------
Net increase (decrease) in net assets resulting from
operations 289 14,277,323 10,489,998
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Note 1) -- (1,801,634) (910,716)
Net realized gain on investments (Note 1) -- (2,741,618) (7,545,935)
NET INCREASE FROM CAPITAL SHARE TRANSACTIONS (NOTE 4) 3,000,000 13,798,251 43,804,633
--------------- ----------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,000,289 23,532,322 45,837,980
--------------- ----------- ----------
NET ASSETS:
Beginning of period -- 98,442,929 52,604,949
--------------- ----------- ----------
End of period $ 3,000,289 $121,975,251 $98,442,929
--------------- ----------- ----------
--------------- ----------- ----------
End of period net assets include undistributed
(overdistributed) net investment income of: $ 289 $ 662,233 $ (540,987)
--------------- ----------- ----------
--------------- ----------- ----------
</TABLE>
- ------------------------------------
* Commencement of investment operations.
The accompanying notes are an integral part of the financial statements.
Page 58
<PAGE>
<TABLE>
<CAPTION>
Dresdner RCM Global Funds, Inc.
Financial Highlights
For a share outstanding throughout each fiscal year or period ended
CLASS I
---------------------------------------------------------------
GLOBAL TECHNOLOGY FUND GLOBAL SMALL CAP FUND
---------------------------------- -----------------------
1998 1997 1996 1995(2) 1998 1997 1996(3)
------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE: (1)
Net asset value, beginning of period $ 13.69 $12.60 $10.04 $10.00 $11.09 $10.00 $10.00
------- ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) (0.16) (0.16) (0.15) -- (0.13) (0.13) --
Net realized and unrealized gain
(loss) on investments 8.44 3.46 2.80 0.04 2.23 2.64 --
------- ------ ------ ------ ------ ------ ------
Total from investment operations 8.28 3.30 2.65 0.04 2.10 2.51 --
Less distributions:
From net investment income -- -- -- -- -- -- --
From net realized gain on
investments (0.57) (2.21) (0.09) -- (0.82) (1.42) --
------- ------ ------ ------ ------ ------ ------
Total distributions (0.57) (2.21) (0.09) -- (0.82) (1.42) --
------- ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 21.40 $13.69 $12.60 $10.04 $12.37 $11.09 $10.00
------- ------ ------ ------ ------ ------ ------
------- ------ ------ ------ ------ ------ ------
TOTAL RETURN (8) 60.53% 27.08% 26.41% 0.40%(9) 19.29% 25.48% 0.00%(9)
------- ------ ------ ------ ------ ------ ------
------- ------ ------ ------ ------ ------ ------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $18,558 $6,950 $5,117 $ 954 $5,479 $4,456 $4,000
------- ------ ------ ------ ------ ------ ------
------- ------ ------ ------ ------ ------ ------
Ratio of expenses to average net assets:
With waiver and reimbursement 1.75% 1.75% 1.73% 0.00%(9) 1.75% 1.75% 0.00%(9)
------- ------ ------ ------ ------ ------ ------
------- ------ ------ ------ ------ ------ ------
Without waiver and reimbursement 2.49% 2.45% 7.75% -- 3.86% 3.09% --
------- ------ ------ ------ ------ ------ ------
------- ------ ------ ------ ------ ------ ------
Ratio of net investment income to
average net assets:
With waiver and reimbursement (0.99)% (1.15)% (1.34)% (0.02)%(9) (1.03)% (1.14)% 0.00%(9)
------- ------ ------ ------ ------ ------ ------
------- ------ ------ ------ ------ ------ ------
Without waiver and reimbursement (1.73)% (1.86)% (7.36)% -- (3.14)% (2.49)% --
------- ------ ------ ------ ------ ------ ------
------- ------ ------ ------ ------ ------ ------
Portfolio turnover 265.99% 189.41% 155.58% 0.00% 184.38% 153.49% 0.00%
------- ------ ------ ------ ------ ------ ------
------- ------ ------ ------ ------ ------ ------
<CAPTION>
Dresdner RCM Global Funds, Inc.
Financial Highlights
For a share outstanding throughout each
GLOBAL HEALTH CARE FUND
-------------------------
1998 1997 1996(3)
------ ------ -------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE: (1)
Net asset value, beginning of period $11.65 $10.00 $ 10.00
------ ------ -------
Income from investment operations:
Net investment income (loss) (0.09) (0.06) --
Net realized and unrealized gain
(loss) on investments 3.02 3.03 --
------ ------ -------
Total from investment operations 2.93 2.97 --
Less distributions:
From net investment income -- -- --
From net realized gain on
investments (1.16) (1.32) --
------ ------ -------
Total distributions (1.16) (1.32) --
------ ------ -------
NET ASSET VALUE, END OF PERIOD $13.42 $11.65 $ 10.00
------ ------ -------
------ ------ -------
TOTAL RETURN (8) 25.57% 30.00% 0.00%(9)
------ ------ -------
------ ------ -------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $5,487 $4,671 $ 4,000
------ ------ -------
------ ------ -------
Ratio of expenses to average net assets:
With waiver and reimbursement 1.50% 1.50% 0.00%(9)
------ ------ -------
------ ------ -------
Without waiver and reimbursement 3.65% 2.93% --
------ ------ -------
------ ------ -------
Ratio of net investment income to
average net assets:
With waiver and reimbursement (0.69)% (0.55)% 0.00%(9)
------ ------ -------
------ ------ -------
Without waiver and reimbursement (2.84)% (1.98)% --
------ ------ -------
------ ------ -------
Portfolio turnover 153.92% 157.65% 0.00%
------ ------ -------
------ ------ -------
</TABLE>
- -----------------------------------------
(1) Calculated using the average share method.
(2) Commencement of operation was December 27, 1995.
(3) Commencement of operation was December 31, 1996.
(4) Commencement of operation was December 30, 1997.
(5) Commencement of operation was December 31, 1998.
(6) Stock split 10:1 at the close of business on June 17, 1996. All prior
period per share amounts were restated to reflect the stock split.
(7) Commencement of operation was December 28, 1994.
(8) Total return measures the change in value of an investment over the period
indicated.
(9) Not annualized. Fund was in operations for less than five days.
The accompanying notes are an integral part of the financial statements.
Page 59
<PAGE>
<TABLE>
<CAPTION>
Dresdner RCM Global Funds, Inc.
Financial Highlights
For a share outstanding throughout each fiscal year or period ended
CLASS I
-----------------------------------------------------------------------------
TAX
MANAGED
BIOTECHNOLOGY EMERGING GROWTH
LARGE CAP GROWTH FUND FUND MARKETS FUND FUND
------------------------ ---------------- --------------- ------
1998 1997 1996(3) 1998 1997(4) 1998 1997(4) 1998(5)
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE: (1)
Net asset value, beginning of period $12.53 $10.00 $10.00 $10.00 $10.00 $ 9.99 $10.00 $10.00
------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) (0.02) 0.01 -- (0.10) -- 0.12 -- --
Net realized and unrealized gain
(loss) on investments 5.51 3.17 -- 1.86 -- (0.97) (0.01) --
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 5.49 3.18 -- 1.76 -- (0.85) (0.01) --
Less distributions:
From net investment income (0.01) (0.01) -- -- -- (0.08) -- --
From net realized gain on
investments (1.87) (0.64) -- (0.32) -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (1.88) (0.65) -- (0.32) -- (0.08) -- --
------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $16.14 $12.53 $10.00 $11.44 $10.00 $ 9.06 $ 9.99 $10.00
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN (8) 44.11% 31.99% 0.00%(9) 17.76% 0.00%(9) (8.50)% 0.00%(9) 0.00 %(9)
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $7,935 $5,025 $4,000 $3,911 $3,000 $2,734 $2,996 $1,000
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
Ratio of expenses to average net assets:
With waiver and reimbursement 0.95% 0.95% 0.00%(9) 1.50% 0.01%(9) 1.50% 0.01%(9) 0.00 %(9)
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
Without waiver and reimbursement 3.04% 2.63% -- 4.87% -- 8.29% -- --
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
Ratio of net investment income to
average net assets:
With waiver and reimbursement (0.11)% 0.10% 0.00%(9) (0.95)% 0.01%(9) 1.23% 0.00%(9) 0.00 %(9)
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
Without waiver and reimbursement (2.20)% (1.58)% -- (4.32)% -- (5.56)% -- --
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
Portfolio turnover 99.58% 119.87% 0.00% 127.21% 0.00% 279.25% 0.00% 0.00 %
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
</TABLE>
- -----------------------------------------
(1) Calculated using the average share method.
(2) Commencement of operation was December 27, 1995.
(3) Commencement of operation was December 31, 1996.
(4) Commencement of operation was December 30, 1997.
(5) Commencement of operation was December 31, 1998.
(6) Stock split 10:1 at the close of business on June 17, 1996. All prior
period per share amounts were restated to reflect the stock split.
(7) Commencement of operation was December 28, 1994.
(8) Total return measures the change in value of an investment over the period
indicated.
(9) Not annualized. Fund was in operations for less than five days.
The accompanying notes are an integral part of the financial statements.
Page 60
<PAGE>
<TABLE>
<CAPTION>
Dresdner RCM Global Funds, Inc.
Financial Highlights
For a share outstanding throughout each fiscal year or period ended
CLASS I
-----------------------------------------------------------------------
GLOBAL
EQUITY STRATEGIC
FUND INCOME FUND INTERNATIONAL GROWTH EQUITY FUND
---------- ----------- --------------------------------------------
1998(5) 1998(5) 1998 1997 1996(6) 1995 1994(7)
---------- ----------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE: (1)
Net asset value, beginning of period $ 10.00 $10.00 $ 13.70 $ 12.72 $ 11.56 $ 10.00 $ 10.00
---------- ----------- -------- ------- ------- ------- -------
Income from investment operations:
Net investment income (loss) -- -- 0.06 0.06 0.04 0.12 --
Net realized and unrealized gain (loss)
on investments -- -- 1.80 2.22 2.16 1.68 --
---------- ----------- -------- ------- ------- ------- -------
Total from investment operations -- -- 1.86 2.28 2.20 1.80 --
Less distributions:
From net investment income -- -- (0.23) (0.14) (0.16) (0.11) --
From net realized gain on investments -- -- (0.35) (1.16) (0.88) (0.13) --
---------- ----------- -------- ------- ------- ------- -------
Total distributions -- -- (0.58) (1.30) (1.04) (0.24) --
---------- ----------- -------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 10.00 $10.00 $ 14.98 $ 13.70 $ 12.72 $ 11.56 $ 10.00
---------- ----------- -------- ------- ------- ------- -------
---------- ----------- -------- ------- ------- ------- -------
TOTAL RETURN (8) 0.00%(9) 0.00%(9) 13.81% 17.93% 19.31% 17.98% 0.01%(9)
---------- ----------- -------- ------- ------- ------- -------
---------- ----------- -------- ------- ------- ------- -------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 1,000 $3,000 $121,975 $98,443 $52,605 $34,347 $25,004
---------- ----------- -------- ------- ------- ------- -------
---------- ----------- -------- ------- ------- ------- -------
Ratio of expenses to average net assets:
With waiver and reimbursement 0.00%(9) 0.00%(9) 1.00% 1.00% 0.99% 0.75% 0.00%(9)
---------- ----------- -------- ------- ------- ------- -------
---------- ----------- -------- ------- ------- ------- -------
Without waiver and reimbursement -- -- 1.06% 1.06% 1.25% 1.11% --
---------- ----------- -------- ------- ------- ------- -------
---------- ----------- -------- ------- ------- ------- -------
Ratio of net investment income to average net
assets:
With waiver and reimbursement 0.00%(9) 0.00%(9) 0.37% 0.41% 0.32% 1.19% 0.01%(9)
---------- ----------- -------- ------- ------- ------- -------
---------- ----------- -------- ------- ------- ------- -------
Without waiver and reimbursement -- -- 0.31% 0.35% 0.06% 0.83% --
---------- ----------- -------- ------- ------- ------- -------
---------- ----------- -------- ------- ------- ------- -------
Portfolio turnover 0.00% 0.00% 84.49% 122.43% 119.09% 87.40% 0.00%
---------- ----------- -------- ------- ------- ------- -------
---------- ----------- -------- ------- ------- ------- -------
</TABLE>
- -----------------------------------------
(1) Calculated using the average share method.
(2) Commencement of operation was December 27, 1995.
(3) Commencement of operation was December 31, 1996.
(4) Commencement of operation was December 30, 1997.
(5) Commencement of operation was December 31, 1998.
(6) Stock split 10:1 at the close of business on June 17, 1996. All prior
period per share amounts were restated to reflect the stock split.
(7) Commencement of operation was December 28, 1994.
(8) Total return measures the change in value of an investment over the period
indicated.
(9) Not annualized. Fund was in operations for less than five days.
The accompanying notes are an integral part of the financial statements.
Page 61
<PAGE>
Dresdner RCM Global Funds
Notes to Financial Statements
December 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
Dresdner RCM Global Funds, Inc. ("Global Company"), previously Dresdner
RCM Equity Funds, Inc., and Dresdner RCM Capital Funds, Inc. ("Capital Company")
are organized as Maryland corporations and are registered as open-end management
investment companies under the Investment Company Act of 1940, as amended. These
two corporations are collectively referred to as the "Companies."
The Global Company consists of nine no-load series:
Non-Diversified Funds
Dresdner RCM Global Technology Fund ("Global Technology Fund")
Dresdner RCM Global Health Care Fund ("Global Health Care Fund")
Dresdner RCM Biotechnology Fund ("Biotechnology Fund")
Diversified Funds
Dresdner RCM Global Small Cap Fund ("Global Small Cap Fund")
Dresdner RCM Large Cap Growth Fund ("Large Cap Growth Fund")
Dresdner RCM Emerging Markets Fund ("Emerging Markets Fund")
Dresdner RCM Tax Managed Growth Fund ("Tax Managed Growth Fund")
Dresdner RCM Global Equity Fund ("Global Equity Fund")
Dresdner RCM Strategic Income Fund ("Strategic Income Fund")
The Dresdner RCM International Growth Equity Fund ("International
Fund"), formerly Dresdner RCM International Growth Equity Fund A, is a
non-diversified, no-load series of the Capital Company (financial information of
the other series of the Capital Company is reported in the Dresdner RCM Capital
Funds annual report). These ten series are collectively referred to as the
"Funds."
The Tax Managed Growth Fund, Global Equity Fund and Strategic Income
Fund commenced operations on December 31, 1998. Beginning December 31, 1998, the
Global Company and the International Fund both offer Non-Institutional Class
("Class N") and Institutional Class ("Class I") of shares for each of the series
listed above except for the Global Health Care Fund and Biotechnology Fund,
which remain as single class funds. The Tax Managed Growth Fund, Global Equity
Fund and Strategic Income Fund commenced operations on December 31, 1998, with
shares designated as Class I. As of December 31, 1998, outstanding shares of the
Global Technology Fund, Global Small Cap Fund, Large Cap Growth Fund, Emerging
Markets Fund and International Fund have been re-designated as each Fund's newly
designated Class I shares.
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 of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results may differ from these estimates.
A. PORTFOLIO VALUATION:
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
Page 62
<PAGE>
Dresdner RCM Global Funds
Notes to Financial Statements
December 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
the close of business on the day the securities are being valued, unless the
Board of Directors determines that such price does not reflect the fair value of
the security. In cases where securities are traded on more than one exchange,
the securities are valued on the exchange determined by the Investment Manager
to be the primary market for the securities. 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 a
duly constituted committee of the appropriate Board of Directors of the 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 will be valued at the mean bid
price, or using such other comparable sources as the Board of Directors of the
Companies 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 appropriate
Board of Directors of the 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.
Dividends are recorded on the ex-dividend date. Interest income is recorded on
the accrual basis and includes amortization of discounts and premiums. 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.
C. FOREIGN CURRENCY TRANSLATIONS AND FOREIGN INVESTMENTS:
The records of the Funds are maintained in U.S. dollars. Foreign
currencies, foreign investments 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 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 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.
D. FORWARD FOREIGN CURRENCY CONTRACTS:
A forward foreign currency 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 forwards 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 fluctuates with changes in currency exchange rates.
The forward is marked-to-market daily and the change in market value is recorded
by the Fund as an unrealized appreciation or depreciation on foreign currency
translations on the Fund's Statement of Assets and Liabilities. When the forward
is closed, the Fund records a realized gain or loss on foreign currency
translations in the Fund's Statement of Operations equal to the difference
between the value at the time the forward was opened and the value at the time
it was closed. A Fund could be exposed to risk of loss if its counterparty is
unable to meet the terms of the contract or if the value of the currency changes
unfavorably.
Page 63
<PAGE>
Dresdner RCM Global Funds
Notes to Financial Statements
December 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. OPTION ACCOUNTING PRINCIPLES:
The Funds 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 Funds' 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 is valued at the closing bid price on such day. If an
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. 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
income or excise taxes on income and capital gains. As of December 31, 1998, the
Emerging Markets Fund had capital loss carryovers of $377,387 and $372 which
will expire on December 31, 2006, and December 31, 2005, respectively. The
International Fund also had a capital loss carryover of $6,919,702 which will
expire on December 31, 2006.
G. DISTRIBUTIONS:
Dividends and capital gains (if any) are declared and distributed to
shareholders annually. Distributions 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.
Page 64
<PAGE>
Dresdner RCM Global Funds
Notes to Financial Statements
December 31, 1998
2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Dresdner RCM Global Investors LLC ("Dresdner RCM") serves as the Funds'
investment manager and provides various administrative services, subject to the
authority of the Boards of Directors. The Funds pay the following management
fees to Dresdner RCM monthly. The fees are annual percentages based on average
daily net assets.
Dresdner RCM has voluntarily agreed, until at least December 31, 1999,
to pay each Fund the amount, if any, by which ordinary operating expenses of the
Fund for each quarter (except interest, taxes, and extraordinary expenses)
exceed its annualized total expense ratio noted below as a percentage of its
average daily net assets. In subsequent years, each Fund will reimburse Dresdner
RCM for any such payments during a five-year period to the extent that operating
expenses are otherwise below the expense cap. For the year ended December 31,
1998, Dresdner RCM reimbursed the Funds for the following operating expenses.
<TABLE>
<CAPTION>
ANNUAL MANAGEMENT FEE PERCENTAGES
-------------------------------------------------------------- EXPENSES
FIRST $500 NEXT $500 ABOVE $1 --------------------------------
FUND FLAT RATE MILLION MILLION BILLION EXPENSE CAPS REIMBURSEMENT
- --------------------- ------------- --------------- --------------- ------------- ------------- -----------------
Global Technology
Fund 1.00% -- -- -- 1.75% $ 77,476
<S> <C> <C> <C> <C> <C> <C>
Global Small Cap Fund -- 1.00% 0.95% 0.90% 1.75% $ 110,415
Global Health Care
Fund -- 1.00% 0.95% 0.90% 1.50% $ 109,088
Large Cap Growth Fund -- 0.70% 0.65% 0.60% 0.95% $ 122,447
Biotechnology Fund -- 1.00% 0.95% 0.90% 1.50% $ 105,283
Emerging Markets Fund 1.00% -- -- -- 1.50% $ 193,127
Tax Managed Fund -- 0.75% 0.70% 0.65% 1.25% --
Global Equity Fund -- 0.75% 0.70% 0.65% 1.25% --
Strategic Income Fund -- 0.75% 0.70% 0.65% 1.25% --
International Fund 0.75% -- -- -- 1.00% $ 70,445
</TABLE>
Beginning December 31, 1998 (effective for fiscal year 1999), the
expense caps have been changed as reflected in the following table. The Health
Care Fund and the Biotechnology Fund will continue to have only one class of
shares, and therefore, will continue to have the same expense caps of 1.50%.
<TABLE>
<CAPTION>
FUND CLASS I CLASS N
- ----------------------------------------------------------------- ----------- -------------
Global Technology Fund 1.50% 1.75%
<S> <C> <C>
Global Small Cap Fund 1.50% 1.75%
Large Cap Growth Fund 0.95% 1.20%
Emerging Markets Fund 1.50% 1.75%
Tax Managed Fund 1.25% 1.50%
Global Equity Fund 1.25% 1.50%
Strategic Income Fund 1.25% 1.50%
International Fund 1.00% 1.25%
</TABLE>
On December 31, 1998, the Dresdner RCM Profit Sharing Plan,
participation in which is limited to employees of Dresdner RCM, owned 190,413
shares and 360,227 shares of the total 867,303 and 8,143,327 outstanding shares
of
Page 65
<PAGE>
Dresdner RCM Global Funds
Notes to Financial Statements
December 31, 1998
2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
the Global Technology Fund and International Fund, respectively. Also on
December 31, 1998, certain Dresdner RCM employees individually owned 151,150
shares of the Global Technology Fund. As of December 31, 1998, clients of
Dresdner Bank AB/Investment Management/ Institutional Asset Management Division
owned the following shares of the Funds:
<TABLE>
<CAPTION>
SHARES OWNED BY CLIENTS OF
FUND DRESDNER BANK AB TOTAL OUTSTANDING SHARES
- ---------------------------- --------------------------- ---------------------------
Global Small Cap Fund 400,000 443,085
<S> <C> <C>
Global Health Care Fund 400,000 409,006
Large Cap Growth Fund 86,717 491,614
Biotechnology Fund 300,000 341,957
Emerging Markets Fund 300,000 301,654
Tax Managed Fund 100,000 100,000
Global Equity Fund 100,000 100,000
Strategic Income Fund 300,000 300,000
</TABLE>
At December 31, 1998, three shareholders in the International Fund each
held more than 5% of the outstanding shares of the International Fund. These
shareholders, in aggregate, held approximately 66% of the International Fund.
3. DISTRIBUTOR
Funds Distributor, Inc. (the "Distributor") acts as distributor of
shares of the Funds. During fiscal 1998, the Global Company had a distribution
plan (the "Old Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to
the Global Small Cap Fund, Global Health Care Fund, Large Cap Growth Fund, and
Biotechnology Fund. Under the Old Plan, which was a "reimbursement plan," the
Global Small Cap Fund, Global Health Care Fund, and Biotechnology Fund each paid
the Distributor an annual fee of up to 0.25% of each respective Fund's average
daily net assets and the Large Cap Growth Fund paid the Distributor an annual
fee of up to 0.15% of its average daily net assets, as reimbursement for certain
expenses actually incurred by the Distributor in connection with distribution of
shares of the Funds. For the year ended December 31, 1998, 12b-1 fees incurred
were $13,111 for the Global Small Cap Fund, $12,687 for the Global Health Care
Fund, $8,792 for the Large Cap Growth Fund, and $7,820 for the Biotechnology
Fund.
Beginning December 31, 1998 (effective for fiscal year 1999), both the
Global Company and the Capital Company adopted new distribution and service
plans (the "New Plans") pursuant to Rule 12b-1 under the 1940 Act. The terms of
the New Plans are substantially the same as the Old Plan. Under the New Plans,
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. These expenses include advertising and marketing expenses,
payments to broker-dealers and others who have entered into agreements with the
Distributor, the expenses of preparing, printing and distributing prospectuses
to persons who are not already stockholders, and indirect and overhead costs
associated with the sale of Class N shares. Class I shares are not subject to
12b-1 fees.
Additionally, under the New Plans the Global Health Care Fund and
Biotechnology Fund, which remain as single class funds, are subject to an annual
fee of up to 0.25% of each respective Fund's average daily net assets.
Page 66
<PAGE>
Dresdner RCM Global Funds
Notes to Financial Statements
December 31, 1998
4. CAPITAL SHARES
At December 31, 1998, the Global Company and Capital Company each has
1,000,000,000 authorized shares of common stock at $0.0001 par value. There were
50,000,000 shares classified as shares of the Global Health Care Fund and
50,000,000 shares classified as shares of the Biotechnology Fund. As of December
31, 1998, shares classified for the Global Technology Fund, Global Small Cap
Fund, Large Cap Growth Fund, Emerging Markets Fund and International Fund were
re-designated as Class I shares. In addition, shares were designated for the
newly created Class N shares as well as the Funds which commenced operations as
of December 31, 1998, as follows:
<TABLE>
<CAPTION>
FUND CLASS I CLASS N
- ----------------------------------------------------- ----------- ----------
<S> <C> <C>
Global Technology Fund 50,000,000 25,000,000
Global Small Cap Fund 50,000,000 25,000,000
Large Cap Growth Fund 50,000,000 25,000,000
Emerging Markets Fund 50,000,000 25,000,000
Tax Managed Growth Fund 25,000,000 25,000,000
Global Equity Fund 25,000,000 25,000,000
Strategic Income Fund 25,000,000 25,000,000
International Fund 100,000,000 50,000,000
</TABLE>
Capital shares transactions were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
GLOBAL TECHNOLOGY FUND DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Shares sold 473,535 $ 8,185,377 149,385 $ 2,140,139
Shares issued in connection with reinvestment of
distributions 20,799 440,325 72,162 940,273
Shares repurchased (134,649) (2,212,220) (120,169) (1,539,011)
--------- ------------ --------- ------------
Net increase 359,685 $ 6,413,482 101,378 $ 1,541,401
--------- ------------ --------- ------------
--------- ------------ --------- ------------
<CAPTION>
YEAR ENDED YEAR ENDED
GLOBAL SMALL CAP FUND DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Shares sold 58,016 $ 770,457 1,498 $ 20,100
Shares issued in connection with reinvestment of
distributions 2,716 32,246 196 2,119
Shares repurchased (19,341) (217,755) -- --
--------- ------------ --------- ------------
Net increase 41,391 $ 584,948 1,694 $ 22,219
--------- ------------ --------- ------------
--------- ------------ --------- ------------
</TABLE>
Page 67
<PAGE>
Dresdner RCM Global Funds
Notes to Financial Statements
December 31, 1998
4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
GLOBAL HEALTH CARE FUND DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Shares sold 9,538 $ 121,310 751 $ 10,100
Shares issued in connection with reinvestment of
distributions 707 9,106 86 985
Shares repurchased (2,076) (26,164) -- --
--------- ------------ --------- ------------
Net increase 8,169 $ 104,252 837 $ 11,085
--------- ------------ --------- ------------
--------- ------------ --------- ------------
<CAPTION>
YEAR ENDED YEAR ENDED
LARGE CAP GROWTH FUND DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Shares sold 403,182 $ 6,444,000 1,101 $ 15,100
Shares issued in connection with reinvestment of
distributions 578 9,143 59 713
Shares repurchased (313,306) (5,000,329) -- --
--------- ------------ --------- ------------
Net increase 90,454 $ 1,452,814 1,160 $ 15,813
--------- ------------ --------- ------------
--------- ------------ --------- ------------
<CAPTION>
YEAR ENDED YEAR ENDED
BIOTECHNOLOGY FUND DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Shares sold 47,923 $ 480,443 300,000 $ 3,000,000
Shares issued in connection with reinvestment of
distributions 948 10,343 -- --
Shares repurchased (6,914) (69,862) -- --
--------- ------------ --------- ------------
Net increase 41,957 $ 420,924 300,000 $ 3,000,000
--------- ------------ --------- ------------
--------- ------------ --------- ------------
<CAPTION>
YEAR ENDED YEAR ENDED
EMERGING MARKETS FUND DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Shares sold 2,068 $ 19,991 300,000 $ 3,000,000
Shares issued in connection with reinvestment of
distributions 3 31 -- --
Shares repurchased (417) (3,513) -- --
--------- ------------ --------- ------------
Net increase 1,654 $ 16,509 300,000 $ 3,000,000
--------- ------------ --------- ------------
--------- ------------ --------- ------------
<CAPTION>
YEAR ENDED YEAR ENDED
INTERNATIONAL FUND DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Shares sold 1,461,592 $ 21,109,570 2,586,189 $ 37,727,115
Shares issued in connection with reinvestment of
distributions 307,165 4,361,747 609,312 8,341,482
Shares repurchased (809,365) (11,673,066) (148,471) (2,263,964)
--------- ------------ --------- ------------
Net increase 959,392 $ 13,798,251 3,047,030 $ 43,804,633
--------- ------------ --------- ------------
--------- ------------ --------- ------------
</TABLE>
Page 68
<PAGE>
Dresdner RCM Global Funds
Notes to Financial Statements
December 31, 1998
4. CAPITAL SHARES (CONTINUED)
The Biotechnology Fund and Emerging Markets Fund commenced operations on
December 30, 1997. The Tax Managed Growth Fund, Global Equity Fund and Strategic
Income Fund commenced operations on December 31, 1998. There were 100,000 Class
I shares sold for a total of $1,000,000 for each of the Tax Managed Growth Fund
and Global Equity Fund; and 300,000 Class I shares sold for a total of
$3,000,000 for the Strategic Income Fund on December 31, 1998. There were no
capital stock transactions for any of the newly offered Class N shares as of
December 31, 1998.
5. INVESTMENTS IN FOREIGN SECURITIES 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/or
emerging markets will subject the Funds to the risk of foreign currency exchange
rate fluctuations, perceived credit risk and adverse economic and political
developments.
6. PURCHASES AND SALES OF SECURITIES
The following summarizes purchases and sales, excluding short-term
investments, for each Fund for the year ended December 31, 1998:
<TABLE>
<CAPTION>
PURCHASES
--------------------------------
U.S. GOVERNMENT OTHER ISSUES
--------------- --------------
<S> <C> <C>
Global Technology Fund -- $ 26,910,068
Global Small Cap Fund -- $ 9,264,526
Global Health Care Fund -- $ 7,670,187
Large Cap Growth Fund -- $ 5,615,060
Biotechnology Fund -- $ 6,545,066
Emerging Markets Fund $1,168,170 $ 5,923,745
International Fund -- $ 113,486,711
Tax Managed Growth Fund -- --
Global Equity Fund -- $ 491,392
Strategic Income Fund -- --
</TABLE>
<TABLE>
<CAPTION>
SALES
------------------------------
U.S. GOVERNMENT OTHER ISSUES
---------------- ------------
<S> <C> <C>
Global Technology Fund -- $23,828,076
Global Small Cap Fund -- $9,230,899
Global Health Care Fund -- $7,857,133
Large Cap Growth Fund -- $6,264,205
Biotechnology Fund -- $3,325,610
Emerging Markets Fund $1,184,955 $5,291,486
International Fund -- $95,448,542
Tax Managed Fund -- --
Global Equity Fund -- --
Strategic Income Fund -- --
</TABLE>
Page 69
<PAGE>
Dresdner RCM Global Funds
Notes to Financial Statements
December 31, 1998
7. DEFERRED ORGANIZATIONAL COSTS
Costs incurred by the Funds in connection with their organization are
being amortized on a straight-line basis over a five-year period beginning at
the commencement of each Fund's operations. The Tax Managed Growth Fund, Global
Equity Fund, Strategic Income Fund and International Fund did not have any
organizational costs.
8. DIRECTORS' FEES
Each Director who is not an interested person of the Global Company
receives from the Global Company an annual retainer of $1,000 (the retainer is
evenly prorated among each series of the Global Company), plus $500 for each
Board meeting attended for each series, and $250 for each committee meeting
attended for each series.
Each Director who is not an interested person of the Capital Company
receives from the Capital Company an annual retainer of $9,000 (the retainer is
evenly prorated among each series of the Capital Company), plus $1,500 for each
Board meeting attended for each series, and $500 for each committee meeting
attended for each series.
Each Director of a Company who is not an interested person of the
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, or of 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.
Page 70
<PAGE>
Report of Independent Accountants
TO THE SHAREHOLDERS AND THE BOARD OF DIRECTORS OF THE DRESDNER RCM GLOBAL FUNDS,
INC. AND THE DRESDNER RCM CAPITAL FUNDS, INC.:
In our opinion, the accompanying statements of assets and liabilities,
including the portfolio of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Dresdner RCM Global Funds, Inc.
(consisting of the Dresdner RCM Global Technology Fund, Dresdner RCM Global
Small Cap Fund, Dresdner RCM Global Health Care Fund, Dresdner RCM Large Cap
Growth Fund, Dresdner RCM Biotechnology Fund, Dresdner RCM Emerging Markets
Fund, Dresdner RCM Tax Managed Growth Fund, Dresdner RCM Global Equity Fund, and
the Dresdner RCM Strategic Income Fund) and the Dresdner RCM Capital Funds, Inc.
(consisting of the Dresdner RCM International Growth Equity Fund), collectively,
the "Funds", at December 31, 1998, the results of their operations, the changes
in their net assets and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of investments owned at December 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 22, 1999
Page 71
<PAGE>
TAX INFORMATION (UNAUDITED)
On December 23, 1998, distributions were paid from investment operations
for the Global Technology Fund, Global Small Cap Fund, Global Health Care Fund,
Large Cap Growth Fund, Biotechnology Fund, Emerging Markets Fund and
International Fund as indicated below (the International Fund's dividend was
paid on December 16, 1998). The dividends were recorded on December 16, 1998, to
shareholders of record on December 15, 1998.
<TABLE>
<CAPTION>
ORDINARY LONG-TERM TOTAL
FUND INCOME CAPITAL GAIN DISTRIBUTIONS
- ------------------------------------------------------- ------------- ------------- --------------
Global Technology Fund
<S> <C> <C> <C>
Per Share -- $ 0.57 $ 0.57
Amount -- $ 463,770 $ 463,770
Global Small Cap Fund
Per Share $ 0.52 $ 0.30 $ 0.82
Amount $ 229,523 $ 132,418 $ 361,941
Global Health Care Fund
Per Share $ 0.22 $ 0.94 $ 1.16
Amount $ 89,728 $ 383,383 $ 473,111
Large Cap Growth Fund
Per Share $ 0.54 $ 1.34 $ 1.88
Amount $ 218,629 $ 542,523 $ 761,152
Biotechnology Fund
Per Share $ 0.32 -- $ 0.32
Amount $ 108,529 -- $ 108,529
Emerging Markets Fund
Per Share $ 0.08 -- $ 0.08
Amount $ 24,028 -- $ 24,028
International Fund
Per Share $ 0.23 $ 0.35 $ 0.58
Amount $ 1,801,634 $ 2,741,618 $ 4,543,252
</TABLE>
During the taxable year ended December 31, 1998, the International Fund
paid foreign taxes of $187,620 and recognized $1,406,071 of foreign source
income. Pursuant to section 853 of the Internal Revenue Code, the International
Fund designates $0.024 per share as creditable foreign tax paid and $0.180 of
income from foreign sources received in the taxable year ended December 31,
1998.
Page 72
<PAGE>
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
(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
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
One Post Office Square
Boston, Massachusetts 02109
Page 73
