<PAGE>
As filed with the Securities and Exchange Commission on April 17, 2000
1933 Act File No. 33-97572
1940 Act File No. 811-9100
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No.17 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 18
(Check appropriate box or boxes.)
DRESDNER RCM GLOBAL FUNDS, INC.
----------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Four Embarcadero Center San Francisco, California 94111
----------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(415) 954-5400
----------------------------------------------------------------------
(Registrant's Telephone Number, including Area Code)
Anthony Ain, President
DRESDNER RCM GLOBAL FUNDS, INC.
Four Embarcadero Center
San Francisco, California 94111
(800) 726-7240
(Name and Address of Agent for Service)
Shares of Capital Stock Offered: Par Value $.0001 per share
Copies to:
Robert J. Goldstein Michael Glazer
Associate General Counsel Paul, Hastings, Janofsky & Walker LLP
Dresdner RCM Global Investors LLC 555 South Flower Street
Four Embarcadero Center Los Angeles, California 90071
San Francisco, California 94111
<PAGE>
It is proposed that this filing will become effective:
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] On May 1, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On _________________ pursuant to paragraph (a)(1)
[ x ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On _________________ pursuant to paragraph (a)(2) of rule 485
<PAGE>
DRESDNER RCM GLOBAL FUNDS, INC.
DRESDNER RCM INTERNET FUND
CROSS REFERENCE SHEET
BETWEEN ITEMS OF PART A AND B OF FORM N-1A AND THE
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM NUMBER OF PART A OF FORM N-1A INFORMATION REQUIRED IN A PROSPECTUS
<S> <C>
1. Front and Back Cover Pages Front and Back Cover Pages
2. Risk/Return Summary: Investments, Risks, and Risk/Return Summary
Performance
3. Risk/Return Summary: Fee Table Fees and Expenses
4. Investment Objectives, Principal Investment Investment Objectives and Policies; Other
Strategies, and Related Risks Investment Practices; Investment Risks
5. Management's Discussion of Fund *
Performance
6. Management, Organization, and Capital Organization and Management
Structure
7. Shareholder Information Stockholder Information
8. Distribution Arrangements Organization and Management:: The
Distributor
9. Financial Highlights Information *
*NOT APPLICABLE.
</TABLE>
C-1
<PAGE>
DRESDNER RCM GLOBAL FUNDS, INC.
DRESDNER RCM INTERNET FUND
CROSS REFERENCE SHEET
BETWEEN ITEMS OF PART A AND B OF FORM N-1A AND THE
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
(CONTINUED)
ITEM NUMBER OF PART B OF FORM N-1A CAPTIONS IN PROSPECTUS AND STATEMENT
OF ADDITIONAL INFORMATION
<S> <C>
10. Cover Page and Table of Contents Cover Page and Table of Contents
11. Fund History General Information
12. Description of the Fund and Its Investments Investment Objectives and Policies; Risk
and Risks Considerations; Investment Restrictions
13. Management of the Fund The Investment Manager
14. Control Persons and Principal Holders of Directors and Officers; Description of Capital
Securities Shares
15. Investment Advisory and Other Services The Investment Manager; The Distributor;
Additional Information
16. Brokerage Allocation and Other Practices Execution of Portfolio Transactions
17. Capital Stock and Other Securities Description of Capital Shares
18. Purchase, Redemption and Pricing of Purchase and Redemption of Shares
Shares
19. Taxation of the Fund Dividends, Distributions and Tax Status
20. Underwriters The Distributor
21. Calculation of Performance Data Investment Results
22. Financial Statements *
</TABLE>
*NOT APPLICABLE.
C-2
<PAGE>
DRESDNER RCM GLOBAL FUNDS, INC.
-------------------------------------------------------------------------
Dresdner RCM Internet Fund
-------------------------------------------------------------------------
June __, 2000
This prospectus contains essential information for anyone considering an
investment in the Dresdner RCM Internet Fund. Please read this document
carefully and retain it for future reference.
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the adequacy or accuracy of this Prospectus. It
is a criminal offense to state or suggest otherwise.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
- ----------------------------------------------------------------------------------------------------------------------
RISK/RETURN SUMMARY AND FUND EXPENSES
- ---------------------------------------------------- -----------------------------------------------------------------
<S> <C>
This section summarizes the Fund's investments, 3 Risk/Return Summary
risks, past performance, and fees. 5 Fees and Expenses
INVESTMENT OBJECTIVES, POLICIES AND RISKS
- ---------------------------------------------------- -----------------------------------------------------------------
This section provides details about the 6 Investment Objectives and Policies
Fund's investment objectives, policies and risks. 10 Other Investment Practices
10 Changing the Fund's Investment Objectives and Policies
11 Investment Risks
ORGANIZATION AND MANAGEMENT
- ---------------------------------------------------- -----------------------------------------------------------------
This section provides details about the people and 14 The Fund and the Investment Manager
organizations who oversee the Fund. 14 The Portfolio Managers
15 Management Fees and other Expenses
15 The Distributor
STOCKHOLDER INFORMATION
- ---------------------------------------------------- -----------------------------------------------------------------
This section tells you how to buy, sell and 16 Buying Shares
exchange shares, how we value shares, and how we 19 Selling Shares
pay dividends and distributions. 20 Other Stockholder Services and Account
22 Policies
Dividends, Distributions and Taxes
</TABLE>
<PAGE>
DRESDNER RCM INTERNET FUND
- --------------------------
Goal: The Fund's goal is to seek long term
capital appreciation by investing in
a diversified portfolio of equity
securities of companies engaged in
Internet and Internet-related activities.
Principal Investment The Fund will normally invest 65% of its
Strategies: total assets in Internet and
Internet-related companies located
throughout the world, regardless of
market capitalization. The Fund may
invest without limit in initial public
offerings.
Internet and Internet-related companies
are companies that derive a significant
portion of their revenues, and/or
profits from the Internet and associated
technologies. The companies chosen for
investment may include hardware,
software, electronic components and
systems, media, and information
services, telecommunication and Internet
companies as well as technology groups
or companies associated with the
computer and Internet business.
The Internet is a world-wide network of
computers designed to permit users to
share information and transfer data
quickly and easily. The Investment
Manager believes that the growth of the
Internet and wireless communications
present a broad range of exciting
investment opportunities.
The Investment Manager evaluates the
fundamental value and prospects for
growth of individual companies and
focuses on Internet and Internet-related
companies that it expects will have
higher than average rates of growth and
strong potential for capital
appreciation. In addition, the
Investment Manager develops forecasts of
economic growth, inflation, and interest
rates that it uses to help identify
those regions and individual countries
that are likely to offer the best
investment opportunities.
The Standard & Poor's 500 Index and the
Goldman Sachs Internet Index are the
Fund's performance benchmarks. The
Investment Manager bases its security
selection on the relative investment
merits of each company around the world
and will not seek to duplicate either
index.
Principal Investment Risks: Because the Fund's investments will
fluctuate with market conditions, so
will the value of your investment in the
Fund. You could lose money on your
investment in the Fund, or the Fund
could underperform other
<PAGE>
investments.
The Fund will focus its investments in
companies engaged in Internet and
Internet-related activities. The value
of such companies is particularly
vulnerable to rapidly changing
technology, extensive government
regulation and high risks of
obsolescence caused by scientific and
technological advances. As a result, the
Fund's share price may be more volatile
than a fund with a more broadly
diversified portfolio.
The values of the Fund's investments
fluctuate in response to the activities
of individual companies and general
stock market and economic conditions.
The performance of foreign securities
also depends on the political and
economic environments and other overall
economic conditions in the countries in
which the Fund invests. The Fund's value
will also be exposed to currency risk.
The stock prices of smaller and newer
companies in which the Fund may invest
often fluctuate more than those of
larger, more established companies.
Investments in initial public offerings
may result in increased transaction
costs and expenses and the realization
of short-term capital gains and
distributions.
An investment in the Fund is not a bank
deposit and is not insured or guaranteed
by the Federal Deposit Insurance
Corporation or any other government
agency.
Performance This section would normally show how the
Fund has performed over time. Because
the Fund was new when this Prospectus
was printed, its performance is not
included.
<PAGE>
YEAR-BY-YEAR TOTAL RETURN FOR CLASS N SHARES
PERFORMANCE DATA IS NOT INCLUDED AS THE FUND IS LESS THAN ONE YEAR OLD.
FEES AND EXPENSES
-----------------
As an investor in the Fund, you will pay the following fees and
expenses.
SHAREHOLDER FEES CLASS N
----------
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) SHARES
------
Redemption Fee on shares held less than 180 days (as a % of 1.00%
amount redeemed)
ANNUAL FUND OPERATING EXPENSES (FEES PAID FROM FUND
ASSETS)
Management fees 1.00%
- --------------------------------------------------------------------------------
Rule 12b-1 fee 0.25%
- --------------------------------------------------------------------------------
Other expenses 1.01%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 2.26%
- --------------------------------------------------------------------------------
Less: Fees waived and reimbursed (1) 0.51%
- --------------------------------------------------------------------------------
Net operating expenses (1) 1.75%
- --------------------------------------------------------------------------------
1 The Investment Manager has contractually agreed until at least December 31,
2000, to pay each quarter the amount, if any, by which the ordinary operating
expenses for the quarter (except interest, taxes and extraordinary expenses)
exceed the annualized rate of 1.75% for Class N. The Fund may reimburse the
Investment Manager in the future.
Example
Use this table to compare fees and expenses of the Fund with those of
other funds. It illustrates the amount of fees and expenses you would pay
assuming:
- $10,000 investment in the Fund
- 5% annual return
- redemption at the end of each period
- no changes in the Fund's operating expenses for the first year
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
1 3
Year Years
Class N $282 $659
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
INVESTMENT OBJECTIVES AND POLICIES
HOW DOES THE FUND SELECT EQUITY INVESTMENTS?
While the Fund emphasizes investments in growth companies, the Fund
also may invest in other companies that are not traditionally considered to be
growth companies, such as cyclical and semi-cyclical companies in developing
economies, if the Investment Manager believes that such companies have
above-average growth potential. The Investment Manager does not expect that
cyclical and semi-cyclical companies will constitute a significant portion of
the Fund's investments.
When the Investment Manager analyzes a specific company it evaluates
the fundamental value of each enterprise as well as its prospects for growth. In
most cases, these companies have one or more of the following characteristics:
- - Superior management
- - Strong balance sheets
- - Differentiated or superior products or services
- - Substantial capacity for growth in revenue through either an expanding
market or expanding market share
- - Strong commitment to research and development
- A steady stream of new products or services
When evaluating foreign companies, the Investment Manager may also
consider the anticipated economic growth rate, political outlook, inflation
rate, currency outlook, and interest rate environment for the country and the
region in which the company is located, as well as other factors it deems
relevant.
In addition to traditional research activities, the Investment Manager
uses research produced by Grassroots Research, a division of the Investment
Manager. Grassroots(sm) Research prepares research reports based on field
interviews with customers, distributors, and competitors of the companies that
the Investment Manager follows. The Investment Manager believes that
Grassroots(sm) Research can be a valuable adjunct to its traditional research
efforts by providing a "second look" at companies in which the Fund might invest
and by checking marketplace assumptions about market demand for particular
products and services.
WHAT KINDS OF EQUITY SECURITIES DOES THE FUND INVEST IN?
The Fund invests primarily in common stocks and depositary receipts.
The Fund may invest in companies of any size. Common stocks represent the basic
equity ownership interests in a company. Depositary receipts are issued by banks
or other financial institutions and represent, or may be converted into,
underlying ordinary shares of a foreign company. They may be sponsored by the
foreign company or organized independently.
The Fund may also invest in other equity and equity related securities.
These include preferred stock, convertible preferred stock, convertible debt
obligations, warrants or other rights to acquire stock, and options on stock and
stock indices.
WHAT KINDS OF FOREIGN SECURITIES DOES THE FUND INVEST IN?
<PAGE>
The Fund invests in the following types of foreign equity and
equity-linked securities:
- Securities of companies that are organized or headquartered outside
the United States, or that derive at least 50% of their total
revenue outside the U.S.
- Securities that are principally traded outside the U.S., regardless
of where the issuer of such securities is organized or
headquartered or where its operations principally are conducted
- Depositary receipts
- Securities of other investment companies investing primarily in
such equity and equity-related foreign securities.
The Investment Manager expects that the Fund's foreign investments will
primarily be traded on recognized foreign securities exchanges. However, the
Fund also may invest in securities that are traded only over-the-counter, either
in the United States or in foreign markets, when the Investment Manager believes
that such securities meet the Fund's investment criteria. The Fund also may
invest in securities that are not publicly traded either in the United States or
in foreign markets.
OTHER INVESTMENT PRACTICES
DOES THE FUND BUY AND SELL FOREIGN CURRENCIES?
The Investment Manager expects to purchase or sell foreign currencies
primarily to settle foreign securities transactions. However, the Fund may also
engage in currency management transactions to hedge currency exposure related to
securities it owns or expects to purchase. The Fund may also hold foreign
currency received in connection with investments in foreign securities when the
Investment Manager believes the relevant exchange rates will change favorably
and it would be better to convert the currency into U.S. dollars later. The Fund
will have the costs of conversions between various currencies, and gains in a
particular securities market may be affected (either positively or negatively)
by changes in exchange rates.
DOES THE FUND HEDGE ITS INVESTMENTS?
For hedging purposes, the Fund may purchase options on financial
indices and on securities it is authorized to purchase. If the Fund purchases a
"put" option on a security, the Fund acquires the right to sell the security at
a specified price at any time during the term of the option (for
"American-style" options) or on the option expiration date (for "European-style"
options). If the Fund purchases a "call" option on a security, it acquires the
right to purchase the security at a specified price at any time during the term
of the option (or on the option expiration date). An option on a financial index
gives the Fund the right to receive a cash payment equal to the difference
between the closing price of the index and the exercise price of the option. The
Fund may "close out" an option before it is exercised or expires by selling an
option of the same series as the option previously purchased.
The Fund may employ certain currency management techniques to hedge
against currency exchange rate fluctuations, changes in interest rates and
general fluctuations in the value of its portfolio securities. These techniques
include forward currency exchange contracts, currency options, futures contracts
(and related options), and currency swaps. A forward currency exchange contract
is an obligation to purchase or sell a specific currency at a future date at a
price set at the time of the contract. Currency options are rights to purchase
or sell a specific currency at a future date at a specified price. Futures
contracts are agreements to take or make delivery of an amount of cash equal to
the difference between the value of the currency at the close of the last
trading day
<PAGE>
of the contract and the contract price. Currency swaps involve the exchange of
rights to make or receive payments in specified currencies.
The Fund may cross-hedge currencies, which involves writing or
purchasing options or entering into foreign exchange contracts on one currency
to hedge against changes in exchange rates for a different currency, if the
Investment Manager believes changes between the two currencies are correlated.
WHAT IS THE FUND'S PORTFOLIO TURNOVER RATE?
The Fund may invest in securities on either a long-term or short-term
basis. The Investment Manager anticipates that the annual portfolio turnover
rate for the Fund will not exceed ___%, during its first full year or operation.
The Fund's expected portfolio turnover rate is not a limiting factor. The
Investment Manager will sell the Fund's portfolio securities whenever it deems
appropriate, regardless of the length of time the Fund has held the securities,
and may purchase or sell securities for short-term profits. Turnover will be
influenced by sound investment practices, the Fund's investment objective and
the need for funds for the redemption of the Fund's shares. A high portfolio
turnover rate would increase the Fund's brokerage commission expenses and other
transaction costs, and may increase its taxable capital gains.
DOES THE FUND INVEST IN OTHER INVESTMENT COMPANIES?
The laws of some foreign countries may make it difficult or impossible
for the Fund to invest directly in issuers organized or headquartered in those
countries, or may limit such investments. The only practical means of investing
in such companies may be through investment in other investment companies that
in turn are authorized to invest in the securities of such issuers. In these
cases and in other appropriate circumstances the Fund may invest up to 10% of
the value of its total assets in other investment companies but no more than 5%
of its total assets in any one investment company. Furthermore, the Fund may not
acquire more than 3% of the outstanding voting securities of any other
investment company.
If the Fund invests in other investment companies, it will bear its
proportionate share of the other investment companies' management or
administration fees and other expenses. At the same time, the Fund would
continue to pay its own management fees and other expenses.
WHAT IS THE FUND'S INVESTMENT POLICIES IN UNCERTAIN MARKETS?
When the Investment Manager believes the Fund should adopt a temporary
defensive posture, including periods of international, political or economic
uncertainty, the Fund may hold all or a substantial portion of its assets in
investment grade debt securities. The securities may be debt obligations issued
or guaranteed by the U.S. Government or foreign governments (including their
agencies, instrumentalities, authorities and political subdivisions), by
international or supranational government entities, and by corporate issuers.
During these periods, the Fund may not achieve its investment objectives.
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENT
PRACTICES?
The Statement of Additional Information("SAI") has more detailed
information about the investment practices described in this Prospectus as well
as information about other investment practices used by the Investment Manager.
<PAGE>
CHANGING THE FUND'S INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objective of long term capital appreciation is a
fundamental policy that may not be changed without stockholder approval.
However, except as otherwise indicated in this Prospectus or the SAI, the Fund's
other investment policies and restrictions are not fundamental and may be
changed without stockholder approval.
The various percentage limitations referred to in this Prospectus and
the SAI apply immediately after a purchase or initial investment. Except as
specifically indicated to the contrary, the Fund is not required to sell any
security in its portfolio as a result of change in any applicable percentage
resulting from market fluctuations or from shareholder redemptions
<PAGE>
INVESTMENT RISKS
Your investment in the Fund is subject to a variety of principal risks,
including those described below. See the SAI for further information about these
and other risks.
EQUITY INVESTMENTS
Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in the issuer's financial
condition and prospects on overall market and economic conditions.
SPECIFIC INDUSTRIES
Because the Fund focuses on a single industry, it will be more
susceptible than other diversified funds to market and other conditions
affecting that industry. These conditions include competitive pressures
affecting a companies' financial condition, rapid product obsolescence,
dependence on extensive research and development, aggressive pricing and greater
sensitivity to changes in government regulation and policies. As a result, the
net assets of the Fund may be more volatile than an investment company with a
more broadly diversified portfolio.
SMALL COMPANIES
Investments in small companies may involve greater risks than
investments in larger companies, and may be speculative. The securities of small
companies, as a class, have had periods of more favorable results, and periods
of less favorable results, than securities of larger companies as a class. In
addition, small companies in which the Fund may invest may have limited or
unprofitable operating histories, limited financial resources and inexperienced
management. They often face competition from larger or more established firms
that have greater resources. Small companies may have less ability to raise
additional capital, and may have a less diversified product line (making them
susceptible to market pressure), than larger companies. Securities of small and
unseasoned companies are often less liquid than securities of larger companies
and are frequently traded in the over-the-counter market or on regional
exchanges where low trading volumes may result in erratic or abrupt price
movements. Selling these securities may take an extended period of time. As a
result, to the extent the Fund invests in small companies, its net asset value
may be more volatile than would otherwise be the case.
FOREIGN SECURITIES
Investing in foreign securities involves significant risks, some of
which are not typically associated with investing in securities of U.S. issuers.
For example, the value of investments in such securities may fluctuate based on
changes in the value of one or more foreign currencies relative to the U.S.
dollar. In addition, information about foreign issuers may be less readily
available than information about domestic issuers. Foreign issuers generally are
not subject to accounting, auditing and financial reporting standards, or to
other regulatory practices and requirements, comparable to U.S. issuers.
Furthermore, certain foreign countries may be politically unstable, expropriate
or nationalize assets, revalue currencies, impose confiscatory taxes, and limit
foreign investment and use or removal of funds or other assets of the Fund
(including the withholding of dividends and limitations on the repatriation of
currencies). The Fund may also face difficulties or delays in obtaining or
enforcing judgments.
Most foreign securities markets have substantially less volume than
U.S. markets, and the securities of many foreign issuers may be less liquid and
more volatile than securities of
<PAGE>
comparable U.S. issuers. There is generally less government regulation of
securities markets, securities exchanges, securities dealers, and listed and
unlisted companies in foreign countries than in the United States. Foreign
markets also have different clearance and settlement procedures, and at times in
certain markets settlements have not been able to keep pace with the volume of
securities transactions, making it difficult to conduct and complete
transactions. In addition, the costs associated with transactions in securities
of foreign companies and securities traded on foreign markets, and the expense
of maintaining custody of these securities with foreign custodians, generally
are higher than in the U.S.
OPTIONS, CURRENCY HEDGING AND CURRENCY MANAGEMENT
Stock options involve a number of risks. Options may be more volatile
than the underlying instruments. Differences between options and securities
markets could result in an imperfect correlation between these markets, causing
a given transaction not to achieve its objective. In addition, the secondary
market for particular options may not be liquid for a variety of reasons. When
trading options on foreign exchanges, many of the protections afforded
participants in the United States are not available. Although the purchaser of
an option cannot lose more than the amount of the premium plus transaction
costs, the entire amount could be lost.
The Fund's currency management techniques involve risks different from
those that arise from investments in U.S. dollar-denominated securities. If the
Fund invests in foreign securities while also maintaining currency positions, it
may be exposed to greater combined risk than would otherwise be the case.
Transactions in currency futures contracts and options on currency futures
contracts involve risks similar to those of options on securities; in addition,
the Fund's potential loss in such transactions is unlimited. To the extent that
such techniques are used to enhance return, they are considered speculative.
The use of hedging and currency management techniques is a highly
specialized activity, and the success of any such operations by the Fund is not
assured. Gains and losses in such transactions depend upon the Investment
Manager's ability to predict correctly the direction of stock prices, interest
rates, currency exchange rates, and other economic factors. Although such
operations could reduce the risk of loss due to a decline in the value of the
hedged security or currency, they could also limit the potential gain from an
increase in the value of the security or currency.
<PAGE>
ORGANIZATION AND MANAGEMENT
THE FUND AND THE INVESTMENT MANAGER
The Internet Fund is a series of Dresdner RCM Global Funds, Inc. (the
"Company"). The Company is incorporated in Maryland as an open-end management
investment company.
Dresdner RCM Global Investors LLC, with principal offices at Four
Embarcadero Center, San Francisco, California 94111, is the Investment Manager
of the Fund. The Investment Manager manages the Fund's investments, provides
various administrative services, and supervises the Fund's daily business
affairs.
The Investment Manager provides investment supervisory services to
institutional and individual clients. It was established in December of 1998 and
is the successor to the business of its holding company, Dresdner RCM Global
Investors US Holdings LLC. The Investment Manager was originally formed as
Rosenberg Capital Management in 1970, and it and its successors have been
consistently in business since then. The Investment Manager is an indirect
wholly owned subsidiary of Dresdner Bank AG ("Dresdner"), an international
banking organization with principal executive offices in Frankfurt, Germany.
THE PORTFOLIO MANAGERS
Huachen Chen and Walter C. Price are primarily responsible for the
day-to-day management of the Internet Fund. They are both Managing Directors of
the Investment Manager, with which they have been associated since 1985 and
1974, respectively. They have managed equity portfolios on behalf of the
Investment Manager since 1985.
<PAGE>
MANAGEMENT FEES AND OTHER EXPENSES
The Fund pays the Investment Manager a fee pursuant to an investment
management agreement at the annual rate of 1.00% of its average daily net
assets.
The Fund is responsible for its own expenses. These include brokerage
and commission expenses, taxes, interest charges on borrowings (if any),
custodial charges and expenses, investment management fees, and other operating
expenses (e.g., legal and audit fees, securities registration expenses, and
compensation of directors who are not affiliated with the Investment Manager).
To limit the expenses of the Fund, the Investment Manager has
contractually agreed, until at least December 31, 2000, to pay the Fund on a
quarterly basis the amount, if any, by which the Fund's ordinary operating
expenses for the quarter (except interest, taxes and extraordinary expenses)
exceed 1.75% for Class N. The Fund will reimburse the Investment Manager for
such payments for a period of up to five years after they are made, to the
extent that the Fund's ordinary operating expenses are less than the expense
cap.
THE DISTRIBUTOR
Funds Distributor, Inc. ("FDI" or the "Distributor"), with principal
offices at 60 State Street, Suite 1300, Boston, Massachusetts 02109, acts as
distributor of the shares of the Fund. The Distributor provides mutual fund
distribution services to registered investment companies, and is an indirect
wholly owned subsidiary of Boston Institutional Group, Inc., which is not
affiliated with the Investment Manager or Dresdner.
The Company has adopted a distribution and service plan (the "Plan")
for its Class N shares pursuant to Rule 12b-1 under the 1940 Act. Under the
Plan, the 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
actually incurred by the Distributor in providing distribution and shareholder
support services. 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 the Prospectus
to persons who are not already stockholders, and indirect and overhead costs
associated with the sale of Class N shares. If in any month the Distributor is
due more for such services than is immediately payable because of the expense
limitation under the Plan, the unpaid amount is carried forward from month to
month while the Plan is in effect until it can be paid. Because these fees are
paid out of the Fund's assets on an ongoing basis, over time these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
<PAGE>
STOCKHOLDER INFORMATION
BUYING SHARES
For your convenience, we offer several ways to start and add to Fund
investments.
OPENING YOUR ACCOUNT BY INVESTING THROUGH A FINANCIAL PROFESSIONAL
If you work with a financial professional, he or she is prepared to
handle your planning and transaction needs. Your financial professional will be
able to assist you in establishing your Fund account, executing transactions,
and monitoring your investment. If you do not hold your Fund investment in the
name of your financial professional and you prefer to place a transaction order
yourself, please use the instructions below for investing directly.
You may also purchase shares through certain brokers which have
entered into selling group agreements with the Distributor. Brokers may charge a
fee for their services at the time of purchase or redemption.
OPENING YOUR ACCOUNT DIRECTLY
You may establish accounts without the help of an intermediary as follows:
- - Choose the Fund in which you wish to invest. Determine the amount you are
investing. The minimum initial and subsequent investment requirements for
each class of each Fund are as follows:
<TABLE>
<CAPTION>
-------- ------------------ ---------------------- ---------------------- -------------------------
Minimum Subsequent IRA Account Minimum IRA Account Minimum
Minimum Initial Investment Initial Investment Subsequent Investment
Fund Investment
-------- ------------------ ---------------------- ---------------------- -------------------------
<S> <C> <C> <C> <C>
Class N $5,000 $250 $2,000 $250
-------- ------------------ ---------------------- ---------------------- -------------------------
</TABLE>
- - The Fund reserves the right at any time to waive, increase or decrease the
minimum requirements applicable to initial or subsequent investments.
Minimum subsequent investment requirements do not apply to investors
purchasing shares through the Fund's automatic dividend reinvestment plan.
In addition, minimum initial investments may vary for investors purchasing
shares through a broker-dealer or other intermediary having a service
agreement with the Investment Manager and maintaining an omnibus account
with the Fund.
- - Complete the account application accompanying this Prospectus. Please apply
at this time for any account privileges you may want to use in the future,
to avoid the delays associated with adding them later on. To add or change
account privileges or to re-register an existing account, please speak with
a Fund representative at 1-800-726-7240 to determine the additional
documentation that will be required.
- -
OPENING YOUR ACCOUNT DIRECTLY
You may establish accounts without the help of an intermediary as follows:
- - Choose the Fund in which you wish to invest.
Determine the amount you are investing. The minimum amount for initial
investments is $5,000 for the Class N shares ($250 for additional
investments) and $250,000 for the Class I shares ($50,000 for additional
investments). The Funds reserve the right at any time to waive, increase or
decrease the minimum requirements applicable to initial or subsequent
investments.
<PAGE>
Minimum subsequent investment requirements do not apply to investors
purchasing shares through the Funds' automatic dividend reinvestment plan.
In addition, minimum initial investments may vary for investors purchasing
shares through a broker-dealer or other intermediary having a service
agreement with the Investment Manager and maintaining an omnibus account
with the Fund.
- Complete the account application accompanying this Prospectus. Please
apply at this time for any account privileges you may want to use in
the future, to avoid the delays associated with adding them later on.
- Mail your completed application to:
Dresdner RCM Global Funds
P.O. Box 8025
Boston, MA 02266-8025
- - For overnight delivery, mail your completed application to:
Dresdner RCM Global Funds
66 Brooks Drive
Braintree, MA 02184
Please note: Initial or subsequent purchase orders of $25,000 or more must
be paid in the form of a wire transfer or certified check. For answers to any
questions, please speak with a Fund Representative at 1-800-726-7240.
We reserve the right to reject any purchase of shares at our sole
discretion. We also reserve the right to cancel any purchase order for which
payment has not been received by the third business day following the order.
Confirmation statements showing transactions in your account and a summary
of the status of the account serve as evidence of ownership of shares of the
Fund. We will forward a confirmation statement to you on receipt of a proper
order.
INVESTING IN YOUR ACCOUNT
BY WIRE
- Make sure you have established an account by mailing an application as
explained above.
- Call 1-800-726-7240 to obtain your account number and to place a
purchase order. Money that is wired without a purchase order will be
returned uninvested.
- After placing your purchase order, instruct your bank to wire the
amount of your investment to:
State Street Bank and Trust Company
Routing number: 011000028
Account Number: 9905-268-0
FCC: your account number, name of registered owner(s) and Fund
name
<PAGE>
BY CHECK
- Make out a check (bank or certified) or money order for the investment
amount payable to Dresdner RCM Internet Fund. Please note: No third
party checks will be accepted.
- Mail the check with your completed application to the Fund at:
Dresdner RCM Global Funds
P.O. Box 8025
Boston, MA 02266-8025
- For overnight delivery, mail your completed application to:
Dresdner RCM Global Funds
66 Brooks Drive
Braintree, MA 02184
ADDING TO YOUR ACCOUNT
BY WIRE
- Call the Fund at 1-800-726-7240 to place a purchase order. Money THAT
IS WIRED WITHOUT A PURCHASE ORDER WILL BE RETURNED UNINVESTED.
- Once you have placed your purchase order, instruct your bank to wire
the amount of your investment as described above.
BY CHECK
- Make out a check for the investment amount payable to Dresdner RCM
Internet Fund. Please note: No third party checks will be accepted.
- Mail the check with a completed investment slip to the Fund at:
Dresdner RCM Global Funds
P.O. Box 8025
Boston, MA 02266-8025
For overnight delivery, mail the check with a completed investment slip to:
Dresdner RCM Global Funds
66 Brooks Drive
Braintree, MA 02184
If you do not have an investment slip, attach a note indicating your
account number on the check.
WITH SECURITIES
At its discretion, the Company may accept securities of equal value instead
of cash in payment of all or part of the subscription price for Fund shares.
Contact the Fund in advance to discuss the securities in question and the
documentation necessary to complete the transaction.
<PAGE>
Any such securities:
- Will be valued at the close of regular trading on the New York Stock
Exchange on the day of acceptance of the subscription in accordance
with the Fund's method of valuing its securities;
- Will have a tax basis to the Fund equal to such value;
- Must not be restricted securities; and
- Must be permitted to be purchased in accordance with the Fund's
investment objective and policies and must be securities that the Fund
would be willing to purchase at that time.
AUTOMATICALLY
This service allows for regular investments once an account is established
by simply authorizing the automatic withdrawal of funds from a bank account into
the Fund. The minimum investment pursuant to this plan is $250 for Class N.
Complete the appropriate section of the account application indicating the
amount of the automatic monthly investment.
<PAGE>
SELLING SHARES
BY PHONE - WIRE PAYMENT
- Call the Fund at 1-800-726-7240 to verify that the wire redemption
privilege via telephone is in place on your account. If it is not, a
representative can help you add it. You will be required to provide a
signature guaranteed letter of instruction signed by all registered
owners, accompanied by a voided check.
- Place your wire request.
BY PHONE - CHECK PAYMENT
- Call the Fund at 1-800-726-7240 to verify that you have telephone
redemption privileges and place your request. Once your request has
been verified, a check for the cash amount (net of any redemption fee,
if applicable), , payable to the registered owner(s), will be mailed
to the address of record. For checks payable to any other party or
mailed to any other address, please make your request in writing.
IN WRITING
- Write a letter of instruction, signed by each registered owner or
their duly authorized agent, that includes the following information:
- The name of the registered owner(s) of the account
- The name of the Fund
- The account number
- The number of shares or the dollar amount you want to sell
- The recipient's name and address or wire information (if
different from those of the account registration)
- - Indicate whether you want any cash proceeds sent by check or by wire.
- - Make sure the letter is signed by all registered owners or their authorized
parties. The Fund may require additional information, such as a signature
guarantee.
- - Mail the letter to the Fund.
BY ELECTRONIC TRANSFER
- Fill out the appropriate areas of the account application for this
feature. To request an electronic transfer (not less than $50 nor more
than $100,000), call 1-800-726-7240. Transfers of $50,000 or more will
require a signature guarantee. The Fund will transfer your sales
proceeds electronically to your bank account. The bank must be a
member of the Automated Clearing House.
SIGNATURE GUARANTEES
Certain requests must include a signature guarantee, which is designed to
protect you and the Fund from fraudulent activities. Your request must be made
in writing and include a signature guarantee if any of the following situations
apply:
- - You wish to redeem more than $50,000 worth of shares.
<PAGE>
Please note: exchanges in excess of $50,000 will require a signature
guarantee. Exchanges will not become effective until all documents in the form
required have been received by the Fund. If you have any questions, please
contact the Fund.
Please be sure to read carefully the prospectus of any other Fund in which you
wish to exchange shares.
ACCOUNT STATEMENTS
Stockholder accounts are opened in accordance with your registration
instructions. Transactions in the account, such as additional investments and
dividend reinvestments, will be reflected on regular confirmation statements.
REPORTS TO STOCKHOLDERS
The Fund's fiscal year ends on December 31. The Fund will issue to its
stockholders semi-annual and annual reports. In addition, stockholders will
receive quarterly statements on the status of their accounts reflecting all
transactions having taken place within that quarter. In order to reduce
duplicate mailings and printing costs, the Company will provide one annual and
semi-annual report and annual prospectus per household. Information regarding
the tax status of income dividends and capital gains distributions will be
mailed to stockholders on or before January 31st of each year. Account tax
information will also be sent to the IRS.
REDEMPTION
Redemption payments will be made wholly in cash unless the Fund
believes that unusual conditions exist which would make such payment detrimental
to the best interests of the Fund. Under such circumstances, payment of the
redemption price could be made in whole or in part in portfolio securities. You
would incur brokerage costs to sell such securities.
A redemption fee of 1% payable to and retained by the Fund is imposed
on any redemption of Fund shares within 180 days of the date of purchase. The
1.00% fee is imposed on the net asset value of the redeemed shares at the time
of purchase. This fee is designed to offset the market impact and other costs
associated with fluctuations in Fund asset levels and cash flow caused by
short-term shareholder trading.
If Fund shares were purchased of different days, the shares held
longest will be redeemed first for purposes of determining whether the
redemption fee applies. The redemption fee does not apply to shares that were
acquired through reinvestment of distributions.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund's dividends and distributions consist of most or all of its
net investment income and net realized capital gains. They are typically paid
once a year in December.The Fund typically pays income dividends four times a
year (usually in April, July, October and December) and makes capital gains
distributions once a year (usually in December). The amount depends on the
Fund's investment results and its tax compliance situation.
Dividends and distributions normally are reinvested in additional Fund
shares. You may instruct your financial professional or the Fund to have them
sent to you by check or credited to a separate account.
<PAGE>
- The check is being mailed to an address different from the one on your
account (address of record).
- The check is being made payable to someone other than the account
owner.
- You are instructing us to change your bank account information.
OTHER STOCKHOLDER SERVICES AND ACCOUNT POLICIES
TELEPHONE ORDERS
We accept telephone orders to buy or sell shares of the Fund. To order,
call 1-800-726-7240. To guard against fraud, we may record telephone orders or
take other reasonable precautions. However, if we do not take such steps to
ensure the authenticity of an order, we may bear any loss if the order later
proves fraudulent. At times of peak activity, such as during periods of volatile
economic or market conditions, it may be difficult to place buy or sell orders
by phone. During these times, consider sending your request in writing.
BUSINESS HOURS AND NAV CALCULATIONS
The Fund's regular business days and hours are the same as those of the
New York Stock Exchange (NYSE). The price of the Fund's shares is based on its
net asset value per share (NAV). The Fund calculates its NAV every business day
as of the close of trading on the NYSE (normally 4:00 p.m. eastern time). Shares
of the Fund will not be priced on days on which the NYSE is closed for trading.
The Fund's securities are typically priced using market quotes or pricing
services. When these methods are not available or do not represent a security's
value at the time of pricing, the security is valued in accordance with the
Fund's fair valuation procedures.
TIMING OF ORDERS
The Fund accepts orders until the close of trading on the NYSE every
business day (normally 4:00 pm eastern time). Orders received before the close
of trading on the NYSE are executed the same day at the Fund's NAV for that day.
Orders received after the close of trading on the NYSE are executed the
following day at that day's NAV. We have the right to suspend redemption of
shares of the Fund and to postpone payment of proceeds for up to seven days or
as permitted by law.
We may suspend the right of redemption or postpone the date of payment
for more than seven days after shares are tendered for redemption for any period
during which
- The New York Stock Exchange is closed (other than a customary weekend
or holiday closing) or the SEC determines that trading thereon is
restricted;
- An emergency (as determined by the SEC) exists as a result of which
disposal by the Fund of securities it owns is not reasonably
practicable, or as a result of which it is not reasonably practical
for the Fund fairly to determine the value of its net assets; or
- The SEC, by order, permits such suspension for the protection of
stockholders.
TIMING OF SETTLEMENTS
<PAGE>
When you buy shares of the Fund, you will become the owner of record
when the Fund receives your payment, generally the day following execution. When
you sell shares, cash proceeds are generally available the day following
execution and will be forwarded according to your instructions.
When you sell shares that you recently purchased by check, your order
will be executed at the Fund's next NAV but the proceeds will not be available
until your check clears. This may take up to 15 days from the purchase date.
Upon execution of the redemption order, a confirmation statement will be
forwarded to you indicating the number of shares sold and the proceeds thereof.
ACCOUNTS WITH BELOW-MINIMUM BALANCES
If your account balance falls below the minimum required by the Fund
($5,000 for Class N shares and $250,000 for Class I shares) as a result of
selling shares (and not because of performance), the Fund reserves the right to
request that you buy more shares or close your account. If your account balance
is still below the minimum 90 days after notification, we reserve the right to
close out your account and send the proceeds to the address of record.
AUTOMATIC REINVESTMENT
We will reinvest each income dividend and capital gain distribution
declared by the Fund in full and fractional shares of the Fund of the same
class, unless you or your duly authorized agent elect to receive all such
payments, or only the dividend or distribution portions in cash. We will base
such reinvestment on the Fund's NAV as determined on the ex-dividend date. You
or your authorized agent may request changes in the manner in which dividend and
distribution payments are made by written notice to the Fund or by calling the
Fund at 1-800-726-7240. This request will be effective as to any subsequent
payment if it is received before the record date used for determining your
payment. Any dividend and distribution election will remain in effect until you
notify the Fund in writing to the contrary.
EXCHANGE PRIVILEGE
You may exchange shares of the Fund into shares of the same class of
any other Fund offered by Dresdner RCM, without a sales charge or other fee
(except redemption fee, if any), by contacting the Fund. Exchange purchases are
subject to the minimum investment requirements of the class purchased. In order
to keep Fund expenses low for all shareholders, the Fund will not allow frequent
exchanges, purchases of sales of Fund shares. If a shareholder exhibits a
pattern of frequent trading, the Fund reserves the right to refuse to accept
further purchase or exchange orders from that shareholder. An exchange will be
treated as a redemption and purchase for tax purposes.
Shares will be exchanged at net asset value per share next determined
after receipt by the Fund of:
- - A written request for exchange, signed by each registered owner or his or
her duly authorized agent exactly as the shares are registered, which
clearly identifies the exact names in which the account is registered, the
account number and the number of shares or the dollar amount to be
exchanged
<PAGE>
If you are an individual (or certain other non-corporate stockholders),
we have to withhold 31% of all dividends, capital gains distributions and
redemption proceeds we pay to you if: (a) you have not given us a certified
correct taxpayer identification number and (b) except with respect to redemption
proceeds, have not certified that backup withholding does not apply. Amounts we
withhold are applied to your federal tax liability, and a refund may be obtained
from the Internal Revenue Service if withholding results in an overpayment of
taxes. Distributions of our taxable income and net capital gain to non-resident
alien individuals, non-resident alien fiduciaries of trusts of estate, foreign
corporations, or foreign partnerships may also be subject to U.S. withholding
tax, although distributions of net capital gain to such stockholders generally
will not be subject to withholding.
We may be required to pay income, withholding and other taxes imposed
by foreign countries, generally at rates from 10% to 40%, which would reduce our
investment income. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes. We may "pass through" to you the amount of
foreign income taxes we pay, if it is in the best interests of stockholders. If
a Fund does so, you will be required to include in your gross income your
pro-rata share of foreign taxes it paid, and you will be able to treat such
taxes as either an itemized deduction or a foreign credit against U.S. income
taxes on your tax returns. If the Fund does not, you will not be able to deduct
your share of such taxes in computing your taxable income and will not be able
to take your share of such taxes as a credit against your U.S. income taxes.
In general, selling shares for cash, exchanging shares, and receiving
distributions (whether reinvested or taken in cash) are all taxable events.
These transactions typically create the following tax liabilities for taxable
accounts:
<TABLE>
<CAPTION>
----------------------------- -----------------------------
TRANSACTION TAX STATUS
----------------------------- -----------------------------
<S> <C>
Income dividends Ordinary income
----------------------------- -----------------------------
Short-term capital gains Ordinary income
distributions
----------------------------- -----------------------------
Long-term capital gains Capital gains
distributors
----------------------------- -----------------------------
Sales or exchanges of shares Capital gains or losses
owned for more than one year
----------------------------- -----------------------------
Sales of exchanges of shares Gains are treated as
owned for one year or less ordinary income; losses are
subject to special rules
----------------------------- -----------------------------
</TABLE>
Dividends and other distributions generally are taxable to you at the
time they are received. However, dividends declared in October, November and
December by the Fund and made payable to you in such month are treated as paid
and are thereby taxable as of December 31, provided that the Fund pays the
dividend no later than January 31 of the following year.
If you purchase the Fund's shares shortly before the record date for a
dividend or other distribution on those shares thereon, you will pay full price
for the shares. This is known as "buying a distribution" because you will
receive some portion of your purchase price back as a distribution even though,
because the amount of the dividend or other distribution reduces the shares' net
asset value, it actually represents a return of invested capital. Depending on
your taxpayer status, that distribution may be taxable.
<PAGE>
You will receive, after the end of each year, full information on
dividends, capital gain distributions and other reportable amounts with respect
to shares of the Fund for tax purposes. This includes information such as the
portion taxable as capital gains and the amount of dividends, if any, eligible
for the federal dividends-received deduction for corporate taxpayers.
Foreign stockholders may be subject to special withholding
requirements. A penalty is charged on certain pre-retirement distributions form
retirement accounts. Consult your tax adviser about the federal, state and local
tax consequences in your particular circumstances.
The tax considerations described in this section do not apply to
tax-deferred accounts or other non-taxable entities. Because each investor's tax
circumstances are unique, please consult your tax professional about your
investment in the Fund.
<PAGE>
For more information about Dresdner RCM Internet Fund, the following document is
available free upon request:
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides more detailed information about the Fund, including
operations and investment policies. It is incorporated by reference and is
legally considered as part of this Prospectus.
You can get a free copy of the SAI, or request other information and
discuss your questions about the Fund, by contacting us at:
Dresdner RCM Global Funds
Four Embarcadero Center
San Francisco, CA 94111
Telephone 1-800-726-7240
You can review the Fund's SAI at the Public Reference Room of the
Securities and Exchange Commission. You can also get copies:
- For a fee, by writing the Public Reference Section of the
Commission, Washington, D.C. 20549-6009 or calling
1-800-SEC-0330 or by email at [email protected].
- Free from the Commission's Website at http://www.sec.gov.
Investment Company Act file nos. 33-97572 and 811-2913.
<PAGE>
[LOGO]
DRESDNER RCM INTERNET FUND
STATEMENT OF ADDITIONAL INFORMATION
June__, 2000
Dresdner RCM Internet Fund (the "Fund") is a diversified series of Dresdner RCM
Global Funds, Inc. (the "Company"), an open-end management investment company.
This Statement of Additional Information ("SAI") is not a prospectus, and should
be read in conjunction with the Prospectus of the Fund dated June __, 2000. The
Prospectus may be obtained without charge by writing or calling the Company at
the address and phone number above.
<PAGE>
Table of Contents
Page
3
Investment Objectives and Policies....................................
Risk Considerations...................................................
Investment Restrictions...............................................
Execution of Portfolio Transactions...................................
Directors and Officers................................................
The Investment Manager................................................
The Distributor.......................................................
Net Asset Value.......................................................
Purchase and Redemption of Shares.....................................
Dividends, Distributions and Tax Status...............................
Investment Results....................................................
Description of Capital Shares.........................................
Additional Information................................................
Page 3
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT CRITERIA
In evaluating particular investment opportunities, the Investment
Manager may consider such other factors, in addition to those described in the
Prospectus, as the anticipated economic growth rate, the political outlook, the
anticipated inflation rate, the currency outlook, and the interest rate
environment for the country and the region in which a particular issuer is
located. When the Investment Manager believes it would be appropriate and
useful, the Investment Manager's personnel may visit the issuer's headquarters
and plant sites to assess an issuer's operations and to meet and evaluate its
key executives. The Investment Manager also will consider whether other risks
may be associated with particular securities.
INVESTMENT IN FOREIGN SECURITIES
The securities markets of many countries have at times in the past
moved relatively independently of one another due to different economic,
financial, political, and social factors. In seeking to achieve the investment
objective of the Fund, the Investment Manager allocates the Fund's assets among
securities of countries and in currency denominations where it expects
opportunities for meeting the Fund's investment objectives to be the most
attractive, subject to the percentage limitations set forth in the Prospectus.
In addition, from time to time the Fund may strategically adjust its investments
among issuers based in various countries and among the various equity markets of
the world in order to take advantage of diverse global opportunities, based on
the Investment Manager's evaluation of prevailing trends and developments, as
well as on the Investment Manager's assessment of the potential for capital
appreciation (as compared to the risks) of particular companies, industries,
countries, and regions.
INVESTMENT IN DEVELOPED FOREIGN COUNTRIES. The Fund may invest in
securities of foreign governments and companies that are organized or
headquartered in developed foreign countries. The Fund may not be invested in
all developed foreign countries at one time, and may not invest in particular
developed foreign countries at any time, depending on the Investment Manager's
view of the investment opportunities available.
Although these countries have developed economies, even developed
countries may be subject to periods of economic or political instability. For
example, efforts by the member countries of the European Union to eliminate
internal barriers to the free movement of goods, persons, services and capital
have encountered opposition arising from the conflicting economic, political and
cultural interests and traditions of the member countries and their citizens.
The reunification of the former German Democratic Republic (East Germany) with
the Federal Republic of Germany (West Germany) and other political and social
events in Europe have caused considerable economic and social dislocations. Such
events can materially affect securities markets and have also disrupted the
relationship of such currencies with each other and with the U.S. dollar.
Similarly, events in the Japanese economy and social developments may affect
Japanese securities and currency markets, as well as the relationship of the
Japanese yen to the U.S. dollar. Future political, economic and social
developments can be expected to produce continuing effects on securities and
currency markets in these and other developed foreign countries.
CURRENCY MANAGEMENT
Securities purchased by the Fund may be denominated in U.S. dollars,
foreign currencies, or multinational currencies such as the Euro, and the Fund
will incur costs in connection with conversions between various currencies.
Movements in the various securities markets may be offset by changes in foreign
currency exchange rates. Exchange rates frequently move independently of
securities markets in a particular country. As a result, gains in a particular
securities market may be affected, either positively or negatively, by changes
in exchange rates, and the Fund's net currency positions may expose it to risks
independent of its securities positions.
<PAGE>
From time to time, the Fund may employ currency management techniques
to enhance its total return, although there is no current intention to do so.
The Fund may not employ more than 30% of the value of its total assets in
currency management techniques for the purpose of enhancing returns. To the
extent that such techniques are used to enhance return, they are considered
speculative.
The Fund's ability and decision to purchase or sell portfolio
securities may be affected by the laws or regulations in particular countries
relating to convertibility and repatriation of assets. Because the shares of the
Fund are redeemable in U.S. dollars each day the Fund determines its net asset
value, the Fund must have the ability at all times to obtain U.S. dollars to the
extent necessary to meet redemptions. Under present conditions, the Investment
Manager does not believe that these considerations will have any significant
adverse effect on its portfolio strategies, although there can be no assurances
in this regard.
GENERAL CURRENCY CONSIDERATIONS. Currency exchange rates may fluctuate
significantly over short periods of time causing, along with other factors, the
Fund's net asset value to fluctuate as well. Currency exchange rates generally
are determined by the forces of supply and demand in the foreign exchange
markets and the relative merits of investments in different countries, actual or
anticipated changes in interest rates and other complex factors, as seen from an
international perspective. Currency exchange rates also can be affected
unpredictably by intervention, or failure to do so, by U.S. or foreign
governments or central banks or by currency controls or political developments
in the United States or abroad. The markets in forward foreign currency exchange
contracts, currency swaps and other privately negotiated currency instruments
offer less protection against defaults by the other party to such instruments
than is available for currency instruments traded on an exchange. To the extent
that a substantial portion of the Fund's total assets, adjusted to reflect the
Fund's net position after giving effect to currency transactions, is denominated
or quoted in the currencies of foreign countries, the Fund will be more
susceptible to the risk of adverse economic and political developments within
those countries.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may purchase or
sell forward foreign currency exchange contracts ("forward contracts") for
hedging purposes or to seek to increase total return when the Investment Manager
anticipates that a foreign currency will appreciate or depreciate in value, but
securities denominated or quoted in that currency do not present attractive
investment opportunities and are not held in the Fund's portfolio. When
purchased or sold to increase total return, forward contracts are considered
speculative. In addition, the Fund may enter into forward contracts in order to
protect against anticipated changes in future foreign currency exchange rates.
The Fund may engage in cross-hedging by using forward contracts in a currency
different from that in which the hedged security is denominated or quoted if the
Investment Manager determines that there is a pattern of correlation between the
two currencies. The Fund may also engage in proxy hedging, by using forward
contracts in a series of foreign currencies for similar purposes.
The Fund may enter into forward contracts to purchase foreign
currencies to protect against an anticipated rise in the U.S. dollar price of
securities it intends to purchase. The Fund may enter into forward contracts to
sell foreign currencies to protect against the decline in value of its foreign
currency denominated or quoted portfolio securities, or a decline in the value
of anticipated income or dividends from such securities, due to a decline in the
value of foreign currencies against the U.S. dollar. Forward contracts to sell
foreign currency could limit any potential gain which might be realized by the
Fund if the value of the hedged currency increased.
If the Fund enters into a forward contract to sell foreign currency to
increase total return or to buy foreign currency for any purpose, the Fund will
segregate cash, U.S. Government securities, or other liquid debt or equity
securities with the Fund's custodian in an amount equal to the value of the
Fund's total assets committed to the consummation of the forward contract. If
the value of the segregated securities declines, additional assets will be
segregated so that the value of the segregated assets will equal the amount of
the Fund's commitment with respect to the contract.
A forward contract is subject to the risk that the counterparty to such
contract will default on its obligations. Since a forward contract is not
guaranteed by an exchange or clearinghouse, a default on the contract would
deprive the Fund of unrealized profits, transaction costs or the benefits of a
currency hedge or force the Fund to cover its purchase or sale commitments, if
any, at the current market price.
<PAGE>
OPTIONS ON FOREIGN CURRENCIES. The Fund may purchase and sell (write)
put and call options on foreign currencies for the purpose of protecting against
declines in the U.S. dollar value of foreign portfolio securities and
anticipated income or dividends on such securities and against increases in the
U.S. dollar cost of foreign securities to be acquired. The Fund may also use
options on currency to cross-hedge, which involves writing or purchasing options
on one currency to hedge against changes in exchange rates for a different
currency, if the Investment Manager believes there is a pattern of correlation
between the two currencies. Options on foreign currencies to be written or
purchased by the Fund will be traded on U.S. and foreign exchanges.
The writer of a put or call option receives a premium and gives the
purchaser the right to sell (or buy) the currency underlying the option at the
exercise price. The writer has the obligation upon exercise of the option to
purchase (or deliver) the currency during the option period. A writer of an
option who wishes to terminate the obligation may effect a "closing transaction"
by buying an option of the same series as the option previously written. A
writer may not effect a closing purchase transaction after being notified of the
exercise of an option. The writing of an option on foreign currency will
constitute only a partial hedge, up to the amount of the premium received; the
Fund could be required to purchase or sell additional foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may constitute an effective hedge against exchange
rate fluctuations; however, in the event of exchange rate movements adverse to
the Fund's position, the Fund may forfeit the entire amount of the premium plus
related transaction costs.
The Fund may purchase call or put options on a currency to seek to
increase total return when the Investment Manager anticipates that the currency
will appreciate or depreciate in value, but the securities quoted or denominated
in that currency do not present attractive investment opportunities and are not
held in the Fund's portfolio.
When the Fund writes a put or call option on a foreign currency, an
amount of cash, U.S. Government securities, or other liquid debt or equity
securities equal to the market value of its obligations under the option will be
segregated by the Fund's custodian to collateralize the position.
CURRENCY FUTURES CONTRACTS. The Fund may enter into currency futures
contracts, as described under "Futures Transactions" below.
CURRENCY SWAPS. The Fund may enter into currency swaps for both hedging
and to seek to increase total return. Currency swaps involve the exchange of
rights to make or receive payments in specified currencies. Since currency swaps
are individually negotiated, the Fund expects to achieve an acceptable degree of
correlation between their portfolio investments and their currency swap
positions entered into for hedging purposes. Currency swaps may involve the
delivery of the entire principal value of one designated currency in exchange
for the other designated currency, or the delivery of the net amount of a
party's obligations over its entitlements. Therefore, the entire principal value
of a currency swap may be subject to the risk that the other party to the swap
will default on its contractual delivery obligations. The Fund will maintain in
a segregated account with the Fund's custodian cash, U.S. Government securities,
or other liquid debt or equity securities equal to the amount of the Fund's
obligations, or the net amount (if any) of the excess of the Fund's obligations
over its entitlements, with respect to swap transactions. To the extent that
such amount of a swap is segregated, the Company and the Investment Manager
believe that swaps do not constitute senior securities under the Investment
Company Act of 1940 (the "1940 Act") and, accordingly, will not treat them as
being subject to the Fund's borrowing restriction.
The use of currency swaps is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If the Investment Manager is
incorrect in its forecasts of market values and currency exchange rates, the
investment performance of the Fund entering into a currency swap would be less
favorable than it would have been if this investment technique were not used.
OPTIONS TRANSACTIONS
The Fund may purchase listed put and call options on any securities
which it is eligible to purchase as a hedge against changes in market conditions
that may result in changes in the value of the Fund's portfolio securities. The
aggregate premiums on put options and call options purchased by the Fund may not
in each case exceed 5% of the
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value of the net assets of the Fund as of the date of purchase. In addition, the
Fund will not purchase options if more than 25% of the value of its net assets
would be hedged.
A put gives the holder the right, in return for the premium paid, to
require the writer of the put to purchase from the holder a security at a
specified price. A call gives the holder the right, in return for the premium
paid, to require the writer of the call to sell a security to the holder at a
specified price. Put and call options on various stocks and financial indices
are traded on U.S. and foreign exchanges. A put option is covered if the writer
segregates cash, U.S. Government securities or other liquid debt or equity
securities equal to the exercise price. A call option is covered if the writer
owns the security underlying the call or has an absolute and immediate right to
acquire the security without additional cash consideration upon conversion or
exchange of other securities held by it.
PUT OPTIONS. If the Fund purchases a put option, the Fund acquires the
right to sell the underlying security at a specified price at any time during
the term of the option (for "American-style" options) or on the option
expiration date (for "European-style" options). Purchasing put options may be
used as a portfolio investment strategy when the Investment Manager perceives
significant short-term risk but substantial long-term appreciation for the
underlying security. The put option acts as an "insurance policy", as it
protects against significant downward price movement while it allows full
participation in any upward movement. If the Fund is holding a security which
the Investment Manager feels has strong fundamentals, but for some reason may be
weak in the near term, the Fund may purchase a put option on such security,
thereby giving itself the right to sell such security at a certain strike price
throughout the term of the option. Consequently, the Fund will exercise the put
only if the price of such security falls below the strike price of the put. The
difference between the strike price of the put and the market price of the
underlying security on the date the Fund exercises the put, less transaction
costs, will be the amount by which the Fund will be able to hedge against a
decline in the underlying security. If during the period of the option the
market price for the underlying security remains at or above the put's strike
price, the put will expire worthless, representing a loss of the price the Fund
paid for the put, plus transaction costs. If the price of the underlying
security increases, the profit the Fund realizes on the sale of the security
will be reduced by the premium paid for the put option less any amount for which
the put may be sold.
CALL OPTIONS. If the Fund purchases a call option, it acquires the
right to purchase the underlying security at a specified price at any time
during the term of the option. The purchase of a call option is a type of
"insurance policy" to hedge against losses that could incur if the Fund intends
to purchase the underlying security and the security thereafter increases in
price. The Fund will exercise a call option only if the price of the underlying
security is above the strike price at the time of exercise. If during the option
period the market price for the underlying security remains at or below the
strike price of the call option, the option will expire worthless, representing
a loss of the price paid for the option, plus transaction costs. If the price of
the underlying security increases, the price the Fund pays for the security will
in effect be increased by the premium paid for the call.
STOCK INDEX OPTIONS. The Fund may purchase put and call options with
respect to stock indices such as the S&P Composite 500 Stock Price Index and
other stock indices. Such options may be purchased as a hedge against changes
resulting from market conditions in the values of securities which are held in
the Fund's portfolio or which it intends to purchase or sell, or when they are
economically appropriate for the reduction of risks inherent in the ongoing
management of the Fund.
The distinctive characteristics of options on stock indices create
certain risks that are not present with stock options generally. Because the
value of an index option depends upon movements in the level of the index rather
than the price of a particular stock, whether the Fund will realize a gain or
loss on the purchase or sale of an index option depends upon movements in the
level of stock prices in the stock market generally rather than movements in the
price of a particular stock. Accordingly, successful use by the Fund of options
on a stock index will be subject to the Investment Manager's ability to predict
correctly movements in the direction of the stock market generally. This
requires different skills and techniques than predicting changes in the prices
of individual stocks.
Index prices may be distorted if trading of certain stocks included in
an index is interrupted. Trading of index options also may be interrupted in
certain circumstances, such as if trading were halted in a substantial number of
stocks included in the index. If this were to occur, the Fund would not be able
to close out options which it had purchased, and if restrictions on exercise
were imposed, the Fund might be unable to exercise an option it holds, which
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could result in substantial losses to the Fund. It is the policy of the Fund to
purchase put or call options only with respect to an index which the Investment
Manager believes includes a sufficient number of stocks to minimize the
likelihood of a trading halt in the index.
DEALER OPTIONS. The Fund may engage in transactions involving dealer
options as well as exchange-traded options. Options not traded on an exchange
generally lack the liquidity of an exchange-traded option, and may be subject to
the Fund's restriction on investment in illiquid securities. In addition, dealer
options may involve the risk that the securities dealers participating in such
transactions will fail to meet their obligations under the terms of the options.
SHORT SALES
The Fund may engage in short sales transactions. A short sale that is
not made "against the box" is a transaction in which the Fund sells a security
it does not own in anticipation of a decline in market price. When the Fund
makes a short sale, the proceeds it receives are retained by the broker until
the Fund replaces the borrowed security. In order to deliver the security to the
buyer, the Fund must arrange through a broker to borrow the security and, in so
doing, the Fund becomes obligated to replace the security borrowed at its market
price at the time of replacement, whatever that price may be.
The value of securities of any issuer in which the Fund maintains a
short position that is not "against the box" may not exceed the lesser of 5% of
the value of the Fund's net assets or 5% of the securities of such class of the
issuer. The Fund's ability to enter into short sales transactions is limited by
the requirements of the Investment Company Act of 1940 (the "1940 Act").
Short sales by the Fund that are not made "against the box" create
opportunities to increase the Fund's return but, at the same time, involve
special risk considerations and may be considered a speculative technique. Since
the Fund in effect profits from a decline in the price of the securities sold
short without the need to invest the full purchase price of the securities on
the date of the short sale, the Fund's net asset value per share will tend to
increase more when the securities it has sold short decrease in value, and to
decrease more when the securities it has sold short increase in value, than
would otherwise be the case if it had not engaged in such short sales. Short
sales theoretically involve unlimited loss potential, as the market price of
securities sold short may continuously increase, although the Fund may mitigate
such losses by replacing the securities sold short before the market price has
increased significantly. Under adverse market conditions, the Fund might have
difficulty purchasing securities to meet its short sale delivery obligations,
and might have to sell portfolio securities to raise the capital necessary to
meet its short sale obligations at a time when fundamental investment
considerations would not favor such sales.
If the Fund makes a short sale "against the box," the Fund would not
immediately deliver the securities sold and would not receive the proceeds from
the sale. The seller is said to have a short position in the securities sold
until it delivers the securities sold, at which time it receives the proceeds of
the sale. The Fund's decision to make a short sale "against the box" may be a
technique to hedge against market risks when the Investment Manager believes
that the price of a security may decline, causing a decline in the value of a
security owned by the Fund or a security convertible into or exchangeable for
such security. In such case, any future losses in the Fund's long position would
be reduced by a gain in the short position.
In the view of the Securities and Exchange Commission ("SEC"), a short
sale involves the creation of a "senior security" as such term is defined in the
1940 Act, unless the sale is "against the box" and the securities sold are
placed in a segregated account (not with the broker), or unless the Fund's
obligation to deliver the securities sold short is "covered" by segregating (not
with the broker) cash, U.S. Government securities or other liquid debt or equity
securities in an amount equal to the difference between the market value of the
securities sold short at the time of the short sale and any cash or securities
required to be deposited as collateral with a broker in connection with the sale
(not including the proceeds from the short sale), which difference is adjusted
daily for changes in the value of the securities sold short. The total value of
the cash and securities deposited with the broker and otherwise segregated may
not at any time be less than the market value of the securities sold short at
the time of the short sale.
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To avoid limitations under the 1940 Act on borrowing by investment
companies, short sales by the Fund will be "against the box", or the Fund's
obligation to deliver the securities sold short will be "covered" by segregating
cash, U.S. Government securities or other liquid debt or equity securities in an
amount equal to the market value of its delivery obligation. The Fund will not
make short sales of securities or maintain a short position if doing so could
create liabilities or require collateral deposits and segregation of assets
aggregating more than 25% of the value of the Fund's total assets.
DELAYED-DELIVERY TRANSACTIONS
The Fund may purchase securities on a delayed delivery or "when issued"
basis and may enter into firm commitment agreements (transactions in which the
payment obligation and interest rate are fixed at the time of the transaction
but the settlement is delayed). Delivery and payment for these securities
typically occur 15 to 45 days after the commitment to purchase, but delivery and
payment can be scheduled for shorter or longer periods, based upon the agreement
of the buyer and the seller. No interest accrues to the purchaser during the
period before delivery. The Fund generally does not intend to enter into these
transactions for the purpose of leverage, but may sell the right to receive
delivery of the securities before the settlement date. The value of the
securities at settlement may be more or less than the agreed upon price.
The Fund will segregate cash, U.S. Government securities or other
liquid debt or equity securities in an amount sufficient to meet its payment
obligations with respect to any such transactions. To the extent that assets are
segregated for this purpose, the Fund's liquidity and the ability of the
Investment Manager to manage its portfolio may be adversely affected.
FUTURES TRANSACTIONS
The Fund may enter into futures contracts for the purchase or sale of
fixed-income securities, foreign currencies or contracts based on financial
indices, including indices of U.S. government securities, foreign government
securities, equity securities or fixed-income securities. For example, if the
Fund owns Treasury bonds and the portfolio manager expects interest rates to
increase, the Fund may take a short position in interest rate futures contracts.
Taking such a position would have much the same effect as the Fund selling
Treasury bonds in its portfolio. If interest rates increase as anticipated, the
value of the Treasury bonds would decline, but the value of the Fund's interest
rate futures contract will increase, thereby keeping the net asset value of the
Fund from declining as much as it may have otherwise. If, on the other hand, a
portfolio manager expects interest rates to decline, the Fund may take a long
position in interest rate futures contracts in anticipation of later closing out
the futures position and purchasing the bonds. Although the Fund can accomplish
similar results by buying securities with long maturities and selling securities
with short maturities, given the greater liquidity of the futures market than
the cash market, it may be possible to accomplish the same result more easily
and more quickly by using futures contracts as an investment tool to reduce
risk.
FUTURES CHARACTERISTICS. A futures contract is an agreement between two
parties (buyer and seller) to take or make delivery of an amount of cash equal
to the difference between the value of the currency, security or index at the
close of the last trading day of the contract and the price at which the
currency, security or index contract was originally written. In the case of
futures contracts traded on U.S. exchanges, the exchange itself or an affiliated
clearing corporation assumes the opposite side of each transaction (i.e., as
buyer or seller). A futures contract may be satisfied or closed out by payment
of the change in the cash value of the currency, security or index. No physical
delivery of the underlying currency, securities, or securities in the index is
made.
Unlike when the Fund purchases or sells a security, no price is paid or
received by the Fund upon the purchase or sale of a futures contract. Initially,
the Fund will be required to deposit with the Fund's custodian or such other
parties as may be authorized by the SEC (in the name of the futures commission
merchant (the "FCM")) an amount of cash or U.S. Treasury bills which is referred
to as an "initial margin" payment. The nature of initial margin in futures
transactions is different from that of margin in security transactions in that a
futures contract margin does not involve the borrowing of funds by the Fund to
finance the transactions. Rather, the initial margin is in the nature of a
performance bond or good faith deposit on the contract which is returned to the
Fund upon termination of the futures contract, assuming all
<PAGE>
contractual obligations have been satisfied. Futures contracts customarily are
purchased and sold with initial margins that may range upwards from less than 5%
of the value of the futures contract being traded. Subsequent payments, called
"variation margin", to and from the FCM, will be made on a daily basis as the
price of the underlying currency or stock index varies, making the long and
short positions in the futures contract more or less valuable. This process is
known as "marking to the market." For example, when the Fund has purchased a
currency futures contract and the price of the underlying currency has risen,
the Fund's position will have increased in value and the Fund will receive from
the FCM a variation margin payment equal to that increased value. Conversely,
when the Fund has purchased a currency futures contract and the price of the
underlying currency has declined, the position would be less valuable and the
Fund would be required to make a variation margin payment to the FCM. At any
time prior to expiration of a futures contract, the Fund may elect to close the
position by taking an identical opposite position which will operate to
terminate the Fund's position in the futures contract. A final determination of
variation margin is then made, additional cash is required to be paid by or
released to the Fund, and the Fund realizes a loss or a gain.
CHARACTERISTICS OF FUTURES OPTIONS. The Fund may also purchase call
options and put options on securities or index futures contracts ("futures
options"), and the Fund may purchase futures options on currencies. A futures
option gives the holder the right, in return for the premium paid, to assume a
long position (in the case of a call) or short position (in the case of a put)
in a futures contract at a specified exercise price prior to the expiration of
the option. Upon exercise of a call option, the holder acquires a long position
in the futures contract and the writer is assigned the opposite short position.
In the case of a put option, the opposite is true. A futures option may be
closed out (before exercise or expiration) by an offsetting purchase or sale of
a futures option of the same series.
PURCHASE OF FUTURES. The Fund may purchase a currency futures contract
when it anticipates the subsequent purchase of particular securities and has the
necessary cash, but expects the currency exchange rates then available in the
applicable market to be less favorable than rates that are currently available,
or to attempt to enhance return when it anticipates that future currency
exchange rates will be more favorable than current rates. Similarly, when the
Investment Manager anticipates a significant stock market or stock market sector
advance, the Fund may purchase a stock index futures contract which affords a
hedge against not participating in such advance at a time when the Fund is not
fully invested in equity securities. Such purchase of a futures contract would
serve as a temporary substitute for the purchase of individual stocks which may
later be purchased (with attendant costs) in an orderly fashion. As such
purchase of individual stocks are made, an approximately equivalent amount of
stock index futures would be terminated by offsetting sales.
SALE OF FUTURES. The Fund may sell a currency futures contract to hedge
against an anticipated decline in foreign currency rates that would adversely
affect the dollar value of the Fund's portfolio securities denominated in such
currency, or may sell a currency futures contract in one currency to hedge
against fluctuations in the value of securities denominated in a different
currency if there is an established historical pattern or correlation between
the two currencies. Similarly, the Fund may sell stock index futures contracts
in anticipation of or during a general stock market or market sector decline
that may adversely affect the market values of the Fund's portfolio of equity
securities. To the extent that the Fund's portfolio of equity securities changes
in value in correlation with a given stock index, the sale of futures contracts
on that index would reduce the risk to the portfolio of a market decline and, by
doing so, would provide an alternative to the liquidation of securities
positions in the portfolio with resultant transaction costs.
PURCHASE OF PUT OPTIONS ON FUTURES. The purchase of a put option on a
currency, financial or index futures contract is analogous to the purchase of a
put on individual stocks, where an absolute level of protection from price
fluctuation is sought below which no additional economic loss would be incurred
by the Fund. For example, put options on futures may be purchased to hedge a
portfolio of stocks or a position in the futures contract upon which the put
option is based against a possible decline in market value. The purchase of a
put option on a currency futures contract can be used to hedge against
unfavorable movements in currency exchange rates, or to attempt to enhance
returns in contemplation of movements in such rates.
PURCHASE OF CALL OPTIONS ON FUTURES. The purchase of a call option on a
currency, financial or index futures contract represents a means of obtaining
temporary exposure to favorable currency exchange rate or interest rate
movements or temporary exposure to market appreciation with risk limited to the
premium paid for the call option. It is analogous to the purchase of a call
option on an individual security or index, which can be used as a substitute for
a
<PAGE>
position in the security or index itself. Depending on the pricing of the
option compared to either the futures contract upon which it is based, or to the
price of the underlying currency, security or index itself, the call option may
be less risky, because losses are limited to the premium paid for the call
option, when compared to the ownership of the underlying currency, security or
index futures contract. Like the purchase of a currency, financial or index
futures contract, the Fund would purchase a call option on a currency, financial
or index futures contract to hedge against an unfavorable movement in exchange
rates, interest rates or securities prices.
LIMITATIONS ON PURCHASE AND SALE OF FUTURES AND FUTURES OPTIONS. The
Fund may not purchase or sell futures contracts or purchase futures options if,
immediately thereafter, more than 30% of the value of its net assets would be
hedged. In addition, the Fund may not purchase or sell futures or purchase
futures options if, immediately thereafter, the sum of the amount of margin
deposits on the Fund's existing futures positions and premiums paid for futures
options would exceed 5% of the market value of the Fund's total assets. In Fund
transactions involving futures contracts, to the extent required by applicable
SEC guidelines, an amount of cash, U.S. Government securities, or other liquid
debt or equity securities equal to the market value of the futures contracts
will be segregated with the Fund's Custodian, or in other segregated accounts as
regulations may allow, to collateralize the position and thereby to insure that
the use of such futures is unleveraged.
REGULATORY MATTERS. The Company has filed a claim of exemption from
registration of the Fund as a commodity pool with the Commodity Futures Trading
Commission (the "CFTC"). The Fund intends to conduct its futures trading
activity in a manner consistent with that exemption. The Investment Manager is
registered with the CFTC as both a commodity pool operator and as a commodity
trading advisor.
DEBT SECURITIES
Under normal market conditions, the Fund may invest up to 10% of its
total assets in short-term debt obligations (with maturities of one year or
less) issued or guaranteed by the U.S. Government or foreign governments
(including their respective agencies, instrumentalities, authorities and
political subdivisions), debt obligations issued or guaranteed by international
or supranational governmental entities, and debt obligations of corporate
issuers. Such debt obligations will be rated, at the time of purchase,
investment grade by Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. ("Standard & Poor's"), Moody's Investors Service ("Moody's"), or another
recognized rating organization, or if unrated will be determined by the
Investment Manager to be of comparable investment quality. Investment grade
means the issuer of the security is believed to have adequate capacity to pay
interest and repay principal, although certain of such securities in the lower
grades have speculative characteristics, and changes in economic conditions or
other circumstances may be more likely to lead to a weakened capacity to pay
interest and principal than would be the case with higher-rated securities.
Although securities rated BBB by Standard & Poor's or Baa by Moody's
are considered to be of "investment grade," and are considered to have adequate
capacity to pay interest and repay principal, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and principal than higher-rated securities. Credit ratings evaluate the
safetly of principal and interest payments of securities, not their market
value. The rating of an issuer is also heavily weighted by past developments and
dies not necessarily reflect probable future conditions. There is frequently a
lag between the time a rating is assigned and the time it is updated.
The timing of purchase and sale transactions in debt obligations may
result in capital appreciation or depreciation because the value of a debt
obligation generally varies inversely with prevailing interest rates.
RATINGS. Credit ratings evaluate the safety of principal and interest
payments of securities, not their market value. The rating of an issuer is also
heavily weighted by past developments and does not necessarily reflect probable
future conditions. There is frequently a lag between the time a rating is
assigned and the time it is updated. As credit rating agencies may fail to
timely change credit ratings of securities to reflect subsequent events, the
Investment Manager will also monitor issuers of such securities to determine if
such issuers will have sufficient cash flow and profits to meet required
principal and interest payments and to assure their liquidity. In general, debt
securities held by the Fund will be treated as investment grade if they are
rated by at least one major rating agency
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in one of its top four rating categories at the time of purchase or, if unrated,
are determined by the Investment Manager to be of comparable quality. Investment
grade means the isseur of the security is believed to have adequate capacity to
pay interest and repay principal, although certain of such securities in the
lower grades have speculative characteristics, and changes in economic
conditions or other circumstances may be more likely to lead to a weakened
capacity to pay interest and principal than would be the case with higher rated
securities. If the rating of an investment grade security held by the Fund is
downgraded, the Investment Manager will determine whether it is in the best
interests of the Fund to continue to hold the security in its investment
portfolio.
GOVERNMENT OBLIGATIONS. U.S. Government obligations include obligations
issued or guaranteed as to principal and interest by the U.S. Government and its
agencies and instrumentalities, by the right of the issuer to borrow from the
U.S. Treasury, by the discretionary authority of the U.S. Government to purchase
certain obligations of the agency or instrumentality, or only by the credit of
the agency or instrumentality. No assurance can be given that the U.S.
Government will provide financial support to U.S. Government -sponsored
instrumentalities if it is not obligated to do so by law.
The Fund may invest in sovereign debt obligations of foreign countries.
A number of factors affect a sovereign debtor's willingness or ability to repay
principal and interest in a timely manner, including its cash flow situation,
the extent of its foreign reserves, the availability of sufficient foreign
exchange on the date a payment is due, the relative size of the debt service
burden to the economy as a whole, the sovereign debtor's policy toward principal
international lenders and the political constraints to which it may be subject.
Emerging market governments could default on their sovereign debt. The
commitments son the part of these governments, agencies and others to make such
disbursements may be conditioned on a sovereign debtor's implementation of
economic reforms and/or economic performance and the timely service of such
debtor's obligations. Failure to meet such conditions could result in the
cancellation of such third parties' commitments to lend funds to the sovereign
debtor, which may further impair such debtor's ability or willingness to service
its debt in a timely manner.
CONVERTIBLE SECURITIES AND WARRANTS
The Fund may invest in convertible securities and warrants. The value
of a convertible security is a function of its "investment value" (determined by
its yield in comparison with the yields of other securities of comparable
maturity and quality that do not have conversion privilege) and its "conversion
value" (the security's worth, at market value, if converted into the underlying
common stock). The credit standing of the issuer and other factors may also
affect the investment value of a convertible security. The conversion value of a
convertible security is determined by the market price of the underlying common
stock. If the conversion value is low relative to the investment value, the
price of the convertible security is governed principally by its investment
value. To the extent the market price of the underlying common stock approaches
or exceeds the conversion price, the price of the convertible security will be
increasingly influenced by its conversion value.
As a matter of operating policy, the Fund will not invest more than 5%
of its net assets in warrants. A warrant gives the holder a right to purchase at
any time during a specified period a predetermined number of shares of common
stock at a fixed price. Unlike convertible debt, securities or preferred stock,
warrants do not pay a fixed dividend. Investments in warrants involve certain
risks, including the possible lack of a liquid market for resale of the
warrants, potential price fluctuations as a result of speculation or other
factors, and failure of the price of the underlying security to reach or have
reasonable prospects of reaching a level at which the warrant can be prudently
exercised (in which event the warrant may expire without being exercised)
resulting in a loss of the Fund's entire investment therein.
SYNTHETIC CONVERTIBLE SECURITIES
The Fund may invest in "synthetic" convertible securities, which are
derivative positions composed of two or more different securities whose
investment characteristics, taken together, resemble those of convertible
securities. For example, the Fund may purchase a non-convertible debt security
and a warrant or option, which enables the Fund to have a convertible-like
position with respect to a company, group of companies or stock index. Synthetic
convertible securities are typically offered by financial institutions and
investment banks in private placement transactions. Upon
<PAGE>
conversion, the Fund generally receives an amount in cash equal to the
difference between the conversion price and the then current value of the
underlying security. Unlike a true convertible security, a synthetic convertible
comprises two or more separate securities, each with its own market value.
Therefore, the market value of a synthetic convertible is the sum of the values
of its fixed-income component and its convertible component. For this reason,
the values of a synthetic convertible and a true convertible security may
respond differently to market fluctuations. The Fund only invests in synthetic
convertibles with respect to companies whose corporate debt securities are rated
"A" or higher by Moody's or Standard & Poor's and will not invest more than 15%
of its net assets in such synthetic securities and other illiquid securities.
PREFERRED STOCK
The Fund may purchase preferred stock. Preferred stock, unlike common
stock, offers a stated dividend rate payable from a corporation's earnings. Such
preferred stock dividends may be cumulative or non-cumulative, participating, or
auction rate. If interest rates rise, the fixed dividend on preferred stocks may
be less attractive, causing the price of preferred stocks to decline. Preferred
stock may have mandatory sinking fund provisions, as well as call/redemption
provisions prior to maturity, a negative feature when interest rates decline.
Dividends on some preferred stock may be "cumulative," requiring all or a
portion of prior unpaid dividends to be paid prior to payment of dividends on
the issuer's common stock. Preferred stock also generally has a preference over
common stock on the distribution of a corporation's assets in the event of
liquidation of the corporation, and may be "participating," which means that it
may be entitled to a dividend exceeding the stated dividend in certain cases.
The rights of the holders of preferred stock on the distribution of a
corporation's assets in the event of a liquidation are generally subordinate to
the rights associated with a corporation's debt securities.
BORROWING MONEY
From time to time, it may be advantageous for the Fund to borrow money
rather than sell portfolio securities to raise the cash to meet redemption
requests. In order to meet such redemption requests, The Fund may borrow from
banks or enter into reverse repurchase agreements. The Fund may also borrow up
to 5% of the value of its total assets for temporary or emergency purposes other
than to meet redemptions. However, the Fund will not borrow money for leveraging
purposes. The Fund may continue to purchase securities while borrowings are
outstanding, but will not do so when the Fund's borrowings (including reverse
repurchase agreements) exceed 5% of the value of its total assets. The 1940 Act
permits the Fund to borrow only from banks and only to the extent that the value
of its total assets, less its liabilities other than borrowings, is equal to at
least 300% of all borrowings (including the proposed borrowing), and requires
the Fund to take prompt action to reduce its borrowings if this limit is
exceeded. For the purpose of the 300% borrowing limitation, reverse repurchase
transactions are considered to be borrowings.
A reverse repurchase agreement involves a transaction by which a
borrower (such as the Fund) sells a security to a purchaser (a member bank of
the Federal Reserve System or a broker-dealer deemed creditworthy pursuant to
standards adopted by the Board of Directors, and simultaneously agrees to
repurchase the security at an agreed-upon price on an agreed-upon date within a
number of days (usually not more than seven) from the date of purchase.
LENDING PORTFOLIO SECURITIES
The Fund is authorized to make loans of portfolio securities, for the
purpose of realizing additional income, to broker-dealers or other institutional
investors deemed creditworthy pursuant to standards adopted by the Board of
Directors. The borrower must maintain with the Fund's custodian collateral
consisting of cash, U.S. Government securities or other liquid debt or equity
securities equal to at least 100% of the value of the borrowed securities, plus
any accrued interest. The Fund will receive any interest paid on the loaned
securities, and a fee and/or a portion of the interest earned on the collateral,
less any fees and administrative expenses associated with the loan.
<PAGE>
INVESTMENT IN ILLIQUID SECURITIES
The Fund may invest up to 15% of the value of its net assets in
illiquid securities. Securities may be considered illiquid if the Fund cannot
reasonably expect to receive approximately the amount at which the Fund values
such securities within seven days. The Investment Manager has the authority to
determine whether certain securities held by the Fund are liquid or illiquid
pursuant to standards adopted by the Board of Directors.
The Investment Manager takes into account a number of factors in
reaching liquidity decisions, including, but not limited to: the listing of the
security on an exchange or national market system; the frequency of trading in
the security; the number of dealers who publish quotes for the security; the
number of dealers who serve as market makers for the security; the apparent
number of other potential purchasers; and the nature of the security and how
trading is effected (e.g., the time needed to sell the security, how offers are
solicited, and the mechanics of transfer).
The Fund's investments in illiquid securities may include securities
that are not registered for resale under the Securities Act of 1933 (the
"Securities Act"), and therefore are subject to restrictions on resale. When the
Fund purchases unregistered securities, it may, in appropriate circumstances,
obtain the right to register such securities at the expense of the issuer. In
such cases there may be a lapse of time between the Fund's decision to sell any
such security and the registration of the security permitting sale. During any
such period, the price of the security will be subject to market fluctuations.
The fact that there are contractual or legal restrictions on resale of
certain securities to the general public or to certain institutions may not be
indicative of the liquidity of such investments. If such securities are subject
to purchase by institutional buyers in accordance with Rule 144A under the
Securities Act, the Investment Manager may determine in particular cases,
pursuant to standards adopted by the Board of Directors, that such securities
are not illiquid securities notwithstanding the legal or contractual
restrictions on their resale. Investing in Rule 144A securities could have the
effect of increasing the Fund's illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing such
securities.
CASH-EQUIVALENT INSTRUMENTS
Other than as described under INVESTMENT RESTRICTIONS below, the Fund
is not restricted with regard to the types of cash-equivalent investments it may
make. When the Investment Manager believes that such investments are an
appropriate part of the Fund's overall investment strategy, the Fund may hold or
invest, for investment purposes, a portion of its assets in any of the
following, denominated in U.S. dollars, foreign currencies, or multinational
currencies: cash; short-term U.S. or foreign government securities; commercial
paper rated at least A-2 by Standard & Poor's or P-2 by Moody's certificates of
deposit or other deposits of banks deemed creditworthy by the Investment Manager
pursuant to standards adopted by the Board of Directors; time deposits; bankers'
acceptances; and repurchase agreements related to any of the foregoing. In
addition, for temporary defensive purposes under abnormal market or economic
conditions, the Fund may invest up to 100% of its assets in such cash-equivalent
investments.
A certificate of deposit is a short-term obligation of a commercial
bank. A bankers' acceptance is a time draft drawn on a commercial bank by a
borrower, usually in connection with international commercial transactions. A
repurchase agreement involves a transaction by which an investor (such as the
Fund) purchases a security and simultaneously obtains the commitment of the
seller (a member bank of the Federal Reserve System or a securities dealer
deemed creditworthy by the Investment Manager pursuant to standards adopted by
the Board of Directors) to repurchase the security at an agreed-upon price on an
agreed-upon date within a number of days (usually not more than seven) from the
date of purchase.
PORTFOLIO TURNOVER
Securities in the Fund's portfolio will be sold whenever the Investment
Manager believes it is appropriate to do so, regardless of the length of time
that securities have been held, and securities may be purchased or sold for
short-term profits whenever the Investment Manager believes it is appropriate or
desirable to do so. Turnover will be
<PAGE>
influenced by sound investment practices, the Fund's investment objective, and
the need for funds for the redemption of the Fund's shares,
For example, a 100% portfolio turnover rate would occur if the value of
purchases or sales of portfolio securities (whichever is less) by the Fund for a
year (excluding purchases of U.S. Treasury issues and securities with a maturity
of one year or less) were equal to 100% of the average monthly value of the
securities held by the Fund during such year. As a result of the manner in which
turnover is measured, a high turnover rate could also occur during the first
year of the Fund's operations, and during periods when the Fund's assets are
growing or shrinking. A high portfolio turnover rate would increase the Fund's
brokerage commission expenses and other transaction costs, and may increase its
taxable captial gains.
INVESTMENT AND RISK CONSIDERATIONS
INVESTMENTS IN FOREIGN SECURITIES GENERALLY
Investments in foreign securities may offer investment opportunities
and potential benefits not available from investments solely in securities of
U.S. issuers. Such benefits may include higher rates of interest on debt
securities than are available from domestic issuers, the opportunity to invest
in foreign issuers that appear, in the opinion of the Investment Manager, to
offer better opportunity for long-term capital appreciation than investments in
securities of U.S. issuers, the opportunity to invest in foreign countries with
economic policies or business cycles different from those of the United States
and the opportunity to reduce fluctuations in portfolio value by taking
advantage of foreign markets that do not necessarily move in a manner parallel
to U.S. stock markets.
At the same time, however, investing in foreign securities involves
significant risks, some of which are not typically associated with investing in
securities of U.S. issuers. For example, the value of investments in such
securities may fluctuate based on changes in the value of one or more foreign
currencies relative to the U.S. dollar, and a change in the exchange rate of one
or more foreign currencies could reduce the value of certain portfolio
securities. Currency exchange rates may fluctuate significantly over short
periods of time, and are generally determined by the forces of supply and demand
and other factors beyond the Fund's control. Changes in currency exchange rates
may, in some circumstances, have a greater effect on the market value of a
security than changes in the market price of the security. To the extent that a
substantial portion of the Fund's total assets is denominated or quoted in the
currency of a foreign country, the Fund will be more susceptible to the risk of
adverse economic and political developments within that country. As discussed
above, the Fund may employ certain investment techniques to hedge its foreign
currency exposure; however, such techniques also entail certain risks.
In addition, information about foreign issuers may be less readily
available than information about domestic issuers. Foreign issuers generally are
not subject to accounting, auditing, and financial reporting standards or to
other regulatory practices and requirements comparable to those applicable to
U.S. issuers. Furthermore, with respect to certain foreign countries, the
possibility exists of expropriation, nationalization, revaluation of currencies,
confiscatory taxation, and limitations on foreign investment and the use or
removal of funds or other assets of the Fund, including the withholding of tax
on interest, dividends and other distributions and limitations on the
repatriation of currencies. In addition, the Fund may experience difficulties or
delays in obtaining or enforcing judgments. Foreign securities may be subject to
foreign government taxes that could reduce the yield and total return on such
securities.
Foreign equity securities may be traded on an exchange in the issuer's
country, an exchange in another country, or over-the-counter in one or more
countries. Most foreign securities markets, including over-the-counter markets,
have substantially less volume than U.S. securities markets, and the securities
of many foreign issuers may be less liquid and more volatile than securities of
comparable U.S. issuers. In addition, there is generally less government
regulation of securities markets, securities exchanges, securities dealers, and
listed and unlisted companies in foreign countries than in the United States.
<PAGE>
Foreign markets also have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct and complete such transactions. Inability to dispose of a
portfolio security caused by settlement problems could result either in losses
to the Fund due to subsequent declines in the value of the portfolio security
or, if the Fund has entered into a contract to sell that security, could result
in possible liability of the Fund to the purchaser. Delays in settlement could
adversely affect the Fund's ability to implement its investment strategies and
to achieve its investment objectives.
In addition, the costs associated with transactions in securities
traded on foreign markets or of foreign issuers, and the expense of maintaining
custody of such securities with foreign custodians, generally are higher than
the costs associated with transactions in U.S. securities on U.S. markets.
Investments in foreign securities may result in higher expenses due to the cost
of converting foreign currency to U.S. dollars, the payment of fixed brokerage
commissions on foreign exchanges, the expense of maintaining securities with
foreign custodians and the imposition of transfer taxes or transaction charges
associated with foreign exchanges.
Investment in debt securities of supranational organizations involves
additional risks. Such organizations' debt securities generally are not
guaranteed by their member governments, and payment depends on their financial
solvency and/or the willingness and ability of their member governments to
support their obligations. Continued support of a supranational organization by
its government members is subject to a variety of political, economic and other
factors, as well as the financial performance of the organization.
DEPOSITARY RECEIPTS
In many respects, the risks associated with investing in depositary
receipts are similar to the risks associated with investing in foreign equity
securities directly. In addition, to the extent that the Fund acquires
depositary receipts through banks that do not have a contractual relationship
with the foreign issuer of the security underlying the depositary receipts to
issue and service depositary receipts, there may be an increased possibility
that the Fund would not become aware of and be able to respond to corporate
actions, such as stock splits or rights offerings, involving the foreign issuer
in a timely manner.
The information available for American Depositary Receipts ("ADRs")
sponsored by the issuers of the underlying securities is subject to the
accounting, auditing, and financial reporting standards of the domestic market
or exchange on which they are traded, which standards generally are more uniform
and more exacting than those to which many non-domestic issuers may be subject.
However, some ADRs are sponsored by persons other than the issuers of the
underlying securities. Issuers of the stock on which such ADRs are based are not
obligated to disclose material information in the United States. The information
that is available concerning the issuers of the securities underlying European
Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs") may be less
than the information that is available about domestic issuers, and EDRs and GDRs
may be traded in markets or on exchanges that have lesser standards than those
applicable to the markets for ADRs.
A depositary receipt will be treated as an illiquid security for
purposes of the Fund's restriction on the purchases of such securities unless
the depositary receipt is convertible into cash by the Fund within seven days.
INVESTMENTS IN SMALLER COMPANIES
Investment in the securities of companies with market capitalizations
below $1 billion involves greater risk and the possibility of greater portfolio
price volatility than investing in larger capitalization companies. The
securities of small-sized concerns, as a class, have shown market behavior which
has had periods of more favorable results, and periods of less favorable
results, relative to securities of larger companies as a class. For example,
smaller capitalization companies may have less certain growth prospects, and may
be more sensitive to changing economic conditions, than large, more established
companies. Moreover, smaller capitalization companies often face competition
from larger or more established companies that have greater resources. In
addition, the smaller capitalization companies in which the Fund may invest may
have limited or unprofitable operating histories, limited financial resources,
and inexperienced
<PAGE>
management. Furthermore, securities of such companies are often less liquid than
securities of larger companies, and may be subject to erratic or abrupt price
movements. To dispose of these securities, the Fund may have to sell them over
an extended period of time below the original purchase price. Investments in
smaller capitalization companies may be regarded as speculative.
Securities issued by companies (including predecessors) that have
operated for less than three years may have limited liquidity, which can result
in their prices being lower than might otherwise be the case. In addition,
investments in such companies are more speculative and entail greater risk than
do investments in companies with established operating records.
CONVERTIBLE SECURITIES
Investment in convertible securities involves certain risks. The value
of a convertible security is a function of its "investment value" (determined by
its yield in comparison with the yields of other securities of comparable
maturity and quality that do not have a conversion privilege) and its
"conversion value" (the security's worth, at market value, if converted into the
underlying stock). If the conversion value is low relative to the investment
value, the price of the convertible security will be governed principally by its
yield, and thus may not decline in price to the same extent as the underlying
stock; to the extent the market price of the underlying common stock approaches
or exceeds the conversion price, the price of the convertible security will be
influenced increasingly by its conversion value. A convertible security held by
the Fund may be subject to redemption at the option of the issuer at a price
established in the instrument governing the convertible security, in which event
the Fund will be required to permit the issuer to redeem the security, convert
it into the underlying common stock, or sell it to a third party.
DELAYED-DELIVERY TRANSACTIONS
The Fund may buy and sell securities on a delayed-delivery or
when-issued basis. These transactions involve a commitment by the Fund to
purchase or sell specific securities at a predetermined price and/or yield, with
payment and delivery taking place after the customary settlement period for that
type of security (and more than seven days in the future). Typically, no
interest accrues to the purchaser until the security is delivered. The Fund may
receive fees for entering into delayed-delivery transactions. When purchasing
securities on a delayed-delivery basis, the Fund assumes the rights and risks of
ownership, including the risk of price and yield fluctuations. Because the Fund
is not required to pay for securities until the delivery date, these risks are
in addition to the risks associated with the Fund's other investments. If the
Fund remains substantially fully invested at a time when delayed-delivery
purchases are outstanding, the delayed-delivery purchases may result in a form
of leverage. When delayed-delivery purchases are outstanding, the Fund will set
aside appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When the Fund has sold a security on a delayed-delivery
basis, the Fund does not participate in further gains or losses with respect to
the security. If the other party to a delayed-delivery transaction fails to
deliver or pay for the securities, the Fund could miss a favorable price or
yield opportunity, or could suffer a loss. The Fund may dispose of or
renegotiate delayed-delivery transactions after they are entered into, and may
sell underlying securities before they are delivered, which may result in
capital gains or losses.
OPTIONS
There are several risks associated with transactions in options on
securities, currencies and financial indices. Options may be more volatile than
the underlying instruments, and therefore, on a percentage basis, an investment
in options may be subject to greater fluctuation than an investment in the
underlying instruments themselves. There are also significant differences
between the securities and options markets that could result in an imperfect
correlation between these markets, causing a given transaction not to achieve
its objective. In addition, a liquid secondary market for particular options may
be absent for reasons which include the following: there may be insufficient
trading interest in certain options; restrictions may be imposed by an exchange
on opening transactions or closing transactions or both; trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options or underlying instruments; unusual or unforeseen
circumstances may interrupt normal operations on an exchange; the
<PAGE>
facilities of an exchange or clearing corporation may not at all times be
adequate to handle current trading volume; or one or more exchanges could, for
economic or other reasons, decide, or be compelled at some future date, to
discontinue the trading of options (or a particular class or series of options),
in which event the secondary market on that exchange (or in that class or series
of options) would cease to exist, although outstanding options that had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms.
A decision as to whether, when and how to use options involves the
exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or unexpected events.
In addition, when trading options on foreign exchanges, many of the
protections afforded to participants in U.S. option exchanges will not be
available. For example, there may be no daily price fluctuation limits in such
exchanges or markets, and adverse market movements could therefore continue to
an unlimited extent over a period of time. Although the purchaser of an option
cannot lose more than the amount of the premium plus related transaction costs,
this entire amount could be lost.
Potential losses to the writer of an option are not limited to the loss
of the option premium received by the writer, and thus may be greater than the
losses incurred in connection with the purchasing of an option.
FUTURES TRANSACTIONS
There are several risks in connection with the use of futures contracts
in the Fund. One risk arises because the correlation between movements in the
price of a futures contract and movements in the price of the security or
currency which is the subject of the hedge is not always perfect. The price of
the futures contract acquired by the Fund may move more than, or less than, the
price of the security or currency being hedged. If the price of the future moves
less than the price of the security or currency which is the subject of the
hedge, the hedge will not be fully effective but, if the price of the security
or currency being hedged has moved in an unfavorable direction, the Fund would
be in a better position than if it had not hedged at all. If the price of the
security or currency being hedged has moved in a favorable direction, this
advantage will be partially offset by movement in the value of the future. If
the price of the futures contract moves more than the price of the security or
currency, the Fund will experience either a loss or a gain on the futures
contract which will not be completely offset by movements in the price of the
security or currency which is the subject of the hedge.
To compensate for the imperfect correlation of movements in the price
of a security or currency being hedged and movements in the price of the
futures, the Fund may buy or sell futures contracts in a greater dollar amount
than the dollar amount of the security or currency being hedged, if the
historical volatility of the price of such security or currency has been greater
than the historical volatility of the security or currency. Conversely, the Fund
may buy or sell fewer futures contracts if the historical volatility of the
price of the security or currency being hedged is less than the historical
volatility of the security or currency.
Because of the low margins required, futures trading involves a high
degree of leverage. As a result, a relatively small investment in a futures
contract by the Fund may result in immediate and substantial loss, or gain, to
the Fund. A purchase or sale of a futures contract may result in losses in
excess of the initial margin for the futures contract. However, the Fund would
have sustained comparable losses if, instead of the futures contract, it had
invested in the underlying financial instrument and sold the instrument after
the decline.
When futures are purchased by the Fund to hedge against a possible
unfavorable movement in a currency exchange rate before the Fund is able to
invest its cash (or cash equivalents) in stock or debt instruments in an orderly
fashion, it is possible that the currency exchange rate may move in a favorable
manner instead. If the Fund then decides not to invest in stock or debt
instruments at that time because of concern as to possible further market
decline or for other reasons, the Fund will realize a loss on the futures
contract that is not offset by a reduction in the price of securities purchased.
<PAGE>
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the futures and the
security or currency which is the subject of a hedge, the price of futures
contracts may not correlate perfectly with movements in the index or currency
due to certain market distortions. First, all participants in the futures market
are subject to margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through offsetting transactions. This practice could distort the normal
relationship between the index or currency and futures markets. Second, from the
point of view of speculators, the deposit requirements in the futures market may
be less onerous than margin requirements in the security or currency market.
Therefore, increased participation by speculators in the futures market also may
cause temporary price distortions. Due to the possibility of price distortion in
the futures market and because of the imperfect correlation between movements in
the index or currency and movements in the price of index or currency futures, a
correct forecast of general market or currency trends by the Investment Manager
still may not result in a successful hedging transaction over a short time
frame.
Futures exchanges may limit the amount of fluctuation permitted in
certain futures contract prices during a single trading day. Once the daily
limit has been reached, no more trades may be made on that day at a price beyond
the limit. The daily limit governs only price movements during a particular
trading day and therefore does not limit potential losses, because the limit may
prevent the liquidation of unfavorable positions.
Compared to the use of a futures contract, the purchase of an option on
a futures contract involves less potential risk to the Fund because the maximum
amount at risk is the premium paid for the option (plus transaction costs).
However, there may be circumstances when the use of an option on a futures
contract would result in loss to the Fund when the use of a futures contract
would not, such as when there is no movement in the level of an index. In
addition, daily changes in the value of the option due to changes in the value
of the underlying futures contract are reflected in the net asset value of the
Fund.
The Fund will only enter into futures contracts or purchase futures
options that are standardized and traded on a U.S. or foreign exchange or board
of trade, or similar entity, or quoted on an automated quotation system.
However, there is no assurance that a liquid secondary market on an exchange or
board of trade will exist for any particular futures contract or futures option
or at any particular time. In such event, it may not be possible to close a
futures position, and, in the event of adverse price movements, the Fund would
continue to be required to make daily cash payments of variation margin. In the
event futures contracts have been used to hedge a portfolio security or
currency, an increase in the price of the security or currency, if any, may
partially or completely offset losses on the futures contract. However, as
described above, there is no guarantee that the price of the security or
currency will, in fact, correlate with the movements in the futures contract and
thus provide an offset to losses on a futures contract.
Successful use of futures by the Fund is subject to the Investment
Manager's ability to predict correctly movements in the direction of the
security and currency markets. For example, if the Fund hedged against the
possibility of a decline in the market adversely affecting stocks held in its
portfolio and stock prices increased instead, the Fund would lose part or all of
the benefit of the increased value of its stocks which it hedged because it
would have offsetting losses in its futures positions. In addition, in such
situations, if the Fund had insufficient cash, it might have to sell securities
to meet daily variation margin requirements. Such sales of securities might, but
would not necessarily be at increased prices which would reflect the rising
market. Similarly, if the Fund purchased currency futures contracts with the
intention of profiting from a favorable change in currency exchange rates, and
the change was unfavorable, the Fund would incur a loss, and might have to sell
securities to meet daily variation margin requirements at a time when it might
be disadvantageous to do so. The Investment Manager and its predecessor have
been actively engaged in the provision of investment supervisory services for
institutional and individual accounts since 1970, but the skills required for
the successful use of futures and options on futures are different from those
needed to select portfolio securities, and the Investment Manager has limited
prior experience in the use of futures or options techniques in the management
of assets under its supervision.
<PAGE>
OTHER RISK CONSIDERATIONS
Investment in illiquid securities involves potential delays on resale
as well as uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of portfolio securities, and the Fund might not be
able to dispose of such securities promptly or at reasonable prices.
A number of transactions in which the Fund may engage are subject to
the risks of default by the other party to the transaction. If the seller of
securities pursuant to a repurchase agreement entered into by the Fund defaults
and the value of the collateral securing the repurchase agreement declines, the
Fund may incur a loss. If bankruptcy proceedings are commenced with respect to
the seller, realization of the collateral by the Fund may be delayed or limited.
Similarly, when the Fund engages in when-issued, reverse repurchase, forward
commitment and related settlement transactions, it relies on the other party to
consummate the trade; failure of the other party to do so may result in the Fund
incurring a loss or missing an opportunity to obtain a price the Investment
Manager believed to be advantageous. The risks in lending portfolio securities,
as with other extensions of secured credit, consist of a possible delay in
receiving additional collateral or in recovery of the securities or possible
loss of rights in the collateral should the borrower fail financially.
Borrowing also involves special risk considerations. Interest costs of
borrowings may fluctuate with changing market rates of interest and may
partially offset or exceed the return earned on the borrowed funds (or on the
assets that were retained rather than sold to meet the needs for which funds
were borrowed). Under adverse market conditions, the Fund might have to sell
portfolio securities to meet interest or principal payments at a time when
fundamental investment considerations would not favor such sales. To the extent
the Fund enters into reverse repurchase agreements, the Fund is subject to risks
that are similar to those of borrowing.
INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES
The Fund has adopted certain investment restrictions that are
fundamental policies and that may not be changed without approval by the vote of
a majority of the Fund's outstanding voting securities, as defined in the 1940
Act. The "vote of a majority of the outstanding voting securities" of the Fund,
as defined in Section 2(a)(42) of the 1940 Act, means the vote of (i) 67% or
more of the voting securities of the Fund present at any meeting, if the holders
of more than 50% of the outstanding voting securities of the Fund are present or
represented by proxy, or (ii) more than 50% of the outstanding voting securities
of the Fund, whichever is less. These restrictions provide that the Fund may
not:
1. Invest more than 25% of the value of its total assets in the securities
of companies primarily engaged in any one industry (other than the
United States of America, its agencies and instrumentalities)
2. Acquire more than 10% of the outstanding voting securities of any one
issuer.
3. Invest in companies for the purpose of exercising control or
management.
4. Borrow money, except from banks to meet redemption requests or for
temporary or emergency purposes; provided that borrowings for temporary
or emergency purposes other than to meet redemption requests shall not
exceed 5% of the value of its total assets; and provided further that
total borrowings shall be made only to the extent that the value of the
Fund's total assets, less its liabilities other than borrowings, is
equal to at least 300% of all borrowings (including the proposed
borrowing). For purposes of the foregoing limitations, reverse
repurchase agreements and other borrowing transactions covered by
segregated assets are considered to be borrowings. The Fund will not
mortgage, pledge, hypothecate, or in any other manner transfer as
security for an indebtedness any of its assets. This investment
restriction shall not prohibit the Fund from engaging in
<PAGE>
futures contracts, options on futures contracts, forward foreign
currency exchange transactions, and currency options.
5. Purchase securities on margin, but it may obtain such short-term credit
from banks as may be necessary for the clearance of purchases and sales
of securities.
6. Make loans of its funds or assets to any other person, which shall not
be considered as including: (i) the purchase of a portion of an issue
of publicly distributed debt securities, (ii) the purchase of bank
obligations such as certificates of deposit, bankers' acceptances and
other short-term debt obligations, (iii) entering into repurchase
agreements with respect to commercial paper, certificates of deposit
and obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, and (iv) the loan of portfolio
securities to brokers, dealers and other financial institutions where
such loan is callable by the Fund at any time on reasonable notice and
is fully secured by collateral in the form of cash or cash equivalents.
The Fund will not enter into repurchase agreements with maturities in
excess of seven days if immediately after and as a result of such
transaction the value of the Fund's holdings of such repurchase
agreements exceeds 10% of the value of the Fund's total assets.
7. Act as an underwriter of securities issued by other persons, except
insofar as it may be deemed an underwriter under the Securities Act of
1933 in selling portfolio securities.
8. Purchase the securities of any other investment company or investment
trust, except by purchase in the open market where, to the best
information of the Company, no commission or profit to a sponsor or
dealer (other than the customary broker's commission) results from such
purchase and such purchase does not result in such securities exceeding
10% of the value of the Fund's total assets, or except when such
purchase is part of a merger, consolidation, acquisition of assets, or
other reorganization approved by the Fund's stockholders.
9. Purchase portfolio securities from or sell portfolio securities to the
officers, directors, or other "interested persons" (as defined in the
1940 Act) of the Company, other than unaffiliated broker-dealers.
10. Purchase commodities or commodity contracts, except that the Fund may
purchase securities of an issuer which invests or deals in commodities
or commodity contracts, and except that the Fund may enter into futures
and options contracts in accordance with the applicable rules of the
CFTC.
11. Issue senior securities, except that the Fund may borrow money as
permitted by restriction 4 above. This restriction shall not prohibit
the Fund from engaging in short sales, options, futures and foreign
currency transactions.
12. Purchase or sell real estate; provided that the Fund may invest in
readily marketable securities secured by real estate or interests
therein or issued by companies which invest in real estate or interests
therein.
OPERATING POLICIES
The Fund has adopted certain investment restrictions that are not
fundamental policies and may be changed by the Board of Directors without
approval of the Fund's outstanding voting securities. These restrictions provide
that the Fund may not:
1. Invest in interests in oil, gas, or other mineral exploration or
development programs.
2. Invest more than 5% of the value of its total assets in the securities
of any issuer which has a record of less than three years of continuous
operation.
3. Participate on a joint or a joint-and-several basis in any trading
account in securities (the aggregation of orders for the sale or
purchase of marketable portfolio securities with other accounts under
the management of the
<PAGE>
Investment Manager to save brokerage costs, or to average prices among
them, is not deemed to result in a securities trading account).
4. Purchase or sell futures or purchase related options if, immediately
thereafter, the sum of the amount of "margin" deposits on the Fund's
existing futures positions and premiums paid for related options
entered into for the purpose of seeking to increase total return would
exceed 5% of the value of the Fund's net assets.
5. Invest more than 15% of the value of its net assets in securities that
are illiquid.
The Fund is also subject to other restrictions under the 1940 Act;
however, the registration of the Company under the 1940 Act does not involve any
supervision by any federal or other agency of the Company's management or
investment practices or policies, other than incident to occasional or periodic
compliance examinations conducted by the SEC staff.
EXECUTION OF PORTFOLIO TRANSACTIONS
The Investment Manager, subject to the overall supervision of the Board
of Directors, makes the Fund's investment decisions and selects the broker or
dealer to be used in each specific transaction using its best judgment to choose
the broker or dealer most capable of providing the services necessary to obtain
the best execution of that transaction. In seeking the best execution of a
transaction, the Investment Manager evaluates a wide range of criteria,
including any or all of the following: the broker's commission rate, promptness,
reliability and quality of executions, trading expertise, positioning and
distribution capabilities, back-office efficiency, ability to handle difficult
trades, knowledge of other buyers and sellers, confidentiality, capital strength
and financial stability, prior performance in serving the Investment Manager and
its clients, and other factors affecting the overall benefit to be received in
the transaction. When circumstances relating to a proposed transaction indicate
to the Investment Manager that a particular broker is in a position to obtain
the best execution, the order is placed with that broker. This may or may not be
a broker that has provided investment information and research services to the
Investment Manager.
Such investment information may include, among other things: a wide
variety of written reports or other data on individual companies and industries;
data and reports on general market or economic conditions; information
concerning pertinent federal and state legislative and regulatory developments
and other developments that could affect the value of actual or potential
investments; information about companies in which the Investment Manager has
invested or may consider investing; attendance at meetings with corporate
management personnel, industry experts, economists, government personnel, and
other financial analysts; comparative issuer performance and evaluation and
technical measurement services; subscription to publications that provide
investment-related information; accounting and tax law interpretations;
availability of economic advice; quotation equipment and services; execution
measurement services; market-related and survey data concerning the products and
services of an issuer and its competitors or concerning a particular industry
that are used in reports prepared by the Investment Manager to enhance its
ability to analyze an issuer's financial condition and prospects; and other
services provided by recognized experts on investment matters of particular
interest to the Investment Manager. In addition, the foregoing services may
include the use of, or be delivered by, computer systems whose hardware and/or
software components may be provided to the Investment Manager as part of the
services. In any case in which information and other services can be used for
both research and non-research purposes, the Investment Manager makes an
appropriate allocation of those uses and pays directly for that portion of the
services to be used for non-research purposes.
Subject to the requirement of seeking the best execution, the
Investment Manager may, in circumstances in which two or more brokers are in a
position to offer comparable execution, give preference to a broker or dealer
that has provided investment information to the Investment Manager. In so doing,
the Investment Manager may effect securities transactions which cause the Fund
to pay an amount of commission in excess of the amount of commission another
broker would have charged. In electing such broker or dealer, the Investment
Manager will make a good faith determination that the amount of commission is
reasonable in relation to the value of the brokerage services and
<PAGE>
research and investment information received, viewed in terms of either the
specific transaction or the Investment Manager's overall responsibility to the
accounts for which the Investment Manager exercises investment discretion. The
Investment Manager evaluates all commissions paid in order to ensure that the
commissions represent reasonable compensation for the brokerage and research
services provided by such brokers. Such investment information as is received
from brokers or dealers may be used by the Investment Manager in servicing all
of its clients (including the Fund), and the Fund's commissions may be paid to a
broker or dealer who supplied research services not used by the Fund. However,
the Investment Manager expects that the Fund will benefit overall by such
practice because it is receiving the benefit of research services and the
execution of such transactions not otherwise available to it without the
allocation of transactions based on the recognition of such research services.
Subject to the requirement of seeking the best execution, the
Investment Manager may also place orders with brokerage firms that have sold
shares of the Fund. The Investment Manager has made and will make no commitments
to place orders with any particular broker or group of brokers. The Company
anticipates that a substantial portion of all brokerage commissions will be paid
to brokers who supply investment information to the Investment Manager.
The Investment Manager has no obligation to purchase or sell for the
Fund any security that it, or its officers or employees, may purchase of sell
for the Investment Manager's or their own accounts or the account of any other
client, if in the opinion of the Investment Manager such transaction appears
unsuitable, impractical or undesirable for the Fund. Additionally, the
Investment Manager does not prohibit any of its officers or employees from
purchasing or selling for their own accounts securities that may be recommended
to or held by the Investment Manager's clients, subject to the Investment
Manager's and the Fund's Code of Ethics.
The Fund also invests in foreign and/or U.S. securities that are not
listed on a national securities exchange but are traded in the over-the-counter
market. The Fund may also purchase listed securities through the third market or
fourth market. When transactions are executed in the over-the-counter market or
the third or fourth market, the Investment Manager will seek to deal with the
counterparty that the Investment Manager believes can provide the best
execution, whether or not that counterparty is the primary market maker for that
security.
As noted below, the Investment Manager is an indirect wholly owned
subsidiary of Dresdner Bank AG ("Dresdner"). Dresdner Kleinwort Benson North
America LLC ("Dresdner Kleinwort Benson") and other Dresdner subsidiaries may be
broker-dealers (collectively, the "Dresdner Affiliates"). The Investment Manager
believes that it is in the best interests of the Fund to have the ability to
execute brokerage transactions, when appropriate, through the Dresdner
Affiliates. Accordingly, the Investment Manager intends to execute brokerage
transactions on behalf of the Fund through the Dresdner Affiliates, when
appropriate and to the extent consistent with applicable laws and regulations,
including federal banking laws.
In all such cases, the Dresdner Affiliates will act as agent for the
Fund, and the Investment Manager will not enter into any transaction on behalf
of the Fund in which a Dresdner Affiliate is acting as principal for its own
account. In connection with such agency transactions, the Dresdner Affiliates
will receive compensation in the form of brokerage commissions separate from the
Investment Manager's management fee. The Investment Manager's policy is that
such commissions must be reasonable and fair when compared to the commissions
received by other brokers in connection with comparable transactions involving
similar securities and that the commissions paid to a Dresdner Affiliate must be
no higher than the commissions paid to that broker by any other similar customer
of that broker who receives brokerage and research services that are similar in
scope and quality to those received by the Fund.
The Investment Manager performs investment management and advisory
services for various clients, including other registered investment companies,
and pension, profit-sharing and other employee benefit plans, as well as
individuals. In many cases, portfolio transactions for the Fund may be executed
in an aggregated transaction as part of concurrent authorizations to purchase or
sell the same security for numerous accounts served by the Investment Manager,
some of which accounts may have investment objectives similar to those of the
Fund. The objective of aggregated transactions is to obtain favorable execution
and/or lower brokerage commissions, although there is no certainty that such
objective will be achieved. Although executing portfolio transactions in an
aggregated transaction potentially could be either advantageous or
disadvantageous to any one or more particular accounts, aggregated transactions
in which the Fund participates will be effected only when the Investment Manager
believes that to do so
<PAGE>
will be in the best interest of the Fund, and the Investment Manager is not
obligated to aggregate orders into larger transactions. These orders generally
will be averaged as to price. When such aggregated transactions occur, the
objective will be to allocate the executions in a manner which is deemed fair
and equitable to each of the accounts involved over time. In making such
allocation decisions, the Investment Manager will use its business judgment and
will consider, among other things, any or all of the following: each client's
investment objectives, guidelines, and restrictions, the size of each client's
order, the amount of investment funds available in each client's account, the
amount already committed by each client to that or similar investments, and the
structure of each client's portfolio.
DIRECTORS AND OFFICERS
The names and addresses of the Directors and officers of the Company
and their principal occupations and certain other affiliations during the past
five years are given below. Unless otherwise specified, the address of each of
the following persons is Four Embarcadero Center, San Francisco, California
94111.
DEWITT F. BOWMAN, (68), Chairman and Director. Mr. Bowman is a
Principal of Pension Investment Consulting, with which he has been associated
since February 1994. From February 1989 to January 1994, he was Chief Investment
Officer for California Public Employees Retirement System, a public pension
fund. He serves as a director of RREEF America REIT, Inc. and the Wilshire
Target Funds Inc.; and as a trustee of Brandes Institutional International
Investment Trust, the Pacific Gas and Electric Nuclear Decommissioning Trust,
and the PCG Private Equity Fund.
PAMELA A. FARR, (53), Director. Ms. Farr is a partner in Best & Co.
LLC, a manufacturer and retailer of children's clothing and accessories. From
1991 to 1994, she was President of Banyan Homes, Inc., a real estate development
and construction firm; and for eight years she was a management consultant for
McKinsey & Company, where she served a variety of Fortune 500 companies in all
aspects of strategic management and organizational structure.
GEORGE B. JAMES, (61), Director. Mr. James is a Senior Vice President
and Chief Financial Officer, retired, of Levi Strauss & Co., with which he was
associated since 1985. Mr. James serves as a director of Basic Vegetable
Products, Clayton Group, Inc., and Crown Vantage, Inc. Mr. James also serves as
a trustee of the Committee for Economic Development and the California Pacific
Medical Center Foundation. Previously, Mr. James was Chair of the Advisory
Committee to the California Public Employees Retirement System.
GEORGE G.C. PARKER, (59), Director. Mr. Parker is Associate Dean for
Academic Affairs, and Director of the MBA Program and Dean Witter Professor of
Finance at the Graduate School of Business at Stanford University, with which he
has been associated since 1973. Mr. Parker has served on the Board of Directors
of: the California Casualty Group of Insurance Companies since 1977; BB&K
Holdings, Inc., a holding company for financial services companies, since 1980;
H. Warshow & Sons, Inc., a manufacturer of specialty textiles, since 1982;
Zurich Reinsurance Centre, Inc., a large reinsurance underwriter, since 1994;
and Continental Airlines, since 1996. Mr. Parker served on the Board of
Directors of the University National Bank & Trust Company from 1986 to 1995.
ANTHONY AIN (40), President. Mr. Ain is a Managing Director and General
Counsel of Dresdner RCM, with which he has been associated since 1992. Prior to
joining Dresdner RCM, he worked for the United States Securities and Exchange
Commission, first as Counsel to Commissioner Joseph A. Grundfest, then as a
Senior Special Counsel in the SEC's Division of Market Regulation. Before
joining the SEC, he was an associate in the Washington, D.C. office of Fried,
Frank, Harris, Shriver & Jacobson, where he practiced securities and banking
law. He received his undergraduate degree from Cornell University in 1980 and
graduated cum laude in 1984 from the University of Pennsylvania Law School,
where he served on the Law Review and was a member of the Order of the Coif. He
is a Director of the National Society of Compliance Professionals.
<PAGE>
ROBERT GOLDSTEIN (36), Vice President and Secretary. Mr. Goldstein is a
Director and Associate General Counsel of Dresdner RCM, which he joined in 1997.
Prior to joining Dresdner RCM, he was an associate in the New York, London and
Prague offices of Weil, Gotshal & Manges where his practice primarily focused on
private investment and hedge funds, and international transactional and general
corporate matters. Mr. Goldstein holds a B.A. from Hobart College, and graduated
from Brooklyn Law School where he was a member of the Brooklyn Law Review and
recipient of the Mead Data Central Award for excellence in research and writing
and the American Jurisprudence Award for excellence in Secured Transactions and
Civil Procedure.
JENNIE KLEIN (35), Vice President and Treasurer. Ms. Klein, CPA,
Director of Commingled Fund Services, joined Dresdner RCM in 1994. She is
responsible for the fund administration and shareholder record keeping for the
Dresdner RCM fund products. Prior to joining Dresdner RCM, she was at G.T.
Capital Management where she was the Manager of Financial Reporting and
Compliance for their mutual funds. Before joining G.T., Ms. Klein was an auditor
at KPMG Peat Marwick. She received a Bachelor of Science degree in Business
Administration from San Francisco State University.
KARIN BROTMAN (33), Assistant Secretary. Ms. Brotman joined Dresdner
RCM in 1997 and is Assistant Fund Counsel working with investment companies.
Prior to joining Dresdner RCM, Karin was a Product Manager at Fidelity
Investments in their Legal Department, where she was involved in providing `40
Act regulatory compliance for mutual funds. Previously she was employed as an
Account Officer with Fleet Financial Group where she was responsible for
negotiating the legal recovery of a distressed asset portfolio. Ms. Brotman
holds a B.S. in Business from the University of Connecticut and graduated cum
laude from The New England School of Law.
STEVEN WONG (33), Assistant Treasurer. Mr. Wong, CPA, joined Dresdner
RCM in 1994 and is the Manager of Commingled Fund Services. He is responsible
for overseeing Dresdner RCM's mutual fund administration which includes
financial reporting, compliance, tax reporting, fund accounting, budgeting and
shareholder servicing. Prior to joining Dresdner RCM, he was a senior auditor at
KPMG Peat Marwick specializing in the audit of investment companies. Before
that, he was a fund accountant with Franklin Funds. Mr. Wong received his
Bachelor of Science degree in Managerial Economics from the University of
California, Davis.
Regular meetings of the Company's Board of Directors are held on a
quarterly basis. The Company's Audit Committee, whose sole present member is
DeWitt F. Bowman, meets with its independent accountants to exchange views and
information and to assist the full Board in fulfilling its responsibilities
relating to corporate accounting and reporting practices. Each Director of the
Company receives a fee of $1,000 per year plus $500 for each Board meeting
attended and $250 for each Audit Committee meeting attended. Each Director is
reimbursed for travel and other expenses incurred in connection with attending
Board meetings.
The following table sets forth the aggregate compensation paid by the
Company for the fiscal year ended December 31, 1999, to the Directors and the
aggregate compensation paid to the Directors for service on the Board of
Directors and that of all other funds in the "Company complex" (as defined in
Schedule 14A under the Securities Exchange Act of 1934):
<TABLE>
<CAPTION>
Total
Compensation
Pension or from the
Retirement Company and
Aggregate Benefits Accrued Estimate Company
Compensation as Part of Annual Complex
from the the Company's Benefits Upon Paid to Director
Name Company Expenses Retirement (1)
- ------------------- ------------------ -------------------- ---------------- ---------------------
<S> <C> <C> <C> <C>
DeWitt F. Bowman $21,250 $10,625 N/A $48,250
<PAGE>
Pamela A. Farr $19,000 $19,000 N/A $46,000
George B. James $21,250 - N/A $48,250
George G.C. Parker $19,000 $19,000 N/A $47,500
- ---------------------
</TABLE>
(1) During the fiscal year ended December 31, 1999, there were thirteen funds in
the complex.
Each Director of the Company who is not an "interested person" as that
term is defined in the 1940 Act, of the Investment Manager may elect to defer
receipt of all or a portion of his or her fees for service as a Director in
accordance with the terms of a Deferred Compensation Plan for Non-Interested
Directors ("Directors' Plan"). Under the Directors' Plan, an eligible Director
may elect to have his or her deferred fees deemed invested either in 90-day U.S.
Treasury bills, shares of the Common Stock of the Company of which he or she is
a Director, or a combination of these options, and the amount of deferred fees
payable to such director under the Directors' Plan will be determined by
reference to the return on such deemed investments. Generally, the deferred fees
(reflecting any earnings, gains or losses thereon) become payable upon the
Director's retirement or disability. The obligation to make these payments to
the Directors of a Company pursuant to the Directors' Plan is a general
obligation of such Company. The Fund may, to the extent permitted by the 1940
Act, invest in 90-day U.S. Treasury bills or the Common Stock of the Company to
match its share of the deferred compensation obligation under the Directors'
Plan. As of December 31, 1998, no Director or officer of the Company was a
beneficial owner of any shares of the outstanding Common Stock of any series of
the Company.
THE INVESTMENT MANAGER
The Board of Directors of the Company has overall responsibility for
the operation of the Fund. Pursuant to such responsibility, the Board of
Directors has approved various contracts for designated financial organizations
to provide, among other things, day to day management services required by the
Fund. The Company has retained as the Fund's Investment Manager, Dresdner RCM
Global Investors LLC, a Delaware limited liability company with principal
offices at Four Embarcadero Center, San Francisco, California 94111. The
Investment Manager is actively engaged in providing investment supervisory
services to institutional and individual clients. The Investment Manager was
established in December of 1998 and is the successor to the business of its
holding company, Dresdner RCM Global Investors US Holdings LLC. The Investment
Manager was originally formed as Rosenberg Capital Management in 1970, and it
and its successors have been consistently in business since then.
The Investment Manager is an indirect wholly owned subsidiary of
Dresdner Bank, an international banking organization with principal executive
offices located at Gallunsanlage 7, 60041 Frankfurt, Germany. With total
consolidated assets as of December 31, 1998, of DM 715 billion ($427 billion),
and approximately 1,600 offices and 48,000 employees in over 60 countries around
the world, Dresdner is one of Germany's largest banks. Dresdner provides a full
range of banking services including, traditional lending activities, mortgages,
securities, project finance and leasing, to private customers and financial and
institutional clients. In the United States, Dresdner maintains branches in New
York and Chicago and an agency in Los Angeles. As of the date of this SAI, the
nine members of the Board of Managers of the Investment Manager are William L.
Price (Chairman), Gerhard Eberstadt, George N. Fugelsang, Joachim Madler,
Leonhard Fischer, Susan C. Gause, Luke D. Knecht, William S. Stack, and Kenneth
B. Weeman, Jr.
Dresdner and the Investment Manager, by virtue of Dresdner's banking
operations in the United States, are subject to U.S. banking laws and
regulations. U.S. banking organizations generally may act as advisers to
investment companies and may buy and sell investment company shares for their
customers. The Investment Manager believes that it may perform the services
contemplated by its investment management agreements with the Company without
violating these banking laws or regulations. In addition, effective March 11,
2000, banking organizations that qualify as and elect to become financial
holding companies are permitted to sponsor and distribute the shares of
investment
<PAGE>
companies. Thus, the extent to which Dresdner qualifies and elects to engage in
these activities, as well as future changes in legal requirements or regulatory
interpretations relating to permissible activities of banking organizations and
their affiliates, could affect the nature and scope of services provided to the
Company by the Investment Manager or its affiliates.
The Investment Manager provides the Fund with investment supervisory
services pursuant to an Investment Management Agreement, Power of Attorney and
Service Agreement (the "Management Agreement") dated as of June __, 2000. The
Investment Manager manages the Fund's investments, provides various
administrative services, and supervises the Fund's daily business affairs,
subject to the authority of the Boards of Directors. The Investment Manager is
also the investment manager for Dresdner RCM Growth Equity Fund and Dresdner RCM
Small Cap Fund, and Dresdner RCM International Growth Equity Fund, each a series
of Dresdner RCM Capital Funds, Inc.; Dresdner RCM Large Cap Growth Fund,
Dresdner RCM Global Small Cap Fund, Dresdner RCM Global Technology Fund,
Dresdner RCM Global Health Care Fund, Dresdner RCM Biotechnology Fund, Dresdner
RCM Emerging Markets Fund, Dresdner RCM Tax Managed Growth Fund, Dresdner RCM
Global Equity Fund and Dresdner RCM Strategic Income Fund, each a series of
Dresdner RCM Global Funds, Inc.; Dresdner RCM Europe Fund, a series of Dresdner
RCM Investment Funds Inc.; RCM Strategic Global Government Fund, Inc. and
Bergstrom Capital Corporation, each closed-end management investment companies.
The Fund's Management Agreement may be renewed from year-to-year after its
initial term, provided that any such renewals have been specifically approved at
least annually by (i) the vote of a majority of the Company's Board of
Directors, including a majority of the Directors who are not parties to the
Management Agreement or interested persons (as defined in the 1940 Act) of any
such person, cast in person at a meeting called for the purpose of voting on
such approval, or (ii) the vote of a majority (as defined in the 1940 Act) of
the outstanding voting securities of the Fund and the vote of a majority of the
Directors who are not parties to the contract or interested persons of any such
party.
The Fund has, under its Management Agreement, assumed the obligation
for payment of all of its ordinary operating expenses, including: (a) brokerage
and commission expenses, (b) federal, state, or local taxes incurred by, or
levied on, the Fund, (c) interest charges on borrowings, (d) charges and
expenses of the Fund's custodian, (e) investment advisory fees (including fees
payable to the Investment Manager under the Management Agreement), (f) legal and
audit fees, (g) SEC and "Blue Sky" registration expenses, and (h) compensation,
if any, paid to officers and employees of the Company who are not employees of
the Investment Manager (see DIRECTORS AND OFFICERS). The Investment Manager is
responsible for all of its own expenses in providing services to the Fund.
Expenses attributable to the Fund are charged against the assets of the Fund.
The Investment Manager has voluntarily agreed to limit the Fund's
expenses as described in the Prospectus. The Fund has agreed to reimburse the
Investment Manager, for a period of up to five years, for any such payments to
the extent that the Fund's operating expenses are otherwise below this expense
cap. This obligation will not be recorded on the books of the Fund to the extent
that the total operating expenses of the Fund are at or above the expense cap.
However, if the total operating expenses of the Fund fall below the expense cap,
the reimbursement to the Investment Manager will be accrued by the Fund as a
liability.
The Fund's Management Agreement provides that the Investment Manager
will not be liable for any error of judgment or for any loss suffered by the
Fund in connection with the matters to which the Management Agreement relates,
except for liability resulting from willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of the Investment
Manager's reckless disregard of its duties and obligations under the Management
Agreement. The Company has agreed to indemnify the Investment Manager out of the
assets of The Fund, against liabilities, costs and expenses that the Investment
Manager may incur in connection with any action, suit, investigation or other
proceeding arising out of or otherwise based on any action actually or allegedly
taken or omitted to be taken by the Investment Manager in connection with the
performance of its duties or obligations under the Management Agreement with
respect to the Fund or otherwise as investment manager of the Fund. The
Investment Manager is not entitled to indemnification with respect to any
liability to the Fund or its stockholders by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties, or of its reckless
disregard of its duties and obligations under the Management Agreement.
<PAGE>
The Management Agreement is terminable without penalty on 60 days'
written notice by a vote of the majority of the outstanding voting securities of
the Fund which is the subject of the Management Agreement, by a vote of the
majority of the Company's Board of Directors, or by the Investment Manager on 60
days' written notice and will automatically terminate in the event of its
assignment (as defined in the 1940 Act).
THE DISTRIBUTOR
Funds Distributor, Inc., 60 State Street, Suite 1300, Boston,
Massachusetts 02109 (the "Distributor") serves as Distributor to the Fund. The
Distributor has provided mutual fund distribution services since 1976, and is a
subsidiary of Boston Institutional Group, Inc., which provides distribution and
other related services with respect to investment products.
DISTRIBUTION AGREEMENT
Pursuant to a Distribution Agreement with the Company, the Distributor
has agreed to use its best efforts to effect sales of shares of the Fund, but is
not obligated to sell any specified number of shares. The Distribution Agreement
contains provisions with respect to renewal and termination similar to those in
the Fund's Management Agreement discussed above. Pursuant to the Distribution
Agreement, the Company has agreed to indemnify the Distributor out of the assets
of the Fund to the extent permitted by applicable law against certain
liabilities under the Securities Act of 1933 arising in connection with the
Distributor's activities on behalf of the Company.
The Company also has an Agreement with the Investment Manager and the
Distributor pursuant to which the Distributor has agreed to provide: regulatory,
compliance and related technical services to the Company; services with regard
to advertising, marketing and promotional activities; and officers to the
Company. The Investment Manager is required to reimburse the Company for any
fees and expenses of the Distributor pursuant to the Agreement.
DISTRIBUTION AND SERVICE PLAN
The Global Company, on behalf of its Dresdner RCM Large Cap Fund,
Dresdner RCM Global Small Cap Fund, Dresdner RCM Emerging Markets Fund, Dresdner
RCM Biotechnology Fund, Dresdner RCM Global Health Care Fund, Dresdner RCM
Global Technology Fund, Dresdner RCM Tax Managed Growth Fund and Dresdner RCM
Internet Fund Class N shares, has adopted a distribution and service plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the 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 actually incurred by
the Distributor in connection with providing distribution and shareholder
support services to such shares. Class I shares are not subject to 12b-1 fees.
The Distributor is reimbursed for: (a) expenses incurred in connection with
advertising by radio, television, newspapers, magazines, brochures, sales
literature, telemarketing or direct mail solicitations; (b) periodic payments of
fees or commissions for distribution assistance made to one or more securities
brokers, dealers or other industry professionals such as investment advisers,
accountants, estate planning firms and the Distributor itself in respect of the
average daily value of shares owned by clients of such service organizations;
and (c) expenses incurred in preparing, printing and distributing the Fund's
prospectus and statement of additional information.
The Plan continues in effect from year to year with respect to each
Fund, provided that each such continuance is approved at least annually by a
vote of the Board of Directors, including a majority vote of the Directors who
are not "interested persons" of the Company within the meaning of the 1940 Act
and have no direct or indirect financial interest in the Plan or in any
agreement related to the Plan, cast in person at a meeting called for the
purpose of voting on such continuance. The Plan may be terminated with respect
to a Fund at any time, without penalty, by the vote of a majority of the
outstanding shares of the Fund. The Plan may not be amended to increase
materially the amounts to be paid by a Fund for the services described therein
without approval by the shareholders of the Fund, and all material
<PAGE>
amendments are required to be approved by the Board of Directors of the Company
in the manner described above. The Plan will automatically terminate in the
event of its assignment.
If in any year Funds Distributor is due more from a Fund for such
services than is immediately payable because of the expense limitation under the
Plan, the unpaid amount is carried forward while the Plan is in effect until
such later year as it may be paid. There is no limit on the periods during which
unreimbursed expenses may be carried forward, although the Funds are not
obligated to repay any outstanding unreimbursed expenses that may exist if the
Plan is terminated or not continued. No interest, carrying, or finance charge
will be imposed on any amounts carried forward.
The Distributor may pay broker-dealers and others, out of the fees it
receives under the Plan, quarterly trail commissions of up to 0.25%, on an
annual basis, of the average daily net assets attributable to the Class N shares
of each Fund held in the accounts of their customers.
Pursuant to the Plan, the Board of Directors of the Company will review
at least quarterly a written report of the distribution expenses incurred on
behalf of shares of the Class N shares of the Funds by the Distributor. The
report will include an itemization of the distribution expenses and the purposes
of such expenditures. In addition, as long as the Plans remain in effect, the
selection and nomination of Directors of the Company who are not "interested
persons" of the Company within the meaning of the 1940 Act will be committed to
the Directors who are not interested persons of the Company.
THE ADMINISTRATOR
Effective January 1, 1999, the administrator of the Company is State
Street Bank and Trust Company ("State Street"), 1776 Heritage Drive, North
Quincy, Massachusetts 02109.
Pursuant to an Administration Agreement with the Company, State Street
is responsible for performing all administrative services required for the daily
operation of the Company, subject to the control, supervision and direction of
the Company and the review and comment by the Company's auditors and legal
counsel. State Street has no supervisory responsibility over the investment
operations of the Fund. Administrative services performed by State Street
include, but are not limited to, the following: overseeing the determination and
publication of the Company's net asset value; overseeing the maintenance by the
Company's custodian of certain book and records of the Company; preparing the
Company's federal, state and local income tax returns; arrange for payment of
the Company's expenses; and preparing the financial information for the
Company's semi-annual and annual reports, proxy statements and other
communications.
For its services, State Street receives annual fees pursuant to the
following schedule:
ANNUAL FEE
Average Assets Expressed in Basis Points: 1/100 of 1%
First $250 Million/Fund 2.50
Next $250 Million/Fund 1.75
Thereafter 1.00
Minimum/Fund $57,500
Fees are calculated by multiplying each Average Asset Break Point in
the above schedule by the number of Funds in the Dresdner RCM complex to
determine the breakpoints used in the schedule. Total net assets of the Fund
will be used to calculate the fee by multiplying the net assets of the Funds by
the basis point fees in the above schedule. The minimum fee will be calculated
by multiplying the minimum fee by the number of Funds in the
<PAGE>
complex to arrive at the total minimum fee. The greater of the basis point fee
or the minimum fee will be allocated equally to each Fund in the complex.
OTHER SERVICE PROVIDERS
State Street acts as the transfer agent, redemption agent and dividend
paying agent for the Fund. State Street also acts as custodian for the Fund. The
custodian is responsible for the safekeeping of the Fund's assets and the
appointment of any subcustodian banks and clearing agencies.
State Street's principal business address is 1776 Heritage Drive, North
Quincy, Massachusetts 02171.
PricewaterhouseCoopers LLP ("PWC") acts as the independent public
accountants for the Fund. The accountant examines financial statements for the
Fund and provides other audit, tax, and related services. PWC's principal
business address is One Post Office Square, Boston, Massachusetts 02109.
NET ASSET VALUE
For purposes of the computation of the net asset value of each share of
the Fund, equity securities traded on stock exchanges are valued at the last
sale price on the exchange or in the principal over-the-counter market in which
such securities are traded as of the close of regular trading on the day the
securities are being valued, unless the Board of Directors or a duly constituted
committee of the Board 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, the security will be valued at the closing bid price on such day.
If no bid price is quoted on such day, then the security will be valued by such
method as a duly constituted committee of the Board of Directors determines in
good faith to reflect its fair value. Readily marketable securities traded only
in the over-the-counter market that are not listed on the NASDAQ Stock Market or
a similar foreign reporting service will be valued at the mean bid price, or
such other comparable sources as the Board of Directors deems appropriate to
reflect their fair value. Other portfolio securities held by the Fund will be
valued at current market value, if current market quotations are readily
available for such securities. To the extent that market quotations are not
readily available such securities will be valued by whatever means a duly
constituted committee of the Board of Directors deems appropriate to reflect
their fair value.
Futures contracts and related options are valued at their last sale or
settlement price as of the close of the exchange on which they are traded or, if
no sales are reported, at the mean between the last reported bid and asked
prices. All other assets of the Fund will be valued in such manner as a duly
constituted committee of the Board of Directors in good faith deems appropriate
to reflect their fair value.
Trading in securities on foreign exchanges and over-the-counter markets
is normally completed at times other than the close of regular trading on the
New York Stock Exchange. In addition, foreign securities and commodities trading
may not take place on all business days in New York, and may occur in various
foreign markets on days which are not business days in New York and on which net
asset value is not calculated. The calculation of net asset value may not take
place contemporaneously with the determination of the prices of portfolio
securities used in such calculation. Events affecting the values of portfolio
securities that occur between the time their prices are determined and the close
of the New York Stock Exchange will not be reflected in the calculation of net
asset value unless the Board of Directors determines that a particular event
would materially affect net asset value, in which case an adjustment will be
made.
<PAGE>
Assets or liabilities initially expressed in terms of foreign
currencies are translated prior to the next determination of net asset value
into U.S. dollars at the spot exchange rates at 12:00 p.m. Eastern time or at
such other rates as the Investment Manager may determine to be appropriate in
computing net asset value.
Debt obligations with maturities of 60 days or less are valued at
amortized cost. The Company may use a pricing service approved by the Board of
Directors to value other debt obligations. Prices provided by such a service
represent evaluations of the mean between current bid and asked market prices,
may be determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, individual
rating characteristics, indications of value from dealers, and other market
data. Such services may use electronic data processing techniques and/or a
matrix system to determine valuations. The procedures of such services are
reviewed periodically by the officers of the Investment Manager under the
general supervision of the Board of Directors. Short-term investments are
amortized to maturity based on their cost, adjusted for foreign exchange
translation, provided such valuations equal fair market value.
The Board of Directors of the Company has adopted guidelines and
procedures for valuing portfolio securities for which market quotations are not
readily available and has delegated to a Pricing Committee the responsibility
for determining the basis for pricing such securities. Such pricing may be used
only when no reliable external price is available from a pricing service, from a
dealer quotation, or from a recent sale.
PURCHASE AND REDEMPTION OF SHARES
The price paid for purchase and redemption of shares of the Fund is
based on the net asset value per share, which is normally calculated once daily
at the close of regular trading (normally 4:00 P.M. Eastern time) on the New
York Stock Exchange on each day that the New York Stock Exchange is open. The
New York Stock Exchange is currently closed on weekends and on the following
holidays: New Year's Day,President's Day, Martin Luther King Jr. Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas
Day. The offering price is effective for orders received by Boston Financial
Data Services ("BFDS") prior to the time of determination of net asset value.
Dealers are responsible for promptly transmitting purchase orders to BFDS. The
Company reserves the right in its sole discretion to suspend the continued
offering of its Fund's shares and to reject purchase orders in whole or in part
when such rejection is in the best interests of the Fund and its respective
shareholders.
REDEMPTION OF SHARES
Payments will be made wholly in cash unless the Board of Directors
believes that economic conditions exist which would make such a practice
detrimental to the best interests of the Fund. Under such circumstances, payment
of the redemption price could be made either in cash or in portfolio securities
taken at their value used in determining the redemption price (and, to the
extent practicable, representing a pro rata portion of each of the portfolio
securities held by the Fund), or partly in cash and partly in portfolio
securities. Payment for shares redeemed also may be made wholly or partly in the
form of a pro rata portion of each of the portfolio securities held by the Fund
at the request of the redeeming stockholder, if the Company believes that
honoring such request is in the best interests of such series. If payment for
shares redeemed were to be made wholly or partly in portfolio securities,
brokerage costs would be incurred by the stockholder in converting the
securities to cash.
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
Each income dividend and capital gain distribution, if any, declared by
the Fund will be paid in full and fractional shares based on the net asset value
as determined on the payment date for such distribution, unless the stockholder
or
<PAGE>
his or her duly authorized agent has elected to receive all such payments or the
dividend or other distribution portion thereof in cash. Changes in the manner in
which dividend and other distribution payments are paid may be requested by the
stockholder or his or her duly authorized agent at any time through written
notice to the appropriate Company and will be effective as to any subsequent
payment if such notice is received by the Company prior to the record date used
for determining the stockholders entitled to such payment. Any distribution
election will remain in effect until the Company is notified by the stockholder
in writing to the contrary.
REGULATED INVESTMENT COMPANY
The Company intends to qualify the Fund for treatment as a "regulated
investment company" under Subchapter M of the Code. The Fund is treated as a
separate corporation for tax purposes and thus the provisions of the Code
generally applicable to regulated investment companies are applied separately to
the Fund. In addition, net capital gains (the excess of net long-term capital
gain over net short-term capital loss), net investment income, and operating
expenses are determined separately for the Fund. By complying with the
applicable provisions of the Code, the Fund will not be subject to federal
income tax with respect to net investment income and net realized capital gains
distributed to its stockholders.
To qualify as a regulated investment company under Subchapter M,
generally the Fund must: (i) derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of stock, securities or
foreign currencies and certain other income (including gains from certain
options, futures and forward contracts), ("Income Requirement"); and (ii)
diversify its holdings so that, at the end of each fiscal quarter, (a) at least
50% of the value of the Fund's total assets is represented by cash, cash items,
U.S. Government securities, securities of other regulated investment companies
and other securities, limited, in respect of any one issuer, to an amount not
greater than 5% of the Fund's total assets and 10% of the outstanding voting
securities of such issuer, and (b) not more than 25% of the value of its total
assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses.
In any taxable year in which the Fund so qualifies and distributes at
least 90% of the sum of its investment company taxable income (consisting of net
investment income, the excess of net short-term capital gains over net long-term
capital losses and net gains from certain foreign currency transactions) and its
net tax-exempt interest income (if any) ("Distribution Requirement"), it will be
taxed only on that portion, if any, of such investment company taxable income
and any net capital gain that it retains. The Fund expect to so distribute all
of such income and gains on an annual basis and thus will generally avoid any
such taxation.
Even if the Fund qualifies as a "regulated investment company," it may
be subject to a federal excise tax unless it meets certain additional
distribution requirements. Under the Code, a nondeductible excise tax of 4%
("Excise Tax") is imposed on the excess of a regulated investment company's
"required distribution" for a calendar year ending within the regulated
investment company's taxable year over the "distributed amount" for that
calendar year. The term "required distribution" means the sum of (i) 98% of
ordinary income (generally net investment income and net gains from certain
foreign currency transactions) for the calendar year, (ii) 98% of capital gain
net income (generally both long-term and short-term capital gain) for the
one-year period ending on October 31 (as though that period were the regulated
investment company's taxable year), and (iii) the sum of any untaxed,
undistributed net investment income and net capital gains of the regulated
investment company for prior periods. The term "distributed amount" generally
means the sum of (i) amounts actually distributed by the Fund from its current
year's ordinary income and capital gain net income and (ii) any amount on which
the Fund pays income tax for the year. The Fund intends to meet these
distribution requirements to avoid Excise Tax liability.
Stockholders who are subject to federal or state income or franchise
taxes will be required to pay taxes on dividend and capital gain distributions
they receive from the Fund whether paid in additional shares of the Fund or in
cash. To the extent that dividends received by the Fund would qualify for the
70% dividends-received deduction available to corporations, the Fund must
designate in a written notice to stockholders, within 60 days after the close of
the Fund's taxable year, the amount of the Fund's dividends that would be
eligible for this treatment. In order to qualify for the dividends-received
deduction with respect to a dividend paid on Fund shares, a corporate
stockholder must
<PAGE>
hold the Fund shares for at least 45 days during the 90 day period that begins
45 days before the shares become ex-dividend with respect to the dividend.
Stockholders, such as qualified employee benefit plans, which are exempt from
federal and state taxation generally would not have to pay income tax on
dividend or capital gain distributions. Prospective tax-exempt investors should
consult their own tax advisers with respect to the tax consequences of an
investment in the Fund under federal, state, and local tax laws.
WITHHOLDING
Dividends paid by the Fund to a stockholder who, as to the U.S., is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation, or foreign partnership (a "foreign stockholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or a lower treaty
rate, if applicable). Withholding will not apply, however, if a dividend paid by
the Fund to a foreign stockholder is "effectively connected" with the conduct of
a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens or domestic corporations will apply.
Distributions of net capital gain to foreign stockholders who are neither U.S.
resident aliens nor engaged in a U.S. trade or business generally are not
subject to withholding or U.S. federal income tax.
FOREIGN CURRENCY, OPTIONS, FUTURES AND FORWARD CONTRACTS
Gains from the sale or other disposition of foreign currencies (except
certain gains therefrom that may be excluded by future regulations), and gains
from options, futures, and forward contracts derived by the Fund with respect to
its business of investing in securities of foreign currencies, will qualify as
permissible income under the Income Requirement.
SECTION 1256 CONTRACTS
Many of the options, futures contracts and forward contracts entered
into by the Fund are "Section 1256 contracts." Any gains or losses realized on
Section 1256 contracts are generally considered 60% long-term and 40% short-term
capital gains or losses, although certain foreign currency gains and losses from
such contracts may be treated as ordinary income in character. Section 1256
contracts held by the Fund at the end of each taxable year (and, for purposes of
the Excise Tax, on October 31 or such other dates as prescribed under the Code),
other than Section 1256 contracts that are part of a "mixed straddle" with
respect to which the Fund has made an election not to have the following rules
apply, must be "marked-to-market" (that is, treated as sold for their fair
market value) for federal income tax purposes, with the result that unrealized
gains or losses are treated as though they were realized. The 60% portion of
gains on Section 1256 contracts that is treated as long-term capital gain will
qualify for the reduced maximum tax rates on net capital gain -- 20% (10% for
taxpayers in the 15% marginal tax bracket) for gain recognized on capital assets
held for more than 12 months.
STRADDLE RULES
Generally, the hedging transactions and other transactions in options,
futures and forward contracts undertaken by the Fund may result in "straddles"
for U.S. federal income tax purposes. The straddle rules may affect the amount,
character and timing of recognition of gains or losses realized by the Fund. In
addition, losses realized by the Fund on positions that are part of a straddle
position may be deferred under the straddle rules, rather than being taken into
account for the taxable year in which these losses are realized. Because limited
regulations implementing the straddle rules have been promulgated, the tax
consequences of hedging transactions and options, futures and forward contracts
to the Fund are not entirely clear.
Hedging transactions may increase the amount of short-term capital gain
realized by the Fund, which is taxed as ordinary income when distributed to
stockholders. The Fund may make one or more elections available under the Code
which are applicable to straddle positions. If the Fund makes any of the
elections, the amount, character and timing of the recognition of gains or
losses from the affected straddle positions will be determined under rules that
vary
<PAGE>
according to elections made. The rules applicable under certain elections
operate to accelerate the recognition of gains or losses from the affected
straddle positions. Because the application of the straddle rules may affect the
character of gains or losses, defer losses and/or accelerate the recognition of
gains or losses from the affected straddle positions, the amount which must be
distributed to stockholders, and which will be taxed to stockholders as ordinary
income or long-term capital gain, may be increased or decreased substantially as
compared to a Fund that did not engage in such hedging transactions.
SECTION 988 GAINS AND LOSSES
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time the Fund accrues interest or other
receivables, or accrues expenses or other liabilities, denominated in a foreign
currency and the time the Fund actually collects such receivables or pays such
liabilities, generally are treated as ordinary income or loss. Similarly, on the
disposition of debt securities denominated in foreign currency and on the
disposition of certain futures contracts, forward contracts and options, gains
or losses attributable to fluctuation in the value of foreign currency between
the date of acquisition of the debt security, contract or option and the date of
disposition thereof are also treated as ordinary gain or loss. These gains or
losses, referred to under the Code as "Section 988" gains or losses, may
increase or decrease the amount of the Fund's investment company taxable income
to be distributed to stockholders as ordinary income.
FOREIGN TAXES
The Fund may be required to pay withholding and other taxes imposed by
foreign countries which would reduce the Fund's investment income, generally at
rates from 10% to 40%. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes. If more than 50% of the value of the
Fund's total assets at the close of its taxable year consists of securities of
foreign corporations, the Fund will be eligible to elect to "pass-through" to
the Fund's stockholders the amount of foreign income and similar taxes paid by
the Fund. If this election is made, stockholders generally subject to tax will
be required to include in gross income (in addition to taxable dividends
actually received) their pro rata shares of the foreign income taxes paid by the
Fund, and may be entitled either to deduct (as an itemized deduction) their pro
rata shares of foreign taxes in computing their taxable income or to use such
amount (subject to limitations) as a foreign tax credit against their U.S.
federal income tax liability. No deduction for foreign taxes may be claimed by a
stockholder who does not itemize deductions. Each stockholder will be notified
within 60 days after the close of the Fund's taxable year whether the foreign
taxes paid by the Fund will be "passed-through" for that year.
The foregoing is a general abbreviated summary of present U.S. federal
income tax laws applicable to the Fund, their stockholders and dividend and
capital gain distributions by the Fund. Stockholders are urged to consult their
own tax advisers for more detailed information and for information regarding any
foreign, state, and local tax laws and regulations applicable to dividends and
other distributions received from the Fund.
INVESTMENT RESULTS
Average annual total return ("T") of the Fund is calculated as follows:
an initial hypothetical investment of $1,000 ("P") is divided by the net asset
value of shares of the Fund as of the first day of the period in order to
determine the initial number of shares purchased. Subsequent dividend and
capital gain distributions by the Fund are paid at net asset value on the
payment date determined by the Board of Directors. The sum of the initial shares
purchased and shares acquired through distributions is multiplied by the net
asset value per share of the Fund as of the end of the period ("n") to determine
ending redeemable value ("ERV"). The ending value divided by the initial
investment converted to a percentage equals total return. The formula thus used,
as required by the SEC, is:
P(1+T)to the power of n = ERV
<PAGE>
The resulting percentage indicates the positive or negative investment
results that an investor would have experienced from reinvested dividend and
capital gain distributions and changes in share price during the period.
This formula reflects the following assumptions: (i) all share sales at
net asset value, without a sales load reduction from the $1,000 initial
investment; (ii) reinvestment of dividends and distributions at net asset value
on the reinvestment date determined by the Board of Directors; and (iii)
complete redemption at the end of any period illustrated. Total return may be
calculated for one year, five years, ten years, and for other periods, and will
typically be updated on a quarterly basis. The average annual compound rate of
return over various periods may also be computed by using ending values as
determined above.
In addition, in order to more completely represent the Fund's
performance or more accurately compare such performance to other measures of
investment return, the Fund also may include in advertisements and stockholder
reports other total return performance data based on time-weighted,
monthly-linked total returns computed on the percentage change of the month end
net asset value of the Fund after allowing for the effect of any cash additions
and withdrawals recorded during the month. Returns may be quoted for the same or
different periods as those for which average total return is quoted. The Fund's
investment results will vary from time to time depending upon market conditions,
the composition of the Fund's portfolio, and operating expenses, so that any
investment results reported should not be considered representative of what an
investment in the Fund may earn in any future period. These factors and possible
differences in calculation methods should be considered when comparing the
Fund's investment results with those published for other investment companies,
other investment vehicles and unmanaged indices. Results also should be
considered relative to the risks associated with the Fund's investment objective
and policies.
The Fund may from time to time compare its investment results with data
and mutual fund rankings published or prepared by Lipper Analytical Services,
Inc. and Morningstar, Inc., which rank mutual funds by overall performance,
investment objectives, and assets.
In addition, the Fund may from time to time compare their performance
with one or more of the following:
1. THE STANDARD & POOR'S 500 INDEX which 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.
2. The Goldman Sachs Internet Index
General Information
The Global Company was incorporated in Maryland as open-end management
investment company in September 1995.
The authorized capital stock of the Global Company is 1,000,000,000
shares of capital stock (par value $.0001 per share), of which 25,000,000 shares
have been designated as shares of the Internet Fund. The Board of Directors of
the Company may, in the future, authorize the issuance of other classes of
shares of the Fund, or of other series of capital stock representing shares of
additional investment portfolios or funds.
<PAGE>
DESCRIPTION OF CAPITAL SHARES
All shares of the Company have equal voting rights and will be voted in
the aggregate, and not by series, except where voting by series is required by
law or where the matter involved affects only one series. There are no
conversion or preemptive rights in connection with any shares. All shares of the
Fund when duly issued will be fully paid and non-assessable. The rights of the
holders of shares of the Fund may not be modified except by vote of the majority
of the outstanding shares of the Fund. Certificates are not issued unless
requested and are never issued for fractional shares. Fractional shares are
liquidated when an account is closed.
Shares of the Company have non-cumulative voting rights, which means
that the holders of more than 50% of all series of the Company's shares voting
for the election of the directors can elect 100% of the directors of the Company
if they wish to do so. In such event, the holders of the remaining less than 50%
of the shares of the Company voting for the election of directors will not be
able to elect any person to the Board of Directors of the Company.
The Company is not required to hold a meeting of stockholders in any
year in which the 1940 Act does not require a stockholder vote on a particular
matter, such as election of directors. The Company will hold a meeting of its
stockholders for the purpose of voting on the question of removal of one or more
directors if requested in writing by the holders of at least 10% of the
Company's outstanding voting securities, and will assist in communicating with
its stockholders as required by Section 16(c) of the 1940 Act.
Stockholders are entitled to one vote for each full share held and
fractional votes for fractional shares held. Unless otherwise provided by law or
its Articles of Incorporation or Bylaws, the Company generally may take or
authorize any extraordinary action upon the favorable vote of the holders of
more than 50% of the outstanding shares of the Company or may take or authorize
any routine action upon approval of a majority of the votes cast.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Company shall not be deemed to have been effectively acted
upon unless approved by a majority of the outstanding voting securities, as
defined in the 1940 Act, of the series or class of the Company affected by the
matter. Under Rule 18f-2, a series or class is presumed to be afffected by a
matter, unless the interests of each series or class in the matter are identical
or the matter does not affect any interest of such series or class. Under Rule
18f-2 the approval of an investment advisory agreement or any change in a
fundamental investment policy would be effectively acted upon with respect to a
Fund only if approved by a majority of its outstanding voting securities, as
defined in the 1940 Act. However, the rule also provides that the ratification
of independent accountants, the approval of principal underwriting contracts and
the election of directors may be effectively acted upon by the stockholders of
the Company voting without regard to the Fund.
Each share of the Fund represents an equal proportional interest in the
Fund with each other share and is entitled to such dividends and distributions
out of the income earned on the assets of the Fund as are declared in the
discretion of the Board of Directors. In the event of the liquidation or
dissolution of the Company, stockholders of the Fund are entitled to receive the
assets attributable to the Fund that are available for distribution, and a
distribution of any general assets not attributable to the Fund that are
available for distribution, will be distrbuted in such manner and on such
general basis as the Board of Directors may determine.
<PAGE>
ADDITIONAL INFORMATION
COUNSEL
Certain legal matters in connection with the capital shares offered by
the Prospectus have been passed upon for the Fund by Paul, Hastings, Janofsky &
Walker LLP. The validity of the capital stock offered by the Fund has been
passed upon by Venable, Baetjer and Howard, LLP. Paul, Hastings, Janofsky &
Walker LLP has acted and will continue to act as counsel to the Investment
Manager in various matters.
LICENSE AGREEMENT
Under License Agreements dated as of December 11, 1997, the Investment
Manager has granted the Company the right to use the "Dresdner RCM" name and has
reserved the right to withdraw its consent to the use of such name by the
Company at any time, or to grant the use of such name to any other company. In
addition, the Company has granted the Investment Manager, under certain
conditions, the right to use any other name it might assume in the future, with
respect to any other investment company sponsored by the Investment Manager.
REGISTRATION STATEMENT
The Fund's Prospectus and this SAI do not contain all of the
information set forth in the Company's registration statement and related forms
as filed with the SEC, certain portions of which are omitted in accordance with
rules and regulations of the SEC. The registration statement and related forms
may be inspected at the Public Reference Room of the SEC at Room 1024, 450 5th
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and copies thereof may be
obtained from the SEC at prescribed rates. It is also available on the SEC's
Internet Web site at http://www.sec.gov. Statements contained in the Prospectus
or this SAI as to the contents of any contract or other document referred to
herein or in the Prospectus are not necessarily complete, and, in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to the Company's registration statement, such statement being qualified
in all respects by such reference.
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS.
1. (a) Articles of Incorporation of Registrant are incorporated herein
by reference to Exhibit 1 of Pre-Effective Amendment No.1.
(b) Articles Supplementary to Articles of Incorporation of Registrant
with respect to RCM Global Health Care Fund, RCM Global Small Cap
Fund and RCM Large Cap Growth Fund, (currently known as Dresdner
RCM Global Health Care Fund, Dresdner RCM Global Small Cap Fund
and Dresdner RCM Large Cap Growth Fund, respectively), are
incorporated herein by reference to Exhibit 1(b) of
Post-Effective Amendment No. 2.
(c) Articles Supplementary to Articles of Incorporation of Registrant
with respect to Dresdner RCM Emerging Markets Fund are
incorporated herein by reference to Exhibit 1(c) of
Post-Effective Amendment No. 5.
(d) Articles Supplementary to Articles of Incorporation of Registrant
with respect to Dresdner RCM Biotechnology Fund are incorporated
herein by reference to Exhibit 1(d) of Post-Effective Amendment
No. 6.
(e) Articles of Amendment to Articles of Incorporation of Registrant
with respect to Dresdner RCM Global Technology Fund, Dresdner RCM
Global Health Care Fund, Dresdner RCM Global Small Cap Fund and
Dresdner RCM Large Cap Growth Fund, are incorporated herein by
reference to Exhibit 1(e) of Post-Effective Amendment No. 6.
(f) Articles of Amendment to Articles of Incorporation of Registrant
with respect to changing the corporate name of Dresdner RCM
Equity Funds, Inc. to Dresdner RCM Global Funds, Inc. are
incorporated herein by reference to Exhibit 1(f) of
Post-Effective Amendment No. 10.
(g) Articles of Amendment to Articles of Incorporation of Registrant,
with respect to changing the name of the existing shares of
capital stock of its Dresdner RCM Large Cap Growth Fund, Dresdner
RCM Global Small Cap Fund, Dresdner RCM Global Technology Fund,
and Dresdner RCM Emerging Markets Fund are incorporated herein by
reference to Exhibit 1(g) of Post-Effective Amendment No. 10.
(h) Articles Supplementary to Articles of Incorporation of Registrant
with respect to establishing a new class of capital stock for its
Dresdner RCM Large Cap Growth Fund, Dresdner RCM Global Small Cap
Fund, Dresdner RCM Global Technology Fund and Dresdner RCM
Emerging Markets Fund
C-3
<PAGE>
and establishing three new series of capital stock, Dresdner RCM
Tax Managed Growth Fund, Dresdner RCM Global Equity Fund and
Dresdner RCM Strategic Income Fund are incorporated herein by
reference to Exhibit 1(h) of Post-Effective Amendment No. 10.
(i) Articles Supplementary to Articles of Incorporation of Registrant
with respect to Dresdner RCM Balanced Fund is incorporated herein
by reference to Exhibit 1(i) of Post-Effective Amendment No. 14.
(j) Form of Articles Supplementary to Articles of Incorporation of
Registrant with respect to the Dresdner RCM Internet Fund is
filed herein as Exhibit 1(j).
2. (a) Bylaws of Registrant are incorporated herein by reference to
Exhibit 2 of Pre-Effective Amendment No. 2.
(b) Form of Amendments to Bylaws of Registrant are incorporated
herein by reference to Exhibit 2(b) of Post-Effective Amendment
No. 3.
3. (a) Proof of specimen of certificate for capital stock ($0.0001 par
value) of Registrant, on behalf of RCM Global Technology Fund
(currently known as Dresdner RCM Global Technology Fund), and
excerpts from Articles of Incorporation and Bylaws, are
incorporated herein by reference to Exhibit 4 of Pre-Effective
Amendment No. 2.
(b) Proof of specimen of certificate for capital stock ($0.0001 par
value) of Registrant, on behalf of RCM Global Health Care Fund
(currently known as Dresdner RCM Global Health Care Fund), is
incorporated herein by reference to Exhibit 4(b) of
Post-Effective Amendment No. 1.
(c) Proof of specimen of certificate for capital stock ($0.0001 par
value) of Registrant, on behalf of RCM Global Small Cap Fund
(currently known as Dresdner RCM Global Small Cap Fund), is
incorporated herein by reference to Exhibit 4(c) of
Post-Effective Amendment No. 1.
(d) Proof of specimen of certificate for capital stock ($0.0001 par
value) of Registrant, on behalf of RCM Large Cap Growth Fund
(currently known as Dresdner RCM Large Cap Growth Fund), is
incorporated herein by reference to Exhibit 4(d) of
Post-Effective Amendment No. 1.
(e) Proof of specimen of certificate for capital stock ($0.0001 par
value) of Registrant, on behalf of Dresdner RCM Emerging Markets
Fund, is incorporated herein by reference to Exhibit 4(e) of
Post-Effective Amendment No. 2.
C-4
<PAGE>
(f) Proof of specimen of certificate for capital stock ($0.0001 par
value) of Registrant, on behalf of Dresdner RCM Biotechnology
Fund, is incorporated herein by reference to Exhibit 4(f) of
Post-Effective Amendment No. 5.
(g) Proof of specimen of certificate for capital stock ($0.0001 par
value) of Registrant, on behalf of its Dresdner RCM Large Cap
Growth Fund Class N shares, is incorporated herein by reference
to Exhibit 4(g) of Post-Effective Amendment No. 10.
(h) Proof of specimen of certificate for capital stock ($0.0001 par
value) of Registrant, on behalf of its Dresdner RCM Global Small
Fund Class N shares, is incorporated herein by reference to
Exhibit 4(h) of Post-Effective Amendment No. 10.
(i) Proof of specimen of certificate for capital stock ($0.0001 par
value) of Registrant, on behalf of its Dresdner RCM Global
Technology Fund Class N shares, is incorporated herein by
reference to Exhibit 4(i) of Post-Effective Amendment No. 10.
(j) Proof of specimen of certificate for capital stock ($0.0001 par
value) of Registrant, on behalf of its Dresdner RCM Emerging
Markets Fund Class N shares, is incorporated herein by reference
to Exhibit 4(j) of Post-Effective Amendment No. 10.
(k) Proof of specimen of certificates for capital stock ($0.0001 par
value) of Registrant, on behalf of its Dresdner RCM Tax Managed
Growth Fund Class N and I shares, are incorporated herein by
reference to Exhibit 4(k) of Post-Effective Amendment No. 10.
(l) Proof of specimen of certificates for capital stock ($0.0001 par
value) of Registrant, on behalf of its Dresdner RCM Global Equity
Fund Class N and I shares, are incorporated herein by reference
to Exhibit 4(l) of Post-Effective Amendment No.10.
(m) Proof of specimen of certificates for capital stock ($0.0001 par
value) of Registrant, on behalf of its Dresdner RCM Strategic
Income Fund Class N and I shares, are incorporated herein by
reference to Exhibit 4(m) of Post-Effective Amendment No. 10.
(n) Proof of specimen of certificate for capital stock ($.0001 par
value) of Registrant, on behalf of its Dresdner RCM Balanced
Fund, is incorporated herein by reference to Exhibit 3(n) of
Post-Effective Amendment No. 12.
C-5
<PAGE>
(o) Proof of specimen of certificate for capital stock ($.0001 par
value) of Registrant, on behalf of its Dresdner RCM Internet Fund
Class N shares, is filed herein as Exhibit 3(o).
4. (a) Investment Management Agreement, Power of Attorney and Service
Agreement between Registrant, on behalf of RCM Global Technology
Fund (currently known as Dresdner RCM Global Technology Fund),
and RCM Capital Management, L.L.C., (currently known as Dresdner
RCM Global Investors LLC), dated as of June 14, 1996, is
incorporated herein by reference to Exhibit 5(a) of
Post-Effective Amendment No. 1.
(b) Investment Management Agreement, Power of Attorney and Service
Agreement between Registrant, on behalf of RCM Global Health Care
Fund (currently known as Dresdner RCM Global Health Care Fund)
and RCM Capital Management, L.L.C., (currently known as Dresdner
RCM Global Investors LLC) dated as of December 27, 1996 and
Appendix A (Schedule of Fees) dated as of December 30, 1997, are
incorporated herein by reference to Exhibit 5(b) of
Post-Effective Amendment No. 6.
(c) Investment Management Agreement, Power of Attorney and Service
Agreement between Registrant, on behalf of RCM Global Small Cap
Growth Fund (currently known as Dresdner RCM Small Cap Growth
Fund), and RCM Capital Management, L.L.C., (currently known as
Dresdner RCM Global Investors LLC) dated as of December 27, 1996
and Appendix A (Schedule of Fees) dated as of December 30, 1997,
are incorporated herein by reference to Exhibit 5(c) of
Post-Effective Amendment No. 6.
(d) Investment Management Agreement, Power of Attorney and Service
Agreement between Registrant, on behalf of RCM Large Cap Growth
Fund, (currently known as Dresdner RCM Large Cap Growth Fund) and
RCM Capital Management, L.L.C., (currently known as Dresdner RCM
Global Investors LLC) dated as of December 27, 1996 and Appendix
A (Schedule of Fees) dated as of December 30, 1997, are
incorporated herein by reference to Exhibit 5(d) of
Post-Effective Amendment No. 6.
(e) Investment Management Agreement, Power of Attorney and Service
Agreement and Appendix A (Schedule of Fees) between Registrant,
on behalf of Dresdner RCM Emerging Markets Fund and RCM Capital
Management, L.L.C. (currently known as Dresdner RCM Global
Investors LLC) dated as of December 30, 1997, are incorporated
herein by reference to Exhibit 5(e) of Post-Effective Amendment
No. 6.
(f) Investment Management Agreement, Power of Attorney and Service
Agreement and Appendix A (Schedule of Fees) between Registrant,
on behalf of Dresdner RCM Biotechnology Fund and Dresdner RCM
Global
C-6
<PAGE>
Investors LLC dated as of December 30, 1997, are incorporated
herein by reference to Exhibit 5(f) of Post-Effective Amendment
No. 6.
(g) Investment Management Agreement, Power of Attorney and Service
Agreement and Appendix A (Schedule of Fees) between Registrant,
on behalf of Dresdner RCM Tax Managed Growth Fund and Dresdner
RCM Global Investors LLC dated as of December 30, 1998, are
incorporated herein by reference to Exhibit 5(g) of
Post-Effective Amendment No. 10.
(h) Investment Management Agreement, Power of Attorney and Service
Agreement and Appendix A (Schedule of Fees) between Registrant,
on behalf of Dresdner RCM Global Equity Fund and Dresdner RCM
Global Investors LLC dated as of December 30, 1998, are
incorporated herein by reference to Exhibit 5(h) of
Post-Effective Amendment No. 10.
(i) Investment Management Agreement, Power of Attorney and Service
Agreement and Appendix A (Schedule of Fees) between Registrant,
on behalf of Dresdner RCM Strategic Income Fund and Dresdner RCM
Global Investors LLC dated as of December 30, 1998, are
incorporated herein by reference to Exhibit 5(i) of
Post-Effective Amendment No. 10.
(j) Form of Investment Management Agreement, Power of Attorney and
Service Agreement and Appendix A (Schedule of Fees) between
Registrant, on behalf of its Dresdner RCM Balanced Fund and
Dresdner RCM Global Investors LLC dated as of December 15, 1999
are incorporated herein by reference to Exhibit 4(j) of
Post-Effective Amendment No. 14.
(k) Form of Investment Management Agreement, Power of Attorney and
Service Agreement and Appendix A (Schedule of Fees) between
Registrant, on behalf of its Dresdner RCM Internet Fund and
Dresdner RCM Global Investors LLC dated as of __________________
are filed herein as Exhibit 4(k).
5. (a) Distribution Agreement between Registrant and Funds Distributor
Inc., dated June 13, 1996 is incorporated herein by reference to
Exhibit 6(b) of Post-Effective Amendment No. 1.
(b) Service Agreement among RCM Capital Management, a California
Limited Partnership, (currently known as Dresdner RCM Global
Investors LLC), RCM Equity Funds, Inc., RCM Capital Funds, Inc.
(currently known as Dresdner RCM Global Funds, Inc. and Dresdner
RCM Capital Funds, Inc., respectively) and Funds Distributor,
Inc. ("FDI"), dated June 13, 1996, is incorporated herein by
reference to Exhibit 6(a) of Post-Effective Amendment No. 1.
C-7
<PAGE>
(c) Fee Letter Agreement between Registrant, RCM Capital Management,
a California Limited Partnership, (currently known as Dresdner
RCM Global Investors LLC), RCM Equity Funds, Inc., RCM Capital
Funds, Inc. (currently known as Dresdner RCM Global Funds, Inc.
and Dresdner RCM Capital Funds, Inc., respectively) and Funds
Distributor Inc., dated June 13, 1996 is incorporated herein by
reference to Exhibit 6(c) of Post-Effective Amendment No. 1.
(d) Form of Selling Agreement is incorporated herein by reference to
Exhibit 6(d) of Post-Effective Amendment No. 1.
6. None
7. (a) Custodian Contract and remuneration schedule between Registrant,
on behalf of RCM Global Technology Fund (currently known as
Dresdner RCM Global Technology Fund) and State Street Bank and
Trust Company is incorporated herein by reference to Exhibit 8(a)
of Post-Effective Amendment No. 5.
(b) Form of Amendment to Custodian Contract between Registrant, on
behalf of RCM Global Health Care Fund (currently known as
Dresdner RCM Global Health Care Fund), and State Street Bank and
Trust Company is incorporated herein by reference to Exhibit 8(b)
of Post-Effective Amendment No. 1.
(c) Form of Amendment to Custodian Contract between Registrant, on
behalf of RCM Global Small Cap Fund (currently known as Dresdner
RCM Global Small Cap Fund), and State Street Bank and Trust
Company is incorporated herein by reference to Exhibit 8(c) of
Post-Effective Amendment No. 1.
(d) Form of Amendment to Custodian Contract between Registrant, on
behalf of RCM Large Cap Growth Fund (currently known as Dresdner
RCM Large Cap Growth Fund), and State Street Bank and Trust
Company is incorporated herein by reference to Exhibit 8(d) of
Post-Effective Amendment No. 1.
(e) Custodian Agreement between Registrant, on behalf of Dresdner RCM
Emerging Markets Fund, and Brown Brothers Harriman & Co. is
incorporated herein as Exhibit 8(e) of Post-Effective Amendment
No. 6.
(f) Amendment to Custodian Agreement between Registrant on behalf of
Dresdner RCM Emerging Markets Fund and Brown Brothers Harriman &
Co. is incorporated herein by reference to Exhibit 8(f) of
Post-Effective Amendment No. 6.
C-8
<PAGE>
(g) Form of Amendment to Custodian Contract between Registrant, on
behalf of Dresdner RCM Biotechnology Fund, and State Street Bank
and Trust Company is incorporated herein by reference to Exhibit
8(g) of Post-Effective Amendment No. 5.
(h) Form of Amendment to Custodian Contract between Registrant, on
behalf of Dresdner RCM Tax Managed Growth Fund, Dresdner RCM
Global Equity Fund, and Dresdner RCM Strategic Income Fund is
incorporated herein by reference to Exhibit 8(h) of
Post-Effective Amendment No. 8.
(i) Form of Amendment to Custodian Contract between Registrant, on
behalf of Dresdner RCM Balanced Fund and State Street Bank and
Trust Company is incorporated herein by reference to Exhibit 7(i)
of Post-Effective Amendment No. 14.
(j) Form of Amendment to Custodian Contract between Registrant, on
behalf of Dresdner RCM Internet Fund and State Street Bank and
Trust Company is filed herein as Exhibit 7(j).
8. (a) License Agreement between Dresdner RCM Global Investors LLC and
Registrant relating to the use by Registrant of the mark
"Dresdner RCM", is incorporated herein by reference to Exhibit
9(a) of Post-Effective Amendment No. 6.
(b) Form of Transfer Agency Agreement between Registrant and State
Street Bank and Trust Company is incorporated herein by reference
to Exhibit 9(b) of Post-Effective Amendment No. 10.
(c) Form of Administration Agreement between Registrant and State
Street Bank and Trust Company is incorporated herein by
referenced to Exhibit 8(c) of Post-Effective Amendment No. 11.
9. (a) Opinion and consent of Venable, Baetjer and Howard LLP in
connection with the establishment of the Dresdner RCM Tax Managed
Growth Fund, Dresdner RCM Strategic Income Fund and Dresdner RCM
Strategic Income Fund, is incorporated herein by reference to
Exhibit 10(b) of Post-Effective Amendment No. 10.
(b) Opinion and consent of Venable, Baetjer and Howard LLP in
connection with the issuance of Class N shares of the Dresdner
RCM Large Cap Growth Fund, Dresdner RCM Global Small Cap Fund,
Dresdner RCM Global Technology Fund and Dresdner RCM Emerging
Markets Fund, is incorporated herein by reference to
Exhibit 10(c) of Post-Effective Amendment No. 10.
C-9
<PAGE>
(c) Opinion and consent of Venable, Baetjer and Howard LLP in
connection with the issuance of Class I shares of the Dresdner
RCM Balanced Fund is incorporated herein by reference to Exhibit
9(c) of Post-Effective Amendment No. 14.
10. (a) Power of Attorney for DeWitt F. Bowman, Pamela A. Farr, George
G.C. Parker and George B. James is incorporated herein by
reference to Exhibit 10(a) of Post-Effective Amendment No. 14.
11. None
12. (a) Investment Letter of initial investors in the Technology Fund is
incorporated herein by reference to Exhibit 13 of Pre-Effective
Amendment No. 1.
(b) Investment Letter of initial investors in the Large Cap Fund,
Global Small Cap Fund and Health Care Fund is incorporated herein
by reference to Exhibit 13(b) of Post-Effective Amendment No. 7.
(c) Subscription Agreement for initial stockholder of the Dresdner
RCM Biotechnology Fund is incorporated herein by reference to
Exhibit 13(c) of Post-Effective Amendment No. 7.
(d) Subscription Agreement for initial stockholder of the Dresdner
RCM Emerging Markets Fund is incorporated herein by reference to
Exhibit 13(d) of Post-Effective Amendment No. 7.
(e) Investment Letter of initial investor in the Dresdner RCM
Balanced Fund is incorporated herein by reference to Exhibit
12(c) of Post-Effective Amendment No. 14.
13. (a) Form of Rule 12b-1 Plan of Registrant, on behalf of Dresdner RCM
Global Health Care Fund is incorporated herein by reference to
Exhibit 15(a) of Post-Effective Amendment No. 9.
(b) Form of Rule 12b-1 Plan of Registrant, on behalf of Dresdner RCM
Biotechnology Fund is incorporated herein by reference to Exhibit
15(b) of Post-Effective Amendment No. 6.
(d) Rule 12b-1 Plan of Registrant, on behalf of the Class N shares of
the series listed on Appendix A (dated December 14, 1998) is
incorporated herein by reference to Post-Effective Amendment No.
10.
(e) Form of Amended Appendix A to Rule 12b-1 Plan of Registrant,
dated as of __________________ is filed herein as Exhibit 13(e).
14. None
C-10
<PAGE>
15. Multiple Class of Shares Plan of Registrant, on behalf of the series
listed on Appendix A (dated December 14, 1998) pursuant to Rule 18f-3,
is incorporated herein by reference to Post-Effective
Amendment No. 10.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None
ITEM 25. INDEMNIFICATION.
Section 2-418 of the General Corporation Law of Maryland empowers a
corporation to indemnify directors and officers of the corporation under various
circumstances as provided in such statute. A director or officer who has been
successful on the merits or otherwise, in the defense of any proceeding, must be
indemnified against reasonable expenses incurred by such person in connection
with the proceeding. Reasonable expenses may be paid or reimbursed by the
corporation in advance of the final disposition of the proceeding, after a
determination that the facts then known to those making the determination would
not preclude indemnification under the statute, and following receipt by the
corporation of a written affirmation by the person that his or her standard of
conduct necessary for indemnification has been met and upon delivery of a
written undertaking by or on behalf of the person to repay the amount advanced
if it is ultimately determined that the standard of conduct has not been met.
Article VI of the Bylaws of Registrant contains indemnification
provisions conforming to the above statute and to the provisions of Section 17
of the Investment Company Act of 1940, as amended.
The Registrant and the directors and officers of Registrant obtained
coverage under an Errors and Omissions insurance policy. The terms and
conditions of the policy coverage conforms generally to the standard coverage
available throughout the investment company industry. The coverage also applies
to Registrant's investment manager and its members and employees.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Registrant pursuant to the provisions of Maryland law and Registrant's Articles
of Incorporation and Bylaws, or otherwise, Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in said Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses incurred or paid
by a director, officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
C-11
<PAGE>
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Registrant's investment manager, Dresdner RCM Global Investors LLC, is
a Delaware limited liability company, whose two members are Dresdner Bank AG
("Dresdner") and Dresdner Kleinwort Benson North America, Inc. ("Dresdner
Kleinwort Benson"). Dresdner is an international banking organization whose
principal executive offices are located at Gallunsanlage 7, 60041 Frankfurt am
Main, Frankfurt, Germany. Dresdner Kleinwort Benson is an indirect wholly owned
subsidiary of Dresdner whose principal executive offices are located at 75 Wall
Street, New York, New York 10005.
The individuals who sit on the Board of Managers of Dresdner RCM have held
the following director or officer positions within the past two fiscal years:
<TABLE>
<CAPTION>
NAME OF THE OFFICER OR BUSINESS AFFILIATIONS ADDRESS
MEMBER OF THE BOARD OF
MANAGERS
<S> <C> <C>
Gerhard Eberstadt Dresdner Bank AG Jurgen-Ponto-Platz 1
(May 1998 - present) D-60301
Frankfurt am Main
Germany
Chairman, Dresdner Kleinwort 75 Wall Street
Benson North America, Inc. New York, NY 10005
(September 1996 - present)
Director, KBIMA (December 75 Wall Street
1997 - present) New York, NY 10005
</TABLE>
C-12
<PAGE>
<TABLE>
<CAPTION>
NAME OF THE OFFICER OR BUSINESS AFFILIATIONS ADDRESS
MEMBER OF THE BOARD OF
MANAGERS
<S> <C> <C>
Leonard H. Fisher Dresdner Bank AG Jurgen-Ponto-Platz 1
Institutional Asset Management D-60301
(January 1998-present) Frankfurt am Main
Germany
George N. Fugelsang President, Chief Executive 75 Wall Street
Officer, Chairman, Dresdner New York NY 10005
Kleinwort Benson North
America LLC (February 1994 -
present)
Director, Dresdner Kleinwort 75 Wall Street
Benson North America Services New York, NY 10005
LLC (September 1996 -
present); Director, KBIMA
(December 1997 - present)
Director, KBIMA (December 1997 - 75 Wall Street
present) New York, NY 10005
</TABLE>
C-13
<PAGE>
<TABLE>
<CAPTION>
NAME OF THE OFFICER OR BUSINESS AFFILIATIONS ADDRESS
MEMBER OF THE BOARD OF
MANAGERS
<S> <C> <C>
Susan C. Gause Dresdner RCM (July 1994 - Four Embarcadero Center
present) San Francisco, CA 94111
Chief Operating Officer, Senior Four Embarcadero Center
Managing Director, and San Francisco, CA 94111
Member of the Board of
Managers (July 1998-present)
Luke D. Knecht Managing Director (July 1998- Four Embarcadero Center
present), Member of the Board San Francisco, CA 94111
of Managers, Dresdner RCM
(November 1997 - present)
Joachim Madler Director, Dresdner Bank AG Mainzer Lanstra(beta) 15-17
(September 1997 - present) 60301 Frankfurt
Germany
Director, KBIMA (December 75 Wall Street
1997 - present); New York, NY 10005
Director, Dresdner (South East Singapore
Asia) (October 1997 - present)
Managing Director, Dresdner Farberstra(beta)e 6,
Bank (Schweiz) AG (November Zurich, Switzerland
1997 - present)
Chairman, DFV Deutsche Fonds Mainzer Lanstra(beta)e 11-13
und Vorsorgeberatungs (July 60301 Frankfurt
1996 - June 1997) Germany
Deutscher Investment-Trust Mainzer Lanstra(beta)e 11-13
(June 1996 - June 1997) 60301 Frankfurt
Germany
Managing Director, GKS Windmuhlweg 12
Gesellschaft fur Kontenservice 95030 Hof
GmbH (June 1994 - June 1997) Germany
</TABLE>
C-14
<PAGE>
<TABLE>
<CAPTION>
NAME OF THE OFFICER OR BUSINESS AFFILIATIONS ADDRESS
MEMBER OF THE BOARD OF
MANAGERS
<S> <C> <C>
William L. Price Chief Executive Officer and Four Embarcadero Center
Global Chief Investment Officer, San Francisco, CA 94111
Dresdner RCM (July 1998 -
present)
Chairman and Member of the Four Embarcadero Center
Board of Managers, Senior San Francisco, CA 94111
Managing Director, Dresdner
RCM (December 1997 -
present)
Director, KBIMA (December 75 Wall Street
1997- present) New York, NY 10005
Director, Dresdner RCM (UK) 10 Fenchurch Street
(January 1998 - present) London, UK EC3M3LB
William S. Stack Senior Managing Director, Four Embarcadero Center
Global Equity Chief Investment San Francisco, CA 94111
Officer (July 1998 - present);
Member of the Board of
Managers, Dresdner RCM
(August 1994 - present)
Director, KBIMA (December 75 Wall Street
1997 - present) New York, NY 10005
Director, Dresdner RCM (UK) 10 Fenchurch Street
(January 1998 - present) London, UK EC3M3LB
Kenneth B. Weeman, Jr. Dresdner RCM (October 1979 - Four Embarcadero Center
present) San Francisco, CA 94111
Vice Chairman, Senior Four Embarcadero Center
Managing Director (July 1998 - San Francisco, CA 94111
present)
Director, Dresdner RCM (UK) 10 Fenchurch Street
(January 1998 - present) London, UK EC3M3LB
</TABLE>
C-15
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) Funds Distributor, Inc. ("FDI"), whose principal offices are
located at 60 State Street, Suite 1300, Boston Massachusetts
02109, is the principal underwriter of Registrant. FDI is an
indirect, wholly owned subsidiary of Boston Institutional
Group, Inc., a holding company, all of whose outstanding
shares are owned by key employees. FDI is registered with the
Securities and Exchange Commission as a broker-dealer and is a
member of the National Association of Securities Dealers. FDI
also serves as principal underwriter for the following
investment companies:
American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
The Brinson Funds
CDC MPT+Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Investment Funds Inc.
J.P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
LaSalle Partners Funds, Inc.
Merrimac Series
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds I
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
National Investors Cash Management Fund, Inc.
Nomura Pacific Basin Fund, Inc.
Orbitex Group of Funds
The Saratoga Advantage Trust
C-16
<PAGE>
SG Cowen Funds, Inc.
SG Cowen Income + Growth Fund, Inc.
SG Cowen Standby Reserve Fund, Inc.
SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
SG Cowen Series Funds, Inc.
St. Clair Funds, Inc.
The Skyline Funds
TD Waterhouse Family of Funds, Inc.
TD Waterhouse Trust
FDI does not act as a depositor or investment adviser of any
investment company.
(b) The following is a list of the executive officers, directors
and partners of FDI:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES WITH FUNDS POSITIONS AND OFFICES WITH
BUSINESS ADDRESS DISTRIBUTOR, INC. REGISTRANT
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Marie E. Connolly Director, President and Chief None
Executive Officer
George A. Rio Executive Vice President None
Donald R. Roberson Executive Vice President None
William S. Nichols Executive Vice President None
Margaret W. Chambers Senior Vice President, General None
Counsel, Chief Compliance Officer,
Secretary and Clerk
Joseph F. Tower III Director, Senior Vice President and None
Treasurer
Gary S. MacDonald Senior Vice President None
Judith K. Benson Senior Vice President None
William J. Nutt Chairman and Directorresident None
William J. Nutt Chairman and Director None
William J. Stetter Vice President and Chief Financial None
Officer
</TABLE>
(c) Not Applicable.
C-17
<PAGE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2
under the Investment Company Act of 1940, as amended, are maintained and held in
the offices of Registrant's investment manager, Dresdner RCM Global Investors
LLC, Four Embarcadero Center, San Francisco, California 94111; and/or
Registrant's distributor, Funds Distributor, Inc., 60 State Street, Suite 1300,
Boston, Massachusetts 02109.
Records covering portfolio transactions are also maintained and kept by
Registrant's custodian and transfer agent, State Street Bank and Trust Company,
U.S. Mutual Funds Services Division, P.O. Box 1713, Boston, Massachusetts 02105
and Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts 02109,
with respect to Dresdner RCM Emerging Markets Fund.
ITEM 29. MANAGEMENT SERVICES.
None
ITEM 30. UNDERTAKINGS.
Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders, upon
request and without charge.
C-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Dresdner RCM Global Funds, Inc. has duly caused
this Post-Effective Amendment No. 17 to the Registration Statement pursuant to
Rule 485(a) under the Securities Act of 1933 to be signed on its behalf by
the undersigned, thereunto duly authorized, in San Francisco, California, on
April 17, 2000.
DRESDNER RCM GLOBAL FUNDS, INC.
By: /s/ANTHONY AIN, President
--------------
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 17 to the Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.
SIGNATURE DATE
(1) Directors April 17, 2000
/s/DEWITT F. BOWMAN*
--------------------
DeWitt F. Bowman
<PAGE>
SIGNATURE TITLE DATE
/S/ PAMELA A. FARR* April 17, 2000
-----------------------------
Pamela A. Farr
/S/ GEORGE B. JAMES* April 17, 2000
-----------------------------
George B. James
/S/ GEORGE G.C. PARKER* April 17, 2000
-----------------------------
George G.C. Parker
By: /S/ ANTHONY AIN April 17, 2000
---------------
Anthony Ain
as Attorney-in-Fact
- - By Anthony Ain, pursuant to a Power of Attorney dated December 8, 1999.
<PAGE>
EXHIBIT LIST
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
<S> <C>
1(j) Form of Articles Supplementary
3(o) Certificate of Capital Stock - Dresdner RCM Internet Fund
4(k) Form of Investment Management Agreement - Dresdner RCM Internet Fund
7(j) Form of Amendment to Custodian Contract
13(e) Form of Amended Appendix A to Rule 12b-1 Plan
</TABLE>
<PAGE>
Exhibit 1(j)
FORM OF
DRESDNER RCM GLOBAL FUNDS, INC.
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
- --------------------------------------------------------------------------------
Dresdner RCM Global Funds, Inc., a Maryland corporation having its principal
office in the State of Maryland in Baltimore City (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Board of Directors has classified 25,000,000 unissued shares
of capital stock, par value $.0001 per share, of the Corporation, which shares
are currently unclassified, into shares of capital stock, par value $.0001 per
share, of the Corporation of a new series of capital stock, the series having
one class with the following designation:
DESIGNATION NUMBER OF SHARES
Dresdner RCM Internet Fund Class N 25,000,000
SECOND: The Shares of Dresdner RCM Internet Fund Class N of the
Corporation so classified by the Board of Directors shall have the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption set forth in
Article IV(5) of the Corporation's Articles of Incorporation and shall be
subject to all provisions of the Charter of the Corporation relating to stock of
the Corporation generally.
THIRD: The Dresdner RCM Internet Fund Class N shares, as classified
above, have been classified by the Board of Directors pursuant to authority
contained in the Charter of the Corporation.
IN WITNESS WHEREOF, Dresdner RCM Global Funds, Inc. has caused these
Articles Supplementary to be executed by its President and witnessed by its
Assistant Secretary on this __ day of _________, 2000. The President of the
Corporation who signed these Articles Supplementary acknowledges them to be the
act of the Corporation and states under penalties of perjury that, to the best
of his knowledge, information and belief, the matters and facts set forth herein
relating to authorization and approval hereof are true in all material respects.
WITNESS: DRESDNER RCM GLOBAL FUNDS, INC.
By:__________________________ By:_________________________________
<PAGE>
Exhibit 3(o)
INCORPORATED UNDER THE LAWS OF
THE STATE OF MARYLAND
DRESDNER RCM GLOBAL FUNDS, INC.
DRESDNER RCM INTERNET FUND
CLASS N
(Par Value $0.0001)
THIS CERTIFIES THAT _______________________ IS THE REGISTERED HOLDER OF
_________________________ SHARES OF THE DRESDNER RCM INTERNET FUND CLASS N of
common stock of DRESDNER RCM GLOBAL FUNDS, INC. TRANSFERABLE ONLY ON THE BOOKS
OF THE CORPORATION BY THE HOLDER HEREOF IN PERSON OR BY ATTORNEY UPON SURRENDER
OF THIS CERTIFICATE PROPERLY ENDORSED.
IN WITNESS WHEREOF, THE SAID CORPORATION HAS CAUSED THIS CERTIFICATE TO
BE SIGNED BY ITS DULY AUTHORIZED OFFICERS AND ITS CORPORATE SEAL TO BE HEREUNTO
AFFIXED
THIS ___________________ DAY OF __________________________ AD.__________________
--------------------- -------------------------------
Secretary President
SHARES Par Value Each
$0.0001
Page 1
<PAGE>
Exhibit 3(o)
CERTIFICATE
FOR
SHARES
DRESDNER RCM INTERNET FUND
Class N of Common Stock of
DRESDNER RCM GLOBAL FUNDS, INC.
ISSUED TO:_________________________________
DATED:_____________________________________
THIS CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF
CAPITAL STOCK AND THE BOARD OF DIRECTORS MAY AUTHORIZE ADDITIONAL
CLASSES OF CAPITAL STOCK. THE CORPORATION WILL FURNISH A FULL
STATEMENT OF THE BOARD OF DIRECTORS' AUTHORITY AND OF THE
DESIGNATIONS AND ANY PREFERENCES, CONVERSION AND OTHER RIGHTS,
VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS,
QUALIFICATIONS AND TERMS AND CONDITIONS OF REDEMPTION OF THE STOCK
OF EACH CLASS WHICH THE CORPORATION IS AUTHORIZED TO ISSUE TO ANY
STOCKHOLDER UPON REQUEST WITHOUT CHARGE.
FOR VALUE RECEIVED, _________________________ HEREBY SELL, ASSIGN AND TRANSFER
UNTO____________________________________________________________________________
SHARES REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY
CONSTITUTE AND APPOINT__________________________________________________
ATTORNEY TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN NAMED
CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED___________________
In presence of ____________________________
Page 2
<PAGE>
Exhibit 4(k)
FORM OF
INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY
AND SERVICE AGREEMENT
THIS AGREEMENT is entered into this ___ day of June, 2000 by and between
Dresdner RCM Global Funds, Inc. (the "Company"), on behalf of Dresdner RCM
Internet Fund, a series of the Company (the "Fund") and Dresdner RCM Global
Investors LLC (the "Investment Manager").
1. APPOINTMENT AND ACCEPTANCE OF APPOINTMENT OF THE INVESTMENT MANAGER
(a) Subject to express provisions and limitations set forth in the
Company's Articles of Incorporation, Bylaws, Form N-1A Registration
Statement under the Investment Company Act of 1940, as amended (the "1940
Act") and under the Securities Act of 1933, as amended (the "1933 Act"),
and the Fund's prospectus as in use from time to time, as well as to the
factors affecting the Company's status as a regulated investment company
under the Internal Revenue Code of 1986, as amended, the Company hereby
grants to the Investment Manager and the Investment Manager hereby accepts
full discretionary authority to manage the investment and reinvestment of
the cash, securities, and other assets of the Fund (the "Portfolio")
presently held by State Street Bank & Trust Company (the "Custodian"), any
proceeds thereof, and any additions thereto, in the Investment Manager's
discretion. In the performance of its duties hereunder, the Investment
Manager shall further be bound by any and all determinations by the Board
of Directors of the Company relating to the investment objectives policies
or restrictions of the Fund, which determinations shall be communicated in
writing to the Investment Manager. For all purposes herein, the Investment
Manager shall be deemed an independent contractor of the Company.
2. POWERS OF THE INVESTMENT MANAGER
Subject to the limitations provided in Section 1 hereof, the Investment
Manager is empowered hereby, through any of its partners, principals, or
appropriate employees, for the benefit of the Fund:
(a) to invest and reinvest in shares, stocks, bonds, notes and other
obligations of every description issued or incurred by governmental
bodies, corporations, mutual funds, trusts, associations or firms, in
trade acceptances and other commercial paper, and in loans and
deposits at interest on call or on time, whether or not secured by
collateral;
(b) to purchase and sell commodities or commodities contracts and
investments in put, call, straddle, or spread options;
(c) to enter into forward, future, or swap contracts with respect to the
purchase and sale of securities, currencies, commodities, and
commodities contracts;
<PAGE>
Exhibit 4(k)
(d) to lend its portfolio securities to brokers, dealers and other
financial institutions;
(e) to buy, sell, or exercise options, rights and warrants to subscribe
for stock or securities;
(f) to engage in any other types of investment transactions described in
the Fund's Prospectus and Statement of Additional Information; and
(g) to take such other action, or to direct the Custodian to take such
other action, as may be necessary or desirable to carry out the purpose
and intent of the foregoing.
3. EXECUTION OF PORTFOLIO TRANSACTIONS
(a) The Investment Manager shall provide adequate facilities and qualified
personnel for the placement of, and shall place, orders for the purchase,
or other acquisition, and sale, or other disposition, of portfolio
securities or other portfolio assets for the Fund.
(b) Unless otherwise specified in writing to the Investment Manager by the
Fund, all orders for the purchase and sale of securities for the Portfolio
shall be placed in such markets and through such brokers as in the
Investment Manager's best judgment shall offer the most favorable price and
market for the execution of each transaction; provided, however, that,
subject to the above, the Investment Manager may place orders with
brokerage firms that have sold shares of the Fund or that furnish
statistical and other information to the Investment Manager, taking into
account the value and quality of the brokerage services of such firms,
including the availability and quality of such statistical and other
information. Receipt by the Investment Manager of any such statistical and
other information and services shall not be deemed to give rise to any
requirement for abatement of the advisory fee payable to the Investment
Manager pursuant to Section 5 hereof and Appendix A hereto.
(c) The Fund understands and agrees that the Investment Manager may effect
securities transactions which cause the Fund to pay an amount of commission
in excess of the amount of commission another broker would have charged,
provided, however, that the Investment Manager determines in good faith
that such amount of commission is reasonable in relation to the value of
Fund share sales, statistical, brokerage and other services provided by
such broker, viewed in terms of either the specific transaction or the
Investment Manager's overall responsibilities to the Fund and other clients
for which the Investment Manager exercises investment discretion. The Fund
also understands that the receipt and use of such services will not reduce
the Investment Manager's customary and normal research activities.
(d) The Fund understands and agrees that:
(i) the Investment Manager performs investment management services for
various clients and that the Investment Manager may take action with
respect to any of its other clients which may differ from action taken or
from the timing or nature of action taken with respect to the Portfolio, so
long as it is the Investment Manager's policy, to the extent practical, to
allocate investment opportunities to the Portfolio over a period of time on
a fair and equitable basis relative to other clients;
<PAGE>
Exhibit 4(k)
(ii) the Investment Manager shall have no obligation to purchase or
sell for the Portfolio any security which the Investment Manager, or its
principals or employees, may purchase or sell for its or their own accounts
or the account of any other client, if in the opinion of the Investment
Manager such transaction or investment appears unsuitable, impractical or
undesirable for the Portfolio;
(iii) on occasions when the Investment Manager deems the purchase or
sale of a security to be in the best interests of the Fund as well as other
clients of the Investment Manager, the Investment Manager, to the extent
permitted by applicable laws and regulations, may aggregate the securities
to be so sold or purchased when the Investment Manager believes that to do
so will be in the best interests of the Fund. In such event, allocation of
the securities so purchased or sold, as well as the expenses incurred in
the transaction, shall be made by the Investment Manager in the manner the
Investment Manager considers to be the most equitable and consistent with
its fiduciary obligations to the Fund and to such other clients; and
(iv) the Investment Manager does not prohibit any of its principals or
employees from purchasing or selling for their own accounts securities that
may be recommended to or held by the Investment Manager's clients, subject
to the provisions of the Investment Manager's Code of Ethics and that of
the Company.
4. ALLOCATION OF EXPENSES OF THE COMPANY AND THE FUND
(a) The Investment Manager will bear all expenses related to salaries of
its employees and to the Investment Manager's overhead in connection with
its duties under this Agreement. The Investment Manager also will pay all
fees and salaries of the Company's directors and officers who are
affiliated persons (as such term is defined in the 1940 Act) of the
Investment Manager.
(b) Except for the expenses specifically assumed by the Investment
Manager, the Fund will pay all of its expenses, including, without
limitation, fees and expenses of the directors not affiliated with the
Investment Manager attributable to the Fund; fees of the Investment
Manager; fees of the Fund's administrator, custodian and subcustodians for
all services to the Fund (including safekeeping of funds and securities and
maintaining required books and accounts); transfer agent, registrar and
dividend reinvestment and disbursing agent; interest charges; taxes;
charges and expenses of the Fund's legal counsel and independent
accountants; charges and expenses of legal counsel provided to the
non-interested directors of the Company; expenses of repurchasing shares of
the Fund; expenses of printing and mailing share certificates, stockholder
reports, notices, proxy statements and reports to governmental agencies;
brokerage and other expenses connected with the execution, recording and
settlement of portfolio security transactions; expenses connected with
negotiating or effecting purchases or sales of portfolio securities or
registering privately issued portfolio securities; expenses of calculating
and publishing the net asset value of the Fund's shares; expenses of
membership in investment company associations; premiums and other costs
associated with the acquisition of a mutual fund directors and officers
errors and omissions liability insurance policy; expenses of fidelity
bonding and other insurance premiums; expenses of stockholders' meetings;
and SEC and state blue sky registration fees.
<PAGE>
Exhibit 4(k)
(c) The expenses borne by the Fund pursuant to Section 4(b) shall include
the Fund's proportionate share of any such expenses of the Company, which
shall be allocated among the Fund and the other series of the Company on
such basis as the Company shall deem appropriate.
5. COMPENSATION OF THE INVESTMENT MANAGER
(a) In consideration of the services performed by the Investment Manager
hereunder, the Funds will pay or cause to be paid to the Investment
Manager, as they become due and payable, management fees determined in
accordance with the attached Schedule of Fees (Appendix A). In the event of
termination, any management fees paid in advance pursuant to such fee
schedule will be prorated as of the date of termination and the unearned
portion thereof will be returned to the Fund.
(b) The net asset value of the Fund's Portfolio used in fee calculations
shall be determined in the manner set forth in the Articles of
Incorporation and Bylaws of the Company and the Fund's prospectus as of the
close of regular trading on the New York Stock Exchange on each business
day the New York Stock Exchange is open.
(c) The Fund hereby authorizes the Investment Manager to charge the
Portfolio, subject to the provisions in Section 4 hereof, for the full
amount of fees as they become due and payable pursuant to the attached
schedule of fees; provided, however, that a copy of a fee statement
covering said payment shall be sent to the Custodian and to the Company.
(d) The Investment Manager may from time to time voluntarily agree to
limit the aggregate operating expenses of the Fund for one or more fiscal
years of the Company, as set forth in Appendix A hereto or in any other
written agreement with the Company. If in any such fiscal year the
aggregate operating expenses of the Fund (as defined in Appendix A or such
other written agreement) exceed the applicable percentage of the average
daily net assets of the Fund for such fiscal year, the Investment Manager
shall reimburse the Fund for such excess operating expenses. Such operating
expense reimbursement, if any, shall be estimated, reconciled and paid on a
quarterly basis, or such more frequent basis as the Investment Manager may
agree in writing. Any such reimbursement of the Fund shall be repaid to the
Investment Manager by the Fund, without interest, at such later time or
times as it may be repaid without causing the aggregating operating
expenses of the Fund to exceed the applicable percentage of the average
daily net assets of the Fund for the period in which it is repaid;
provided, however, that upon termination of this Agreement, the Fund shall
have no further obligation to repay any such reimbursements.
6. SERVICE TO OTHER CLIENTS
Nothing contained in this Agreement shall be construed to prohibit the
Investment Manager from performing investment advisory, management,
distribution or other services for other investment companies and other
persons, trusts or companies, or to prohibit affiliates of the Investment
Manager from engaging in such businesses or in other related or unrelated
businesses.
<PAGE>
Exhibit 4(k)
7. STANDARD OF CARE
The Investment Manager shall have no liability to the Fund, or its
stockholders, for any error of judgment, mistake of law, loss arising out
of any investment, or other act or omission in the performance of its
obligations to the Fund not involving willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder.
The federal securities laws impose liabilities under certain circumstances
on persons who act in good faith, and therefore nothing herein shall in any
way constitute a waiver or limitation of any rights which the undersigned
may have under any federal securities laws.
8. DURATION OF AGREEMENT
This Agreement shall continue in effect until the close on the second
anniversary on the date hereof. This Agreement may thereafter be renewed
from year to year by mutual consent, provided that such renewal shall be
specifically approved at least annually by (i) the Board of Directors of
the Company, or by the vote of a majority (as defined in the 1940 Act) of
the outstanding voting securities of the Company, and (ii) a majority of
those directors who are not parties to this Agreement or interested persons
(as defined in the 1940 Act) of any such party cast in person at a meeting
called for the purpose of voting on such approval.
9. TERMINATION
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Company or by the vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities
of the Company on sixty (60) days' written notice to the Investment
Manager, or by the Investment Manager on like notice to the Company. This
Agreement shall automatically terminate in the event of its assignment (as
defined in the 1940 Act).
10. REPORTS, BOOKS AND RECORDS
The Investment Manager shall render to the Board of Directors of the
Company such periodic and other reports as the Board may from time to time
reasonably request. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Investment Manager hereby agrees that all records which
it maintains for the Company are property of the Company. The Investment
Manager shall surrender promptly to the Company any of such records upon
the Company's request, and shall preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under the 1940 Act.
11. REPRESENTATIONS AND WARRANTIES
The Investment Manager represents and warrants to the Company that the
Investment Manager is registered as an investment adviser under the
Investment Advisers Act of 1940. During the term of this Agreement, the
Investment Manager shall notify the Company of any change in the membership
of the Investment Manager's partnership within a reasonable time after such
change. The Company
<PAGE>
Exhibit 4(k)
represents and warrants to the Investment Manager that the company is
registered as an open-end management investment company under the 1940 Act.
Each party further represents and warrants to the other that this Agreement
has been duly authorized by such party and constitutes the legal, valid and
binding obligation of such party in accordance with its terms.
12. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination
is sought.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their officers thereunto duly authorized as
of the date first above written.
DRESDNER RCM GLOBAL INVESTORS LLC DRESDNER RCM GLOBAL FUNDS, INC.
ON BEHALF OF DRESDNER RCM
INTERNET FUND
By: ______________________________ By: ______________________________
ATTEST: ATTEST:
<PAGE>
Exhibit 4(k)
FORM OF
APPENDIX A
INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY,
AND SERVICE AGREEMENT
BETWEEN DRESDNER RCM GLOBAL INVESTORS LLC (the "INVESTMENT MANAGER")
AND DRESDNER RCM GLOBAL FUNDS, INC.
SCHEDULE OF FEES
FOR DRESDNER RCM INTERNET FUND
Effective Date: as of ________________
The Fund will pay a monthly fee to the Investment Manager based on the average
daily net assets of the Fund, at the following annual rate:
Value of Securities and Cash of Fund Fee
------------------------------------ ---
On all sums 1.00% annually
For the fiscal year ended December 31, 2000, the Investment Manager shall
reimburse the Fund, on behalf of its Class N shares, to the extent that the
operating expenses exceed 1.75% of its average daily net assets. For this
purpose, the "operating expenses" shall be deemed to include all ordinary
operating expenses other than interest, taxes and extraordinary expenses.
Dated: as of ________________________________
DRESDNER RCM GLOBAL INVESTORS LLC DRESDNER RCM GLOBAL FUNDS, INC.
ON BEHALF OF DRESDNER RCM
INTERNET FUND
By: ______________________ By:____________________________
ATTEST: ATTEST:
<PAGE>
Exhibit 7(j)
[Letterhead]
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts
Dear Sirs:
In accordance with Section 17 of the Custodian Contract dated January 3, 1996
(the "Agreement"), between Dresdner RMC Global Funds, Inc. (the "Fund") and
State Street Bank & Trust Company (the "Bank"), the Fund hereby notifies the
Bank of the Fund's desire to have the Bank render services as Custodian under
the terms of the Agreement with respect to Dresdner RCM Internet Fund.
Please indicate your acceptance of the foregoing by executing to copies of this
Letter Agreement, returning one to the Fund and retaining one copy for your
records.
Very truly yours,
Dresdner RCM Global Funds, Inc.
By: __________________________
Name:
Title:
Accepted:
State Street Bank & Trust Company
By: ___________________________
Name:
Title:
<PAGE>
Exhibit 13(e)
FORM OF
AMENDED APPENDIX A DATED ____________________TO
DRESDNER RCM GLOBAL FUNDS, INC. DISTRIBUTION AND SERVICE PLAN
FUND/CLASS DISTRIBUTION FEE
Dresdner RCM Large Cap Growth Fund
Class N 0.25%
Dresdner RCM Global Small Cap Fund
Class N 0.25%
Dresdner RCM Global Technology Fund
Class N 0.25%
Dresdner RCM Emerging Markets Fund
Class N 0.25%
Dresdner RCM Tax Managed Growth Fund
Class N 0.25%
Dresdner RCM Global Equity Fund
Class N 0.25%
Dresdner RCM Strategic Income Fund
Class N 0.25%
Dresdner RCM Internet Fund
Class N 0.25%
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