RCM EQUITY FUNDS INC
497, 2000-11-13
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<PAGE>
                                                                November 6, 2000

To the Stockholders:

    A special joint meeting of stockholders of Dresdner RCM Investment Funds
Inc. and Dresdner RCM Capital Funds, Inc. will be held at the offices of
Dresdner RCM Global Investors LLC, Four Embarcadero Center, San Francisco,
California 94111, on December 18, 2000 at 10:00 a.m. PST. We hope this material
will receive your immediate attention and that, if you cannot attend in person,
you will vote your proxy promptly.

    In the attached Combined Proxy Statement and Prospectus, we are asking
stockholders of the sole portfolio of the Investment Company and stockholders of
the various portfolios of the Capital Company to consider and approve proposed
reorganizations of each portfolio into newly created portfolios of Dresdner RCM
Global Funds, Inc.

    The Capital Company currently consists of three portfolios:

    Dresdner RCM MidCap Fund
    Dresdner RCM Small Cap Fund
    Dresdner RCM International Growth Equity Fund

    The Investment Company currently consists of one portfolio:

    Dresdner RCM Europe Fund

    The MidCap Fund, the Small Cap Fund, the International Fund, and the Europe
Fund are referred to below collectively as the "Existing Funds".

    The Board of Directors of the Investment Company and the Board of Directors
of the Capital Company has each approved a plan of reorganization between their
respective Companies and the Global Company. Pursuant to the plans of
reorganization, four new portfolios of the Global Company were recently
established for the purpose of continuing the investment operations of the
Capital and Investment Company funds that are listed above. If stockholders
approve the plans of reorganization, the assets of the Existing Funds will be
transferred into the four newly created portfolios of the Global Company (each,
a "New Fund"). There will be no change to the Existing Funds' names nor will
there be any change to their investment objectives.

    After the transfer, shares of each New Fund will be distributed to the
corresponding Existing Fund's stockholders tax-free in liquidation of their
interest in the respective Existing Fund. As a result of these transactions,
your Existing Fund shares, in effect, would be exchanged at their net asset
value on a tax-free basis for shares of the corresponding New Fund of the Global
Company. All these actions will more or less occur simultaneously and will be
transparent to you. In the case of the Europe Fund and the International Fund,
stockholders of Class I shares of each Fund will receive Class I of the
corresponding New Fund of the Global Company and consequently, stockholders of
Class N shares of the Europe Fund and International Fund will receive Class N
shares of the corresponding New Fund of the Global Company. Stockholders of the
MidCap Fund and Small Cap Fund, which currently have no share classes, will
receive Class I shares of the corresponding New Fund of the Global Company.

    The end result, should stockholders approve the plans of reorganization,
would be one surviving corporate entity, the Global Company. In addition, each
of the members of the Boards of Directors of the Capital Company and the
Investment Company would become directors of the Global Company, to the extent
that they are not already directors of the Global Company. Except to the extent
described in the enclosed Combined Proxy Statement and Prospectus, we expect
that the New Funds will operate in a manner substantially similar to the manner
in which the Existing Funds currently operate. We believe that the Global
Company will provide to its stockholders the same high level of service that
stockholders of the Existing Funds have come to expect from the Capital Company
and the Investment Company.

    The Boards of Directors of the Capital Company and the Investment Company
each have determined that reorganizing the Existing Funds as part of the Global
Company could in the long run reduce expenses
<PAGE>
paid by stockholders, streamline and simplify their organization and increase
the efficiency of their operations. After careful consideration, the Boards of
both Companies have unanimously approved plans of reorganization and recommend
that you read the enclosed materials carefully and then vote FOR the proposed
reorganizations. It is important that you sign and return your proxy card
because approval of the reorganizations requires a specific number of
affirmative votes. You may also vote by telephone or through the internet by
following the simple instructions on the proxy card provided.

    Thank you for your prompt attention to the enclosed Combined Proxy Statement
and Prospectus.

Sincerely,
                                                /s/ Barbel Lenz

                                                Barbel Lenz

/s/ Anthony Ain
                                                President
                                                Dresdner RCM Investment Funds
Inc.

Anthony Ain
President
Dresdner RCM Capital Funds, Inc.

                                       ii
<PAGE>
                        DRESDNER RCM CAPITAL FUNDS, INC.

                 Dresdner RCM International Growth Equity Fund
                            Dresdner RCM MidCap Fund
                          Dresdner RCM Small Cap Fund
                            ------------------------

                       DRESDNER RCM INVESTMENT FUNDS INC.

                            Dresdner RCM Europe Fund
                            ------------------------

                           NOTICE OF SPECIAL MEETING
                        TO BE HELD ON DECEMBER 18, 2000
                            ------------------------

    A special joint meeting of stockholders of Dresdner RCM Capital Funds, Inc.
(the "Capital Company") and Dresdner RCM Investment Funds Inc. (the "Investment
Company") will be held on Monday, December 18, 2000, at 10:00 a.m. Pacific Time,
at Four Embarcadero Center, 30th Floor, San Francisco, California. The meeting
will be held for the following purposes:

    1. REORGANIZATION OF CAPITAL FUNDS. For the stockholders of the various
portfolios of the Capital Company--Dresdner RCM International Growth Equity
Fund, Dresdner RCM MidCap Fund and Dresdner RCM Small Cap Fund to consider and
vote on a proposed reorganization into substantially similar newly created
portfolios of Dresdner RCM Global Funds, Inc. (the "Global Company") and the
subsequent dissolution of the Capital Company.

    2. REORGANIZATION OF EUROPE FUND. For the stockholders of the only portfolio
of the Investment Company--Dresdner RCM Europe Fund -- to consider and vote on a
proposed reorganization into a substantially similar newly created portfolio of
the Global Company and the subsequent dissolution of the Investment Company.

    3. OTHER BUSINESS. To consider and act upon such other business as may
properly come before the meeting or any adjournments.

    The Boards of Directors of the Capital Company and the Investment Company,
respectively have unanimously approved the proposed reorganizations. Please read
the accompanying Combined Proxy Statement and Prospectus for a more complete
discussion of the proposals.

                                          /s/ ROBERT J. GOLDSTEIN

                                          ROBERT J. GOLDSTEIN
                                          SECRETARY

November 1, 2000

                                       1
<PAGE>
 WHO CAN VOTE?

 Any person owning shares of the Capital Company or the Investment Company on
 October 23, 2000.

 WHY SHOULD I BOTHER TO VOTE?

 Your vote is important. If the proposals do not receive enough votes, more
 time will be required to mail proxies again or solicit stockholders by
 telephone so the meeting can take place.

 HOW CAN I VOTE?

 Please take a moment now to sign and return your proxy in the enclosed
 postage-paid return envelope. You may also vote telephonically by calling the
 toll-free number on your proxy card, electronically by voting at our website
 at www.proxyvote.com, or in person at the meeting. If we do not receive your
 executed proxy after a reasonable amount of time you may receive a telephone
 call from our proxy solicitor, Georgeson Shareholder Communications Inc.,
 reminding you to vote your shares.

 QUESTIONS?

 Call toll-free at 877-518-9413.

                                       2
<PAGE>
                        DRESDNER RCM CAPITAL FUNDS, INC.
                 Dresdner RCM International Growth Equity Fund
                            Dresdner RCM MidCap Fund
                          Dresdner RCM Small Cap Fund
                            ------------------------

                       DRESDNER RCM INVESTMENT FUNDS INC.
                            Dresdner RCM Europe Fund
                            ------------------------

                    COMBINED PROXY STATEMENT AND PROSPECTUS
                            ------------------------

    The Boards of Directors of Dresdner RCM Capital Funds, Inc. (the "Capital
Company") and Dresdner RCM Investment Funds Inc. (the "Investment Company") are
soliciting the enclosed proxies in connection with a special joint meeting (the
"Meeting") of their stockholders.

    The portfolios of the Capital Company are Dresdner RCM International Growth
Equity Fund (the "International Fund"), Dresdner RCM MidCap Fund (the "MidCap
Fund"), and Dresdner RCM Small Cap Fund (the "Small Cap Fund"). These series are
sometimes referred to below as the "Capital Funds." The only portfolio of the
Investment Company is Dresdner RCM Europe Fund (the "Europe Fund"). The Capital
Funds and the Europe Fund are sometimes referred to below as the "Funds."

    The Meeting will be held on Monday, December 18, 2000 at 10:00 a.m. Pacific
Time at Four Embarcadero Center, 30th Floor, San Francisco, California. The
meeting of the Capital Funds stockholders is being called to consider the
proposed reorganization of the various portfolios of the Capital Funds into
substantially similar, newly created portfolios (the "New Capital Funds") of
Dresdner RCM Global Funds, Inc. (the "Global Company"), and to transact such
other business as may properly come before the Meeting or any adjournments. The
meeting of the Investment Company stockholders is being called to consider the
proposed reorganization of the Europe Fund into a substantially similar, newly
created portfolio (the "New Europe Fund") of the Global Company, and to transact
such other business as may properly come before the Meeting or any adjournments.

    The Capital Company, the Investment Company, and the Global Company
(collectively, the "Companies") are open-end management investment companies
(referred to generally as "mutual funds"). Their offices are at Four Embarcadero
Center, San Francisco, California 94111.

    This Combined Proxy Statement and Prospectus (the "Proxy Statement") is
furnished to the stockholders of each Fund on behalf of the respective Boards of
Directors of the Capital Company and the Investment Company in connection with
the solicitation of voting instructions for use at the Meeting. This Proxy
Statement is being mailed to stockholders of the Funds on or about November 6,
2000.

    The prospectuses for the New Capital Funds and the New Europe Fund (each a
"Prospectus") accompany and are incorporated into this Proxy Statement. This
Proxy Statement and the Prospectuses set forth concisely the information about
the proposed reorganization that Fund stockholders should know before voting on
the proposed reorganizations. You should retain them for future reference.

                                       3
<PAGE>
 This Proxy Statement is organized as follows:

 - Summary of Proxy Statement -- begins on page 5.

 - Proposed Reorganizations -- begins on page 9.

 - Voting and Meeting Procedures -- begins on page 18.

 - General Information -- begins on page 21.

    The Capital Company or the Investment Company, as the case may be, will
furnish you, at your request and without charge, a copy of the most recent
annual report or semi-annual report for any Fund. Please direct any request by
telephone to 1-800-726-7240 or by writing to the Capital Company or the
Investment Company at the address above.

    Additional information about the Global Company has been filed with the
Securities and Exchange Commission (the "Commission"). You can review it at the
Public Reference Room of the Commission (for hours of operation, call
1-202-942-8090). You may retrieve text-only copies at no charge from the "EDGAR"
database on the Commission's website at http://www.sec.gov. You also may get
such copies for a fee by writing the Commission's Public Reference Section,
Washington, D.C. 20549-0102, or by e-mail to the Commission at
[email protected]

    THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED ON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

Dated: November 1, 2000

                                       4
<PAGE>
                           SUMMARY OF PROXY STATEMENT

PROPOSED REORGANIZATIONS

    The Board of Directors of the Capital Company has approved a plan to
reorganize the Capital Funds into the corresponding New Capital Funds. The New
Capital Funds are sometimes referred to below as the "New International Fund,"
the "New MidCap Fund," and the "New Small Cap Fund," respectively. The Board of
Directors of the Investment Company has approved a plan to reorganize the Europe
Fund into the New Europe Fund. The New Capital Funds and the New Europe Fund are
sometimes referred to collectively below as the "New Funds."

    The Boards of Directors of the Companies believe that reorganizing the Funds
as part of the Global Company should streamline and simplify their organization
and administration, increase the overall efficiency of their operations and
improve the overall marketability of some of the Funds as a result of their
inclusion in a family of related mutual funds. Revising the existing "unitary
fee" structure of the MidCap and Small Cap Fund to a more traditional fee
structure should also make it easier for stockholders to understand and compare
their fees with the fees charged by other mutual funds. To ensure that the
expenses of the New MidCap Fund and New Small Cap Fund remain at current levels,
the Investment Manager has agreed to limit their expenses to the level of the
existing Funds through June 30, 2003. Finally, the Boards of Directors believe
that the reorganizations may in the long run reduce certain expenses paid by
stockholders (such as federal securities registration fees, state "blue sky"
registration fees, transfer agent and custodian fees and expenses,
administration fees and expenses, printing costs, and legal fees), as economies
of scale may result when Fund assets are aggregated with assets of other Global
Company portfolios and such expenses are spread over a larger asset base.

    The reorganizations will have no material federal income tax consequences to
you, the Existing Funds or the New Funds.

COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RISKS

    The investment objectives of each New Fund are identical to those of the
corresponding existing Fund. Except as discussed below, the investment policies
and risks of each New Fund are substantially similar to those of the
corresponding existing Fund.

    To increase the efficiency of operation of the existing Funds when they are
reorganized into the corresponding New Funds and managed as additional
portfolios of the Global Company, certain of the fundamental investment
restrictions of the New Funds (which may be changed only with stockholder
approval) and the operating restrictions of the New Funds (which may be changed
by the Board of Directors of the Global Company) have been conformed with those
of the existing portfolios of the Global Company. In most instances, these
revisions will not result in a material change in operations after the
reorganizations. However, a few changes, summarized below, may be deemed to be
material:

    The New Europe Fund will be restricted in its ability to loan its assets
    such that it will not enter into repurchase agreements with maturities in
    excess of seven days if immediately after such transaction the value of the
    New Europe Fund's holdings of such repurchase agreements exceeds 10% of the
    value of the New Europe Fund's total assets. This limitation does not
    currently apply to the existing Europe Fund.

    The New International Fund will be able to make short sales of securities,
    although the Investment Manager does not have any current intention of doing
    so.

    The New Europe Fund will be restricted to investing up to 10% of its total
    assets in shares of other investment companies. This limitation does not
    currently apply to the existing Europe Fund.

    The New Europe and New International Funds will not be restricted to using
    futures contracts and related options only for hedging purposes, but will
    also be able to use these instruments to enhance returns (although the
    Investment Manager has no current intention of doing so). The New Europe

                                       5
<PAGE>
    Fund will be permitted to enter into futures contracts not only with respect
    to financial indexes, but also with respect to securities and for currency
    management purposes, and will be permitted to purchase and sell options on
    futures contracts. In all cases, use of these instruments will be subject to
    restrictions imposed on all mutual funds by the Commodity Futures Trading
    Commission.

    The New Europe Fund's limit of investment in debt securities will be
    increased from 10% of total assets to 20% of total assets.

COMPARISON OF STRUCTURE AND OPERATION

    The New Funds are newly created portfolios of the Global Company, a
registered investment company with multiple portfolios. All of the Companies are
incorporated in Maryland as open-end management investment companies, and are
subject to the provisions of the Investment Company Act of 1940 (the "1940 Act")
and to the rules and regulations of the Commission under the 1940 Act.

    Each New Fund will be advised and operated in substantially the same manner
as its corresponding existing Fund. Dresdner RCM Global Investors LLC (the
"Investment Manager"), which currently manages the existing Funds, will continue
to act as investment manager to the New Funds. The other service providers to
the Funds will also be unchanged. In addition, each New Fund will be governed by
Articles of Incorporation that are substantially similar to those that currently
govern its corresponding existing Fund.

    There will also be no change in distribution and purchase procedures,
exchange rights, or redemption procedures. For a description of these services,
see "Stockholder Information" in the accompanying Prospectus.

COMPARISON OF FEES AND EXPENSES

    The fees and expenses of the International Fund and the Europe Fund will not
change immediately as a result of the reorganizations, although as described
above the Boards of Directors of the Companies believe that the reorganizations
could in the long run assist in reducing their expenses.

    Each of the Investment Management Agreements between the Investment Manager
and the Global Company with respect to the New MidCap Fund and the New Small Cap
Fund (each a "New Management Agreement") is different than the current
investment management agreement between the Investment Manager and the Capital
Company with respect to the existing MidCap Fund and the existing Small Cap Fund
(each a "Current Management Agreement"). The Current Management Agreement
provides that the existing MidCap Fund and the Small Cap Fund will pay the
Investment Manager a monthly fee at the annual rate of 0.75% and 1.00% of their
respective average daily net assets. Each Current Management Agreement also
provides that while the existing Fund will pay its own brokerage and commission
expenses, taxes, interest on borrowings, custodial expenses and investment
management fees, the Investment Manager will pay all other ordinary operating
expenses of each Fund (e.g., legal and audit fees, securities registration
expenses, and compensation of directors of the Capital Company who are not
affiliated with the Investment Manager). Each New Management Agreement provides
that the New Fund will pay all its own expenses, including all of its ordinary
operating expenses.

    During the fiscal year ended December 31, 1999, the Investment Manager paid
approximately $152,000 of expenses of the existing MidCap Fund (0.015% of
average daily net assets) and approximately $153,000 of expenses of the existing
Small Cap Fund (0.036% of average net assets). To help limit the expenses of the
New MidCap Fund and New Small Cap Fund to current levels (after expense
reimbursements), the Investment Manager has agreed that through June 30, 2003,
it will pay the New Funds on a quarterly basis the amount, if any, by which the
New Funds' ordinary operating expenses for the quarter (except interest, taxes
and extraordinary expenses) exceed the following levels on an annual basis for
Class I shares--which the holders of existing Fund shares will receive in the
reorganization--and Class N shares: New MidCap Fund Class I, 0.77%, and
Class N, 1.02%; New Small Cap Fund--Class I, 1.02%,

                                       6
<PAGE>
Class N, 1.27%. Each New Fund may reimburse the Investment Manager for such
payments for a period of up to five years after they are made, to the extent
that the New Fund's ordinary operating expenses are less than the expense limit.

    The following tables compare the annual operating expenses of the
International Fund, Europe Fund, Small Cap Fund and MidCap Fund (based on the
fiscal year ended December 31, 1999) with that of each corresponding New Fund.

<TABLE>
<CAPTION>
                                      INTERNATIONAL FUND             EUROPE FUND                       SMALL CAP FUND
                                    ----------------------      ----------------------      ------------------------------------
ANNUAL FUND OPERATING EXPENSES         EXISTING AND NEW            EXISTING AND NEW         EXISTING               NEW
(EXPENSES DEDUCTED FROM FUND        ----------------------      ----------------------      --------      ----------------------
ASSETS)                             CLASS I       CLASS N       CLASS I       CLASS N                     CLASS I       CLASS N
-------                             --------      --------      --------      --------                    --------      --------
<S>                                 <C>           <C>           <C>           <C>           <C>           <C>           <C>
Management fee..............         0.75%          0.75%        1.00%         1.00%         1.00%         1.00%         1.00%
Distribution (12b-1) fee....         None           0.25%        None          0.25%         None          None          0.25%
Other expenses..............         0.31%          9.89%        0.44%(2)      0.44%(2)      0.02%         0.09%         0.61%
Total annual operating
  expenses                           1.06%         10.89%        1.44%         1.69%         1.02%         1.09%         1.86%
Less: fee waivers and expense
  reimbursements............         0.06%(1)       9.64%(1)     0.09%(3)      0.09%(3)      None          0.07%(4)      0.59%(4)
Net expenses                         1.00%(1)       1.25%(1)     1.35%(3)      1.60%(3)      1.02%         1.02%(4)      1.27%(4)
</TABLE>

------------------------

(1) The Investment Manager has contractually agreed until at least December 31,
    2001 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 1.00% for Class I and 1.25% for Class N. The
    New International Fund may reimburse the Investment Manager in the future.

(2) This percentage does not include non-recurring expenses of approximately
    0.32% associated with the conversion of the Europe Fund to an open-end
    investment company in May 1999.

(3) The Investment Manager has contractually agreed until at least December 31,
    2002 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 1.35% for Class I and 1.60% for Class N. The
    New Europe Fund may reimburse the Investment Manager in the future.

(4) The Investment Manager has contractually agreed until at least June 30, 2003
    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 1.02% for Class I and 1.27% for Class N. The
    New Small Cap Fund may reimburse the Investment Manager in the future.

<TABLE>
<CAPTION>
                                                                       MIDCAP FUND
                                                              ------------------------------
                                                              EXISTING           NEW
ANNUAL FUND OPERATING EXPENSES                                --------   -------------------
(EXPENSES DEDUCTED FROM FUND ASSETS)                                     CLASS I    CLASS N
------------------------------------                                     --------   --------
<S>                                                           <C>        <C>        <C>
Management fee..............................................   0.75%      0.75%      0.75%
Distribution (12b-1) fee....................................  None       None        0.25%
Other expenses..............................................   0.02%      0.05%      0.48%
Total annual operating expenses.............................   0.77%      0.80%      1.48%
Less: fee waivers and expense reimbursements................  None        0.03%*     0.46%*
Net expenses................................................   0.77%      0.77%*     1.02%*
</TABLE>

------------------------

*   The Investment Manager has contractually agreed until at least June 30, 2003
    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 0.77% for Class I and 1.02% for Class N. The
    New MidCap Fund may reimburse the Investment Manager in the future.

                                       7
<PAGE>
    The following example compares the cost of investing in the New Funds with
the cost of investing in the existing Funds. The example assumes that:

    - you invest $10,000 for the time periods indicated;

    - your investment has a 5% return each year;

    - Fund operating expenses remain the same; and

    - you redeem your shares at the end of the relevant period.

<TABLE>
<CAPTION>
ALTHOUGH YOUR ACTUAL COSTS MAY BE
HIGHER OR LOWER, BASED ON THESE
ASSUMPTIONS YOUR COSTS WOULD BE
AS FOLLOWS:                                                    1 YEAR    3 YEARS    5 YEARS    10 YEARS
---------------------------------                             --------   --------   --------   --------
<S>                                                           <C>        <C>        <C>        <C>
INTERNATIONAL FUND
EXISTING AND NEW
  Class I*..................................................    $102      $  331     $  579     $1,289
  Class N*..................................................    $127      $2,256     $4,141     $7,964
EUROPE FUND
EXISTING AND NEW
  Class I*..................................................    $137      $  437     $  769     $1,708
  Class N*..................................................    $163      $  515     $  901     $1,982
MIDCAP FUND
EXISTING....................................................    $ 79      $  246     $  435     $  981
NEW
  Class I*..................................................    $ 79      $  246     $  435     $  981
  Class N*..................................................    $104      $  325     $  669     $1,643
SMALL CAP FUND
EXISTING....................................................    $104      $  325     $  579     $1,309
NEW
  Class I*..................................................    $104      $  325     $  579     $1,309
  Class N*..................................................    $129      $  403     $  831     $2,025
</TABLE>

------------------------

*   Assuming the Investment Manager continues to reimburse the ordinary
    operating expenses which exceed the annualized rates for the Class I and
    Class N shares of 1.00% and 1.25% for the New International Fund, 1.35% and
    1.60% for the New Europe Fund, 0.77% and 1.02% for the New MidCap Fund and
    1.02% and 1.27% for the New Small Cap Fund, your expenses for the periods
    indicated would be as follows:

New International Fund--$102, $318, $552 and $1,225 for Class I and $127, $397,
$686 and $1,511 for Class N

New Europe Fund--$137, $428, $739 and $1,624 for Class I and $163, $505, $871
and $1,900 for Class N

New MidCap Fund--$79, $246, $428 and $954 for Class I and $104, $325, $563 and
$1,248 for Class N

New Small Cap Fund--$104, $325, $563 and $1,248 for Class I and $129, $403, $697
and $1,534 for Class N

                                       8
<PAGE>
                            PROPOSED REORGANIZATIONS

    The Board of Directors of the Capital Company has approved a plan to
reorganize the Capital Funds into the New Capital Funds, and the Board of
Directors of the Investment Company has approved a plan to reorganize the Europe
Fund into the New Europe Fund. To proceed, we need the approval of the
stockholders of each Fund. The following pages outline the important details of
the reorganizations in response to the following questions:

    - Why do we want to reorganize the Funds?

    - How will we accomplish the reorganizations?

    - Are there material differences between the existing Funds and the New
      Funds?

    - What aspects of the existing Funds will not change as a result of the
      reorganizations?

    - How will the capitalization of the New Funds compare with that of the
      existing Funds?

WHY DO WE WANT TO REORGANIZE THE FUNDS?

    The Boards of Directors of the Companies believe that reorganizing the Funds
as part of the Global Company should streamline and simplify their organization
and administration, increase the overall efficiency of their operations and
improve the overall marketability of some of the Funds as a result of their
inclusion in a family of related mutual funds. Revising the existing "unitary
fee" structure of the MidCap and Small Cap Fund to a more traditional fee
structure should also make it easier for stockholders to understand and compare
their fees with the fees charged by other mutual funds. To ensure that the
expenses of the New MidCap Fund and New Small Cap Fund remain at current levels,
the Investment Manager has agreed to limit their expenses to the level of the
existing Funds through June 30, 2003. Finally, the Boards of Directors believe
that the reorganizations may in the long run reduce certain expenses paid by
stockholders (such as federal securities registration fees, state "blue sky"
registration fees, transfer agent and custodian fees and expenses,
administration fees and expenses, printing costs, and legal fees), as economies
of scale may result when Fund assets are aggregated with assets of other Global
Company portfolios and such expenses are spread over a larger asset base.

    Accordingly, management of the Companies recommended, and the Boards of
Directors of the Capital Company and the Investment Company each approved, the
proposed reorganizations. In that connection, the Board of each Company
specifically determined, as required by the 1940 Act, that the proposed
reorganizations are in the best interests of the Funds, the New Funds and their
respective stockholders, and that the interests of the stockholders will not be
diluted as a result of the reorganizations.

HOW WILL WE ACCOMPLISH THE REORGANIZATIONS?

    The Board of Directors of the Capital Company has approved an agreement of
reorganization between the Capital Company (on behalf of the existing Capital
Funds) and the Global Company (on behalf of the New Capital Funds). Similarly,
the Board of Directors of the Investment Company has approved an agreement of
reorganization between the Investment Company (on behalf of the existing Europe
Fund) and the Global Company (on behalf of the New Europe Fund). These
agreements spell out the terms and conditions of the reorganizations.

    If the stockholders of each Fund approve the reorganization, the
reorganization essentially will involve the following steps, which will occur
more or less simultaneously:

    - First, each existing Fund will transfer all of its assets and liabilities
      to the corresponding New Fund. (In other words, the existing International
      Fund will transfer its assets and liabilities to the New International
      Fund; the existing MidCap Fund will transfer its assets and liabilities to
      the New MidCap Fund; the existing Small Cap Fund will transfer its assets
      and liabilities to the New Small

                                       9
<PAGE>
      Cap Fund, and the existing Europe Fund will transfer its assets and
      liabilities to the New Europe Fund.)

    - Second, in exchange for the assets transferred to a New Fund, the
      corresponding existing Fund will receive Class I and Class N shares of the
      New Fund having a total value equal to their proportionate share of the
      value of the assets the existing Fund transferred to the New Fund (net of
      any liabilities). The existing MidCap Fund and the existing Small Cap
      Fund, which have no share classes, will receive Class I shares of the New
      MidCap Fund and New Small Cap Fund, respectively.

    - Third, each existing Fund will distribute the Class I and Class N shares
      of the New Fund which it receives to its Class I and Class N stockholders,
      respectively, and dissolve. Stockholders of the existing MidCap Fund and
      existing Small Cap Fund will receive Class I shares of the New MidCap Fund
      and New Small Cap Fund, respectively.

    - Fourth, each New Fund will open an account for each stockholder of the
      corresponding dissolving Fund, and will credit the stockholder with shares
      of the New Fund having the same total value as the existing Fund shares
      that he or she owned on the date of the reorganization. Share certificates
      will not be issued.

    The stockholders of the Funds are not entitled to any preemptive or
dissenters' rights. The Investment Manager will pay the expenses of the
reorganizations.

    If the reorganizations are approved by the Funds' stockholders, they will
take place as soon as feasible. Management of the Companies believes this should
be accomplished by December 31, 2000. However, at any time before the
reorganizations the Board of Directors of any of the Companies may decide that
it is not in the best interest of their respective stockholders to go forward.

    None of the proposed reorganizations of the Capital Funds will be completed
unless the stockholders of all three Capital Funds approve the reorganizations.
If the stockholders of all of the Capital Funds do not approve the
reorganizations, or the reorganizations are not completed for any other reason,
then the Capital Company will continue its current form of operation until its
Board of Directors determines what further action, if any, to recommend to the
stockholders. Likewise, if the stockholders of the Europe Fund do not approve
the reorganization, or the reorganization is not completed for any other reason,
then the Investment Company will continue its current form of operation until
its Board of Directors determines what further action, if any, to recommend to
the stockholders.

ARE THERE MATERIAL DIFFERENCES BETWEEN THE EXISTING FUNDS AND THE NEW FUNDS?

    Except as indicated below, there are no material differences between the
existing Funds and the New Funds.

EXPENSES OF THE MIDCAP FUND AND SMALL CAP FUND WILL CHANGE.

    As described above under "Comparison of Fees and Expenses," the expense
structures of the New MidCap Fund and New Small Cap Fund will change. However,
total New MidCap Fund and New Small Cap Fund expenses will be maintained at
current levels (after expense reimbursements) through June 30, 2003.

CERTAIN INVESTMENT RESTRICTIONS OF THE FUNDS WILL CHANGE.

    To increase the efficiency of operation of the existing Funds when they are
reorganized into the corresponding New Funds and managed as additional
portfolios of the Global Company, certain of the fundamental investment
restrictions of the New Funds (which may be changed only with stockholder
approval) and certain of the operating restrictions of the New Funds (which may
be changed by the Board

                                       10
<PAGE>
of Directors of the Global Company) have been conformed with those of the
existing portfolios of the Global Company.

    In most instances, these revisions will not result in a material change in
the operations of the existing Funds after the reorganizations. However, a few
of the changes, described below, may be deemed to be material.

1.  MAKING LOANS (CHANGE FOR EUROPE FUND)

    THE EUROPE FUND.  The existing Europe Fund is not subject to any restriction
on making loans.

    THE NEW EUROPE FUND.  The New Europe Fund will be subject to a fundamental
investment policy which is the same as the current policy of the majority of the
existing Global Fund portfolios, which provides that a portfolio may not "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. A 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."

    THE INVESTMENT MANAGER DOES NOT BELIEVE THAT THE NEW INVESTMENT RESTRICTION
WILL HAVE ANY MATERIAL IMPACT ON THE OPERATIONS OF THE NEW EUROPE FUND. UNDER
CERTAIN CIRCUMSTANCES THE LIMIT ON THE NEW EUROPE FUND'S ABILITY TO ENTER INTO
REPURCHASE AGREEMENTS WITH MATURITIES OF MORE THAN SEVEN DAYS, TO 10% OF THE NEW
EUROPE FUND'S TOTAL ASSETS, MAY BE MORE RESTRICTIVE THAN THE LIMIT OTHERWISE
APPLICABLE (UNDER A CURRENT OPERATING POLICY) TO ALL ILLIQUID SECURITIES OF 15%
OF THE EXISTING EUROPE FUND'S NET ASSETS.

2.  SHORT SALES OF SECURITIES (CHANGE FOR INTERNATIONAL FUND)

    THE INTERNATIONAL FUND.  As a matter of operating policy, the existing
International Fund may not make short sales of securities.

    THE NEW INTERNATIONAL FUND.  The New International Fund will not be subject
to this restriction.

    THE INVESTMENT MANAGER DOES NOT HAVE ANY CURRENT INTENTION OF MAKING SHORT
SALES OF SECURITIES ON BEHALF OF THE NEW INTERNATIONAL FUND. HOWEVER, BECAUSE IT
COULD HAVE THE RIGHT TO DO SO IN THE FUTURE, THE NEW INTERNATIONAL FUND COULD BE
SUBJECT TO THE RISKS ASSOCIATED WITH SUCH TRANSACTIONS.

    AS A MATTER OF OPERATING POLICY, SHORT SALES BY THE NEW INTERNATIONAL 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. FOR A DESCRIPTION OF THE RISKS ASSOCIATED WITH
SHORT SALES, SEE "SHORT SALES" IN THE "INVESTMENT OBJECTIVES AND POLICIES"
SECTION OF THE STATEMENT OF ADDITIONAL INFORMATION OF THE GLOBAL FUNDS.

3.  PURCHASING SECURITIES OF OTHER INVESTMENT COMPANIES (CHANGE FOR EUROPE FUND)

    THE EUROPE FUND.  The existing Europe Fund does not have a specific
fundamental investment policy or operating policy with respect to investment in
other investment companies.

                                       11
<PAGE>
    THE NEW EUROPE FUND.  The New Europe Fund will be subject to the same
restriction as the existing Global Fund portfolios, which provides that a
portfolio may not "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."

    THE INVESTMENT MANAGER DOES NOT BELIEVE THAT THE IMPOSITION OF A LIMIT OF
10% OF TOTAL ASSETS FOR THE NEW EUROPE FUND WILL AFFECT ITS ABILITY TO MANAGE
THE NEW EUROPE FUND'S PORTFOLIO. MOREOVER, THE NEW EUROPE FUND IS ALSO SUBJECT
TO THE PROVISIONS OF THE 1940 ACT, WHICH PROHIBIT SUCH INVESTMENTS FOR A NO-LOAD
FUND IF, IMMEDIATELY AFTER THE PURCHASE, THE FUND AND ITS AFFILIATED PERSONS (AS
DEFINED IN THE 1940 ACT) WOULD OWN MORE THAN 3% OF THE TOTAL OUTSTANDING STOCK
OF THE OTHER INVESTMENT COMPANY.

4.  FUTURES AND OPTIONS TRANSACTIONS (CHANGES FOR EUROPE AND INTERNATIONAL
  FUNDS)

    THE NEW EUROPE FUND AND NEW INTERNATIONAL FUND.  As a matter of fundamental
investment policy, neither the New Europe Fund nor the New International Fund
may "Purchase commodities or commodity contracts, except that a New Fund may
purchase securities of an issuer which invests or deals in commodities or
commodity contracts, and may also enter into futures or options contracts in
accordance with the applicable rules of the Commodity Futures Trading Commission
(the "CFTC")." The applicable rules of the CFTC prohibit a fund's purchase or
sale of futures contracts or related options if, immediately thereafter, the
fund's margin deposits on its existing futures positions plus the premiums it
has paid for related options would exceed 5% of the market value of the fund's
net assets.

    THE EUROPE FUND.  As a matter of fundamental investment policy, the existing
Europe Fund may not "Buy or sell commodities, commodity contracts or futures
contracts (other than futures contracts with respect to foreign stock or bond
indices or other financial indices that the Investment Manager determines are
appropriate to hedge the risks associated with interest rates or general
fluctuations in the value of its portfolio securities). In addition, as a matter
of operating policy, the existing Europe Fund may not purchase or sell futures
if, immediately thereafter, the sum of the amount of "margin" deposits on the
Fund's existing futures positions would exceed 5% of the value of the Fund's
total assets.

    THE INTERNATIONAL FUND.  As a matter of operating policy, the existing
International Fund may enter into futures contracts and related quotas only for
hedging purposes.

    AS A RESULT OF THESE CHANGES, THE NEW INTERNATIONAL FUND WILL NOT BE
RESTRICTED TO USING FUTURES CONTRACTS AND RELATED OPTIONS ONLY FOR HEDGING
PURPOSES, SUBJECT TO THE RESTRICTIONS IMPOSED ON ALL MUTUAL FUNDS BY THE CFTC.

    AS A RESULT OF THESE CHANGES, THE NEW EUROPE FUND WILL BE PERMITTED TO ENTER
INTO FUTURES TRANSACTIONS WITH RESPECT TO NOT ONLY FINANCIAL INDEXES, BUT ALSO
FOREIGN AND DOMESTIC SECURITIES AND CURRENCIES. IN ADDITION, THE NEW EUROPE FUND
WILL BE PERMITTED TO PURCHASE AND SELL OPTIONS ON FUTURES CONTRACTS (WITHIN THE
CFTC LIMITS REFERRED TO ABOVE).

    THE INVESTMENT MANAGER BELIEVES THAT THIS ADDED FLEXIBILITY COULD BE HELPFUL
IN MANAGING THESE NEW FUNDS' PORTFOLIOS IN THE FUTURE. FOR A DESCRIPTION OF THE
RISKS ASSOCIATED WITH FUTURES CONTRACTS AND RELATED OPTIONS, SEE "FUTURES
TRANSACTIONS" IN THE "INVESTMENT OBJECTIVES AND POLICIES" SECTION OF THE
STATEMENT OF ADDITIONAL INFORMATION OF THE GLOBAL FUNDS.

5.  INVESTMENT IN DEBT SECURITIES (CHANGE FOR EUROPE FUND)

    THE EUROPE FUND.  As a matter of operating policy, the existing Europe Fund
is restricted from investing more than 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

                                       12
<PAGE>
agencies, instrumentalities, authorities and political subdivisions), debt
obligations issued or guaranteed by international or supranational government
entities, and debt obligations of corporate issuers. Such obligations must be
rated, at the time of purchase, BBB or higher by Standard & Poor's, a division
of The McGraw-Hill Companies, or Baa or higher by Moody's Investors
Service, Inc., or equivalent ratings by other rating organizations, or, if
unrated, must be determined by the Investment Manager to be of comparable
investment quality.

    THE NEW EUROPE FUND.  As a matter of operating policy, the New Europe Fund
will be permitted to invest up to 20% of its total assets in the same types of
debt obligations in which the existing Europe Fund is currently permitted to
invest.

    AS A RESULT OF THESE CHANGES, THE NEW EUROPE FUND WILL BE PERMITTED TO
INVEST UP TO 20% OF ITS TOTAL ASSETS IN DEBT OBLIGATIONS, RATHER THAN 10%. THE
INVESTMENT MANAGER BELIEVES THIS WILL PERMIT THE NEW EUROPE FUND GREATER
FLEXIBILITY IN INVESTING CASH RESULTING FROM INVESTOR SUBSCRIPTIONS.

    FOR A DESCRIPTION OF THE OTHER CHANGES TO THE INVESTMENT AND OPERATING
RESTRICTIONS OF THE FUNDS, SEE APPENDIX A.

THE NEW MIDCAP FUND AND NEW SMALL CAP FUND WILL HAVE TWO CLASSES OF SHARES.

    Certain of the portfolios of the Global Company have both Class I and
Class N shares, as do the existing International Fund and Europe Fund. These
Classes are identical, except as follows: the Class I shares have a higher
minimum investment ($250,000) than the Class N shares ($5,000) and a higher
minimum for subsequent investments ($50,000 compared to $250); the Class N
shares bear an annual expense of up to 0.25% of average daily net assets, which
is paid to the Funds' distributor as reimbursement for certain expenses incurred
by the distributor in providing distribution and stockholder support services to
such shares under distribution and stockholder service plans adopted pursuant to
Rule 12b-1 under the 1940 Act; and any voluntary annual expense limitation by
the Investment Manager is 0.25% higher for the Class N shares than the Class I
shares.

    In the reorganizations, the stockholders of the existing MidCap Fund and
Small Cap Fund will receive Class I shares of the New MidCap Fund and New Small
Cap Fund, respectively, which are not subject to the expenses of a Rule 12b-1
plan. Although Class I shares of the New Funds have a minimum initial investment
of $250,000 (compared with $10,000 for the existing MidCap Fund and Small Cap
Fund) and a minimum subsequent investment of $50,000 (compared with $1,000),
these higher minimum requirements will be waived for investors who are
stockholders of the existing MidCap Fund and Small Cap Fund as of the effective
date of the reorganizations. In addition, such stockholders will have the right
to exchange their shares for Class I shares of any of the other portfolios of
the Global Company. Management of the Global Company believes that the
availability of Class N shares may help increase the assets of the New MidCap
Fund and New Small Cap Fund in the future. Although Class N shares of the New
MidCap Fund will be available for sale upon the effective date of the
reorganizations, the Class N shares of the New Small Cap Fund will not be
available for sale until some future date.

THE BOARD OF DIRECTORS WILL CHANGE.

    The business of the Capital Company is managed under the direction of a
six-member Board of Directors. They are identified and their backgrounds are
described in the Capital Company's Statement of Additional Information on file
with the Commission. The business of the Investment Company is managed under the
direction of a three-member Board of Directors. They are identified and their
backgrounds are described in the Investment Company's Statement of Additional
information on file with the Commission.

    After the reorganizations, the New Funds will be series of the Global
Company. The responsibilities, powers, and duties of the Directors of the Global
Company are the same as those of the Directors of the Capital Company and the
Investment Company. The Board of Directors of the Global Company currently

                                       13
<PAGE>
has four members, all of whom also are directors of the Capital Company. The
stockholders of the Global Company separately are considering a proposal to
expand the composition of the Global Company's Board from four to nine members,
two additional members from the reorganization of the Capital Funds and three
additional members from the reorganization of the Europe Fund. The current and
proposed directors of the Global Company are as follows:

    The current Directors of the Global Company are as follows:

<TABLE>
<CAPTION>
                                                    POSITION WITH GLOBAL COMPANY (IF ANY),
            NAME                 AGE             PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
----------------------------     ---      -----------------------------------------------------------
<S>                            <C>        <C>
Dewitt F. Bowman                  70      Chairman and Director (Since 1995). Interim Treasurer,
                                          Regents of the University of California (since 2000);
                                          Director, Forward Funds (since 2000) and Wilshire Target
                                          Funds, Inc. (since 1996); Principal, Pension Investment
                                          Consulting (since 1994); Chief Investment Officer,
                                          California Public Employees Retirement System (from 1989 to
                                          1994); Trustee, RREEF America REIT, Inc. (since 1994),
                                          Brandes Institutional International Investment Trust (since
                                          1995), Pacific Gas and Electric Nuclear Decommissioning
                                          Trust (since 1994), and PCG Private Equity Fund (since
                                          1998).

Pamela A. Farr                    55      Director (Since 1996). Independent Management Consultant
                                          and Partner, Best & Co. LLC (manufacturer and retailer of
                                          children's clothing and accessories, from 1996 to 1999);
                                          President, Banyan Homes, Inc. (real estate development and
                                          construction, from 1991 to 1996).

George B. James                   63      Director (Since 1998). Senior Vice President and Chief
                                          Financial Officer, Levi Strauss & Co. (1985 to 1999);
                                          Director, Pacific States Industries (since 1985), Canned
                                          Foods Grocery Outlets (since 1990), Crown Vantage, Inc.
                                          (since 1995), Clayton Group, Inc. (since 1997), Sharper
                                          Image (since 1999), and Callidus Software (since 1999).

George G.C. Parker                61      Director (Since 1996). Senior Associate Dean for Academic
                                          Affairs and Director of the MBA Program and Dean Witter
                                          Professor of Finance, Graduate School of Business, Stanford
                                          University (since 1973); Director, California Casualty
                                          Group of Insurance Companies (since 1977), BB&K
                                          Holdings, Inc. (holding company for financial services
                                          companies, since 1980), Affinity Group International (since
                                          1998), Tejon Ranch Company (since 1999), and iShares Inc.
                                          (since 1999).
</TABLE>

                                       14
<PAGE>
    The following persons have been submitted to the stockholders of the Global
Company for election as additional Directors:

<TABLE>
<CAPTION>
           NAME                 AGE              PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
---------------------------   --------   ------------------------------------------------------------
<S>                           <C>        <C>
John A. Kriewall                 60      Director, Dresdner RCM Capital Funds, Inc.(since 1999).
                                         Retired Managing Director, Co-Chief Investment Officer of
                                         the Mid Cap Team of the Investment Manager, member of Mid
                                         Cap Team Management Committee of the Investment Manager;
                                         Co-CIO of Small and Mid Cap Teams of the Investment Manager;
                                         and Member of the Equity Management Group of the Investment
                                         Manager (associated with the Investment Manager since 1973);
                                         (Mr. Kriewall would be an "interested person" of the Company
                                         (as defined in the 1940 Act) by virtue of his affiliation
                                         with the Investment Manager.)

Kenneth E. Scott                 71      Director, Dresdner RCM Capital Funds, Inc.(since 1994).
                                         Ralph M. Parsons Professor of Law and Business, Stanford Law
                                         School (since 1967); Director, certain registered investment
                                         companies managed by American Century Investments (since
                                         1972).

Robert J. Birnbaum               73      Director, Dresdner RCM Investment Funds Inc. (since 1990).
                                         Director, Chicago Board Options Exchange (since 1998) and
                                         Chicago Mercantile Exchange (from 1990 to 1998); Trustee,
                                         Liberty All-Star Growth Fund, Inc. (since 1997), Colonial
                                         Funds (from 1995 to 1999) and Liberty All-Star Equity
                                         Fund, Inc. (since 1994).

Theodore J. Coburn               47      Director, Dresdner RCM Investment Funds Inc. (since 1991).
                                         Partner, Brown, Coburn & Co. (a consulting firm, since
                                         1991); Education Associate at Harvard University Graduate
                                         School of Education (since 1996); Trustee,
                                         Nicholas-Applegate Mutual Funds (since 1992); Director,
                                         Nicholas-Applegate Fund, Inc. (since 1987), Measurement
                                         Specialties, Inc. (since 1995) and Moovies, Inc. (since
                                         1995).

Alfred W. Fiore                  63      Director, Dresdner RCM Investment Funds Inc.(since 1996).
                                         General Manager, Ross Consulting (employee benefit
                                         consulting firm, since 1988); Executive Vice President and
                                         Chief Financial Officer, Parlux Fragrances, Inc. (since
                                         1987); Executive Vice President and Chief Financial Officer,
                                         Concord Assets Group, Inc. (real estate manager, since
                                         1986) and Director, Southeast Frozen Foods Corporation
                                         (since 1998).
</TABLE>

    The nomination and election of Messrs. Birnbaum, Coburn and Fiore is
conditioned on the closing of the Europe Fund reorganization.

    The officers of the Global Company will be the same as the officers of the
Capital Company and the Investment Company.

WHAT ASPECTS OF THE FUNDS WILL NOT CHANGE AS A RESULT OF THE REORGANIZATIONS?

    After the reorganizations, you will own shares of the New Fund that
corresponds to the existing Fund in which you presently hold shares.

                                       15
<PAGE>
THE INVESTMENT OBJECTIVES OF THE NEW FUNDS ARE IDENTICAL TO THOSE OF THE
CORRESPONDING EXISTING FUNDS.

    The investment objective of each existing Fund is long-term capital
appreciation, and this will also be the investment objective of each of the New
Funds. Of course, there can be no assurance that this objective will be
achieved.

THE INVESTMENT POLICIES, RESTRICTIONS AND RISKS OF THE NEW FUNDS ARE
SUBSTANTIALLY SIMILAR TO THOSE OF THE CORRESPONDING EXISTING FUNDS.

    As indicated above in the discussion of the differences between the Existing
Funds and the New Funds, although the investment restrictions and policies of
the New Funds will to some extent differ from those of the corresponding
existing Funds, they are substantially similar.

    Stockholders of the Capital Funds should review the current prospectuses for
the Capital Funds (dated May 1, 2000) and the "Investment Strategies, Policies
and Risks" sections of the accompanying Prospectuses of the New Capital Funds
for additional information.

    Stockholders of the Europe Fund should review the current prospectus for the
Europe Fund (dated May 1, 2000) and the "Investment Strategies, Policies and
Risks" section of the accompanying Prospectus of the New Europe Fund for
additional information.

THE INVESTMENT MANAGER AND OTHER SERVICE PROVIDERS WILL STAY THE SAME.

    Dresdner RCM Global Investors LLC is the investment manager of the Funds and
will continue to manage the New Funds after the reorganizations. The
International Equity Team of Dresdner RCM is primarily responsible for the
day-to-day management of the International Fund; Gary B. Sokol, CFA, and Brian
E. Dombkowski, CFA, are the primary portfolio managers of the MidCap Fund;
Matthew L. Blazei, CFA, and Timothy M. Kelly, CFA, are the primary portfolio
managers of the Small Cap Fund; Barbel Lenz and David S. Plants are primarily
responsible for the day-to-day management of the Europe Fund. All of these
individuals will continue to have the same responsibilities for the
corresponding New Funds after the reorganizations. For further information about
them, see "The Portfolio Managers" section of the accompanying Prospectuses
under "Organization and Management."

    State Street Bank and Trust Company is the administrator of the Capital
Company and the Investment Company and serves as the transfer agent, redemption
agent, dividend paying agent, and custodian for the Funds; Funds
Distributor, Inc. is the distributor for the Funds; and PricewaterhouseCoopers
LLP acts as independent public accountant for the Funds. They will serve in the
same capacities for the New Funds after the reorganizations.

THE TOTAL VALUE OF YOUR FUND SHARES WILL NOT BE AFFECTED BY THE REORGANIZATIONS.

    On the day of the reorganizations, you will receive New Fund shares of the
same Class having the same total value as your shares of the corresponding
existing Fund (MidCap Fund and Small Cap Fund stockholders will receive Class I
shares of the New MidCap Fund and New Small Cap Fund, respectively). The number
of New Fund shares you receive, and their per share price, also will be the same
as your shares of the corresponding Fund.

THE REORGANIZATIONS WILL HAVE NO MATERIAL FEDERAL INCOME TAX CONSEQUENCES.

    We expect that the reorganizations will have no material federal income tax
consequences to you, to the existing Funds or to the New Funds. We will not
proceed with the reorganizations unless this point is confirmed by an opinion of
counsel. Following the reorganizations, the adjusted federal tax basis of your
New Fund shares will be the same as the basis of your Fund shares before the
reorganizations. We do not

                                       16
<PAGE>
expect Fund stockholders to incur any personal state or local taxes as a result
of the reorganizations, but you should consult your own tax adviser to make
sure.

YOU WILL CONTINUE TO RECEIVE DIVIDENDS ANNUALLY.

    The existing Funds typically declare and pay dividends annually in December,
and the New Funds will do the same. As is the case for the Funds, all dividends,
if any, paid by each New Fund will be reinvested in shares of that New Fund
unless you request otherwise in writing. If you have such a request on file for
an existing Fund, it will be applied to your New Fund shares.

SHARE PURCHASE AND REDEMPTION PROCEDURES WILL NOT BE AFFECTED.

    The New Funds will have substantially the same purchase and redemption
procedures as the existing Funds. As is the case for the existing Funds, the
distributor for the New Funds does not charge any fees or sales charges on
reinvestments in shares of the New Funds. See the "Buying Shares" and "Selling
Shares" sections of the accompanying Prospectuses under "Stockholder
Information."

THE FUNDS' FORM OF ORGANIZATION AND GOVERNING STATE LAW WILL STAY THE SAME.

    The Global Company is incorporated in Maryland. The Capital Company and
Investment Company also are incorporated in Maryland. The operations of the New
Funds, like those of the existing Funds, are subject to the provisions of the
1940 Act and to the rules and regulations of the Commission.

HOW WILL THE CAPITALIZATION OF THE NEW FUNDS COMPARE WITH THAT OF THE EXISTING
  FUNDS?

    The following table sets forth as of September 30, 2000: (i) the
capitalization of the existing Funds; (ii) the capitalization of the New Funds;
and (iii) the pro forma capitalization of the New Funds, as adjusted to give
effect to the reorganizations. If the reorganizations are consummated, the
capitalization of the New Funds is likely to be different at the closing date as
a result of daily share purchase and redemption activity in the Funds after
September 30, 2000.

                                       17
<PAGE>

<TABLE>
<CAPTION>
                             INTERNATIONAL GROWTH EQUITY FUND                     MIDCAP FUND
                          --------------------------------------   ------------------------------------------
                                                     PRO FORMA                                   PRO FORMA
                            EXISTING       NEW        COMBINED        EXISTING        NEW         COMBINED
                          ------------   --------   ------------   --------------   --------   --------------
<S>                       <C>            <C>        <C>            <C>              <C>        <C>
Total Net Assets          $325,919,251              $352,919,251   $1,418,170,253              $1,418,170,253
  Class N...............  $  6,889,656      $0      $  6,889,656              N/A      $0                 N/A
  Class I...............  $319,029,595      $0      $319,029,595   $1,418,170,253      $0      $1,418,170,253
Shares Outstanding
  Class N...............       396,641       0           396,641                0       0                   0
  Class I...............    18,313,984       0        18,313,984      130,948,315       0         130,948,315
Net Asset Value Per
  Share
  Class N...............        $17.37      $0            $17.37              N/A      $0                 N/A
  Class I...............        $17.42      $0            $17.42           $10.83      $0              $10.83

<CAPTION>
                                      SMALL CAP FUND                              EUROPE FUND
                          --------------------------------------   ------------------------------------------
                                                     PRO FORMA                                   PRO FORMA
                            EXISTING       NEW        COMBINED        EXISTING        NEW         COMBINED
                          ------------   --------   ------------   --------------   --------   --------------
Total Net Assets          $361,587,111              $361,587,111   $   80,691,000              $   80,691,000
<S>                       <C>            <C>        <C>            <C>              <C>        <C>
  Class N...............           N/A      $0               N/A   $   79,675,069      $0      $   79,675,069
  Class I...............  $361,587,111      $0      $361,587,111   $    1,015,931      $0      $    1,015,931
Shares Outstanding
  Class N...............             0       0                 0        5,037,784       0           5,037,784
  Class I...............    33,021,654       0        33,021,654           66,706       0              66,076
Net Asset Value Per
  Share
  Class N...............           N/A      $0               N/A           $15.22      $0              $15.22
  Class I...............        $10.95      $0            $10.95           $15.23      $0              $15.23
</TABLE>

                         VOTING AND MEETING PROCEDURES

HOW TO VOTE

    You can vote by mail, phone, internet, or in person at the Meeting.

    - To vote by mail, sign and send us the enclosed Proxy voting card in the
      envelope provided.

    - To vote by phone, call us at the toll-free number on your proxy card.

    - To vote electronically, visit our website at www.proxyvote.com.

    If you vote by phone or electronically, the appropriate Company or its agent
will use reasonable procedures (such as requiring an identification number) to
verify the authenticity of the vote cast.

    If you vote by Proxy, you can revoke your Proxy by notifying the Secretary
of the Capital Company or the Investment Company, as the case may be, in
writing, or by returning a Proxy with a later date. You can also revoke a Proxy
by voting in person at the Meeting. Even if you plan to attend the Meeting and
vote in person, please return the enclosed Proxy card or vote by phone or
electronically. This will help us ensure that an adequate number of shares are
present at the Meeting.

    THE BOARD OF DIRECTORS OF THE CAPITAL COMPANY ON BEHALF OF THE MIDCAP FUND,
SMALL CAP FUND AND INTERNATIONAL FUND, AND THE BOARD OF DIRECTORS OF THE
INVESTMENT COMPANY ON BEHALF OF THE EUROPE FUND, RECOMMEND THAT YOU VOTE "FOR"
THE PROPOSED REORGANIZATIONS.

PROXY SOLICITATION

    In addition to the solicitation of proxies by electronic means, officers and
employees of the Capital Company, the Investment Company and the Investment
Manager, without additional compensation, may

                                       18
<PAGE>
solicit proxies in person or by telephone. The costs associated with those
solicitations and the Meeting will be paid by the Investment Manager and not by
either Company or any Fund. Georgeson Shareholder Communications Inc. will also
be retained to provide professional proxy solicitation services. The cost of
solicitation, including specified expenses, is not expected to exceed $13,000.
The Investment Manager will reimburse banks, brokerage houses and other
custodians, nominees and fiduciaries for the costs of forwarding soliciting
material to beneficial owners of shares entitled to vote at the Meeting.

QUORUM REQUIREMENTS

    The presence in person or by proxy of the following percentage of the
outstanding shares of each Company entitled to vote will constitute a quorum for
the Meeting of stockholders of that Company: Capital Company--one third;
Investment Company--one third. If a quorum is not present, sufficient votes are
not received by the date of the Meeting, or the holders of shares present in
person or by proxy determine to adjourn the Meeting for any other reason, a
person named as proxy may propose one or more adjournments from time to time to
permit further solicitation of proxies. A Fund will count all shares represented
by proxies that reflect abstentions and "broker non-votes" (i.e., shares held by
brokers or nominees as to which instructions have not been received from the
beneficial owners or the persons entitled to vote, and the broker or nominee
does not have discretionary voting power on the matter) as shares that are
present and entitled to vote for purposes of determining a quorum. The persons
named as proxies will vote in favor of adjournment those shares which they
represent if adjournment is necessary to obtain a quorum or to obtain a
favorable vote on any proposal.

VOTE REQUIRED

    The Capital Funds will be reorganized only if the reorganization of each
Capital Fund is approved by a majority of its outstanding shares entitled to
vote, without regard to share Class. The Europe Fund will be reorganized only if
approved by a majority of its outstanding shares entitled to vote, without
regard to share Class. Each Fund will count the total number of votes cast "for"
approval of the reorganization to determine whether sufficient affirmative votes
have been cast. Assuming the presence of a quorum, abstentions and broker
non-votes have the effect of a negative vote.

STOCKHOLDERS ENTITLED TO VOTE

    Stockholders of each Fund at the close of business on October 23, 2000 will
be entitled to be present and vote at the Meeting. Stockholders are entitled to
one vote for each share held and fractional votes for fractional shares held.
Stockholders of each Fund will vote only with other stockholders of that Fund,
without regard to share Class, and separately from stockholders of any other
Fund. As of that date, each of the Funds had outstanding and entitled to vote
the following numbers of shares:

<TABLE>
<CAPTION>
FUND                                                     TOTAL SHARES OUTSTANDING
----                                                     ------------------------
<S>                                                      <C>
International Growth Equity Fund                                 19,809,941

MidCap Fund                                                     130,830,855

Small Cap Fund                                                   33,062,671

Europe Fund                                                       5,221,223
</TABLE>

    The following tables show, to the knowledge of Company management, the
percentage of the total shares of each Fund owned at the close of business on
October 23, 2000 by the Directors and officers of the

                                       19
<PAGE>
Capital Company or the Investment Company, as the case may be, and the
Investment Manager and by other persons owning beneficially more than 5% of the
outstanding shares of each Fund:

<TABLE>
<CAPTION>
                                                                 PERCENT OF TOTAL
                                                    NUMBER OF      OUTSTANDING
                 NAME AND ADDRESS                     SHARES          SHARES
--------------------------------------------------  ----------   ----------------
<S>                                                 <C>          <C>
                        INTERNATIONAL GROWTH EQUITY FUND

Citigroup Inc. Pension Plan                          3,397,203        17.15%
1 Court Square 15th Floor
Long Island City, NY 11120-0001

JM Family Enterprises Inc.                           1,615,782         8.16%
100 NW 12th Avenue
Deerfied Beach, FL 33442

National Financial Services Group                    1,203,841         6.08%
FBO Customers
200 Liberty Street
One World Financial Center
New York, NY 10281-1003

Boston Safe Deposit and Trust Company                1,064,239         5.37%
FBO Blue Cross and Blue Shield of Massachusetts
Retirement Income Trust
Boston, MA 02110

                                   MIDCAP FUND

Ernst & Young Master Trust                          22,272,764        17.02%
c/o The Chase Manhattan Bank, N.A.
770 Broadway, 10th Floor
New York, NY 10003

American Stores Retirement Portfolio                21,703,875        16.59%
c/o Fidelity Management Trust Co.
82 Devonshire Street
Boston, MA 02109

Boeing Company Employee Retirement Plan             12,322,187         9.42%
c/o The Chase Manhattan Bank, N.A.
3 Metrotech Center
Brooklyn, NY 11245

Chevron Corp. Annuity Trust                          8,730,596         6.67%
c/o Bankers Trust Company
BT Services Tennessee
648 Grassmere Park Road
Nashville, TN 37211

Tektronix, Inc.                                      8,081,638         6.18%
c/o Northern Trust Company
P.O. Box 3577
Terminal Annex
Los Angeles, CA 90051

Consolidated Natural Gas Company Pension Trust       6,612,324         5.05%
c/o Bankers Trust Company
BT Services Tennessee
648 Grassmere Park Road
Nashville, TN 37211
</TABLE>

                                       20
<PAGE>

<TABLE>
<CAPTION>
                                                                 PERCENT OF TOTAL
                                                    NUMBER OF      OUTSTANDING
                 NAME AND ADDRESS                     SHARES          SHARES
--------------------------------------------------  ----------   ----------------
<S>                                                 <C>          <C>
                                 SMALL CAP FUND

American Stores Retirement Portfolio                11,634,333        35.19%
c/o Fidelity Management Trust Co.
82 Devonshire Street
Boston, MA 02109

Chevron Corp. Annuity Trust                          2,357,196         7.13%
c/o Bankers Trust Company
BT Services Tennessee
648 Grassmere Park Road
Nashville, TN 37211

Richard and Rhoda Goldman Fund                       2,077,408         6.28%
1 Lombard Street Suite 303
San Francisco, CA 94111-1130

Hughes Aircraft                                      2,008,452         6.07%
P.O. Box 2458
Culver City, CA 90231-2458

                                   EUROPE FUND

Charles Schwab & Co., Inc.                           1,080,293        21.90%
FBO Customers
101 Montgomery Street
San Francisco, CA 94104

National Financial Services Corp.                      489,574         9.38%
FBO Customers
200 Liberty Street
One World Financial Center
New York, NY 10281-1003

Marshicove & Co.                                       290,930         5.57%
P.O. Box 5756
Boston, MA 02206-0001

Smith Barney                                           287,938         5.51%
388 Greenwich Street
New York, NY 10013-2339

National Investors Service Corp.                       285,633         5.47%
FBO Customers
55 Water Street
New York, NY 10041-0098
</TABLE>

    The Directors and Officers of the Companies as a group owned beneficially
less than 1% of each Fund's outstanding shares as of October 23, 2000.

                              GENERAL INFORMATION

    The persons named in the accompanying Proxy will vote in each case as
directed in the Proxy, but in the absence of any direction, they intend to vote
FOR the proposed reorganizations and may vote in their discretion with respect
to other matters that may be presented to the Meeting.

                                       21
<PAGE>
OTHER MATTERS TO COME BEFORE THE MEETING

    Management of the Capital Company and the Investment Company does not know
of any matters to be presented at the Meeting other than those described in this
Proxy Statement. If other business should properly come before the Meeting, the
Proxy holders will vote on them in accordance with their best judgment.

STOCKHOLDER PROPOSALS

    The Meeting is a special joint meeting of stockholders of each Company.
Neither the Capital Company nor the Investment Company is required, nor does it
intend, to hold regular annual meetings of its stockholders. If such a meeting
is called, any stockholder who wishes to submit a proposal for consideration at
the meeting should submit the proposal promptly to the appropriate Company. Any
proposal to be considered for submission to stockholders must comply with
applicable federal and state laws.

NAMES AND ADDRESSES

    Dresdner RCM Global Investors LLC, Four Embarcadero Center, San Francisco,
California 94111, is the Funds' investment manager. State Street Bank and Trust
Company, 1776 Heritage Drive, North Quincy, Massachusetts 02109, is the
administrator of the Capital Company and the Investment Company. State Street
also serves as transfer agent, redemption agent, dividend paying agent, and
custodian for the Funds. Funds Distributor, Inc., 60 State Street, Suite 1300,
Boston, Massachusetts 02109, is the distributor for each Fund.
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts 02110,
acts as independent public accountant for the Funds.

    PLEASE SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY TO ASSURE A QUORUM AT THE
MEETING.

                                          ROBERT J. GOLDSTEIN, SECRETARY

San Francisco, California
November 1, 2000

                                       22
<PAGE>
                                   APPENDIX A
                  OTHER DIFFERENCES IN INVESTMENT RESTRICTIONS

    This Appendix describes certain differences between the investment
restrictions applicable to the existing Funds, and the restrictions that will
apply to the corresponding New Funds. See page 10 of the text for a description
of the other differences.

1.  INVESTMENT IN SECURITIES OF ANY ONE ISSUER (CHANGE FOR EUROPE FUND)

    THE EUROPE FUND: As a matter of fundamental investment policy, the existing
Europe Fund may not: "Purchase any security (other than obligations of the
Federal Republic of Germany, the German Federal Railways and the German Federal
Post Office, which in the aggregate shall not represent more than 25% or more of
the Fund's total assets, or obligations of the U.S. Government, its agencies or
instrumentalities) if as a result more than 10% of the Fund's total assets would
then be invested in securities of any single issuer."

    THE NEW EUROPE FUND: The New Europe Fund will not be restricted, as a matter
of the Fund's fundamental or operating policies, from investing any portion of
its assets in the securities of any one issuer. However, it will comply with the
requirements of Subchapter M of the Internal Revenue Code of 1986, as amended,
which provides among other things that, at the end of each fiscal quarter of a
fund, (a) at least 50% of the value of its total assets must be represented by
cash and cash items (including receivables), U.S. Government securities,
securities of other regulated investment companies, and other securities limited
(in respect of any one issuer) to no more than 5% of the fund's total assets and
10% of the outstanding voting securities of the issuer; and (b) no more than 25%
of the value of the fund's total assets may be 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.

    AS A RESULT OF THESE CHANGES, THE NEW EUROPE FUND WILL BE PERMITTED TO
INVEST A GREATER PROPORTION OF ITS TOTAL ASSETS - UP TO 25% - IN THE SECURITIES
OF ANY ONE ISSUER. IN ADDITION, AS A RESULT OF THESE CHANGES, THE NEW EUROPE
FUND WILL BE PERMITTED TO INVEST MORE THAN 25% OF ITS TOTAL ASSETS IN THE
AGGREGATE IN OBLIGATIONS OF THE FEDERAL REPUBLIC OF GERMANY, THE GERMAN FEDERAL
RAILWAYS AND THE GERMAN FEDERAL POST OFFICE. THE INVESTMENT MANAGER HAS NO
CURRENT INTENTION OF INVESTING MORE THAN 5% OF THE ASSETS OF THE NEW EUROPE FUND
IN THE SECURITIES OF ANY ONE ISSUER. HOWEVER, BECAUSE IT WILL HAVE THE RIGHT TO
DO SO IN THE FUTURE, THE NEW EUROPE FUND COULD BE MORE SUBJECT TO THE RISKS OF
ADVERSE MARKET OR OTHER DEVELOPMENTS RELATED TO A SINGLE ISSUER THAN THE
CORRESPONDING EXISTING FUND.

2.  INVESTMENT IN SECURITIES OF ISSUERS IN ANY ONE INDUSTRY (CHANGE FOR EUROPE
  FUND)

    THE EUROPE FUND: As a matter of fundamental investment policy, the existing
Europe Fund may not "invest 25% or more of the value of its total assets in a
particular industry. This restriction does not apply to securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, but will
apply to foreign government obligations until such time as the Securities and
Exchange Commission permits their exclusion."

    THE NEW EUROPE FUND. As a matter of fundamental policy, the New Europe Fund
may not "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)."

    ALTHOUGH THE NEW RESTRICTION IS WORDED DIFFERENTLY THAN THE INVESTMENT
RESTRICTION THAT CURRENTLY APPLIES TO THE EUROPE FUND, IT IS NOT SUBSTANTIVELY
DIFFERENT.

3.  EXERCISING CONTROL OR MANAGEMENT OF ISSUERS (CHANGE FOR EUROPE FUND)

    THE EUROPE FUND. The Europe Fund is not restricted from investing in
companies for the purpose of exercising control or management.

                                       23
<PAGE>
    THE NEW EUROPE FUND: As a matter of fundamental investment policy, the New
Europe Fund will be prohibited from investing in companies for the purpose of
exercising control or management.

    THE INVESTMENT MANAGER HAS NEVER INTENDED THAT THE EUROPE FUND WOULD INVEST
IN COMPANIES FOR THE PURPOSE OF EXERCISING CONTROL OR MANAGEMENT. THE ADDITION
OF THIS RESTRICTION TO THE NEW EUROPE FUND WILL MERELY CONFORM THE RESTRICTIONS
OF THE NEW EUROPE FUND TO THE EXISTING PORTFOLIOS OF THE GLOBAL COMPANY.

4.  PURCHASE OF REAL ESTATE (CHANGE FOR EUROPE FUND)

    THE EUROPE FUND. As a matter of fundamental investment policy, the existing
Europe Fund may not "purchase or sell real estate or real estate mortgage loans,
except that the Fund may purchase and sell securities of companies that deal in
real estate or interests therein."

    THE NEW EUROPE FUND. As a matter of fundamental investment policy, the New
Europe Fund may not "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."

    ALTHOUGH THE NEW RESTRICTION IS WORDED DIFFERENTLY THAN THE INVESTMENT
RESTRICTION THAT CURRENTLY APPLIES TO THE EUROPE FUND, IT IS NOT SUBSTANTIVELY
DIFFERENT.

5.  ISSUANCE OF SENIOR SECURITIES (CHANGE FOR EUROPE FUND)

    THE EUROPE FUND: The existing Europe Fund does not have a specific
fundamental investment policy with respect to the issuance of senior securities.
However, it is subject to the provisions of the 1940 Act which restrict its
ability to issue senior securities.

    THE NEW EUROPE FUND: As a matter of fundamental investment policy, the New
Europe Fund, like the other Global Company portfolios, may not "issue senior
securities, except that the Fund may borrow money. This restriction shall not
prohibit the Fund from engaging in short sales, options, futures and foreign
currency transactions."

    THE INVESTMENT MANAGER DOES NOT BELIEVE THAT THE INCLUSION OF THIS
RESTRICTION AS A FUNDAMENTAL INVESTMENT POLICY FOR THE NEW EUROPE FUND WILL HAVE
ANY SIGNIFICANT IMPACT ON THE OPERATIONS OF THE NEW EUROPE FUND.

6.  PURCHASING SECURITIES ON MARGIN (CHANGE FOR EUROPE FUND)

    THE EUROPE FUND. As a matter of fundamental investment policy, the Europe
Fund may not "purchase securities on margin, except short-term credits as may be
necessary or routine for the clearance or settlement of transactions, and except
for margin posted in connection with hedging transactions consistent with its
investment policies."

    THE NEW EUROPE FUND. As a matter of fundamental investment policy, the New
Europe Fund may not "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."

    ALTHOUGH THE NEW RESTRICTION IS WORDED DIFFERENTLY THAN THE INVESTMENT
RESTRICTION THAT CURRENTLY APPLIES TO THE EUROPE FUND, IT IS NOT SUBSTANTIVELY
DIFFERENT.

7.  PORTFOLIO TRANSACTIONS WITH "INTERESTED PERSONS" (CHANGE FOR THE EUROPE
  FUND)

    THE EUROPE FUND. The existing Europe Fund does not have a specific
fundamental investment policy with respect to portfolio transactions with
"interested parties". However, it is subject to the provisions of Section 17 of
the 1940 Act, which restrict its ability to enter into portfolio transactions
with officers, directors and other "interested persons" of the Fund.

                                       24
<PAGE>
    THE NEW EUROPE FUND. As a matter of fundamental investment policy, the New
Europe Fund may not purchase from or sell portfolio securities to its officers,
directors or other "interested persons" (as defined in the 1940 Act) of the
Fund, other than otherwise unaffiliated broker-dealers.

    THE INVESTMENT MANAGER DOES NOT BELIEVE THAT THE INCLUSION OF THIS
RESTRICTION AS A FUNDAMENTAL INVESTMENT POLICY FOR THE NEW EUROPE FUND WILL HAVE
ANY SIGNIFICANT IMPACT ON THE OPERATIONS OF THE NEW EUROPE FUND.

8.  INVESTMENT IN MINERAL EXPLORATION AND DEVELOPMENT PROGRAMS (CHANGE FOR THE
    MIDCAP, SMALL CAP, EUROPE AND INTERNATIONAL FUNDS)

    THE EXISTING FUNDS. As a matter of fundamental or non-fundamental investment
policy, the existing MidCap Fund, Small Cap Fund, Europe Fund and International
Fund may not invest in interests in oil, gas, or other mineral exploration or
development programs.

    THE NEW FUNDS. None of the corresponding New Funds is subject to this
investment restriction.

    THE INVESTMENT MANAGER HAS NO CURRENT INTENTION OF INVESTING IN MINERAL
EXPLORATION AND DEVELOPMENT PROGRAMS WITH RESPECT TO ANY OF THE NEW FUNDS.
FURTHERMORE, THIS RESTRICTION IS NOT REQUIRED BY THE 1940 ACT, AND WAS
ORIGINALLY ADOPTED IN RESPONSE TO STATE LAW RESTRICTIONS OR INTERPRETATIONS THAT
NO LONGER APPLY TO INVESTMENT COMPANIES. THE INVESTMENT MANAGER BELIEVES THAT
ELIMINATION OF THIS RESTRICTION WILL INCREASE ITS ABILITY TO MANAGE THE NEW
FUNDS' ASSETS EFFECTIVELY AND EFFICIENTLY IN RESPONSE TO MARKET AND REGULATORY
CHANGES.

9.  INVESTMENT IN UNSEASONED ISSUERS (CHANGE FOR MIDCAP, SMALL CAP AND
  INTERNATIONAL FUNDS)

    THE EXISTING FUNDS. As a matter of fundamental or non-fundamental investment
policy, none of the existing MidCap Fund, Small Cap Fund, and International Fund
may invest more than 5% of its net assets in the securities of any issuer which
has a record of less than three years of continuous operation (including the
operation of any predecessor).

    THE NEW FUNDS. None of the corresponding New Funds is subject to this
investment restriction.

    THIS RESTRICTION IS NOT REQUIRED BY THE 1940 ACT, AND WAS ORIGINALLY ADOPTED
IN RESPONSE TO STATE LAW RESTRICTIONS OR INTERPRETATIONS THAT NO LONGER APPLY TO
INVESTMENT COMPANIES. IN THE CURRENT MARKET ENVIRONMENT, THERE ARE MANY
RELATIVELY NEW ENTERPRISES WITH SIGNIFICANT INVESTMENT POTENTIAL. THE INVESTMENT
MANAGER BELIEVES THAT ELIMINATION OF THIS RESTRICTION WILL INCREASE ITS ABILITY
TO MANAGE THE NEW FUNDS' ASSETS EFFECTIVELY AND EFFICIENTLY IN RESPONSE TO
MARKET AND REGULATORY CHANGES.

10.  SECURITIES OF COMPANIES IN WHICH DIRECTORS AND OFFICERS HAVE INTERESTS
     (CHANGE FOR MIDCAP AND SMALL CAP FUNDS)

    THE MIDCAP AND SMALL CAP FUNDS. As a matter of fundamental or
non-fundamental investment policy, the existing MidCap Fund and existing Small
Cap Fund may not purchase or retain securities of an issuer if, to the Capital
Company's knowledge, one or more of the directors, officers, partners or
employees of the Capital Company or the Investment Manager individually owns
beneficially more than 0.5% of the securities of such issuer and together own
beneficially more than 5% of such securities.

    THE NEW FUNDS. Neither of the corresponding New Funds is subject to this
investment restriction.

    THIS RESTRICTION IS NOT REQUIRED BY THE 1940 ACT, AND WAS ORIGINALLY ADOPTED
IN RESPONSE TO STATE LAW RESTRICTIONS OR INTERPRETATIONS THAT NO LONGER APPLY TO
INVESTMENT COMPANIES. BECAUSE THE LIKELIHOOD OF SUCH AN INVESTMENT IS REMOTE,
AND MONITORING COMPLIANCE WITH THE RESTRICTION IS EXTREMELY DIFFICULT, THE BOARD
OF DIRECTORS OF THE GLOBAL COMPANY CONCLUDED THAT IT WAS NO LONGER NECESSARY.
INVESTMENT IN COMPANIES AFFILIATED WITH THE INVESTMENT MANAGER AND THE OFFICERS
AND DIRECTORS OF THE GLOBAL COMPANY WILL CONTINUE TO BE RESTRICTED BY SECTION 17
OF THE 1940 ACT.

                                       25
<PAGE>
11.  CURRENCY MANAGEMENT TECHNIQUES (CHANGE FOR EUROPE FUND)

    THE EUROPE FUND. As a matter of operating policy, the existing Europe Fund
may not engage in currency futures transactions, but may use other types of
currency management techniques, including forward contracts, options on foreign
currencies, and swap transactions, both for hedging purposes and to enhance
returns.

    THE NEW EUROPE FUND. The New Europe Fund will be permitted to engage in the
full range of currency management techniques available to the existing Europe
Fund, as well as currency futures transactions. As with the other portfolios of
the Global Company, the New Europe Fund will not be permitted to use more than
30% of the value of its total assets in currency management techniques for the
purpose of enhancing returns.

    THE INVESTMENT MANAGER BELIEVES THAT THESE CHANGES WILL PROVIDE THE NEW
EUROPE FUND WITH ADDITIONAL DESIRABLE INVESTMENT FLEXIBILITY. FOR A DESCRIPTION
OF THE RISKS ASSOCIATED WITH SUCH TECHNIQUES, SEE "INVESTMENT STRATEGIES,
POLICIES AND RISKS" IN THE ACCOMPANYING PROSPECTUS.

12.  DELAYED DELIVERY TRANSACTIONS (CHANGE FOR EUROPE FUND)

    THE EUROPE FUND. As a matter of operating policy, the existing Europe Fund
is not authorized to purchase securities on a delayed delivery or "when issued"
basis or to 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).

    THE NEW EUROPE FUND. The New Europe Fund will be authorized to enter into
such transactions. 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 New Europe Fund generally will not 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 OTHER PORTFOLIOS OF THE GLOBAL COMPANY ARE AUTHORIZED TO ENTER INTO SUCH
TRANSACTIONS, AND THE INVESTMENT MANAGER BELIEVES THAT THIS CHANGE WILL PROVIDE
THE NEW EUROPE FUND WITH ADDITIONAL DESIRABLE INVESTMENT FLEXIBILITY. 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. THE INVESTMENT MANAGER DOES NOT BELIEVE THAT THE USE
OF THIS TECHNIQUE WILL CREATE SUBSTANTIAL RISKS. HOWEVER, THE VALUE OF THE
SECURITIES AT SETTLEMENT MAY BE MORE OR LESS THAN THE AGREED UPON PRICE, AND TO
THE EXTENT THAT ASSETS ARE SEGREGATED FOR THIS PURPOSE, THE FUND'S LIQUIDITY AND
THE ABILITY OF THE INVESTMENT MANAGER TO MANAGE THE FUND'S PORTFOLIO MAY BE
ADVERSELY AFFECTED.

13.  RESTRICTION ON BORROWING (CHANGE FOR EUROPE FUND)

    THE EUROPE FUND.  The statement of fundamental investment policies of the
existing Europe Fund provides that, for purposes of its fundamental borrowing
restrictions, reverse repurchase agreements and other borrowing transactions
covered by segregated assets are not considered to be borrowings.

    THE NEW EUROPE FUND.  The statement of fundamental investment policies of
the New Europe Fund provides the opposite--that reverse repurchase agreements
and other borrowing transactions covered by segregated assets are considered to
be borrowings for purposes of the New Europe Fund's fundamental borrowing
restrictions.

    THE INVESTMENT MANAGER DOES NOT BELIEVE THAT THIS NEW RESTRICTION WILL HAVE
ANY MATERIAL IMPACT ON THE OPERATIONS OF THE NEW EUROPE FUND.

                                       26
<PAGE>
14.  INVESTMENT IN ILLIQUID SECURITIES (CHANGE FOR THE EUROPE FUND)

    THE EUROPE FUND.  As a matter of operating policy (which may be changed by
its Board of Directors without stockholder approval), the existing Europe Fund
may not invest more than 15% of the value of its net assets in illiquid
securities.

    THE NEW EUROPE FUND.  As a matter of fundamental investment policy, the New
Europe Fund will be restricted from investing more than 15% of the value of its
net assets in illiquid securities.

    SECURITIES ARE CONSIDERED TO BE ILLIQUID IF THE FUND CANNOT REASONABLY
EXPECT TO RECEIVE, WITHIN SEVEN DAYS, APPROXIMATELY THE AMOUNT AT WHICH IT
VALUES THEM. THESE MAY INCLUDE NOT ONLY SECURITIES WITH RELATIVELY THIN TRADING
MARKETS, BUT ALSO SECURITIES THAT ARE SUBJECT TO RESTRICTIONS ON RESALE BECAUSE
THEY ARE NOT REGISTERED UNDER THE SECURITIES ACT OF 1933 AND ARE NOT SUBJECT TO
PURCHASE BY INSTITUTIONAL BUYERS IN ACCORDANCE WITH RULE 144A UNDER THAT ACT.
HOWEVER, CURRENT GUIDELINES OF THE SECURITIES AND EXCHANGE COMMISSION PERMIT
MUTUAL FUNDS TO INVEST UP TO 15% OF THEIR NET ASSETS IN SUCH SECURITIES, THIS
GUIDELINE IS WIDELY USED IN THE FUND INDUSTRY, AND THE INVESTMENT MANAGER
BELIEVES THAT IT WOULD BE PRUDENT TO RETAIN THIS LEVEL OF FLEXIBILITY FOR THE
FUTURE.

    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 NEW EUROPE FUND
MIGHT NOT BE ABLE TO DISPOSE OF SUCH SECURITIES PROMPTLY OR AT REASONABLE PRICES

    ALTHOUGH THE EUROPE FUND IS CURRENTLY SUBJECT TO THE 15% RESTRICTION, THIS
WILL CHANGE FROM AN OPERATING POLICY (WHICH CAN BE CHANGED BY ITS BOARD OF
DIRECTORS) TO A FUNDAMENTAL INVESTMENT POLICY (WHICH CAN ONLY BE CHANGED WITH
THE APPROVAL OF ITS STOCKHOLDERS). THE INVESTMENT MANAGER DOES NOT BELIEVE THAT
THIS CHANGE WILL HAVE ANY SIGNIFICANT IMPACT ON THE NEW EUROPE FUND.

                                       27
<PAGE>

                         DRESDNER RCM GLOBAL FUNDS, INC.



    -------------------------------------------------------------------------



                            DRESDNER RCM MIDCAP FUND
                           DRESDNER RCM SMALL CAP FUND



    -------------------------------------------------------------------------









                                October 30, 2000


      This prospectus contains essential information for anyone considering an
investment in these Funds. Please read this document carefully and keep it for
future reference.

      The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the accuracy or adequacy of this Prospectus. It
is a criminal offense to state or suggest otherwise.

<PAGE>


<TABLE>
<CAPTION>
                                                              TABLE OF CONTENTS
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>

                                                                          RISK/RETURN SUMMARY AND FUND EXPENSES
----------------------------------------------------------------------- -----------------------------------------------------------
THIS SECTION SUMMARIZES THE FUNDS' INVESTMENTS, RISKS, PAST                3      Dresdner RCM MidCap Fund
PERFORMANCE, AND FEES.                                                     6      Dresdner RCM Small Cap Fund



                                                                          INVESTMENT STRATEGIES, POLICIES AND RISKS
----------------------------------------------------------------------- -----------------------------------------------------------
THIS SECTION PROVIDES DETAILS ABOUT THE FUNDS' INVESTMENT STRATEGIES,      9      Investment Strategies and Policies
POLICIES AND RISKS.                                                        11     Other Investment Practices
                                                                           13     Changing the Funds' Investment Objectives and
                                                                                  Policies
                                                                           13     Investment Risks


                                                                          ORGANIZATION AND MANAGEMENT
----------------------------------------------------------------------- -----------------------------------------------------------
THIS SECTION PROVIDES DETAILS ABOUT THE PEOPLE AND ORGANIZATIONS WHO       16     The Funds and the Investment Manager
OVERSEE THE FUNDS.                                                         16     The Portfolio Managers
                                                                           16     Management Fees and Other Expenses
                                                                           16     The Distributor



                                                                          STOCKHOLDER INFORMATION
----------------------------------------------------------------------- -----------------------------------------------------------
THIS SECTION TELLS YOU HOW TO BUY, SELL AND EXCHANGE SHARES, HOW WE        17     Buying Shares
VALUE SHARES, AND HOW WE PAY DIVIDENDS AND DISTRIBUTIONS.                  19     Selling Shares
                                                                           20     Other Stockholder Services and Account Policies
                                                                           23     Dividends, Distributions and Taxes

                                                                          FINANCIAL HIGHLIGHTS
----------------------------------------------------------------------- -----------------------------------------------------------
THIS SECTION PROVIDES DETAILS ON SELECTED FINANCIAL HIGHLIGHTS OF THE      25     Dresdner RCM MidCap Fund
FUNDS.                                                                     26     Dresdner RCM Small Cap Fund
</TABLE>



                                       2
<PAGE>

RISK/RETURN SUMMARY AND FUND EXPENSES

DRESDNER RCM MIDCAP FUND



Goal:                              The Fund's goal is to seek long-term capital
                                   appreciation by investing 65% of its total
                                   assets (which includes cash) and 80% of its
                                   investments (which excludes cash) in equity
                                   and equity-related securities of small- to
                                   medium-sized domestic companies.

Principal Investment Strategies:   The Fund invests in small- to medium-sized
                                   companies with total market capitalizations
                                   not exceeding those of the largest company
                                   included in the Russell Midcap Growth Index,
                                   which currently is $31.6 billion. The Fund
                                   may also invest up to 10% of its total assets
                                   in foreign issuers.

                                   The Fund focuses its investment on companies
                                   that it expects will have higher than average
                                   rates of growth and strong potential for
                                   capital appreciation.

Principal Investment Risks:        Because the values of 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 investments.

                                   The values of the Fund's investments
                                   fluctuate in response to the activities of
                                   individual companies and general stock market
                                   and economic conditions. Stock prices of
                                   smaller and newer companies often fluctuate
                                   more than those of larger, more established
                                   companies.

                                   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.


                                       3
<PAGE>

      PERFORMANCE

      The charts on the next page show the performance of the Fund as a
series of the Capital Company and prior to its proposed reorganization as a
newly created series of the Global Company. The information shows how the
Fund has performed and provides some indication of the risks of investing in
the Fund by showing how its performance has varied from year to year. The bar
chart shows changes in the yearly performance of the Fund. The chart below it
compares the performance of the Fund over time to the Standard & Poor's
MidCap 400 Index and the Russell Midcap Growth Index.

      Both charts assume reinvestment of dividends and distributions. Of course,
past performance does not necessarily indicate how the Fund will perform in the
future.

                           Year-by-Year Total Returns

<TABLE>
<CAPTION>
============================================================================================================
          1990      1991      1992      1993      1994      1995      1996      1997      1998      1999
------------------------------------------------------------------------------------------------------------
          <S>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
          -4.12%    48.23%    7.03%     10.72%    0.76%     34.53%    19.07%    17.50%    15.06%    60.18%
</TABLE>

      For the period covered by this year by year total return chart, the Fund's
highest quarterly return was 42.24% (for the fourth quarter ended 1999) and the
lowest quarterly return was -22.87% (for the third quarter ended 1998).

<TABLE>
<CAPTION>
                          Average Annual Total Returns
                           (through December 31, 1999)

                        ----------------------------------------------------------------------------
                        FUND                ONE          FIVE       TEN YEARS        SINCE
                        INCEPTION          YEAR         YEARS                      INCEPTION
----------------------------------------------------------------------------------------------------
<S>                     <C>                <C>          <C>         <C>            <C>
FUND SHARES                 11/6/79        60.18%       28.24%        19.40%         21.22%
----------------------------------------------------------------------------------------------------
S&P MIDCAP 400 INDEX         ____          14.72%       23.04%        17.31%          N/A
----------------------------------------------------------------------------------------------------
RUSSELL MIDCAP               ____          51.31%       28.03%        18.96%          N/A
GROWTH INDEX*
----------------------------------------------------------------------------------------------------
</TABLE>


*   Effective December 21, 1999 the Fund's performance benchmark was changed
from the S & P Midcap 400 Index to the Russell Midcap Growth Index. The Fund's
Board of Directors believes that the composition of the Russell Midcap Growth
Index more accurately reflects the market capitalization ranges and types of
securities in which the Fund primarily invests in.


                                       4
<PAGE>

FEES AND EXPENSES


      The Fund has both a Non-Institutional Class ("Class N") and an
Institutional Class ("Class I") of shares.  As an investor in the Fund, you
will pay the following fees and expenses.


<TABLE>
<CAPTION>
SHAREHOLDER FEES                                                                 Class of Shares
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)                                        ---------------
None                                                                       Class I             Class N
                                                                           -------             -------

ANNUAL FUND OPERATING EXPENSES (FEES PAID FROM FUND ASSETS)
<S>                                                                        <C>                 <C>
Management fees                                                              0.75%               0.75%
-------------------------------------------------------------------------------------------------------
Rule 12b-1 fee                                                                None               0.25%
-------------------------------------------------------------------------------------------------------
Other expenses                                                               0.04%               0.48%
-------------------------------------------------------------------------------------------------------
Total annual Fund operating expenses                                         0.80%               1.48%
-------------------------------------------------------------------------------------------------------
Less: Fees waived and Reimbursed(1)                                          0.03%               0.46%
-------------------------------------------------------------------------------------------------------
Net operating expenses(1)                                                    0.77%               1.02%
-------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Investment Manager has contractually agreed until at least June 30,
2003, 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 0.77% for Class I and 1.02% 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

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

<TABLE>
<CAPTION>
                             One          Three         Five          Ten
                             Year         Years         Years         Years
<S>                          <C>          <C>           <C>           <C>
Class I*                     $79          $246          $435          $981
Class N*                     $104         $325          $669          $1,643
</TABLE>

* Assuming the Investment Manager continues to reimburse the ordinary operating
expenses which exceed the annualized rate of 0.77% for Class I and 1.02% for
Class N, your expenses for the periods indicated would be $79, $246, $428 and
$954 for Class I and $104, $325, $563 and $1,248 for Class N. However, there is
no guarantee that the Investment Manager will continue such reimbursement
policy.


                                       5
<PAGE>

DRESDNER RCM SMALL CAP FUND

RISK/RETURN SUMMARY

Goal:                              The Fund's goal is to seek long-term capital
                                   appreciation by investing 65% of its total
                                   assets (which includes cash) and 80% of its
                                   investments (which excludes cash) in equity
                                   and equity-related securities of small
                                   companies.

Principal Investment Strategies:   Under normal market conditions, the Fund
                                   invests at least 90% of its investments in
                                   companies with market capitalizations, at the
                                   time of purchase, within the range of market
                                   capitalizations of companies included in the
                                   Russell 2000 Index, which currently ranges
                                   between $12.6 million to $5.8 billion. The
                                   Fund may also invest up to 10% of its total
                                   assets in foreign issuers.

                                   The Fund will maintain a weighted-average
                                   market capitalization that is no less than
                                   50% and no more than 200% of the
                                   weighted-average market capitalization of the
                                   securities that comprise the Russell 2000
                                   Index.



                                   The Fund focuses its investments on companies
                                   that it expects will have higher than average
                                   rates of growth and strong potential for
                                   capital appreciation.

Principal Investment Risks:        Because the values of 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 investments.

                                   The values of the Fund's investments
                                   fluctuate in response to the activities of
                                   individual companies and general stock market
                                   and economic conditions. The stock prices of
                                   smaller and newer companies often fluctuate
                                   more than those of larger, more established
                                   companies.

                                   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.


                                       6
<PAGE>

      PERFORMANCE

      The charts on the next page show the performance of the Fund as a
series of the Capital Company and prior to its proposed reorganization as a
newly created series of the Global Company. The information shows how the
Fund has performed and provides some indication of the risks of investing in
the Fund by showing how its performance has varied from year to year. The bar
chart shows changes in the yearly performance of the Fund. The chart below it
compares the performance of the Fund over time to the Russell 2000 Index.

      Both charts assume reinvestment of dividends and distributions. Of course,
past performance does not necessarily indicate how the Fund will perform in the
future.

<TABLE>
<CAPTION>
                           Year-by-Year Total Returns

=============================================================================
          1993      1994      1995      1996      1997      1998      1999
-----------------------------------------------------------------------------
          <S>       <C>       <C>       <C>       <C>       <C>       <C>
          9.20%     -2.16%    34.08%    34.39%    19.49%    1.11%     12.40%
</TABLE>

      For the periods covered by this year by year total return chart, the
Fund's highest quarterly return was 27.06% (for the fourth quarter ended 1999)
and the lowest quarterly return was -26.61% (for the third quarter ended 1998).

<TABLE>
<CAPTION>
                          Average Annual Total Returns
                           (through December 31, 1999)

                         -----------------------------------------------------------------------
                                   FUND              ONE             FIVE            SINCE
                                 INCEPTION          YEAR             YEARS         INCEPTION
------------------------------------------------------------------------------------------------
<S>                              <C>               <C>              <C>            <C>
FUND SHARES                       1/3/92           12.40%           19.60%           15.62%
------------------------------------------------------------------------------------------------
RUSSELL 2000 INDEX                  __             21.26%           16.69%           14.68%
------------------------------------------------------------------------------------------------
</TABLE>


                                       7
<PAGE>

FEES AND EXPENSES

The Fund has both a Non-Institutional Class ("Class N") and an Institutional
Class ("Class I") of shares. The Fund's Class N shares are not currently being
offered for sale.  As an investor in the Fund, you will pay the following fees
and expenses.


<TABLE>
<CAPTION>
SHAREHOLDER FEES                                                                 Class of Shares
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)                                        ---------------
None                                                                       Class I             Class N
                                                                           -------             -------

ANNUAL FUND OPERATING EXPENSES (FEES PAID FROM FUND ASSETS)
<S>                                                                        <C>                 <C>
Management fees                                                              1.00%               1.00%
------------------------------------------------------------------------------------------------------
Rule 12b-1 fee                                                                None               0.25%
------------------------------------------------------------------------------------------------------
Other expenses                                                               0.09%               0.61%
------------------------------------------------------------------------------------------------------
Total annual Fund operating expenses                                         1.09%               1.86%
------------------------------------------------------------------------------------------------------
Less: Fees waived and Reimbursed(1)                                          0.07%               0.59%
------------------------------------------------------------------------------------------------------
Net operating expenses(1)                                                    1.02%               1.27%
------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Investment Manager has contractually agreed until at least June 30,
2003, 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 1.02% for Class I and 1.27% for Class N. The Fund
may reimburse the Investment Manager in the future.

EXAMPLE

      Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

      -       $10,000 investment in the Fund
      -       5% annual return
      -       redemption at the end of each period
      -       no changes in the Fund's operating expenses

Because this example is hypothetical and for comparison only, your actual costs
will be different.

<TABLE>
<CAPTION>
                        One           Three         Five          Ten
                        Year          Years         Years         Years
<S>                     <C>           <C>           <C>           <C>
Class I*                $104          $325          $579          $1,309
Class N*                $129          $403          $831          $2,025
</TABLE>

* Assuming the Investment Manager continues to reimburse the ordinary operating
expenses which exceed the annualized rate of 1.02% for Class I and 1.27% for
Class N, your expenses for the periods indicated would be $104, $325, $563 and
$1,248 for Class I and $129, $403, $697 and $1,534 for Class N. However, there
is no guarantee that the Investment Manager will continue such reimbursement
policy.


                                       8
<PAGE>

INVESTMENT STRATEGIES, POLICIES AND RISKS

      The following pages provide additional information about the Funds'
principal investment strategies and risks, as well as certain other important
investment policies

INVESTMENT STRATEGIES AND POLICIES

      HOW DO THE FUNDS SELECT EQUITY INVESTMENTS?

      While the Funds emphasize investments in growth companies, the Funds also
may invest in other companies that are not traditionally considered to be growth
companies, such as emerging growth companies and cyclical and semi-cyclical
companies in developing economies, if the Investment Manager believes that such
companies have above-average growth potential.

      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
               -     A strong commitment to research and development
               -     A steady stream of new products or services

      The Funds do not seek current income, and do not restrict their
investments to companies with a record of dividend payments.

      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 its Grassroots(SM) Research operating group.
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 Funds might
invest and by checking marketplace assumptions about market demand for
particular products and services.

      WHAT KINDS OF EQUITY SECURITIES DO THE FUNDS INVEST IN?

      The Funds invest primarily in common stocks. Subject to the restrictions
described above, the Funds may invest in companies of any size. Common stocks
represent the basic equity ownership interests in a company.

      The Funds 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.

OTHER INVESTMENT PRACTICES

      DO THE FUNDS HEDGE THEIR INVESTMENTS?

      Each Fund may purchase and sell stock index futures contracts and options
on those futures contracts as a hedge against changes in market conditions that
may result in changes in the value of the Fund's portfolio securities and not
for speculation.


                                       9
<PAGE>

      DO THE FUNDS INVEST IN FOREIGN SECURITIES?

      Each Fund may invest up to 10% of its total assets in the following types
of foreign equity and equity-related 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 United States.
-   Securities that are principally traded outside the United States, regardless
    of where the issuer of such securities is organized or headquartered or
    where its operations principally are conducted.
-   American Depositary Receipts.
-   Securities of other investment companies investing primarily in such equity
    and equity-related foreign securities.

      Such investments are not currently a principal investment technique for
either Fund. However, if foreign securities present attractive investment
opportunities, either Fund may increase the percentage of its total assets in
foreign securities, subject to the limits described above.

      DO THE FUNDS INVEST IN OTHER INVESTMENT COMPANIES?

      The laws of some foreign countries may make it difficult or impossible for
a 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, and subject to the restrictions
referred to above regarding investments in companies organized or headquartered
in foreign countries, each 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. However, no Fund may acquire more than 3% of the
outstanding voting securities of any other investment company.

      If a Fund invests in other investment companies, it will bear its
proportionate share of the other investment company's 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 ARE THE FUNDS' INVESTMENT POLICIES IN UNCERTAIN MARKETS?

      When the Investment Manager believes a Fund should adopt a temporary
defensive posture, including periods of international, political or economic
uncertainty, each Fund may hold all or a substantial portion of its assets in
cash or cash equivalent investments, U.S. Government obligations,
non-convertible preferred stocks, and non-convertible corporate bonds with a
remaining maturity of less than one year. During these periods, a Fund may not
achieve its investment objective.

      WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT INVESTMENT PRACTICES?

      The STATEMENT OF ADDITIONAL INFORMATION 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.

CHANGING THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES

      Each 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, each
Fund's other investment policies and restrictions are not fundamental and may be
changed without stockholder approval.


                                       10
<PAGE>

      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, a Fund is not required to sell any
security in its portfolio as a result of a change in any applicable percentage
resulting from market fluctuations.


INVESTMENT RISKS

      Your investment in the Funds is subject to a variety of risks, including
those described below. See the SAI for further information about these and other
risks.

      EQUITY INVESTMENTS

      Prices of equity securities fluctuate based on changes in the issuer's
financial condition and prospects and on overall market and economic conditions.

      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 a 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
a 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 a Fund
(including the withholding of dividends and limitations on the repatriation of
currencies). A 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 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.


                                       11
<PAGE>

      FUTURES TRANSACTIONS

      The use of stock index futures and options on futures is a highly
specialized activity, and the success of any such operations by a 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 and other
factors. Although hedging operations could reduce the risk of loss due to a
decline in the value of the hedged portfolio, they could also limit the
potential gain from an increase in the value of the portfolio.



                                       12
<PAGE>

ORGANIZATION AND MANAGEMENT

THE FUNDS AND THE INVESTMENT MANAGER

      The Funds are series of Dresdner RCM Global Funds, Inc. (the "Company").

      Dresdner RCM Global Investors LLC, with principal offices at Four
Embarcadero Center, San Francisco, California 94111, is the investment manager
of the Funds. The Investment Manager manages each Fund's investments, provides
various administrative services, and supervises each Fund's business.

      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

      MIDCAP FUND

      Gary B. Sokol, CFA and Brian E. Dombkowski, CFA are the primary portfolio
managers of the MidCap Fund (formerly called the "Growth Equity Fund"). Mr.
Sokol was a primary portfolio manager of the Small Cap Fund from 1992 to 1997.
He is a Managing Director of the Investment Manager, with which he has been
associated since 1988. Mr. Dombkowski is a Director of the Investment Manager,
with which he has been associated since 1995. Prior to joining Dresdner RCM, he
worked for GE Investments in the international equities department following the
telecommunications and banking industries.

      SMALL CAP FUND

      Matthew L. Blazei, CFA and Timothy M. Kelly, CFA are the primary portfolio
managers of the Small Cap Fund. Mr. Blazei has research and management
responsibilities for small cap securities and is a Managing Director of the
Investment Manager, with which he has been associated since 1992. Mr. Kelly is a
Managing Director of the Investment Manager, with which he has been associated
since 1995.

MANAGEMENT FEES AND OTHER EXPENSES

      Each Fund pays the Investment Manager a fee pursuant to an investment
management agreement. The MidCap Fund and the Small Cap Fund each pay a monthly
fee to the Investment Manager at the annual rate of 0.75% and 1.00% of their
average daily net assets, respectively.

      Each 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). These expenses
are allocated to each class of shares based on the assets of each class. In
addition, each class also bears certain class-specific expenses, such as Rule
12b-1 expenses payable by each Fund's Class N shares.

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 shares of the Funds. 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.


                                       13
<PAGE>

      The Company, on behalf of its Class N shares, has adopted a distribution
and service plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. Under
the Plan, each Fund pays the Distributor an annual fee of up to 0.25% of the
average daily net assets of its Class N shares as reimbursement for certain
expenses actually incurred by the Distributor in providing distribution and
shareholder support services to such shares. Class I shares are not subject to
12b-1 fees.

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 Investment   IRA Account Minimum Initial   IRA Account Minimum Subsequent
                     Minimum Initial                                           Investment                      Investment
   Fund                Investment
   ---------------------------------------------------------------------------------------------------------------------------------
   <S>               <C>               <C>                             <C>                           <C>
   Class N               $5,000                     $250                         $2,000                           $250
   ---------------------------------------------------------------------------------------------------------------------------------

   Class I              $250,000                  $50,000                       $250,000*                        $2,000
   ---------------------------------------------------------------------------------------------------------------------------------
   *   rollovers only
</TABLE>

-  The Funds reserve the right at any time to waive, increase or decrease the
   minimum requirements applicable to initial or subsequent investments. In
   connection with the reorganization of the Funds, each Fund's existing
   shareholders will be reclassified into each such Fund's newly established
   Class I shares. As a result, the minimum subsequent investment
   requirements for Class I shares will be waived for those stockholders whose
   shares were reclassified as Class I. 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. 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.

-  Mail your completed application to:


                                       14
<PAGE>

      Dresdner RCM Global Funds
      P.O. Box 8025
      Boston, MA  02266-8025

   For overnight delivery, mail your completed application to:

      Attn: Boston Financial Data Services
      Dresdner RCM Global Funds
      66 Brooks Drive
      Braintree, MA  02184

      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. The Funds 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. FUNDS THAT ARE 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

      BY CHECK

-   Make out a check (bank or certified) or money order for the investment
    amount payable to Dresdner RCM [insert the name of the 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:

      Attn: Boston Financial Data Services
      Dresdner RCM Global Funds
      66 Brooks Drive
      Braintree, MA  02184

      ADDING TO YOUR ACCOUNT


                                       15
<PAGE>

      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 [insert
    the name of the 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 application to:

      Attn: Boston Financial Data Services
      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.

      WITH SECURITIES

   In its discretion, each Fund 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. 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.

      BY ELECTRONIC TRANSFER (ACH)

   This service allows for regular investments once an account is established by
simply authorizing the automatic withdrawal of funds from a bank account into a
specified Fund. The minimum investment pursuant to this plan is $250 for Class N
and $50,000 for Class I. Complete the appropriate section of the account
application indicating the amount of the automatic monthly investment.


                                       16
<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 and include a signature guarantee.

      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)
      -   A signature guarantee

-  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.

-  Mail the letter to the Fund.

      BY ELECTRONIC TRANSFER(ACH)

-  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 Funds 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.

-  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.


                                       17
<PAGE>

-  You are instructing us to change your bank account information.

-  You wish to add or change your account privileges.

-  You wish to change the registration information on your account.


OTHER STOCKHOLDER SERVICES AND ACCOUNT POLICIES

      TELEPHONE ORDERS

      We accept telephone orders to buy or sell shares of the Funds. 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

      Each Fund's regular business days and hours are the same as those of the
New York Stock Exchange (NYSE). The price of each Fund's shares is based on its
net asset value per share (NAV). Each Fund calculates its net asset value per
share (NAV) every business day as of the close of trading on the NYSE (normally
4:00 p.m. eastern time). Shares of the Funds will not be priced on days on which
the NYSE is closed for trading. The NYSE is closed for trading on national
holidays and weekends. A 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

      Each Fund accepts orders until the close of trading on the NYSE every
business day. 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 Funds and to postpone
payment of proceeds for up to seven days or as permitted by law.

      We may suspend the right of redemption or 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

      When you buy shares of a 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


                                       18
<PAGE>

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 in a Fund falls below the minimum ($5,000 for
Class N shares and $250,000 for Class I shares) as a result of selling shares
(and not because of Fund performance), the Fund reserves the right to ask you to
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 on a class of shares of a 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 either class of a Fund into shares of the same
class of any other Fund offered by Dresdner RCM, without a sales charge or other
fee (except redemption fees, if any), by contacting the Fund. You may also
exchange Class N shares of a Fund into Class I shares of the Fund or any other
Fund offered by Dresdner RCM. Exchange purchases are subject to the minimum
investment requirements of the class purchased. To keep Fund expenses low for
all shareholders, the Funds will not allow frequent exchanges, purchases, or
sales of Fund shares. If a shareholder exhibits a pattern or frequent trading,
each 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

      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.
Stockholders will also receive quarterly statements on the status of their
accounts reflecting all transactions having taken place within that quarter.

      REPORTS TO STOCKHOLDERS

      Each Fund's fiscal year ends on December 31. Each Fund will issue to
its stockholders semi-annual and annual reports. In order to reduce duplicate
mailings and printing costs, the Companies will provide one annual and
semi-annual report and annual prospectus per household. Information


                                       19
<PAGE>

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 Board of
Directors believes that unusual conditions exist which would make such
payment detrimental to the best interests of a Fund. Under these
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.

DIVIDENDS, DISTRIBUTIONS AND TAXES

      Each 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
per year 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.


      If you are an individual (or certain other non-corporate) stockholder, we
have to withhold 31% of all dividends, capital gain 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 you may obtain a refund
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.


      A Fund may be required to pay income, withholding and other taxes
imposed by foreign countries, generally at rates from 10% to 40%, which would
reduce its investment income. Tax conventions between certain countries and
the U.S. may reduce or eliminate such taxes. A Fund may "pass through" to you
the amount of foreign income taxes it pays, 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 we 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 do so,
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
                 ------------------------------------------------------------------------------


                                       20
<PAGE>

<CAPTION>
                 <S>                                            <C>
                 ------------------------------------------------------------------------------
                 Long-term capital gains                        Capital gains
                 distributions
                 ------------------------------------------------------------------------------
                 Sales or exchanges of shares                   Capital gains or losses
                 owned for more than one
                 year
                 ------------------------------------------------------------------------------
                 Sales or exchange 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 Funds and made payable to you in such month are treated as paid and are
thereby taxable as of December 31, provided that the Funds pay the dividend no
later than January 31 of the following year.

      If you purchase a Fund's shares shortly before the record date for a
dividend or other distribution 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.

      You will receive, after the end of each year, full information on
dividends, capital gain distributions and other reportable amounts with respect
to your shares of a 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 from 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 a Fund.



                                       21
<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights tables show the financial performance of
each Fund's predecessor for the past 5 fiscal years as well as for the
six-month period ended June 30, 2000. The information for the past five
fiscal years has been audited by PricewaterhouseCoopers LLP, whose report,
along with the predecessors' financial statements, are included in the Annual
Report of Dresdner RCM Capital Funds, Inc. The financial information for the
six-month period ended June 30, 2000, should be read in conjunction with the
financial statements, which are included in the Semi-Annual Report of Dresdner
RCM Capital Funds, Inc. Both the Annual and Semi-Annual Report are available
upon request and incorporated by reference into the SAI.

DRESDNER RCM MIDCAP FUND


<TABLE>
<CAPTION>
                                                  ---------------------------------------------------------------------------------
                                                     For a share
                                                     outstanding
                                                    during the six
                                                     months ended                 For a share outstanding during the
                                                        June 30:                    fiscal year ended December 31:
                                                  ---------------------------------------------------------------------------------

                                                  ---------------------------------------------------------------------------------
                                                   2000(unaudited)(2)     1999(2)     1998(2)     1997(2)     1996(1)(2)     1995
<S>                                               <C>                   <C>         <C>         <C>          <C>          <C>
Per Share Operating Performance:
  Net asset value, beginning of period                   $8.02             $5.87       $6.23       $6.40        $9.13        $7.89
                                                   -----------------    ----------  ----------  ----------   ----------   ---------
  Income from investment operations:
    Net investment income (loss)                         (0.02)            (0.01)        --        (0.01)       (0.01)        0.02
    Net realized and unrealized gain on
     investments                                          1.98              3.42        0.81        1.08         1.59         2.66
  Total from investment operations                        1.96              3.41        0.81        1.07         1.58         2.68
                                                   -----------------    ----------  ----------  ----------   ----------   ---------
  Less distributions:

    From net investment income                                               --          --          --           --         (0.02)

    From net realized gain on
     investments                                                           (1.26)      (1.17)      (1.24)       (4.31)       (1.42)
                                                   -----------------    ----------  ----------  ----------   ----------   ---------
      Total distributions                                                  (1.26)      (1.17)      (1.24)       (4.31)       (1.44)
                                                   -----------------    ----------  ----------  ----------   ----------   ---------
Net asset value, end of year                             $9.98             $8.02       $5.87       $6.23        $6.40        $9.13
                                                   =================    ==========  ==========  ==========   ==========   =========

Total Return (3)                                         24.31%            60.18%      15.06%      17.50%       19.07%       34.53%
                                                   =================    ==========  ==========  ==========   ==========   =========


Ratios and supplemental data:
Net assets, end of period (in millions)                 $1,311            $1,357        $975        $961         $896       $1,325
                                                   =================    ==========  ==========  ==========   ==========   =========
Ratio of operating expenses to average
 net assets                                               0.76%(4)          0.77%       0.76%       0.76%        0.84%        0.76%
                                                   =================    ==========  ==========  ==========   ==========   =========
Ratio of net investment income to
 average net assets                                      (0.43)%(4)        (0.22)%     (0.01)%     (0.17)%      (0.12)%       0.22%
                                                   =================    ==========  ==========  ==========   ==========   =========
Portfolio turnover                                      101.71%           198.17%     168.24%     155.10%      115.89%       96.46%
                                                   =================    ==========  ==========  ==========   ==========   =========
                                                  ---------------------------------------------------------------------------------
</TABLE>


--------------------------------------------------------
(1)      Stock split 25:1 at the close of business on June 17, 1996. All prior
         period per share amounts were restated to reflect the stock split.
(2)      Calculated using the average share method.
(3)      Total return measures the change in value of an investment over the
         period indicated.
(4)      Annualized.


                                       22
<PAGE>

DRESDNER RCM SMALL CAP FUND


<TABLE>
<CAPTION>
                                                  ---------------------------------------------------------------------------------
                                                     For a share
                                                     outstanding
                                                    during the six
                                                     months ended                 For a share outstanding during the
                                                        June 30:                    fiscal year ended December 31:
                                                  ---------------------------------------------------------------------------------

                                                  ---------------------------------------------------------------------------------
                                                   2000(unaudited)(2)     1999(2)     1998(2)     1997(2)     1996(1)(2)     1995
                                                   -----------------    ----------  ----------  ----------   ----------   ---------
<S>                                               <C>                   <C>         <C>         <C>          <C>          <C>
Per Share Operating Performance:
  Net asset value, beginning of period                   $10.23            $9.36       $11.66     $11.77        $11.35       $9.42
                                                   -----------------    ----------  ----------  ----------   ----------   ---------
  Income from investment
   operations:
     Net investment loss                                  (0.04)           (0.06)       (0.07)     (0.08)        (0.08)      (0.04)
     Net realized and unrealized gain
     on investments                                        1.36             1.20          --(3)     2.29          3.82        3.21
                                                   -----------------    ----------  ----------  ----------   ----------   ---------
  Total from investment operations                         1.32             1.14        (0.07)      2.21          3.74        3.17
                                                   -----------------    ----------  ----------  ----------   ----------   ---------
  Less distributions:
     From net realized gain on
      investments                                                            --         (2.23)     (2.32)        (3.32)      (1.24)
                                                   -----------------    ----------  ----------  ----------   ----------   ---------
     In excess of realized gain on
      investments                                                          (0.27)         --         --            --          --
                                                   -----------------    ----------  ----------  ----------   ----------   ---------
 Total distributions                                                       (0.27)       (2.23)     (2.32)        (3.32)      (1.24)
                                                   -----------------    ----------  ----------  ----------   ----------   ---------
Net asset value, end of year                             $11.55           $10.23        $9.36     $11.66        $11.77      $11.35
                                                   =================    ==========  ==========  ==========   ==========   =========

Total Return (4)                                          12.71%           12.40%        1.11%     19.49%        34.39%      34.08%
                                                   =================    ==========  ==========  ==========   ==========   =========
Ratios and supplemental data:
Net assets, end of period (in
 millions)                                                 $376             $405         $558       $661          $569        $410
                                                   =================    ==========  ==========  ==========   ==========   =========
Ratio of operating expenses to
 average net assets                                        1.02%(5)         1.02%        1.01%      1.02%         1.00%       1.01%
                                                   =================    ==========  ==========  ==========   ==========   =========
Ratio of net investment income to
 average net assets                                       (0.65)%(5)       (0.71)%      (0.61)%    (0.68)%       (0.58)%     (0.22)%
                                                   =================    ==========  ==========  ==========   ==========   =========

Portfolio turnover                                        98.97%          116.42%      131.85%    117.64%       117.00%      83.91%
                                                   =================    ==========  ==========  ==========   ==========   =========
</TABLE>


--------------------------------------------------------
(1)      Stock split 12:1 at the close of business on June 17, 1996. All prior
     period per share amounts were restated to reflect the stock split.
(2)      Calculated using the average share method.
(3)      The amount shown for a share outstanding does not correspond with the
     aggregate net gain on investments for the period due to timing of sales and
     repurchases of Fund shares in relation to fluctuating market values of the
     investments of the Fund.
(4)      Total return measures the change in value of an investment over the
     period indicated.
(5)      Annualized.


                                       23
<PAGE>

[Back Page]


FOR MORE INFORMATION ABOUT THE DRESDNER RCM GLOBAL FUNDS, THE FOLLOWING
DOCUMENTS ARE AVAILABLE FREE UPON REQUEST:

ANNUAL/SEMIANNUAL REPORTS:

      The Funds' annual and semi-annual reports to shareholders contain detailed
information on each Fund's investments. The annual report includes a discussion
of the market conditions and investment strategies that significantly affected
the Funds' performance during their last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI):

      The SAI provides more detailed information about the Funds, including
operations and investment policies. It is incorporated by reference and is
legally considered as part of this Prospectus.

      You can get free copies of the reports and the SAI, or request other
information and discuss your questions about the Funds, by contacting us at:

             Dresdner RCM Global Funds
             Four Embarcadero Center
             San Francisco, CA  94111
             Telephone 1-800-726-7240
             www.DRCMFunds.com

      You can review the Funds' Reports and 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 no. 811-9100.




                                       24
<PAGE>
                        DRESDNER RCM GLOBAL FUNDS, INC.
                       SUPPLEMENT DATED OCTOBER 30, 2000
                      TO THE PROSPECTUS DATED MAY 1, 2000

THE FOLLOWING INFORMATION REPLACES ALL SIMILAR REFERENCES THROUGHOUT THE
PROSPECTUS:

Upon approval of the reorganizations by shareholders and satisfaction of normal
closing conditions, the Dresdner RCM Europe Fund will be reorganized from a
series of the Dresdner RCM Investment Funds Inc. (the "Investment Company") to a
series of the Dresdner RCM Global Funds, Inc. (the "Global Company") and the
Dresdner RCM International Growth Equity Fund will be reorganized from a series
of the Dresdner RCM Capital Funds, Inc. (the "Capital Company") to a series of
the Global Company. As a result of the reorganizations, the Investment Company
and the Capital Company will be dissolved as Maryland corporations.

After the reorganizations, the Global Company will offer, pursuant to a separate
prospectus, the following funds: Dresdner RCM MidCap Fund and Dresdner RCM Small
Cap Fund. For a copy of the prospectus, please call the Global Company at
800-726-7240.

THE FOLLOWING INFORMATION FOR THE LARGE CAP GROWTH FUND REPLACES THE SIMILAR
INFORMATION FOUND UNDER THE SECTION ENTITLED "FEES AND EXPENSES" AT PAGE 3 OF
THE PROSPECTUS.

ANNUAL FUND OPERATING EXPENSES (fees paid from Fund assets)

<TABLE>
<CAPTION>
                                               Class I                             Class N
                                              --------                            --------
<S>                                           <C>                                 <C>
Management Fees                                 0.70%                                0.70%
Rule 12b-1 fee                                  none                                 0.25%
Other Expenses                                  1.75%                               59.09%
Total annual fund Operating expenses            2.45%                               60.04%
Less: Fees waived and reimbursed               -1.70%                              -59.04%
Net operating expenses(1)                       0.75%                                1.00%
</TABLE>

(1) The Investment Manager has contractually agreed until at least December 31,
    2005, 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 0.75% for Class I and 1.00% for
    Class N. The Fund may reimburse the Investment Manager in the future.

EXAMPLE

<TABLE>
<CAPTION>
                            One                Three                Five                Ten
                            Year               Years               Years               Years
<S>                       <C>                 <C>                 <C>                 <C>
Class I*                    $ 77                $240                $417               $2,024
Class N*                    $102                $318                $552               $9,995
</TABLE>

* Assuming the Investment Manager continues to reimburse the ordinary operating
  expenses which exceed the annualized rate of 0.75% for Class I and 1.00% for
  Class N, your expenses for the periods indicated would be $77, $240, $417 and
  $930 for Class I and $102, $318, $552 and $1,225 for Class N. However, there
  is no assurance that the Investment Manager will continue such reimbursement
  policy.

THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN THE SECTION
ENTITLED "DO THE FUNDS HEDGE THEIR INVESTMENTS?" AT PAGE 25 OF THE PROSPECTUS:

After the reorganization, the Europe Fund may utilize futures contracts (and
related options) to hedge against currency exchange rate fluctuations, changes
in interest rates or general fluctuations in the value of its portfolio
securities.

THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND UNDER THE
SUBHEADING "GLOBAL HEALTH CARE FUND AND BIOTECHNOLOGY FUND" AT PAGES 32 AND 33
OF THE PROSPECTUS.
<PAGE>
Faraz Naqvi, M.D. and Michael Dauchot, M.D. are primarily responsible for the
day-to-day management of the Global Health Care Fund. Dr. Naqvi and Camilo
Martinez, M.D., Ph.D., are primarily responsible for the day-to-day management
of the Biotechnology Fund. Dr. Martinez is a research analyst of the Investment
Manager, with which he has been associated since 1999. Prior to joining the
Investment Manager, he practiced Internal Medicine at Northeast Valley Health in
1999 and at Century Group Medicine in 1998, both in southern California. From
1995-1998 Dr. Martinez was a resident at the University of California at Los
Angeles Department of Medicine. He is also a Board Certified physician in
Internal Medicine.

THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND UNDER THE
SUBHEADING "INTERNATIONAL GROWTH EQUITY FUND AND EMERGING MARKETS FUND" AT PAGES
33 AND 34 OF THE PROSPECTUS.

The International Equity Team at Dresdner RCM is primarily responsible for the
day-to-day management of the International Fund. This team manages the
International Fund on a team basis, and no individual is separately responsible
for the management of the International Fund. Ana Wiechers-Marshall and Luis
Laboy, CFA are primarily responsible for the day-to-day management of the
Emerging Markets Fund. Mr. Laboy is a Manager of the Investment Manager, with
which he has been associated since 1997. From 1995 to 1997, he worked at
Dresdner Bank Mexico where he served as assistant equity research analyst.

THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN THE SECTION
ENTITLED "THE DISTRIBUTOR" AT PAGE 38 OF THE PROSPECTUS.

After the reorganizations, the International Fund and the Europe Fund will be
covered under the Global Company's Distribution and Service Plan adopted
pursuant to Rule 12b-1 under the 1940 Act.

THE FOLLOWING INFORMATION WITH RESPECT TO THE FUNDS, WHICH IS UNAUDITED,
SUPPLEMENTS THE SIMILAR INFORMATION FOUND IN THE SECTION ENTITLED "FINANCIAL
HIGHLIGHTS" ON PAGES 49 THROUGH 54 OF THE PROSPECTUS AND SHOULD BE READ IN
CONJUNCTION WITH THE FINANCIAL STATEMENTS AND RELATED NOTES WHICH ARE INCLUDED
IN THE FUNDS' 2000 SEMI-ANNUAL REPORT TO STOCKHOLDERS. COPIES OF THE SEMI-ANNUAL
REPORT ARE AVAILABLE, UPON REQUEST, BY EITHER CALLING DRESDNER RCM GLOBAL FUNDS
AT (800) 726-7240 OR MAILING A REQUEST TO FOUR EMBARCADERO CENTER, SAN
FRANCISCO, CALIFORNIA 94111.
<PAGE>
 Dresdner RCM Global Funds
 Financial Highlights
For a share outstanding throughout each fiscal year or period ended:

<TABLE>
<CAPTION>
                                                                          LARGE CAP GROWTH FUND               BIOTECHNOLOGY FUND
                                                                  --------------------------------------      ------------------
                                                                      CLASS I               CLASS N                CLASS N
                                                                  ----------------      ----------------      ------------------
                                                                    (UNAUDITED)           (UNAUDITED)            (UNAUDITED)
                                                                  SIX MONTHS ENDED      SIX MONTHS ENDED       SIX MONTHS ENDED
                                                                   JUNE 30, 2000         JUNE 30, 2000          JUNE 30, 2000
                                                                  ----------------      ----------------      ------------------
<S>                                                               <C>                   <C>                   <C>
PER SHARE OPERATING PERFORMANCE: (1)
  Net asset value, beginning of period                                $ 19.07                $19.00                $  20.02
                                                                      -------                ------                --------
  Income from investment operations:
    Net investment income (loss)                                        (0.03)                (0.05)                  (0.15)
    Net realized and unrealized gain on investments                      0.74                  0.72                   14.90
                                                                      -------                ------                --------
  Total from investment operations                                       0.71                  0.67                   14.75
  Less distributions:
    From net investment income                                             --                    --                      --
    From net realized gain on investments                                  --                    --                      --
                                                                      -------                ------                --------
      Total distributions                                                  --                    --                      --
                                                                      -------                ------                --------
NET ASSET VALUE, END OF PERIOD                                        $ 19.78                $19.67                $  34.77
                                                                      -------                ------                --------
                                                                      -------                ------                --------
TOTAL RETURN (2)                                                         3.72%                 3.47%                  73.68%
                                                                      -------                ------                --------
                                                                      -------                ------                --------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)                                  $23,265                $6,427                $465,683
                                                                      -------                ------                --------
                                                                      -------                ------                --------
Ratio of expenses to average net assets:
  With waiver and reimbursement (4)                                      0.95%                 1.20%                   1.50%
                                                                      -------                ------                --------
                                                                      -------                ------                --------
  Without waiver and reimbursement (4)                                   1.82%                 2.88%                   1.50%
                                                                      -------                ------                --------
                                                                      -------                ------                --------
Ratio of net investment income (loss) to average net assets:
  With waiver and reimbursement (4)                                     (0.28)%               (0.57)%                 (0.98)%
                                                                      -------                ------                --------
                                                                      -------                ------                --------
  Without waiver and reimbursement (4)                                  (1.15)%               (2.25)%                 (0.98)%
                                                                      -------                ------                --------
                                                                      -------                ------                --------
Portfolio turnover                                                      20.08%                20.08%                 303.77%
                                                                      -------                ------                --------
                                                                      -------                ------                --------
</TABLE>

------------------------------------
For Footnote References, see "Notes to Financial Highlights."
<PAGE>
 Dresdner RCM Global Funds
 Financial Highlights

For a share outstanding throughout each fiscal year or period ended:

<TABLE>
<CAPTION>
                                                      TAX MANAGED GROWTH FUND                      GLOBAL SMALL CAP FUND
                                               --------------------------------------      --------------------------------------
                                                   CLASS I               CLASS N               CLASS I               CLASS N
                                               ----------------      ----------------      ----------------      ----------------
                                                 (UNAUDITED)           (UNAUDITED)           (UNAUDITED)           (UNAUDITED)
                                               SIX MONTHS ENDED      SIX MONTHS ENDED      SIX MONTHS ENDED      SIX MONTHS ENDED
                                                JUNE 30, 2000         JUNE 30, 2000         JUNE 30, 2000         JUNE 30, 2000
                                               ----------------      ----------------      ----------------      ----------------
<S>                                            <C>                   <C>                   <C>                   <C>
PER SHARE OPERATING PERFORMANCE: (1)
  Net asset value, beginning of period             $ 14.99                $14.95               $ 23.38               $ 23.31
                                                   -------                ------               -------               -------
  Income from investment operations:
    Net investment loss                              (0.06)                (0.08)                (0.09)                (0.11)
    Net realized and unrealized gain on
      investments                                     0.63(16)              0.64(16)              3.65                  3.70
                                                   -------                ------               -------               -------
  Total from investment operations                    0.57                  0.56                  3.56                  3.59
  Less distributions:
    From net realized gain on investments               --                    --                    --                    --
    In excess of net realized gain on
      investments                                       --                    --                    --                    --
                                                   -------                ------               -------               -------
      Total distributions                               --                    --                    --                    --
                                                   -------                ------               -------               -------
NET ASSET VALUE, END OF PERIOD                     $ 15.56                $15.51               $ 26.94               $ 26.90
                                                   -------                ------               -------               -------
                                                   -------                ------               -------               -------
TOTAL RETURN (2)                                      3.80%                 3.75%                15.18%                15.32%
                                                   -------                ------               -------               -------
                                                   -------                ------               -------               -------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)               $29,972                $3,806               $29,486               $17,448
                                                   -------                ------               -------               -------
                                                   -------                ------               -------               -------
Ratio of expenses to average net assets:
  With waiver and reimbursement (4)                   1.25%                 1.50%                 1.50%                 1.75%
                                                   -------                ------               -------               -------
                                                   -------                ------               -------               -------
  Without waiver and reimbursement (4)                1.99%                 4.73%                 1.72%                 2.21%
                                                   -------                ------               -------               -------
                                                   -------                ------               -------               -------
Ratio of net investment income to average
  net assets:
  With waiver and reimbursement (4)                  (0.77)%               (1.00)%               (0.72)%               (0.83)%
                                                   -------                ------               -------               -------
                                                   -------                ------               -------               -------
  Without waiver and reimbursement (4)               (1.51)%               (4.23)%               (0.94)%               (1.29)%
                                                   -------                ------               -------               -------
                                                   -------                ------               -------               -------
Portfolio turnover                                   32.85%                32.85%               102.60%               102.60%
                                                   -------                ------               -------               -------
                                                   -------                ------               -------               -------
</TABLE>

------------------------------------
For Footnote References, see "Notes to Financial Highlights."
<PAGE>
 Dresdner RCM Global Funds
 Financial Highlights

For a share outstanding throughout each fiscal year or period ended:

<TABLE>
<CAPTION>
                                                                      GLOBAL TECHNOLOGY FUND              GLOBAL HEALTH CARE FUND
                                                              --------------------------------------      -----------------------
                                                                  CLASS I               CLASS N                   CLASS N
                                                              ----------------      ----------------      -----------------------
                                                                (UNAUDITED)           (UNAUDITED)               (UNAUDITED)
                                                              SIX MONTHS ENDED      SIX MONTHS ENDED         SIX MONTHS ENDED
                                                               JUNE 30, 2000         JUNE 30, 2000             JUNE 30, 2000
                                                              ----------------      ----------------      -----------------------
<S>                                                           <C>                   <C>                   <C>
PER SHARE OPERATING PERFORMANCE: (1)
  Net asset value, beginning of period                            $  59.21              $  59.13                  $ 14.25
                                                                  --------              --------                  -------
  Income from investment operations:
    Net investment loss                                              (0.26)                (0.27)                   (0.07)
    Net realized and unrealized gain (loss) on
      investments                                                    10.87                 10.80                     7.83
                                                                  --------              --------                  -------
  Total from investment operations                                   10.61                 10.53                     7.76
  Less distributions:
    From net realized gain on investments                               --                    --                       --
                                                                  --------              --------                  -------
      Total distributions                                               --                    --                       --
                                                                  --------              --------                  -------
NET ASSET VALUE, END OF PERIOD                                    $  69.82              $  69.66                  $ 22.01
                                                                  --------              --------                  -------
                                                                  --------              --------                  -------
TOTAL RETURN (2)                                                     17.92%                17.81%                   54.39%
                                                                  --------              --------                  -------
                                                                  --------              --------                  -------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)                              $379,724              $383,142                  $65,555
                                                                  --------              --------                  -------
                                                                  --------              --------                  -------
Ratio of expenses to average net assets:
  With waiver and reimbursement (4)                                   1.32%                 1.39%                    1.50%
                                                                  --------              --------                  -------
                                                                  --------              --------                  -------
  Without waiver and reimbursement (4)                                1.32%                 1.39%                    2.04%
                                                                  --------              --------                  -------
                                                                  --------              --------                  -------
Ratio of net investment income (loss) to average net
  assets:
  With waiver and reimbursement (4)                                  (0.75)%               (0.79)%                  (0.77)%
                                                                  --------              --------                  -------
                                                                  --------              --------                  -------
  Without waiver and reimbursement (4)                               (0.75)%               (0.79)%                  (1.31)%
                                                                  --------              --------                  -------
                                                                  --------              --------                  -------
Portfolio turnover                                                  130.26%               130.26%                  279.14%
                                                                  --------              --------                  -------
                                                                  --------              --------                  -------
</TABLE>

------------------------------------
For Footnote References, see "Notes to Financial Highlights."
<PAGE>
 Dresdner RCM Global Funds
 Financial Highlights

For a share outstanding throughout each fiscal year or period ended:

<TABLE>
<CAPTION>
                                                  INTERNATIONAL GROWTH EQUITY FUND                 EMERGING MARKETS FUND
                                               --------------------------------------      --------------------------------------
                                                   CLASS I               CLASS N               CLASS I               CLASS N
                                               ----------------      ----------------      ----------------      ----------------
                                                 (UNAUDITED)           (UNAUDITED)           (UNAUDITED)           (UNAUDITED)
                                               SIX MONTHS ENDED      SIX MONTHS ENDED      SIX MONTHS ENDED      SIX MONTHS ENDED
                                                JUNE 30, 2000         JUNE 30, 2000         JUNE 30, 2000         JUNE 30, 2000
                                               ----------------      ----------------      ----------------      ----------------
<S>                                            <C>                   <C>                   <C>                   <C>
PER SHARE OPERATING PERFORMANCE: (1)
  Net asset value, beginning of period             $  22.34               $22.31                $16.87                $16.84
                                                   --------               ------                ------                ------
  Income from investment operations:
    Net investment income                              0.01                 0.01                  0.05                  0.03
    Net realized and unrealized gain
      (loss) on investments                           (2.98)               (3.00)                (0.63)                (0.63)
                                                   --------               ------                ------                ------
  Total from investment operations                    (2.97)               (2.99)                (0.58)                 0.60
  Less distributions:
    From net investment income                           --                   --                    --                    --
    In excess of net investment income                   --                   --
    From net realized gain on investments                --                   --                    --                    --
                                                   --------               ------                ------                ------
      Total distributions                                --                   --                    --                    --
                                                   --------               ------                ------                ------
NET ASSET VALUE, END OF PERIOD                     $  19.37               $19.32                $16.29                $16.24
                                                   --------               ------                ------                ------
                                                   --------               ------                ------                ------
TOTAL RETURN (2)                                     (13.29)%             (13.40)%               (3.62)%               (3.74)%
                                                   --------               ------                ------                ------
                                                   --------               ------                ------                ------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)               $319,619               $5,129                $6,778                $2,159
                                                   --------               ------                ------                ------
                                                   --------               ------                ------                ------
Ratio of expenses to average net assets:
  With waiver and reimbursement (4)                    1.00%                1.25%                 1.50%                 1.75%
                                                   --------               ------                ------                ------
                                                   --------               ------                ------                ------
  Without waiver and reimbursement (4)                 1.00%                2.50%                 4.46%                 6.10%
                                                   --------               ------                ------                ------
                                                   --------               ------                ------                ------
Ratio of net investment income (loss) to
  average net assets:
  With waiver and reimbursement (4)                    0.06%                0.06%                 0.52%                 0.40%
                                                   --------               ------                ------                ------
                                                   --------               ------                ------                ------
  Without waiver and reimbursement (4)                 0.06%               (1.19)%               (2.44)%               (3.95)%
                                                   --------               ------                ------                ------
                                                   --------               ------                ------                ------
Portfolio turnover                                    58.35%               58.35%                81.45%                81.45%
                                                   --------               ------                ------                ------
                                                   --------               ------                ------                ------
</TABLE>

------------------------------------
For Footnote References, see "Notes to Financial Highlights."
<PAGE>
 Dresdner RCM Global Funds
 Financial Highlights

For a share outstanding throughout each fiscal year or period ended:

<TABLE>
<CAPTION>
                                                                                       EUROPE FUND
                                                                  -----------------------------------------------------
                                                                           CLASS I                      CLASS N
                                                                  -------------------------      ----------------------
                                                                         (UNAUDITED)                  (UNAUDITED)
                                                                         SIX MONTHS                    SIX MONTHS
                                                                  ENDED JUNE 30, 2000(1)(3)      ENDED JUNE 30, 2000(1)
                                                                  -------------------------      ----------------------
<S>                                                               <C>                            <C>
PER SHARE OPERATING PERFORMANCE:
  Net asset value, beginning of period                                     $20.58                        $ 16.12
                                                                           ------                        -------
  Income from investment operations:
    Net investment income (loss)                                            (0.02)                         (0.09)
    Net realized and unrealized gain (loss) on investments                  (4.18)                          0.34(5)
                                                                           ------                        -------
  Total from investment operations                                          (4.20)                          0.25
  Less distributions:
    From net investment income                                                 --                             --
    In excess of net investment income                                         --                             --
    From net realized gain on investments                                      --                             --
                                                                           ------                        -------
      Total distributions                                                      --                             --
                                                                           ------                        -------
NET ASSET VALUE, END OF PERIOD                                             $16.38                        $ 16.37
                                                                           ------                        -------
                                                                           ------                        -------
TOTAL RETURN (2)                                                             1.61%                          1.55%
                                                                           ------                        -------
                                                                           ------                        -------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)                                       $1,092                        $80,852
                                                                           ------                        -------
                                                                           ------                        -------
Ratio of expenses to average net assets: (6)
  With waiver and reimbursement (4)                                          1.35%                          1.60%
                                                                           ------                        -------
                                                                           ------                        -------
  Without waiver and reimbursement (4)                                      10.25%                          2.07%
                                                                           ------                        -------
                                                                           ------                        -------
Ratio of net investment income (loss) to average net assets:
  With waiver and reimbursement (4)                                         (0.37)%                        (1.01)%
                                                                           ------                        -------
                                                                           ------                        -------
  Without waiver and reimbursement (4)                                      (9.27)%                        (1.48)%
                                                                           ------                        -------
                                                                           ------                        -------
Portfolio turnover                                                          86.62%                         86.62%
                                                                           ------                        -------
                                                                           ------                        -------
</TABLE>

------------------------------------
For Footnote References, see "Notes to Financial Highlights."
<PAGE>
 Dresdner RCM Global Funds
 Financial Highlights

For a share outstanding throughout each fiscal year or period ended:

<TABLE>
<CAPTION>
                                                                    BALANCED FUND
                                                                  -----------------
                                                                       CLASS I
                                                                  -----------------
                                                                     (UNAUDITED)
                                                                  SIX MONTHS ENDED
                                                                    JUNE 30, 2000
                                                                  -----------------
<S>                                                               <C>
PER SHARE OPERATING PERFORMANCE: (1)
  Net asset value, beginning of period                                 $ 10.65
                                                                       -------
  Income from investment operations:
    Net investment income                                                 0.09
    Net realized and unrealized gain on investments                       0.21
                                                                       -------
  Total from investment operations                                        0.30
  Less distributions:
    From net investment income                                           (0.03)
                                                                       -------
      Total distributions                                                (0.03)
                                                                       -------
NET ASSET VALUE, END OF PERIOD                                         $ 10.92
                                                                       -------
                                                                       -------
TOTAL RETURN (2)                                                          2.77%
                                                                       -------
                                                                       -------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)                                   $17,429
                                                                       -------
                                                                       -------
Ratio of expenses to average net assets:
  With waiver and reimbursement (4)                                       0.90%
                                                                       -------
                                                                       -------
  Without waiver and reimbursement (4)                                    4.35%
                                                                       -------
                                                                       -------
Ratio of net investment income (loss) to average net assets:
  With waiver and reimbursement (4)                                       1.62%
                                                                       -------
                                                                       -------
  Without waiver and reimbursement (4)                                   (1.83)%
                                                                       -------
                                                                       -------
Portfolio turnover                                                      145.11%
                                                                       -------
                                                                       -------
</TABLE>

------------------------------------
For Footnote References, see "Notes to Financial Highlights."

    The accompanying notes are an integral part of the financial statements.
<PAGE>
 Dresdner RCM Global Funds
 Notes to Financial Highlights
 June 30, 2000 (Unaudited)
The following notes are being used as reference items in the Financial
Highlights of the Funds.

(1)  Calculated using the average share method.

(2)  Total return measures the change in value of an investment over the period
     indicated. For periods less than one year, the total return is not
     annualized.

(3)  Commencement of operations was March 3, 2000.

(4)  Annualized for periods of less than one year.

(5)  The amount shown for a share outstanding does not correspond with the
     aggregate net gain on investments reflected in the Fund's Statement of
     Operations. This is due to the timing of sales and repurchases of the
     Fund's shares in relation to fluctuating market values.

(6)  The operating expenses for the Dresdner RCM Europe Fund include certain
     non-recurring legal expenses of 0.46% and 0.32% of average net assets for
     the years ended Decemebr 31, 1998 and 1999, respectively, for which the
     insurance carrier has agreed to reimburse the Fund 0.78% ($800,000) of
     average net assets for the year ended December 31, 1999.

    The accompanying notes are an integral part of the financial statements.
<PAGE>

                        [LOGO] DRESDNER RCM GLOBAL FUNDS


                                 DOMESTIC FUNDS

                       DRESDNER RCM LARGE CAP GROWTH FUND
                      DRESDNER RCM TAX MANAGED GROWTH FUND
                         DRESDNER RCM BIOTECHNOLOGY FUND
                           DRESDNER RCM BALANCED FUND

                                  GLOBAL FUNDS

                       DRESDNER RCM GLOBAL SMALL CAP FUND
                       DRESDNER RCM GLOBAL TECHNOLOGY FUND
                      DRESDNER RCM GLOBAL HEALTH CARE FUND

                               INTERNATIONAL FUNDS

                  DRESDNER RCM INTERNATIONAL GROWTH EQUITY FUND
                       DRESDNER RCM EMERGING MARKETS FUND
                            DRESDNER RCM EUROPE FUND


     This prospectus contains essential information for anyone considering an
investment in these Funds. 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.


                                   May 1, 2000
<PAGE>

TABLE OF CONTENTS

RISK/RETURN SUMMARY AND FUND EXPENSES
This section summarizes the Funds' investments, risks,
past performance, and fees.
     DRESDNER RCM LARGE CAP GROWTH FUND                                     2
     DRESDNER RCM TAX MANAGED GROWTH FUND                                   4
     DRESDNER RCM BIOTECHNOLOGY FUND                                        6
     DRESDNER RCM BALANCED FUND                                             8
     DRESDNER RCM GLOBAL SMALL CAP FUND                                    10
     DRESDNER RCM GLOBAL TECHNOLOGY FUND                                   12
     DRESDNER RCM GLOBAL HEALTH CARE FUND                                  14
     DRESDNER RCM INTERNATIONAL GROWTH EQUITY FUND                         16
     DRESDNER RCM EMERGING MARKETS FUND                                    18
     DRESDNER RCM EUROPE FUND                                              20

INVESTMENT STRATEGIES, POLICIES AND RISKS
This section provides details about the Funds'
investment strategies, policies and risks.
     INVESTMENT STRATEGIES AND POLICIES                                    22
     OTHER INVESTMENT PRACTICES                                            24
     CHANGING THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES                27
     INVESTMENT RISKS                                                      27

ORGANIZATION AND MANAGEMENT
This section provides details about the people
and organizations who oversee the Funds.
     THE FUNDS AND THE INVESTMENT MANAGER                                  32
     THE PORTFOLIO MANAGERS                                                32
     THE INVESTMENT MANAGER'S COMPOSITE PERFORMANCE                        34
     MANAGEMENT FEES AND OTHER EXPENSES                                    36
     THE DISTRIBUTOR                                                       38

STOCKHOLDER INFORMATION
This section tells you how to buy, sell and exchange shares, how
we value shares, and how we pay dividends and distributions.
     BUYING SHARES                                                         39
     SELLING SHARES                                                        41
     OTHER STOCKHOLDER SERVICES AND ACCOUNT POLICIES                       42
     DIVIDENDS, DISTRIBUTIONS AND TAXES                                    45

FINANCIAL HIGHLIGHTS
This section provides details on selected
financial highlights of the Funds.                                         47


                                                [LOGO] DRESDNER RCM GLOBAL FUNDS
<PAGE>

DRESDNER RCM LARGE CAP GROWTH FUND


GOAL

     The Fund's goal is to seek long-term capital appreciation by investing in
equity securities of U.S. companies with at least $3 billion in market
capitalization.

PRINCIPAL INVESTMENT STRATEGIES

     The Fund will normally invest at least 65% of its total assets in companies
with large market capitalizations, which are companies with a total market
capitalization of at least $3 billion at the time of purchase.

     The Investment Manager evaluates the fundamental value and prospects for
growth of individual companies and focuses on companies that it expects will
have higher than average rates of growth and strong potential for capital
appreciation. The Standard & Poor's 500 Index is the Fund's performance
benchmark. The Investment Manager bases its security selection on the relative
investment merits of each company and industry throughout the United States and
will not seek to duplicate the sector or stock allocations of the benchmark.

PRINCIPAL INVESTMENT RISKS

     Because the value of 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
investments.

     The value of the Fund's investments will fluctuate in response to the
activities of individual companies and general stock market and economic
conditions.

     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

     The charts on the following page provide some indication of the risks of
investing in the Fund by showing how its performance has varied from year to
year. The bar chart shows changes in the yearly performance of the Fund since
its inception. The chart below it compares the performance of the Fund over time
to the Standard & Poor's 500 Index.

     Both charts assume reinvestment of dividends and distributions. Of course,
past performance does not necessarily indicate how the Fund will perform in the
future.


2
<PAGE>

YEAR-BY-YEAR TOTAL RETURN FOR CLASS I SHARES

[GRAPH]
<TABLE>
<CAPTION>
1997      1998      1999
<S>       <C>       <C>
31.99%    44.11%    44.84%
</TABLE>

For the periods covered by this year-by-year total return chart, the Fund's
highest quarterly return was 29.25% (for the fourth quarter ended 1998) and the
lowest quarterly return was -9.11% (for the third quarter ended 1998).

AVERAGE ANNUAL TOTAL RETURNS (THROUGH DECEMBER 31, 1999)

<TABLE>
<CAPTION>
                                                  FUND             ONE           SINCE
                                                INCEPTION         YEAR         INCEPTION
------------------------------------------------------------------------------------------
 <S>                                            <C>              <C>           <C>
 LARGE CAP GROWTH FUND CLASS I (DRLCX)*         12/31/96         44.84%          40.18%
------------------------------------------------------------------------------------------
 LARGE CAP GROWTH FUND CLASS N (DLCNX)**        12/31/96         44.46%          40.06%
------------------------------------------------------------------------------------------
 S&P 500 Index                                        --         21.04%          27.56%
------------------------------------------------------------------------------------------
</TABLE>

*Returns through December 31,1998 reflect Rule 12b-1 fees. On that date, all
Fund shares were redesignated as Class I Shares, which do not pay Rule 12b-1
fees. Performance results for periods after December 31, 1998 do not reflect
Rule 12b-1 fees.

**Class N shares were first issued on March 2, 1999, and pay Rule 12b-1 fees.
Class N returns through December 31, 1998 are based on Class I returns and
reflect Rule 12b-1 fees.

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

     Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

<TABLE>
<CAPTION>
                                   ONE             THREE            FIVE             TEN
                                  YEAR             YEARS            YEARS           YEARS
------------------------------------------------------------------------------------------
 <S>                              <C>             <C>              <C>             <C>
 CLASS I+                         $ 97            $  620           $1,170          $2,672
------------------------------------------------------------------------------------------
 CLASS N+                         $122            $6,670           $7,994          $8,323
------------------------------------------------------------------------------------------
</TABLE>

+ Assuming the Investment Manager continues to reimburse the ordinary operating
expenses which exceed the annualized rate of 0.95% for Class I and 1.20% for
Class N, your expenses for the periods indicated would be $97, $303, $525, and
$1,166 for Class I and $122, $381, $660, and $1,455 for Class N. However, there
is no guarantee that the Investment Manager will continue such reimbursement
policy.

--------------------------------------------------------------------------------
FEES AND EXPENSES

     As an investor in the Fund, you will pay the following fees and expenses.

SHAREHOLDER FEES

(fees paid directly from your investment)                  NONE

ANNUAL FUND OPERATING EXPENSES
(fees paid from Fund assets)

<TABLE>
<CAPTION>
                         CLASS      CLASS
                           I          N
--------------------------------------------
 <S>                    <C>       <C>
 MANAGEMENT FEES         0.70%      0.70%
--------------------------------------------
 RULE 12b-1 FEE          NONE       0.25%
--------------------------------------------
 OTHER EXPENSES          1.75%     59.09%
--------------------------------------------
 TOTAL ANNUAL FUND
 OPERATING EXPENSES      2.45%     60.04%
--------------------------------------------
 LESS: FEES WAIVED
 AND REIMBURSED(1)      -1.50%    -58.84%
--------------------------------------------
 NET OPERATING
 EXPENSES(1)             0.95%      1.20%
--------------------------------------------
</TABLE>

(1)   Dresdner RCM Global Investors LLC (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 0.95% for Class I and 1.20% for Class N.
      The Fund may reimburse the Investment Manager in the future.
--------------------------------------------------------------------------------


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

DRESDNER RCM TAX MANAGED GROWTH FUND


Goal

     The Fund's goal is to enhance the after-tax returns of its shareholders by
investing in a broadly diversified portfolio of equity securities of U.S.
companies for long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

     The Fund currently intends to invest in companies of any size, ranging from
larger, well-established issuers to smaller emerging growth companies. However,
no more than 20% of the Fund's total assets will be invested in companies with
market capitalizations below $500 million at the time of purchase.

     To maximize after-tax total returns, the Fund may use certain investment
techniques designed to reduce capital gains distributions to shareholders. These
techniques may include, among others, holding securities long enough to avoid
higher, short-term capital gains taxes, selling shares with a higher cost basis
first, and selling securities that have declined in value to offset past or
future gains realized on the sale of other securities. These techniques will not
completely eliminate taxable distributions by the Fund.

     The Investment Manager evaluates the fundamental value and prospects for
growth of individual companies and focuses on companies that it expects will
have higher than average rates of growth and strong potential for capital
appreciation. The Standard & Poor's 500 Index is the Fund's performance
benchmark. The Investment Manager bases its security selection on the relative
investment merits of each company and industry throughout the United States and
will not seek to duplicate the sector or stock allocations of the benchmark.

PRINCIPAL INVESTMENT RISKS

     Because the value of 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
investments.

     The value of the Fund's investments will fluctuate in response to the
activities of individual companies and general stock market and economic
conditions. The stock prices of smaller and newer companies in which the Fund
may invest often fluctuate more than those of larger, more established
companies.

     Efforts to minimize the realization of capital gains are not entirely
within the Fund's control and will be affected by shareholder purchase and
redemption activity. In addition, efforts to maximize after-tax total returns
may require trade-offs that reduce pre-tax returns.

     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

     The charts on the following page provide some indication of the risks of
investing in the Fund. The bar chart shows the Fund's performance for its first
full year of operation. The chart below it compares the performance of the Fund
over time to its benchmark.

     Both charts assume reinvestment of dividends and distributions. Of course,
past performance does not necessarily indicate how the Fund will perform in the
future.


4
<PAGE>

YEAR-BY-YEAR TOTAL RETURNS FOR CLASS I SHARES

[GRAPH]
<TABLE>
<CAPTION>
1999
<S><C>
52.44%
</TABLE>

For the period covered by this year-by-year total return chart, the Fund's
highest quarterly return was 31.98% (for the fourth quarter ended 1999) and the
lowest quarterly return was -4.78% (for the third quarter ended 1999).

AVERAGE ANNUAL TOTAL RETURNS (THROUGH DECEMBER 31, 1999)

<TABLE>
<CAPTION>
                                                  FUND             ONE           SINCE
                                                INCEPTION         YEAR         INCEPTION
------------------------------------------------------------------------------------------
 <S>                                            <C>              <C>           <C>
 TAX MANAGED GROWTH CLASS I (DRTIX)             12/30/98         52.44%          52.44%
------------------------------------------------------------------------------------------
 TAX MANAGED GROWTH CLASS N SHARES*             12/30/98         52.00%          51.82%
------------------------------------------------------------------------------------------
 S&P 500 Index                                        --         21.04%          21.04%
------------------------------------------------------------------------------------------
</TABLE>

*Class N shares were first issued on February 12, 1999, and pay Rule 12b-1 fees.
Class N returns through February 12, 1999 are based on Class I returns, and
reflect the deduction of Rule 12b-1 fees applicable to Class N shares.

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

     Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

<TABLE>
<CAPTION>
                                   ONE             THREE            FIVE             TEN
                                  YEAR             YEARS            YEARS           YEARS
------------------------------------------------------------------------------------------
 <S>                              <C>             <C>              <C>             <C>
 CLASS I+                         $231            $2,835           $5,059          $9,035
------------------------------------------------------------------------------------------
 CLASS N+                         $256            $5,394           $7,957          $9,998
------------------------------------------------------------------------------------------
</TABLE>

+ Assuming the Investment Manager continues to reimburse the ordinary operating
expenses which exceed the annualized rate of 1.25% for Class Iand 1.50% for
Class N, your expenses for the periods indicated would be $231, $397, $686 and
$1,511 for Class I and $256, $474, $818 and $1,791 for Class N. However, there
is no guarantee that the Investment Manager will continue such reimbursement
policy.

--------------------------------------------------------------------------------
FEES AND EXPENSES

     As an investor in the Fund, you will pay the following fees and expenses.

SHAREHOLDER FEES(1)
(fees paid directly from your investment)

<TABLE>
<S>                          <C>
Class I Shares ............. 1.00%
Class N Shares ............. 1.00%
</TABLE>

ANNUAL FUND OPERATING EXPENSES
(fees paid from Fund assets)

<TABLE>
<CAPTION>
                         CLASS      CLASS
                           I          N
--------------------------------------------
<S>                   <C>        <C>
 MANAGEMENT FEES         0.75%      0.75%
--------------------------------------------
 RULE 12b-1 FEE          NONE       0.25%
--------------------------------------------
 OTHER EXPENSES         13.61%     34.08%
--------------------------------------------
 TOTAL ANNUAL FUND
 OPERATING EXPENSES     14.36%     35.08%
--------------------------------------------
 LESS:FEES WAIVED
 AND REIMBURSED(2)     -13.11%    -33.58%
--------------------------------------------
 NET OPERATING
 EXPENSES(2)             1.25%      1.50%
--------------------------------------------
</TABLE>

(1)   The Fund charges you a 1.00% redemption fee if you redeem shares
      within the first year of purchase.

(2)   The Investment Manager has contractually agreed until at least December
      31, 2000, to pay each quarter thez amount, if any, by which the
      ordinary operating expenses for the quarter (except interest, taxes and
      extraordinary expenses) exceed the annualized rate of 1.25% for Class I
      and 1.50% for Class N. The Fund may reimburse the Investment Manager in
      the future.
--------------------------------------------------------------------------------


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

DRESDNER RCM BIOTECHNOLOGY FUND


GOAL

     The Fund's goal is to seek long-term capital appreciation by investing in
equity securities of biotechnology companies.

PRINCIPAL INVESTMENT STRATEGIES

     The Fund will normally invest at least 65% of its total assets in
biotechnology companies. Although there is no limitation on the market
capitalizations of companies in which the Fund will invest, the Fund does not
intend to invest more than 15% of its total assets in biotechnology companies
with market capitalizations below $100 million at the time of purchase. The Fund
currently expects that the majority of its investments will be in companies
organized or headquartered in the United States. However, the Fund may invest up
to 25% of its total assets in foreign issuers organized or headquartered in any
one foreign country.

     Biotechnology companies engage in the research, development, provision
and/or manufacture of biotechnological products, services and processes. Such
companies generally employ genetic engineering to develop new drugs and apply
new and innovative processes to discover and develop diagnostic and therapeutic
products and services. The biotechnology industry currently includes
pharmaceutical, biochemical, medical/surgical, human health care, and
agricultural and industrial-oriented companies. Because of the rapid
developments in the biotechnology industry, over time, companies with new and
different products and focuses will likely be included in the industry.

     The Investment Manager evaluates the fundamental value and prospects for
growth of individual companies and focuses on biotechnology companies that it
expects will have higher than average rates of growth and strong potential for
capital appreciation. The American Stock Exchange Biotechnology Index, the
NASDAQ Biotechnology Index, and the Russell 2000 Index are the Fund's
performance benchmarks. The Investment Manager bases its security selection on
the relative investment merits of each company and will not seek to duplicate
its benchmarks.

PRINCIPAL INVESTMENT RISKS

     Because the value of 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
investments.

     Because the Fund will focus its investments in biotechnology companies, it
will be more susceptible than more diversified funds to market and other
conditions affecting biotechnology companies. As a result, its share price may
be more volatile than a fund with a more broadly diversified portfolio.

     The value of the Fund's investments will 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
where 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.

     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

     The charts on the following page show how the Fund has performed and
provide some indication of the risks of investing in the Fund by showing how its
performance has varied from year to year. The bar chart shows changes in the
yearly performance of the Fund since its inception. The chart below it compares
the performance of the Fund over time to its benchmarks.

     Both charts assume reinvestment of dividends and distributions. Of course,
past performance does not necessarily indicate how the Fund will perform in the
future.


6
<PAGE>

YEAR-BY-YEAR TOTAL RETURNS FOR CLASS N SHARES

[GRAPH]
<TABLE>
<CAPTION>
1998      1999
<S>      <C>
17.16%   111.39%
</TABLE>

For the periods covered by this year-by-year total return chart, the Fund's
highest quarterly return was 65.41% (for the fourth quarter ended 1999) and the
lowest quarterly return was -9.17% (for the third quarter ended 1998).

AVERAGE ANNUAL TOTAL RETURNS (THROUGH DECEMBER 31, 1999)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
                                                  FUND             ONE           SINCE
                                                INCEPTION         YEAR         INCEPTION
------------------------------------------------------------------------------------------
 <S>                                            <C>             <C>            <C>
 BIOTECHNOLOGY FUND CLASS N (DRBNX)             12/30/97        111.39%          57.68%
------------------------------------------------------------------------------------------
 AMEX Biotech Index                                   --        111.44%          55.46%
------------------------------------------------------------------------------------------
 NASDAQ Biotech Index                                 --        101.67%          71.95%
------------------------------------------------------------------------------------------
 Russell 2000 Index                                   --         21.26%           9.07%
------------------------------------------------------------------------------------------
</TABLE>

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

     Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

<TABLE>
<CAPTION>
                                   ONE             THREE            FIVE             TEN
                                  YEAR             YEARS            YEARS           YEARS
------------------------------------------------------------------------------------------
 <S>                              <C>             <C>              <C>             <C>
 Class N+                         $153            $1,095           $2,046          $4,463
------------------------------------------------------------------------------------------
</TABLE>

+ Assuming the Investment Manager continues to reimburse the ordinary operating
expenses which exceed the annualized rate of 1.50% for Class N, your expenses
for the periods indicated would be $153, $474, $818, and $1,791. However, there
is no guarantee that the Investment Manager will continue such reimbursement
policy.

--------------------------------------------------------------------------------
FEES AND EXPENSES

     As an investor in the Fund, you will pay the following fees and expenses.

SHAREHOLDER FEES
(fees paid directly from your investment)                  NONE

ANNUAL FUND OPERATING EXPENSES
(fees paid from Fund assets)

<TABLE>
<CAPTION>
--------------------------------------------
                         CLASS
                           N
--------------------------------------------
<S>                   <C>
 MANAGEMENT FEES         1.00%
--------------------------------------------
 RULE 12b-1 FEE          0.25%
--------------------------------------------
 OTHER EXPENSES          3.28%
--------------------------------------------
 TOTAL ANNUAL FUND
 OPERATING EXPENSES      4.53%
--------------------------------------------
 LESS: FEES WAIVED
 AND REIMBURSED(1)      -3.03%
--------------------------------------------
 NET OPERATING
 EXPENSES(1)             1.50%
--------------------------------------------
</TABLE>

(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 Class N for the quarter (except interest, taxes and extraordinary
expenses) exceed the annualized rate of 1.50%. The Fund may reimburse the
Investment Manager in the future. Dresdner RCM Balanced Fund
--------------------------------------------------------------------------------


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------

<PAGE>

DRESDNER RCM BALANCED FUND


GOAL

     The Fund's goal is to seek long-term capital appreciation and current
income by investing in a diversified portfolio of equity and fixed-income
securities.

PRINCIPAL INVESTMENT STRATEGIES

     Under normal market conditions, the Fund will invest up to 75% of its total
assets in equity securities and at least 25% of its total assets in investment
grade fixed-income securities. Up to 30% of the Fund's total assets may be
invested in securities of foreign issuers.

     The Investment Manager will allocate the Fund's assets among various types
of equity and fixed-income securities. The allocation of the Fund's assets will
fluctuate with factors affecting the relative attractiveness of such equity and
fixed-income securities. These factors include, among others: general market and
economic conditions and trends, interest and inflation rates, fiscal and
monetary developments, long-term corporate earnings growth, and expected total
return and risk of each asset class.

     The Investment Manager will focus the equity portion of the portfolio
investment on companies that it expects will have higher than average rates of
growth and strong potential for capital appreciation. Foreign stocks are chosen
using a similar process, while also considering country allocation and currency
exposure. The Fund's equity securities may be of any capitalization. However,
the Fund will generally not invest in securities with market capitalizations
below $1 billion.

     The Fund uses fundamental and original research to select fixed-income
securities and manage the mix between U.S. and foreign bonds. The Fund's fixed-
income securities may be of any maturity. A bond's maturity and duration, among
other factors, are important components of the Fund's fixed-income process. The
Standard & Poor's 500 Index, the Lehman Brothers Aggregate Bond Index and a
composite comprised of 60% Standard & Poor's 500 Index/40% Lehman Brothers
Aggregate Bond Index are the Fund's performance benchmarks. The Investment
Manager bases its equity and fixed income security selections on their relative
investment merits and will not seek to duplicate the Fund's performance
benchmarks.

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 investments.

     The value of the Fund's investments fluctuate in response to the activities
of individual companies and general stock and bond market and economic
conditions. The yields and values of its fixed-income securities also fluctuate
with changes in interest rates; if interest rates rise, the value of
fixed-income securities may fall.

     The performance of foreign securities also depends on the political and
economic environments and other overall economic conditions in the countries
where the Fund invests. Stock prices of smaller and newer companies fluctuate
more than those of larger more established companies.

     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 this Fund was in operation for less than one year when this Prospectus
was printed, its performance is not included. In the future, the Fund will
compare its performance to the Standard & Poor's 500 Index, the Lehman Brothers
Aggregate Bond Index and a composite comprised of 60% Standard & Poor's 500
Index/40% Lehman Brothers Aggregate Bond Index.

     Please refer to the section entitled "The Investment Manager's Composite
Performance" on page 34 for historical performance information of institutional
private accounts managed by the Investment Manager, that have investment
objectives, policies, strategies and risks substantially similar to those of the
Balanced Fund.


8
<PAGE>

YEAR-BY-YEAR TOTAL RETURNS FOR CLASS I SHARES


     PERFORMANCE DATA IS NOT INCLUDED AS THE FUND IS LESS THAN ONE YEAR OLD.

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

        Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

<TABLE>
<CAPTION>
-----------------------------------------------------------
                                   ONE             FIVE
                                  YEAR             YEARS
-----------------------------------------------------------
 <S>                              <C>             <C>
 CLASS I+                         $92             $5,852
-----------------------------------------------------------
</TABLE>

+ Assuming the Investment Manager continues to reimburse the ordinary operating
expenses which exceed the annualized rate of 0.90% for Class I, your expenses
for the periods indicated would be $92 and $287. However, there is no guarantee
that the Investment Manager will continue such reimbursement policy.

--------------------------------------------------------------------------------
FEES AND EXPENSES

     As an investor in the Fund, you will pay the following fees and expenses.

SHAREHOLDER FEES
(fees paid directly from your investment)                  NONE

ANNUAL FUND OPERATING EXPENSES
(fees paid from Fund assets)

<TABLE>
<CAPTION>
                           CLASS
                             I
--------------------------------------------
<S>                        <C>
 MANAGEMENT FEES             0.65%
--------------------------------------------
 RULE 12b-1 FEE              NONE
--------------------------------------------
 OTHER EXPENSES             40.64%
--------------------------------------------
 TOTAL ANNUAL FUND
 OPERATING EXPENSES         41.29%
--------------------------------------------
 LESS: FEES WAIVED
 AND REIMBURSED(1)         -40.39%
--------------------------------------------
 NET OPERATING EXPENSES(1)   0.90%
--------------------------------------------
</TABLE>

(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 0.90% for Class I.
      The Fund may reimburse the Investment Manager in the future.
--------------------------------------------------------------------------------


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

DRESDNER RCM GLOBAL SMALL CAP FUND


GOAL

     The Fund's goal is to seek long-term capital appreciation by investing in
equity securities of companies with small market capitalizations.

PRINCIPAL INVESTMENT STRATEGIES

     Under normal market conditions, the Fund invests at least 65% of its
investments in companies with market capitalizations, at the time of purchase,
within the range of market capitalizations of companies included in the MSCI
World Small Cap Index, which currently ranges between $14.3 million to $3.2
billion. The Fund will maintain a weighted-average market capitalization between
50% and 200% of the weighted-average market capitalization of the securities
that comprise the MSCI World Small Cap Index; this currently would permit the
Fund to maintain a weighted-average market capitalization ranging from $288.5
million to $1.2 billion.

     As a fundamental policy which cannot be changed without stockholder
approval, the Fund invests in companies organized or headquartered in at least
three different countries (one of which may be the United States). However, the
Fund currently expects the majority of its foreign investments will be in
companies organized or headquartered in Japan and the countries of Western
Europe.

     Under normal market conditions, the Fund will invest no more than 25% of
its total assets in issuers that are organized or headquartered in any one
foreign country, other than France, Germany, Japan and the United Kingdom.

     The Investment Manager evaluates the fundamental value and prospects for
growth of individual 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
MSCIWorld Small Cap Index is the Fund's performance benchmark. The Investment
Manager bases its security selection on the relative investment merits of each
company and industry around the world and will not seek to duplicate the country
or sector allocations of the benchmark.

PRINCIPAL INVESTMENT RISKS

     Because the value of 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
investments.

     The value 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 where 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.

     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

     The charts on the following page show how the Fund has performed and
provide some indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year. The bar chart shows changes in the
yearly performance of the Fund since its inception. The chart below it compares
the performance of the Fund over time to its benchmark.

     Both charts assume reinvestment of dividends and distributions. Of course,
past performance does not necessarily indicate how the Fund will perform in the
future.


10
<PAGE>

YEAR-BY-YEAR TOTAL RETURN FOR CLASS I SHARES

[GRAPH]
<TABLE>
<CAPTION>
1997      1998      1999
<C>       <C>      <C>
25.48%    19.29%   104.63%
</TABLE>

For the periods covered by this year-by-year total return chart, the Fund's
highest quarterly return was 64.80% (for the fourth quarter ended 1999) and the
lowest quarterly return was -23.37% (for the third quarter ended 1998).

AVERAGE ANNUAL TOTAL RETURNS (THROUGH DECEMBER 31, 1999)

<TABLE>
<CAPTION>
                                                  FUND             ONE           SINCE
                                                INCEPTION         YEAR         INCEPTION
------------------------------------------------------------------------------------------
 <S>                                            <C>             <C>            <C>
 GLOBAL SMALL CAP FUND CLASS I (DGSCX)*         12/31/96        104.63%          45.23%
------------------------------------------------------------------------------------------
 GLOBAL SMALL CAP FUND CLASS N (DGSNX)**        12/31/96        104.06%          45.09%
------------------------------------------------------------------------------------------
 Salomon EMI Index                                    --         17.27%           9.14%
------------------------------------------------------------------------------------------
 MSCI World Small Cap Index***                        --         25.38%           5.53%
------------------------------------------------------------------------------------------
</TABLE>

*Returns through December 31,1998 reflect Rule 12b-1 fees. On that date, all
Fund shares were redesignated as Class I Shares, which do not pay Rule 12b-1
fees. Performance results for periods after December 31, 1998 do not reflect
Rule 12b-1 fees.

**Class N shares were first issued on March 10, 1999, and pay Rule 12b-1 fees.
Class N returns through March 10, 1999 are based on Class I returns and reflect
Rule 12b-1 fees.

***Effective May 1, 2000 the Fund's performance benchmark was changed from
the Salomon EMI Index to the MSCI World Small Cap Index. The Fund's Board of
Directors believes that the composition of the MSCI World Small Cap Index
most accurately reflects the global small cap focus of the Fund and the
market capitalization ranges of securities in which the Fund is most likely
to invest.

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

     Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

<TABLE>
<CAPTION>
                                   ONE             THREE            FIVE             TEN
                                  YEAR             YEARS            YEARS           YEARS
------------------------------------------------------------------------------------------
 <S>                              <C>             <C>              <C>             <C>
 CLASS I+                         $153            $1,009           $1,881          $4,130
------------------------------------------------------------------------------------------
 CLASS N+                         $178            $3,236           $5,620          $9,527
------------------------------------------------------------------------------------------
</TABLE>

+ Assuming the Investment Manager continues to reimburse the ordinary operating
expenses which exceed the annualized rate of 1.50% for Class I and 1.75% for
Class N, your expenses for the periods indicated would be $153, $474, $818, and
$1,791 for Class I and $178, $551, $949, and $2,062 for Class N. However, there
is no guarantee that the Investment Manager will continue such reimbursement
policy.

--------------------------------------------------------------------------------
FEES AND EXPENSES

     As an investor in the Fund, you will pay the following fees and expenses.

SHAREHOLDER FEES
(fees paid directly from your investment)                  NONE

ANNUAL FUND OPERATING EXPENSES
(fees paid from Fund assets)

<TABLE>
<CAPTION>
                         CLASS      CLASS
                           I          N
--------------------------------------------
<S>                    <C>       <C>
 MANAGEMENT FEES         1.00%      1.00%
--------------------------------------------
 RULE 12b-1 FEE          NONE       0.25%
--------------------------------------------
 OTHER EXPENSES          3.10%     15.46%
--------------------------------------------
 TOTAL ANNUAL FUND
 OPERATING EXPENSES      4.10%     16.71%
--------------------------------------------
 LESS: FEES WAIVED
 AND REIMBURSED(1)      -2.60%    -14.96%
--------------------------------------------
 NET OPERATING
 EXPENSES(1)             1.50%      1.75%
--------------------------------------------
</TABLE>

(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 1.50% for Class I
      and 1.75% for Class N. The Fund may reimburse the Investment Manager in
      the future.
--------------------------------------------------------------------------------


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

DRESDNER RCM GLOBAL TECHNOLOGY FUND


GOAL

     The Fund's goal is to seek long-term capital appreciation by investing in
equity securities of technology companies.

PRINCIPAL INVESTMENT STRATEGIES

     The Fund will normally invest at least 65% of its total assets in
technology companies. The Fund currently intends to invest primarily in
companies with market capitalizations greater than $500 million at the time of
purchase, with no more than 15% of its total assets in technology companies with
market capitalizations below $100 million at the time of purchase.

     Technology companies are companies with revenues primarily generated by
technology products and services. These include the internet, computers and
computer peripherals, software, electronic components and systems,
communications equipment and services, semiconductors, media and information
services, pharmaceuticals, hospital supply and medical devices, biotechnology
products, environmental services, chemical products and synthetic materials, and
defense and aerospace products and services.

     As a fundamental policy, which cannot be changed without stockholder
approval, the Fund invests in technology companies organized or headquartered in
at least three different countries (one of which may be the United States). The
Fund may invest up to 50% of its total assets in foreign issuers (but under
normal market conditions no more than 25% of its total assets in issuers
organized or headquartered in any one foreign country, other than Japan).

     The Investment Manager evaluates the fundamental value and prospects for
growth of individual companies and focuses on technology 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 Lipper Science
& Technology Fund Index are the Fund's performance benchmarks. The Investment
Manager bases its security selection on the relative investment merits of each
company and industry around the world and will not seek to duplicate either
benchmark.

PRINCIPAL INVESTMENT RISKS

     Because the value of 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
investments.

     Because the Fund will focus its investments in technology companies, it
will be more susceptible than more diversified funds to market and other
conditions affecting technology companies. As a result, its share price may be
more volatile than a fund with a more broadly diversified portfolio.

     The value of the Fund's investments will 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
where 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.

     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

     The charts on the following page show how the Fund has performed and
provide some indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year. The bar chart shows changes in the
yearly performance of the Fund since its inception. The chart below it compares
the performance of the Fund over time to its benchmarks.

     Both charts assume reinvestment of dividends and distributions. Of course,
past performance does not necessarily indicate how the Fund will perform in the
future.


12
<PAGE>

YEAR-BY-YEAR TOTAL RETURN FOR CLASS I SHARES

[GRAPH]
<TABLE>
<CAPTION>
1996      1997      1998      1999
<S>       <C>       <C>      <C>
26.41%    27.08%    61.05%   182.95%
</TABLE>

For the periods covered by this year-by-year total return chart, the Fund's
highest quarterly return was 82.82% (for the fourth quarter ended 1999) and the
lowest quarterly return was -15.60% (for the third quarter ended 1998).

AVERAGE ANNUAL TOTAL RETURNS (THROUGH DECEMBER 31, 1999)

<TABLE>
<CAPTION>
                                                  FUND             ONE           SINCE
                                                INCEPTION         YEAR         INCEPTION
------------------------------------------------------------------------------------------
 <S>                                            <C>             <C>            <C>
 GLOBAL TECHNOLOGY FUND CLASS I (DRGTX)*        12/27/95        182.95%          64.43%
------------------------------------------------------------------------------------------
 GLOBAL TECHNOLOGY FUND CLASS N (DGTNX)**       12/27/95        182.55%          64.07%
------------------------------------------------------------------------------------------
 S&P 500 Index                                        --         21.04%          26.39%
------------------------------------------------------------------------------------------
 Lipper Science & Technology Fund Index               --        113.90%          40.88%
------------------------------------------------------------------------------------------
</TABLE>

*On December 31,1998, all Fund shares were redesignated as Class I shares.
Neither the Class I shares nor their predecessors paid Rule 12b-1 fees.

**Class N shares were first issued on January 30, 1999, and pay Rule 12b-1 fees.
Class N returns through January 30, 1999 are based on Class I returns, and
reflect the deduction of Rule 12b-1 fees applicable to Class N shares.

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

     Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

<TABLE>
<CAPTION>
                                   ONE             THREE            FIVE             TEN
                                  YEAR             YEARS            YEARS           YEARS
------------------------------------------------------------------------------------------
 <S>                              <C>             <C>              <C>             <C>
 CLASS I+                         $153              $474           $  818          $1,791
------------------------------------------------------------------------------------------
 CLASS N+                         $178              $601           $1,051          $2,297
------------------------------------------------------------------------------------------
</TABLE>

+ Assuming the Investment Manager continues to reimburse the ordinary operating
expenses which exceed the annualized rate of 1.75% for Class N, your expenses
for the periods indicated would be $178, $551, $949, and $2,062 for Class N.
However, there is no guarantee that the Investment Manager will continue such
reimbursement policy.

--------------------------------------------------------------------------------
FEES AND EXPENSES

     As an investor in the Fund, you will pay the following fees and expenses.

SHAREHOLDER FEES
(fees paid directly from your investment)                  NONE

ANNUAL FUND OPERATING EXPENSES
(fees paid from Fund assets)

<TABLE>
<CAPTION>
                         CLASS      CLASS
                           I          N
--------------------------------------------
<S>                     <C>       <C>
 MANAGEMENT FEES         1.00%      1.00%
--------------------------------------------
 RULE 12b-1 FEE          NONE       0.25%
--------------------------------------------
 OTHER EXPENSES          0.50%      0.74%
--------------------------------------------
 TOTAL ANNUAL FUND
 OPERATING EXPENSES      1.50%      1.99%
--------------------------------------------
 LESS: FEES WAIVED
 AND REIMBURSED(1)          0%     -0.24%
--------------------------------------------
 NET OPERATING
 EXPENSES(1)             1.50%      1.75%
--------------------------------------------
</TABLE>

(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 1.50% for Class I
      and 1.75% for Class N. The Fund may reimburse the Investment Manager in
      the future.
--------------------------------------------------------------------------------


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------

<PAGE>

DRESDNER RCM GLOBAL HEALTH CARE FUND


GOAL

     The Fund's goal is to seek long-term capital appreciation by investing in
equity securities of health care companies.

PRINCIPAL INVESTMENT STRATEGIES

     The Fund will normally invest at least 65% of its total assets in health
care companies. Although there is no limitation on the market capitalizations of
companies in which the Fund will invest, the Fund does not intend to invest more
than 15% of its total assets in health care companies with market
capitalizations below $100 million at the time of purchase.

     Health care companies include pharmaceutical, biochemical, biotechnology
health care service and medical device companies. These companies are
typically involved in research and development or ownership and/or the
operation of health care facilities, franchises or practices, and the design,
production or selling of medical, dental and optical products. A company will
be deemed to be principally engaged in the health care business if:

     1) at least 50% of its earnings or revenues are derived from health care
activities; or

     2) at least 50% of its assets are devoted to such activities, based upon
the company's financial statements as of the end of its most recent fiscal year.

     As a fundamental policy, which cannot be changed without stockholder
approval, the Fund invests in health care companies organized or headquartered
in at least three different countries (one of which may be the United States).
However, the Fund currently expects the majority of its foreign investments will
be in companies organized or headquartered in Japan and the countries of Western
Europe.

     The Investment Manager evaluates the fundamental value and prospects for
growth of individual companies and focuses on health care 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 Russell Midcap
Health Care 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 benchmark.

PRINCIPAL INVESTMENT RISKS

     Because the value of 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
investments.

     Because the Fund will focus its investments in health care companies, it
will be more susceptible than more diversified funds to market and other
conditions affecting health care companies. As a result, its share price may be
more volatile than a fund with a more broadly diversified portfolio.

     The value of the Fund's investments will 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
where 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.

     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

     The charts on the following page show how the Fund has performed and
provide some indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year. The bar chart shows changes in the
yearly performance of the Fund since its inception. The chart below it compares
the performance of the Fund over time to its benchmarks.

     Both charts assume reinvestment of dividends and distributions. Of course,
past performance does not necessarily indicate how the Fund will perform in the
future.


14
<PAGE>

YEAR-BY-YEAR TOTAL RETURNS FOR CLASS N SHARES

[GRAPH]
<TABLE>
<CAPTION>
1997      1998      1999
<S>       <C>       <C>
30.00%    25.57%    28.74%
</TABLE>

For the periods covered by this year-by-year total return chart, the Fund's
highest quarterly return was 39.43% (for the fourth quarter ended 1999) and the
lowest quarterly return was -5.05% (for the third quarter ended 1999).

AVERAGE ANNUAL TOTAL RETURNS (THROUGH DECEMBER 31, 1999)

<TABLE>
<CAPTION>
                                                  FUND             ONE           SINCE
                                                INCEPTION         YEAR         INCEPTION
------------------------------------------------------------------------------------------
 <S>                                            <C>             <C>            <C>
 GLOBAL HEALTH CARE FUND CLASS N (DGHCX)        12/31/96         28.74%          28.09%
------------------------------------------------------------------------------------------
 S&P 500 Index                                        --         21.04%          27.56%
------------------------------------------------------------------------------------------
 Russell Midcap Health Care Index                     --        -13.48%          11.22%
------------------------------------------------------------------------------------------
</TABLE>

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

     Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

<TABLE>
<CAPTION>
                                   ONE             THREE            FIVE             TEN
                                  YEAR             YEARS            YEARS           YEARS
------------------------------------------------------------------------------------------
 <S>                              <C>             <C>              <C>             <C>
 CLASS N+                         $153            $1,158           $2,167          $4,701
------------------------------------------------------------------------------------------
</TABLE>

+ Assuming the Investment Manager continues to reimburse the ordinary operating
expenses which exceed the annualized rate of 1.50% for Class N, your expenses
for the periods indicated would be $153, $474, $818, and $1,791. However, there
is no guarantee that the Investment Manager will continue such reimbursement
policy.

--------------------------------------------------------------------------------
FEES AND EXPENSES

     As an investor in the Fund, you will pay the following fees and expenses.

SHAREHOLDER FEES
(fees paid directly from your investment)                  NONE

ANNUAL FUND OPERATING EXPENSES
(fees paid from Fund assets)

<TABLE>
<CAPTION>
                         CLASS
                           N
----------------------------------
<S>                    <C>
 MANAGEMENT FEES         1.00%
----------------------------------
 RULE 12b-1 FEE          0.25%
----------------------------------
 OTHER EXPENSES          3.60%
----------------------------------
 TOTAL ANNUAL FUND
 OPERATING EXPENSES      4.85%
----------------------------------
 LESS: FEES WAIVED
 AND REIMBURSED(1)      -3.35%
----------------------------------
 NET OPERATING
 EXPENSES(1)             1.50%
----------------------------------
</TABLE>

(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 Class N for the quarter (except
      interest, taxes and extraordinary expenses) exceed the annualized rate
      of 1.50%. The Fund may reimburse the Investment Manager in the future.
--------------------------------------------------------------------------------


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

DRESDNER RCM INTERNATIONAL GROWTH EQUITY FUND


GOAL

     The Fund's goal is to seek long-term capital appreciation by investing in
equity securities of foreign companies.

PRINCIPAL INVESTMENT STRATEGIES

     The Fund will normally invest at least 65% of its total assets in foreign
companies. The Fund currently intends to invest primarily in companies with
market capitalizations in excess of $1 billion at the time of purchase, with no
more than 15% of the Fund's total assets in companies with market
capitalizations below $100 million at the time of purchase.

     The Fund invests in issuers located in at least ten different countries.
The Fund may invest up to 65% of its total assets in issuers organized or
headquartered in Japan, the United Kingdom or Germany, and up to 25% of its
total assets in issuers organized or headquartered in any other foreign country.
The Fund may also invest up to 10% of its total assets in U.S. issuers.

     The Investment Manager evaluates the fundamental value and prospects for
growth of individual companies and focuses on 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 Morgan Stanley Capital International Europe, Australia, Far
East (MSCI-EAFE) Index and the Morgan Stanley Capital International All Country
World Free (MSCI-ACWI) Ex-U.S. Index are the Fund's performance benchmarks. The
Investment Manager bases its security selection on the relative investment
merits of each company and industry throughout the world and will not seek to
duplicate the country or industry allocations of either benchmark.

PRINCIPAL INVESTMENT RISKS

     Because the value of the Fund's investment 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
investments.

     The value of the Fund's investments will 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
where 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.

     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

     The charts on the following page provide some indication of the risks of
investing in the Fund by showing how its performance has varied from year to
year. The bar chart shows changes in the yearly performance of the Fund since
its inception. The chart below it compares the performance of the Fund over time
to its benchmarks.

     Both charts assume reinvestment of dividends and distributions. Of course,
past performance does not necessarily indicate how the Fund will perform in the
future.


16
<PAGE>

YEAR-BY-YEAR TOTAL RETURN FOR CLASS I SHARES

[GRAPH]
<TABLE>
<CAPTION>
1995      1996      1997      1998      1999
<S>       <C>       <C>       <C>       <C>
17.98%    19.31%    17.93%    13.81%    60.66%
</TABLE>

For the periods covered by this year-by-year total return chart, the Fund's
highest quarterly return was 41.32% (for the fourth quarter ended 1999) and the
lowest quarterly return was -16.16% (for the third quarter ended 1998).

AVERAGE ANNUAL TOTAL RETURNS (THROUGH DECEMBER 31, 1999)

<TABLE>
<CAPTION>
                                                        FUND        ONE     FIVE       SINCE
                                                      INCEPTION    YEAR     YEARS    INCEPTION
-------------------------------------------------------------------------------------------------
 <S>                                                  <C>          <C>      <C>      <C>
 INTERNATIONAL GROWTH EQUITY FUND CLASS I (DRIEX)*    12/28/94     60.66%   24.87%     24.82%
-------------------------------------------------------------------------------------------------
 INTERNATIONAL GROWTH EQUITY FUND CLASS N (DRIENX)**  12/28/94     60.27%   24.56%     24.51%
-------------------------------------------------------------------------------------------------
 MSCI-EAFE Index                                            --     27.31%   13.15%     12.56%
-------------------------------------------------------------------------------------------------
 MSCI-ACWI Ex-U.S. Index                                    --     30.92%   12.39%     13.12%
-------------------------------------------------------------------------------------------------
</TABLE>

*On December 31,1998, all Fund shares were redesignated as Class I shares.
Neither the Class I shares nor their predecessors paid Rule 12b-1 fees.

**Class N shares were first issued on March 10, 1999, and pay Rule 12b-1 fees.
Class N returns through March 10, 1999 are based on Class I returns, and reflect
the deduction of Rule 12b-1 fees applicable to Class N shares.

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

     Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

<TABLE>
<CAPTION>
                                   ONE             THREE            FIVE             TEN
                                  YEAR             YEARS            YEARS           YEARS
------------------------------------------------------------------------------------------
 <S>                              <C>             <C>              <C>             <C>
 CLASS I+                         $102            $  331           $  579          $1,289
------------------------------------------------------------------------------------------
 CLASS N+                         $127            $2,256           $4,141          $7,964
------------------------------------------------------------------------------------------
</TABLE>

+ Assuming the Investment Manager continues to reimburse the ordinary
operating expenses which exceed the annualized rate of 1.00% for Class I and
1.25% for Class N, your expenses for the periods indicated would be $102,
$318, $552 and $1,225 for Class I and $127, $397, $686 and $1,511 for Class
N. However, there is no guarantee that the Investment Manager will continue
such reimbursement policy.

-------------------------------------------------------------------------------
FEES AND EXPENSES

     As an investor in the Fund, you will pay the following fees and expenses.

SHAREHOLDER FEES
(fees paid directly from your investment)                  NONE

ANNUAL FUND OPERATING EXPENSES
(fees paid from Fund assets)

<TABLE>
<CAPTION>
                         CLASS      CLASS
                           I          N
--------------------------------------------
<S>                    <C>        <C>
 MANAGEMENT FEES         0.75%      0.75%
--------------------------------------------
 RULE 12b-1 FEE          NONE       0.25%
--------------------------------------------
 OTHER EXPENSES          0.31%      9.89%
--------------------------------------------
 TOTAL ANNUAL FUND
 OPERATING EXPENSES      1.06%     10.89%
--------------------------------------------
 LESS: FEES WAIVED
 AND REIMBURSED(1)      -0.06%     -9.64%
--------------------------------------------
 NET OPERATING
 EXPENSES(1)             1.00%      1.25%
--------------------------------------------
</TABLE>

(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 1.00% for Class I
      and 1.25% for Class N. The Fund may reimburse the Investment Manager in
      the future.
--------------------------------------------------------------------------------


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

DRESDNER RCM EMERGING MARKETS FUND


GOAL

     The Fund's goal is to seek long-term capital appreciation by investing in
equity securities of emerging market companies.

PRINCIPAL INVESTMENT STRATEGIES

     The Fund will normally invest at least 80% of its total assets in emerging
market companies. The Fund currently intends to invest primarily in companies
with market capitalizations in excess of $100 million at the time of purchase.

     The Fund may invest up to 15% of its total assets in issuers that are
organized or headquartered in any one emerging market country. The Fund may also
invest up to 20% of its total assets in issuers that are organized or
headquartered in developed countries.

     Emerging market companies are organized or headquartered in any country
considered an emerging or developing country by the World Bank, the
International Finance Corporation, the United Nations, or other recognized
international financial institutions. This designation currently includes most
countries in the world except Australia, Canada, Japan, New Zealand, Singapore,
United Kingdom, the U.S. and most of the countries of Western Europe.

     The Investment Manager evaluates the fundamental value and prospects for
growth of individual companies and focuses on 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 Morgan Stanley Capital International Emerging Markets Free
(MSCI-EMF) Index and the IFC Emerging Markets Index are the Fund's performance
benchmarks. The Investment Manager bases its security selection on the relative
investment merits of each company and industry throughout emerging market
countries and will not seek to duplicate the country or sector allocations of
either benchmark.

PRINCIPAL INVESTMENT RISKS

     Because the value of 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
investments.

     The value of the Fund's investments will 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
where 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. Emerging
country markets involve greater risk and volatility than more developed markets.

     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

     The charts on the following page provide some indication of the risks of
investing in the Fund by showing how its performance varied from year to
year. The bar chart shows changes in the yearly performance of the Fund since
its inception. The chart below it compares the performance of the Fund over
time to its benchmarks.

     Both charts assume reinvestment of dividends and distributions. Of course,
past performance does not necessarily indicate how the Fund will perform in the
future.


18
<PAGE>

YEAR-BY-YEAR TOTAL RETURN FOR CLASS I SHARES

[GRAPH]
<TABLE>
<CAPTION>
1998      1999
<S>       <C>
-8.39%    92.12%
</TABLE>

For the periods covered by this year-by-year total return chart, the Fund's
highest quarterly return was 52.95% (for the fourth quarter ended 1999) and the
lowest quarterly return was -16.26% (for the second quarter ended 1998).

AVERAGE ANNUAL TOTAL RETURNS (THROUGH DECEMBER 31, 1999)

<TABLE>
<CAPTION>
                                                  FUND             ONE           SINCE
                                                INCEPTION         YEAR         INCEPTION
------------------------------------------------------------------------------------------
 <S>                                            <C>              <C>           <C>
 EMERGING MARKETS FUND CLASS I (DRMIX)*         12/30/97         92.12%          32.47%
------------------------------------------------------------------------------------------
 EMERGING MARKETS FUND CLASS N (DRMNX)**        12/30/97         91.69%          32.16%
------------------------------------------------------------------------------------------
 MSCI Emerging Markets Free Index                     --         66.42%          11.59%
------------------------------------------------------------------------------------------
 IFC Emerging Markets Index                           --         67.15%          14.24%
------------------------------------------------------------------------------------------
</TABLE>

*On December 31,1998, all Fund shares were redesignated as Class I shares.
Neither the Class I shares nor their predecessors paid Rule 12b-1 fees.

**Class N shares were first issued on March 10, 1999, and pay Rule 12b-1 fees.
Class N returns through March 10, 1999 are based on Class I returns, and reflect
the deduction of Rule 12b-1 fees applicable to Class N shares.

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

     Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

<TABLE>
<CAPTION>
                                   ONE             THREE            FIVE             TEN
                                  YEAR             YEARS            YEARS           YEARS
------------------------------------------------------------------------------------------
 <S>                              <C>             <C>              <C>             <C>
 CLASS I+                         $153            $2,001           $3,693          $7,322
------------------------------------------------------------------------------------------
 CLASS N+                         $178            $6,649           $7,080          $7,111
------------------------------------------------------------------------------------------
</TABLE>

+ Assuming the Investment Manager continues to reimburse the ordinary operating
expenses which exceed the annualized rate of 1.50% for Class I and 1.75% for
Class N, your expenses for the periods indicated would be $153, $474, $818, and
$1,791 for Class I and $178, $551, $949, and $2,062 for Class N. However, there
is no guarantee that the Investment Manager will continue such reimbursement
policy.
--------------------------------------------------------------------------------

FEES AND EXPENSES

     As an investor in the Fund, you will pay the following fees and expenses.

SHAREHOLDER FEES
(fees paid directly from your investment)                  NONE

ANNUAL FUND OPERATING EXPENSES
(fees paid from Fund assets)

<TABLE>
<CAPTION>
                         CLASS      CLASS
                           I          N
--------------------------------------------
<S>                    <C>       <C>
 MANAGEMENT FEES         1.00%      1.00%
--------------------------------------------
 RULE 12b-1 FEE          NONE       0.25%
--------------------------------------------
 OTHER EXPENSES          8.33%     77.93%
--------------------------------------------
 TOTAL ANNUAL FUND
 OPERATING EXPENSES      9.33%     79.18%
--------------------------------------------
 LESS: FEES WAIVED
 AND REIMBURSED(1)      -7.83%    -77.43%
--------------------------------------------
 NET OPERATING
 EXPENSES(1)             1.50%      1.75%
--------------------------------------------
</TABLE>

(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 1.50% for Class I
      and 1.75% for Class N. The Fund may reimburse the Investment Manager in
      the future.
--------------------------------------------------------------------------------


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
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DRESDNER RCM EUROPE FUND


GOAL

     The Fund's goal is to seek long-term capital appreciation by investing in
equity securities of European companies.

PRINCIPAL INVESTMENT STRATEGIES

     The Fund invests primarily in companies located in Europe, from both
European Economic and Monetary Union ("EMU") and non-EMU countries. Under normal
market conditions, the Fund invests at least 75% of its total assets in these
companies. The Fund expects to invest most of its assets in equity securities of
issuers located in Western European countries.

     The Investment Manager evaluates the fundamental value and prospects for
growth of individual companies and focuses on 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 Morgan Stanley Capital International (MSCI) Europe Index is
the Fund's performance benchmark. The Investment Manager bases its security
selection on the relative investment merits of each company and industry
throughout Europe and will not seek to duplicate the country or sector
allocations of the benchmark.

PRINCIPAL INVESTMENT RISKS

     Because the value of 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
investments.

     The value of the Fund's investments will fluctuate in response to the
activities of individual companies and general stock market and economic
conditions. The performance of foreign securities depends in part on the
political and economic environments and other overall economic conditions in the
countries where the Fund invests. Because the Fund focuses on certain developed
European countries, it will be more susceptible than other funds to market and
other conditions affecting those countries. 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.

     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

     On May 3, 1999, the Fund converted from a closed-end fund to an open-end
fund. Closed-end fund shares are not redeemed by or purchased from the fund.
Instead, they are normally listed and traded on an exchange. Unlike open-end
funds, the price of a closed-end fund share is not based on the fund's net asset
value, but upon its value in the market. Closed-end funds usually generate fewer
expenses than open-end funds because the fund is not responsible for the
distribution of its shares. Upon conversion, all outstanding shares of the
previously closed-end Fund were redesignated as Class N shares and a new class
of shares, Class I, was created.

     The bar chart and table shown on the following page provide some indication
of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year. The bar chart shows changes in the yearly
performance of the Fund since its inception. The chart below it compares the
performance of the Fund over time to its benchmark.

     Both charts assume reinvestment of dividends and distributions. Of course,
past performance does not necessarily indicate how the Fund will perform in the
future.


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YEAR-BY-YEAR TOTAL RETURN FOR CLASS N SHARES*

[GRAPH]
<TABLE>
<CAPTION>
1991      1992      1993      1994      1995      1996      1997      1998      1999
<S>      <C>        <C>       <C>       <C>       <C>       <C>       <C>      <C>
-5.74%   -12.44%    31.54%    -4.98%     1.33%    15.87%    25.70%    37.23%   43.59%
</TABLE>

For the periods covered by this year-by-year total return chart, the Fund's
highest quarterly return was 51.43% (for the fourth quarter ended 1999) and the
lowest quarterly return was -15.52% (for the third quarter ended 1998).

AVERAGE ANNUAL TOTAL RETURNS (THROUGH DECEMBER 31, 1999)*

<TABLE>
<CAPTION>
                                        FUND         ONE          FIVE          SINCE
                                     INCEPTION      YEAR          YEARS       INCEPTION
------------------------------------------------------------------------------------------
 <S>                                 <C>            <C>           <C>         <C>
 EUROPE FUND CLASS N (DRENX)**         4/5/90       43.59%        23.50%        9.42%
------------------------------------------------------------------------------------------
 EUROPE FUND CLASS I***                4/5/90       43.59%        23.50%        9.42%
------------------------------------------------------------------------------------------
 DAX100 Index****                          --       16.77%        19.00%       10.93%
------------------------------------------------------------------------------------------
 MCSCI Europe Index                        --       16.21%        22.53%       15.03%
------------------------------------------------------------------------------------------
</TABLE>

*For the periods through February 2, 1999 the bar chart and table reflect the
performance of the Fund under its objective of investing primarily in equity
securities of German companies. For periods through May 3, 1999 the bar chart
and table reflect the performance of the Fund as a closed-end investment
company. Beginning on February 9, 1999, the Fund's objective was expanded to
permit investment in European companies. On May 3, 1999, the Fund converted from
a closed-end to an open-end investment company. The expenses of the Fund as an
open-end investment company may be higher than as a closed-end investment
company due to additional fees, such as Rule 12b-1 fees.

**Returns through May 3, 1999 do not reflect Rule 12b-1 fees. Class N returns
through May 3, 1999 would be lower if Rule 12b-1 fees had been paid.

***Class I shares were first issued on May 3, 1999, which do not pay Rule 12b-1
fees. There were no Class I shares outstanding as of December 31, 1999. Returns
through December 31, 1999 are based on Class N returns and reflect Rule 12b-1
fees.

****Since February 9, 1999, when the Fund's mandate was expanded, the Fund has
been comparing its performance to the MSCI Europe Index. Before February 9,
1999, when the Fund invested primarily in equity securities of German Companies
the Fund compared its performance to the DAX100 Index, a German focused index.

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

     Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

<TABLE>
<CAPTION>
                                   ONE             THREE            FIVE             TEN
                                  YEAR             YEARS            YEARS           YEARS
------------------------------------------------------------------------------------------
 <S>                              <C>             <C>              <C>             <C>
 CLASS N+                         $163              $505             $891          $1,974
------------------------------------------------------------------------------------------
 CLASS I+                         $137              $428             $760          $1,700
------------------------------------------------------------------------------------------
</TABLE>

+ Assuming the Investment Manager continues to reimburse the ordinary operating
expenses which exceed the annualized rate of 1.35% for Class I and 1.60% for
Class N, your expenses for the periods indicated would be $137, $428, $739 and
$1,624 for Class I and $163, $505, $871 and $1,900 for Class N. However, there
is no guarantee that the Investment Manager will continue such reimbursement
policy.
--------------------------------------------------------------------------------

FEES AND EXPENSES

     As an investor in the Fund, you will pay the following fees and expenses.

SHAREHOLDER FEES
(fees paid directly from your investment)                  NONE

ANNUAL FUND OPERATING EXPENSES
(fees paid from Fund assets)

<TABLE>
<CAPTION>
                         CLASS      CLASS
                           I          N
--------------------------------------------
<S>                    <C>        <C>
 MANAGEMENT FEES         1.00%      1.00%
--------------------------------------------
 RULE 12B-1 FEE          none       0.25%
--------------------------------------------
 OTHER EXPENSES(1)       0.44%      0.44%
--------------------------------------------
 TOTAL ANNUAL FUND
 OPERATING EXPENSES(2)   1.44%      1.69%
--------------------------------------------
 LESS: FEE WAIVER
 AND REIMBURSEMENT(3)   -0.09%     -0.09%
--------------------------------------------
 NET OPERATING
 EXPENSES(3)             1.35%      1.60%
--------------------------------------------
</TABLE>

(1)   This percentage amount does not include non-recurring expenses of
      approximately 0.32% associated with the conversion of the Fund to an
      open-end investment company.

(2)   The expenses of the Fund as an open-end investment company may be
      higher than as a closed-end investment company due to additional fees,
      such as Rule 12b-1 fees.

(3)   The Investment Manager has contractually agreed until at least December
      31, 2002, 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 1.35% for Class I
      and 1.60% for Class N. The Fund may reimburse the Investment Manager in
      the future.
--------------------------------------------------------------------------------


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                                                 [LOGO]Dresdner RCM Global Funds
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INVESTMENT STRATEGIES, POLICIES AND RISKS

INVESTMENT STRATEGIES AND POLICIES

         The following pages provide additional information about the Funds'
principal investment strategies and risks, as well as certain other important
investment policies.

HOW DO THE FUNDS SELECT EQUITY INVESTMENTS?

         While the Funds emphasize investments in growth companies, the Funds
also may invest in other companies that are not traditionally considered to be
growth companies, such as emerging growth companies and cyclical and
semi-cyclical companies in developing economies, if the Investment Manager
believes that such companies have above-average growth potential.
         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.

         In evaluating potential equity investments, the Funds do not seek
current income and do not restrict their investments to companies with a record
of dividend payments.

         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 its Grassroots-SM- Research operating
group. 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 Funds might
invest and by checking marketplace assumptions about market demand for
particular products and services.

HOW DOES THE BALANCED FUND SELECT FIXED-INCOME INVESTMENTS?

         The Investment Manager's fixed-income philosophy focuses on a top-down
investment process that begins with the development of an economic outlook. Data
on economic sectors and industries, in conjunction with analysis of monetary and
fiscal policy, underlie the analysis of the fixed income investment environment.
Total rates of return are projected for bond market sectors under various market
scenarios that incorporate potential interest rate shifts over a specified time
period.

         In evaluating individual fixed-income investment opportunities, the
Investment Manager uses a variety of proprietary and vendor supplied systems
that provide information in support of its investment selection process.


22
<PAGE>

WHAT KINDS OF EQUITY SECURITIES DO THE FUNDS INVEST IN?

         The Funds invest primarily in common stocks and depositary receipts,
including American Depositary Receipts, European Depositary Receipts, Global
Depositary Receipts or other similar depositary instruments representing
securities of foreign companies. The Funds 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 Funds 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 DO THE FUNDS INVEST IN?

         The Funds invest 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 United States.

     -    Securities that are principally traded outside the United States,
          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 Funds' foreign investments will
primarily be traded on recognized foreign securities exchanges. However, each
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 a Fund's investment criteria. The Funds also may
invest in securities that are not publicly traded either in the United States or
in foreign markets.

WHAT KINDS OF DEBT SECURITIES DOES THE BALANCED FUND INVEST IN?

         Debt securities which are eligible investments for the Fund include,
but are not limited to the following: debt securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities; debt securities issued
or guaranteed by foreign national governments, their agencies or
instrumentalities; debt securities issued or guaranteed by supranational
organizations; and corporate debt securities.

         Debt securities include bonds and other debt instruments used by
issuers to borrow money from investors. The issuer generally pays the investor a
fixed, variable, or floating rate of interest, and must repay the amount
borrowed at maturity. Some debt securities, such as zero coupon bonds, do not
pay current interest, but are sold at a discount from their face values.

         In general, most debt securities held by the Fund will be investment
grade (i.e., rated by at least one major rating agency in one of its top four
rating categories at the time of purchase or, if unrated,


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INVESTMENT STRATEGIES, POLICIES AND RISKS


determined by the Investment Manager to be of comparable 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 investment 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.

U.S. GOVERNMENT SECURITIES

         U.S. Government Securities are high-quality debt instruments issued or
guaranteed by the U.S. Treasury or by an agency or instrumentalities of the U.S.
Government. Not all U.S. Government securities are backed by the full faith and
credit of the United States. For example, securities such as those issued by the
Federal National Mortgage Association ("FNMA") are supported by the
instrumentality's right to borrow money from the U.S. Treasury under certain
circumstances. Securities such as those issued by the Federal Farm Credit Banks
Funding Corporation are supported only by the credit of the entity that issued
them.

MORTGAGE-RELATED SECURITIES

         Mortgage-related securities are securities that directly or indirectly
represent a participation in, or are secured by or payable from, mortgage loans
secured by real or commercial property, and include pass-through securities,
collateralized mortgage obligations ("CMOs"), real estate mortgage conduits
("REMICS"), and adjustable rate mortgage securities ("ARMs"). There are
currently three basis types of mortgage-related securities: (i) those issued or
guaranteed by the U.S. Government or one of its agencies or instrumentalities
such as the Government National Mortgage Association ("GNMA"); (ii) those issued
by private issuers which represent an interest in or are collateralized by
mortgage-related securities issued or guaranteed by the U.S. Government or one
of its agencies or instrumentalities; and (iii) those issued by private issuers
which represent an interest in or are collateralized by whole mortgage loans or
mortgage-related securities without a government guarantee.

ASSET-BACKED SECURITIES

         Asset-backed securities represent undivided fractional interests in a
trust with assets consisting of a pool of domestic loans such as motor vehicle
retail installment sales contracts or credit card receivables. Payments are
typically made monthly, consisting of both principal and interest payments.
Although generally rated AAA, it is possible that the securities could become
illiquid or experience losses if guarantors or insurers default.

OTHER INVESTMENT PRACTICES

         The Funds may also employ the following investment techniques in
pursuit of their investment objectives.

DO THE FUNDS BUY AND SELL FOREIGN CURRENCIES?

         The Investment Manager expects to purchase or sell foreign
currencies primarily to settle foreign securities transactions. However, each
Fund may also engage in currency management transactions (other than currency
futures contracts in the case of the Europe Fund) to hedge currency exposure
related to securities it owns or expects to purchase. A Fund may also hold
foreign currency received in connection with investments in foreign
securities when the Investment Manager

24
<PAGE>


believes the relevant exchange rates will change favorably and it would be
better to convert the currency into U.S. dollars at a later date.

         For purposes of the percentage limitations on each Fund's investments
in foreign securities, the term "securities" does not include foreign
currencies. This means that a Fund's exposure to foreign currencies or
multinational currencies such as the "Euro" may be greater than its percentage
limitation on investments in foreign securities. Each Fund will incur costs in
connection with conversions between various currencies, and gains in a
particular securities market may be affected (either positively or negatively)
by changes in exchange rates.

DO THE FUNDS HEDGE THEIR INVESTMENTS?

           For hedging purposes, each Fund may purchase options on stock indices
and on securities it is authorized to purchase. If a 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 a
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 stock index gives a 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. A 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.

         Each Fund may employ certain techniques to hedge against currency
exchange rate fluctuations, changes in interest rates or general fluctuations in
the value of its portfolio securities. The International Fund may hedge up to
100% of its total assets. These techniques include forward currency exchange
contracts, currency options, futures contracts (and related options) (for the
Europe Fund, only index futures contracts), 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 of the contract and the
contract price. Index futures contracts are agreements to take or make delivery
of an amount of cash equal to the difference between the value of the index at
the close of the last trading day of the contract and the price at which the
index contract was originally written. Currency swaps involve the exchange of
rights to make or receive payments in specified currencies.

         Each 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.

DO THE LARGE CAP GROWTH FUND, BIOTECHNOLOGY FUND, TAX MANAGED GROWTH FUND AND
BALANCED FUND INVEST IN FOREIGN SECURITIES?

         The Large Cap Growth Fund may invest up to 20% of its total assets,
the Tax Managed Growth Fund and the Biotechnology Fund may invest up to 25% of
their total assets, and the Balanced Fund may invest


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INVESTMENT STRATEGIES, POLICIES AND RISKS

up to 30% of its total assets, in foreign securities (but no more than 10% in
any one foreign country). Such investments are not currently a principal
investment technique for these Funds. However, if foreign securities present
attractive investment opportunities, any one of these Funds may increase the
percentage of its total assets in foreign securities, subject to the limits
described above.

DO THE FUNDS, OTHER THAN THE EMERGING MARKETS FUND, INVEST IN EMERGING MARKETS?

         The International Growth Equity Fund and Global Small Cap Fund may each
invest 30%, the Europe Fund 25%, the Global Technology Fund 20%, the Global
Health Care Fund and Biotechnology Fund 15% and the Large Cap Growth Fund 10%,
of their total assets in companies organized or headquartered in emerging market
countries (but no more than 10% in any one emerging market country). The Tax
Managed Growth Fund may invest up to 5% of its total assets in companies
organized or headquartered in emerging market countries. Such investments are
not currently a principal investment technique for these Funds. However, if
emerging markets present attractive investment opportunities, any one of these
Funds may increase the percentage of its total assets in emerging markets,
subject to the limits described above.

WHAT ARE THE FUNDS' PORTFOLIO TURNOVER RATES?

         Each Fund may invest in securities on either a long-term or short-term
basis. The Investment Manager will sell a 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, each Fund's investment
objective and the need for funds for the redemption of a Fund's shares.

         The Investment Manager anticipates that the annual portfolio turnover
rate for the Balanced Fund will not exceed 150% during its first full year of
operation. The portfolio turnover rate for the Tax Managed Growth Fund will
reflect the Investment Manager's efforts to minimize the Fund's capital gains
distributions and to enhance the after-tax returns of its shareholders; the
Investment Manager may sell securities to realize capital losses to offset
accumulated or future capital gains. See, "Financial Highlights" for the
portfolio turnover rates of the other Funds.

         A high portfolio turnover rate would increase a Fund's brokerage
commission expenses and other transaction costs, and may increase its taxable
capital gains.

DO THE FUNDS INVEST IN OTHER INVESTMENT COMPANIES?

         The laws of some foreign countries may make it difficult or impossible
for a 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, and subject to the restrictions
referred to above regarding investments in companies organized or headquartered
in foreign countries, each 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, no Fund may acquire more than 3% of the
outstanding


26
<PAGE>

voting securities of any other investment company.

         If a 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 ARE THE FUNDS' INVESTMENT POLICIES IN UNCERTAIN MARKETS?

         When the Investment Manager believes a Fund should adopt a temporary
defensive posture, including periods of international, political or economic
uncertainty, a 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, a Fund may not achieve its investment objective.

WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT 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.

CHANGING THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES

         Each Fund's investment objective of long-term capital appreciation and
current income, in the case of the Balanced Fund, is a fundamental policy that
may not be changed without stockholder approval. However, except as otherwise
indicated in this Prospectus or the SAI, each 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, a Fund is not required to sell any
security in its portfolio as a result of a change in any applicable percentage
resulting from market fluctuations.

INVESTMENT RISKS

         Your investment in the Funds is subject to a variety of risks,
including those described below. See the SAI for further information about these
and other risks.

EQUITY INVESTMENTs

         The prices of equity securities fluctuate based on changes in the
issuer's financial condition and prospects on overall market and economic
conditions.

DEBT SECURITIES

         The yield and price of a debt security changes daily based on changes
in interest rates and market conditions, and in response to other economic,
political or financial events.


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INVESTMENT STRATEGIES, POLICIES AND RISKS


         The following are some of the more common risk factors associated with
investments in debt securities:

         INTEREST RATE RISK. The change in the prices of debt securities that
accompany changes in the overall level of interest rates. Debt securities have
varying levels of sensitivity to changes in interest rates. In general, bond
prices rise when interest rates fall, and fall when interest rates rise.
Longer-term bonds, lower quality bonds and zero coupon bonds are generally more
sensitive to interest rate changes.

         CREDIT RISK. The chance that a Fund's holdings will have its credit
rating downgraded or will default (fail to make scheduled interest and principal
payments), potentially reducing the Fund's income level and share price. By
definition, lower-rated securities carry a higher credit risk.

         GEOGRAPHIC RISK. The chance of price declines resulting from
developments in a single foreign country.

         CALL RISK. Debt obligations may be issued with a call feature (call
features include a date on which the issuer has reserved the right to redeem the
obligation prior to maturity). An obligation may be called for redemption before
the Fund would otherwise choose to eliminate it from its portfolio holdings. A
call may also reduce an obligation's yield to maturity.

         PREPAYMENT RISK. Mortgage-related and asset-backed securities are
subject to prepayment risk. Such securities may be prepaid prior to maturity,
and hence the actual life of the security cannot be accurately predicted. During
periods of falling interest rates, prepayments may accelerate, which would
require the Fund to reinvest the proceeds at a lower interest rate. Securities
subject to prepayment risk generally offer less potential for gains during a
declining interest rate environment, and similar or greater potential for loss
in a rising interest rate environment.

SPECIFIC INDUSTRIES

         Because the Global Technology Fund, Global Health Care Fund and
Biotechnology Fund each focus on a single industry, each will be more
susceptible than other diversified funds to market and other conditions
affecting that industry. These conditions include competitive pressures
affecting the companies' financial condition, rapid product obsolescence,
dependence on extensive research and development, aggressive pricing and
greater sensitivity to changes in governmental regulation and policies. As a
result, the net assets of these Funds 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 a 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


28
<PAGE>

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 a 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 a Fund
(including the withholding of dividends and limitations on the repatriation of
currencies). A 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 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 in certain markets there have been times when
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.

         Because certain of the Funds may invest more than 25% of their total
assets in the securities of companies organized or headquartered in France,
Germany, Japan or the United Kingdom, these Funds may be subject to increased
risks due to political, economic, social or regulatory events in those
countries.

EMERGING MARKETS

         Investments in emerging markets involve additional risks. The
securities markets of emerging market countries are substantially smaller, less
developed, less liquid, and more volatile than U.S. and other developed foreign
markets. Disclosure and regulatory standards are less stringent. There also may
be a lower level of monitoring and regulation of securities markets in emerging
market countries and of the activities of investors in such markets, and
enforcement of existing regulations has been limited.

         Economies in emerging market countries generally depend heavily on
international trade. They may be affected adversely by the economic conditions
of the countries with which they trade, as well as by trade barriers, exchange
controls, managed adjustments in relative currency values, and other
protectionist measures imposed or negotiated by these countries. In


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

INVESTMENT STRATEGIES, POLICIES AND RISKS


many cases, governments of emerging market countries continue to exercise
significant control over the economies of these countries. In addition, some of
these countries have in the past failed to recognize private property rights and
have at times nationalized or expropriated the assets of private companies.
There is a greater possibility of confiscatory taxation, imposition of
withholding taxes on interest payments, or other similar developments that could
affect investments in those countries. Unanticipated political or social
developments may also affect the value of a Fund's investments in those
countries.

OPTIONS, CURRENCY HEDGING AND CURRENCY MANAGEMENT

         Stock options involve a number of risks. They may be more volatile than
the underlying stock. Options and securities markets could not be precisely
correlated, so that a given transaction may not 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 to participants in the United States will not be available.
A Fund could lose the amount of the option premium plus transaction costs.

         A Fund's currency management techniques involve risks different from
investments in U.S. dollar-denominated securities. If a 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, options on currency futures contracts and index futures
contracts involve risks similar to those of options on securities; in addition,
the Fund's potential loss in such transactions is unlimited.

         The use of hedging and currency management techniques is a highly
specialized activity, and the success of any such operations by a 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.

NON-DIVERSIFICATION

         The Global Technology Fund, Global Health Care Fund, Biotechnology
Fund, International Growth Equity Fund and Europe Fund are non-diversified
within the meaning of the Investment Company Act of 1940. Each may invest a
greater percentage of its assets in the securities of any single issuer than
diversified funds, and may be more susceptible to risks associated with a single
economic, political or regulatory occurrence than diversified funds. However, in
order to meet the requirements of the Internal Revenue Code of 1986, as amended
(the "Code"), for qualification as a regulated investment company, a Fund must
diversify its holdings so that, at the end of each quarter of its taxable year,
(i) at least 50% of the market value of its assets is represented by cash, U.S.
Government securities, the securities of other regulated investment companies
and other securities, with such other securities of any one issuer limited for
purposes of this calculation to an amount not greater than 5% of the value of
the Fund's total assets and representing not more than 10% of the issuer's
outstanding voting securities, and (ii) not more than 25% of the value of the
Fund's total assets may be invested in the securities of any one issuer (other
than the U.S. Government or other regulated investment companies).


30
<PAGE>

GEOGRAPHIC CONCENTRATION

         The Europe Fund will invest in companies located in both EMU and
non-EMU European countries. Investments in EMU countries involve certain risks.
The EMU's objective is to create a single, unified market through which people,
goods, and money can move freely. Participation in the EMU is based on countries
meeting certain financial criteria outlined in the treaty creating the EMU. The
transition to the EMU may be troubled as eleven separate nations adjust to the
reduction in flexibility, independence, and sovereignty that the EMU requires.
High unemployment and a sense of "deculturalization" within the general public
of the participating countries could lead to political unrest and continuing
labor disturbances.


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

ORGANIZATION AND MANAGEMENT


THE FUNDS AND THE INVESTMENT MANAGER

         The International Growth Equity Fund is a series of Dresdner RCM
Capital Funds, Inc. (the "Capital Company"). The Europe Fund is a series of
Dresdner RCM Investment Funds Inc. (the "Investment Company"). The other Funds
are series of Dresdner RCM Global Funds, Inc. (the "Global Company"). The Global
Company, the Capital Company and the Investment Company are incorporated in
Maryland as open-end management investment companies.

         Dresdner RCM Global Investors LLC, with principal offices at Four
Embarcadero Center, San Francisco, California 94111, is the investment manager
of the Funds. The Investment Manager manages each Fund's investments, provides
various administrative services, and supervises each 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

LARGE CAP GROWTH FUND

         Seth A. Reicher, CFA and Mary M. Bersot, CFA, are primarily responsible
for the day-to-day management of the Large Cap Growth Fund. Mr. Reicher is a
Managing Director of the Investment Manager, with which he has been associated
since 1993. He has participated in the management of equity portfolios on behalf
of the Investment Manager since 1993. Ms. Bersot is a Managing Director of the
Investment Manager, with which she has been associated since 1999. From 1990 -
1999, prior to joining Dresdner RCM, she worked for McMorgan & Co. as a Senior
Vice President managing the Taft Hartley Funds as well as a balanced mutual
fund. Mr. Reicher and Ms. Bersot are Co-Chief Investment Officers of U.S. large
cap growth equities at Dresdner RCM.

TAX MANAGED GROWTH FUND

         M. Brad Branson, CFA and Joanne L. Howard, CFA are primarily
responsible for the day-to-day management of the Tax Managed Growth Fund. Mr.
Branson is a Director of the Investment Manager, with which he has been
associated since 1993. He has participated in the management of portfolios on
behalf of the Investment Manager since 1993. Ms. Howard is a Managing Director
of the Investment Manager, with which she has been associated since 1992. She
has participated in the management of portfolios on behalf of the Investment
Manager since 1993.

GLOBAL HEALTH CARE FUND
AND BIOTECHNOLOGY FUND

         Faraz Naqvi M.D. and Michael Dauchot M.D. are primarily responsible for
the day-to-day management of the Global Health Care Fund and Biotechnology Fund.
Dr. Naqvi is a Director of the Investment Manager, with which he has been
associated since 1998. From 1996-1998 he served as an analyst at Montgomery
Securities focusing on biotechnology and pharmaceutical companies. From
1994-1996 he served as a healthcare consultant for McKinsey & Company. Dr.
Dauchot is a


32
<PAGE>

Director of the Investment Manager, with which he has been associated since
1999. From 1996-1999, he served as an equity junior analyst in the field of
medical technology for Robertson Stephens & Co. From 1991-1995 he served as a
physician in the Immediate Care Facility at Hammond Clinic in Munster, Indiana.

BALANCED FUND

         David W. Hays, CFA and Mary M. Bersot, CFA, are primarily responsible
for the day-to-day management of the Dresdner RCM Balanced Fund. Mr. Hays, who
manages the fixed-income portion of the Fund's portfolio, is a Director of the
Investment Manager, with which he has been associated since 1995. Prior to that
time, he served as a Vice President and Fixed-Income Portfolio Manager at CSI in
Chicago, Illinois. He has participated in the management of portfolios on behalf
of the Investment Manager since 1995. Ms. Bersot, who manages the equity portion
of the Fund's portfolio, is a Managing Director of the Investment Manager, with
which she has been associated since 1999. From 1990- 1999, prior to joining
Dresdner RCM, she worked for McMorgan & Co. as a Senior Vice President managing
Taft Hartley Funds as well as a balanced mutual fund.

GLOBAL SMALL CAP FUND

         Timothy M. Kelly, CFA and David S. Plants are primarily responsible for
the day-to-day management of the Global Small Cap Fund. Mr. Kelly is a Managing
Director of the Investment Manager, with which he has been associated since
1995. Before joining Dresdner RCM, he received an MBA from The University of
Chicago Graduate School of Business with concentrations in accounting and
finance. He has participated in the management of portfolios on behalf of the
Investment Manager since 1995. Mr. Plants is a Director of the Investment
Manager, with which he has been associated since 1993. He has participated in
the management of portfolios on behalf of the Investment Manager since 1993.

GLOBAL TECHNOLOGY FUND

         Huachen Chen and Walter C. Price are primarily responsible for the
day-to-day management of the Technology 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.

INTERNATIONAL GROWTH EQUITY FUND
AND EMERGING MARKETS FUND

         William S. Stack and Steven C. Laughton are primarily responsible for
the day-to-day management of the International Fund. Mr. Stack and Ana
Wiechers-Marshall are primarily responsible for the day-to-day management of the
Emerging Markets Fund. Mr. Stack is a Senior Managing Director of the Investment
Manager, with which he has been associated since 1994, and is a member of its
Board of Managers. Mr. Laughton is a Director of the Investment Manager, with
which he has been associated since 1995. He has participated in the management
of equity portfolios on behalf of the Investment Manager since 1995. Prior to
joining Dresdner RCM, he served as the Director of Equities Research at Koeneman
Capital Management in Singapore. Ms. Wiechers-Marshall is a Director of the
Investment Manager, with which she has been associated since 1995. From 1993 to
1995 she was employed by Bank of America where she served as Latin America
Regional Manager. She has participated


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

ORGANIZATION AND MANAGEMENT


in the management of portfolios on behalf of the Investment Manager since 1995.

EUROPE FUND

         Barbel Lenz and David S. Plants are primarily responsible for the
day-to-day management of the Europe Fund. Ms. Lenz is a Director of the
Investment Manager, with which she has been associated since 1997. She joined
the Investment Manager as a Senior Research Specialist for European Equities and
as a portfolio manager. From 1995 to 1997 she served as an Assistant Vice
President at Dresdner Kleinwort Benson North America LLC. Mr. Plants is a
Director of the Investment Manager, with which he has been associated since
1993. He has participated in the management of portfolios on behalf of the
Investment Manager since 1993.

THE INVESTMENT MANAGER'S
COMPOSITE PERFORMANCE

         The following table sets forth the Investment Manager's balanced
composite performance data relating to the historical performance of
institutional private accounts managed by the Investment Manager, since the
dates indicated, that have investment objectives, policies, strategies and risks
substantially similar to those of the Balanced Fund. The composite data is
provided to illustrate the past performance of the Investment Manager in
managing substantially similar accounts as measured against specified market
indices and does not represent the performance of the Balanced Fund. Investors
should not consider this performance data as an indication of future performance
of the Balanced Fund or of the Investment Manager.

         All information set forth in the table below relies on data supplied by
the Investment Manager or from statistical services, reports or other sources
believed by the Investment Manager to be reliable.

         All returns presented below are time weighted rates of return net of
costs and have been presented net of investment management fees. The Investment
Manager's composite includes all actual, fee-paying, discretionary institutional
private accounts managed by the Investment Manager that have investment
objectives, policies, strategies and risks substantially similar to those of the
Balanced Fund. The Investment Manager values all eligible institutional private
client accounts each month on a trade date basis. To calculate the monthly
composite rate of return, the market values, investment income, and additions
and withdrawals of capital are summed for all eligible private client accounts.
The summed data is used to calculate the total composite return weighted by each
private client account's asset size. The annualized composite rates of return
are calculated by linking the monthly composite rates of return. Since January
1, 1989, additions and withdrawals are day weighted. Prior to this date,
additions and withdrawals were assumed to occur on the last day of the month.

         The institutional private accounts that are included in the Investment
Manager's composite are not subject to the same types of expenses to which the
Balanced Fund is subject nor to the diversification requirements, specific tax
restrictions and investment limitations imposed on the Balanced Fund by the
Investment Company Act or Subchapter M of the Internal Revenue Code.
Consequently, the performance results for the Investment Manager's composite
could have been adversely affected if the institutional private accounts
included in the composite had been subject to the same expenses as the Balanced
Fund or had


34
<PAGE>

been regulated as investment companies under the federal securities laws. In
addition, the SEC uses a different methodology from that described above to
calculate performance, which could result in different performance data.

         The results presented below may not necessarily equate with the return
experienced by any particular account as a result of the timing of investments
and redemptions. In addition, the effect of taxes on any account will depend on
the client's tax status, and the results have not been reduced to reflect any
income tax which may have been payable.

         The investment results presented below are not intended to predict or
suggest the returns that might be experienced by the Balanced Fund or an
individual investing in the Balanced Fund.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     ANNUALIZED
                                                                                                                    RETURN SINCE
                                                                    ANNUALIZED        ANNUALIZED       ANNUALIZED     INCEPTION
                                                        ONE YEAR    THREE YEARS       FIVE YEARS       TEN YEARS    (12/31/72)
                                                        THROUGH      THROUGH           THROUGH          THROUGH        THROUGH
                                                        12/31/99     12/31/99          12/31/99         12/31/99      12/31/99
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>           <C>               <C>              <C>          <C>
BALANCED COMPOSITE (NET OF FEES)                         29.23%        27.36%           24.89%           16.57%         13.07%
-------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index                                            21.04%        27.56%           28.55%           18.20%         13.89%
-------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Government Corporate Bond Index         (2.15%)         5.54%            7.60%            7.66%          8.65%
-------------------------------------------------------------------------------------------------------------------------------
Balanced Benchmark(1)                                    11.40%        18.68%           20.03%           14.08%         12.06%
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  The Balanced Benchmark is composed of 60% of the S&P 500 Index and 40% of
     the Lehman Brothers Government Corporate Bond Index.

     The S&P 500 Index is an unmanaged index containing common stocks of 500
     industrial transportation, utility and financial companies, regarded as
     generally representative of the U.S. stock market. The Index reflects the
     reinvestment of income dividends and capital gain distributions, if any,
     but does not reflect fee, brokerage commissions, or other expenses of
     investing.

     The Lehman Brothers Government Corporate Bond Index is an unmanaged
     market-weighted index consisting of all public obligations of the U.S.
     Government, its agencies and instrumentalities, and all corporate issuers
     of fixed rate, non-convertible, investment grade U.S. dollar denominated
     bonds having maturities of greater than one year. It is generally regarded
     as representative of the market for domestic bonds. The Index reflects the
     reinvestment of income dividends and capital gains distributions, if any,
     but does not reflect fees, brokerage commissions or markups, or other
     expenses of investing.


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

ORGANIZATION AND MANAGEMENT


MANAGEMENT FEES AND OTHER EXPENSES

         Each Fund pays the Investment Manager a fee pursuant to an investment
management agreement. The Global Technology Fund and the Emerging Markets Fund
each pay a monthly fee to the Investment Manager at the annual rate of 1.00% of
its average daily net assets. The Europe Fund pays a monthly fee to the
Investment Manager at the annual rate of 1.00% of its average daily net assets
up to and including $100 million and 0.80% of its average daily net assets in
excess of $100 million. The International Growth Equity Fund pays a monthly fee
to the Investment Manager at the annual rate of 0.75% based on its average daily
net assets.

         Each of the other Funds pays a monthly fee to the Investment Manager
based on its average daily net assets, as described below.

         Each 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).
These expenses are allocated to each class of shares based on the assets of each
class. In addition, each class also bears certain class-specific expenses, such
as Rule 12b-1 expenses payable by each Fund's Class N shares.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                            GLOBAL SMALL CAP FUND
                                            GLOBAL HEALTH CARE FUND            LARGE CAP            TAX MANAGED          BALANCED
 AVERAGE DAILY NET ASSETS                     BIOTECHNOLOGY FUND              GROWTH FUND           GROWTH FUND           FUND
 <S>                                          <C>                               <C>                  <C>                  <C>
 The first $500 million                            1.00%                         0.70%                 0.75%               0.65%
 Above $500 million and below $1 billion           0.95%                         0.65%                 0.70%               0.60%
 Above $1 billion                                  0.90%                         0.60%                 0.65%               0.55%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


36
<PAGE>

To limit the expenses of each Fund, the Investment Manager has agreed to pay
each 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 the following expense ratios on an annual basis through the
dates indicated:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                       EXPENSE LIMITS
  FUND                                                                                            THROUGH DECEMBER 31, 2000
<S>                                                                                               <C>
  LARGE CAP GROWTH FUND
      Class I shares                                                                                          0.95%
      Class N shares                                                                                          1.20%
  TAX MANAGED GROWTH FUND
      Class I shares                                                                                          1.25%
      Class N shares                                                                                          1.50%
  BIOTECHNOLOGY FUND
      Class N shares                                                                                          1.50%
  BALANCED FUND
      Class I shares                                                                                          0.90%
  GLOBAL SMALL CAP FUND
      Class I shares                                                                                          1.50%
      Class N shares                                                                                          1.75%
  GLOBAL TECHNOLOGY FUND
      Class I shares                                                                                          1.50%
      Class N shares                                                                                          1.75%
  GLOBAL HEALTH CARE FUND
      Class N shares                                                                                          1.50%
  INTERNATIONAL GROWTH EQUITY FUND
      Class I shares                                                                                          1.00%
      Class N shares                                                                                          1.25%
  EMERGING MARKETS FUND
      Class I shares                                                                                          1.50%
      Class N shares                                                                                          1.75%

<CAPTION>
                                                                                                       EXPENSE LIMITS
  EUROPE FUND                                                                                     THROUGH DECEMBER 31, 2002
<S>                                                                                               <C>
      Class I shares                                                                                          1.35%
      Class N shares                                                                                          1.60%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

A Fund may 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 limit.


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

ORGANIZATION AND MANAGEMENT


THE DISTRIBUTOR

         Funds Distributor, Inc. (the "Distributor"), with principal offices at
60 State Street, Suite 1300, Boston, Massachusetts 02109, acts as distributor of
each class of shares of the Funds. 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 Capital Company and the Global Company have adopted distribution
and service plans (the "Capital Plan" and the "Global Plan") and the Investment
Company has adopted a distribution plan (with the Capital Plan and the Global
Plan, the "Plans"), for their Class N shares pursuant to Rule 12b-1 under the
1940 Act. Under the Plans, each Fund pays the Distributor an annual fee of up to
0.25% of the average daily net assets of its Class N shares as reimbursement for
certain expenses actually incurred by the Distributor in providing distribution
and, in the case of the Capital Plan and Global Plan, also providing shareholder
support services to such shares. 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 Plans, 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 Funds' 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.


38
<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>
                                                                  CLASS N                        CLASS I
------------------------------------------------------------------------------------------------------------
<S>                                                             <C>                            <C>
   Minimum Initial Investment                                     $5,000                         $250,000
------------------------------------------------------------------------------------------------------------
   Minimum Subsequent                                               $250                          $50,000
   Investment
------------------------------------------------------------------------------------------------------------
   IRA Account Minimum                                            $2,000                         $250,000*
   Initial Investment
------------------------------------------------------------------------------------------------------------
   IRA Account Minimum                                              $250                           $2,000
   Subsequent Investment
------------------------------------------------------------------------------------------------------------
</TABLE>

*Rollovers only

     -    The Funds reserve 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 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.
          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.


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

STOCKHOLDER INFORMATION


     -    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:
          Attn: Boston Financial Data Services
          Dresdner RCM Global Funds
          66 Brooks Drive
          Braintree, MA 02184

         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

BY CHECK

     -    Make out a check (bank or certified) or money order for the investment
          amount payable to Dresdner RCM [insert the name of the 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:
          Attn: Boston Financial Data Services
          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.


40
<PAGE>

BY CHECK

     -    Make out a check for the investment amount payable to Dresdner RCM
          [insert the name of the 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:
          Attn: Boston Financial Data Services
          Dresdner RCM Global Funds
          66 Brooks Drive
          Braintree, MA 02184

         If you do not have an investment slip, write your account number on the
check.

WITH SECURITIES

         At its discretion, each Fund 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. 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.

BY ELECTRONIC TRANSFER (ACH)

         This service allows for regular investments once an account is
established by simply authorizing the automatic withdrawal of funds from a bank
account into a specified Fund. The minimum investment pursuant to this plan is
$250 for Class N and $50,000 for Class I. Complete the appropriate section of
the account application indicating the amount of the automatic monthly
investment. The bank must be a member of the Automated Clearing House.

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 net cash amount (net of any redemption
          fee, if applicable), payable to the


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

STOCKHOLDER INFORMATION

          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 and include a signature guarantee.

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).
               *    A signature guarantee.

     -    Indicate whether you want the cash proceeds sent by check or by wire.

     -    Make sure the letter is signed by all registered owners or their
          authorized parties. The Fund requires a signature guarantee.

     -    Mail the letter to the Fund.

BY ELECTRONIC TRANSFER (ACH)

     -    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 applies:

     -    You wish to redeem more than $50,000 worth of shares.

     -    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.

     -    You wish to add or change your account privileges.

     -    You wish to change the registration information on your account.

OTHER STOCKHOLDER SERVICES
AND ACCOUNT POLICIES

TELEPHONE ORDERS

         We may accept telephone orders to buy or sell shares of the Funds. 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.


42
<PAGE>

BUSINESS HOURS AND NAV CALCULATIONS

         Each Fund's regular business days and hours are the same as those of
the New York Stock Exchange (NYSE). The price of each Fund's shares is based on
its net asset value per share (NAV). Each 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 Funds will not be priced on days on which the NYSE is closed for
trading. A 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

         Each 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 Funds 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

         When you buy shares of a 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 ($5,000 for
Class N shares and $250,000 for Class I shares) as a result of selling shares
(and not because of Fund performance), each 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.


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

STOCKHOLDER INFORMATION


AUTOMATIC REINVESTMENT

         We will reinvest each income dividend and capital gain distribution
declared on a class of shares of a 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 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 either class of a 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. You may also
exchange Class N shares of a Fund into Class I shares of the same Fund or any
other Fund offered by Dresdner RCM. Exchange purchases are subject to the
minimum investment requirements of the class purchased. To keep Fund expenses
low for all shareholders, the Funds will not allow frequent exchanges, purchases
or sales of Fund shares. If a shareholder exhibits a pattern of frequent
trading, each 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.

         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 into
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.
Stockholders will also receive quarterly statements of the status of their
accounts reflecting all transactions having taken place within that quarter.

REPORTS TO STOCKHOLDERS

         Each Fund's fiscal year ends on December 31. Each Fund will issue to
its stockholders semi-annual and annual reports. In order to reduce duplicate
mailings and printing costs, the Companies will provide one annual and
semi-annual report and annual prospectus per household. Information regarding
the tax status of


44
<PAGE>

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 a Fund's Board
of Directors believes that unusual conditions exist which would make such
payment detrimental to the best interests of the Fund. Under these
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.

         Upon redemption of Tax Managed Growth Fund shares held for less than
twelve consecutive months, a fee of 1.00% of the redemption proceeds will be
charged and retained by the Fund. Redeeming stockholders may avoid this fee by
presenting satisfactory proof of ownership of the redeemed shares for twelve
consecutive months along with the redemption request. A determination by the
Fund of the redemption fee's applicability is final. This fee is intended to
compensate the Fund for transaction and other expenses caused by redemptions and
to facilitate efficient portfolio management. The fee is not a deferred sales
charge or a commission paid to the Distributor or the Investment Manager. The
Fund reserves the right to modify the terms of or terminate the redemption fee
at any time.

DIVIDENDS, DISTRIBUTIONS AND TAXES

         Each Fund's dividends and distributions consist of most or all of its
net investment income and net realized capital gains. The Balanced 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 remaining Funds typically pay dividends and distributions once
a year in December. The amount depends on a 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.

         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 you: (a) 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 you may obtain a refund
from the Internal Revenue Service if withholding results in an overpayment of
taxes. Distributions of taxable income and net capital gain to non-resident
alien individuals, non-resident alien fiduciaries of trusts or estates, 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.


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

STOCKHOLDER INFORMATION


         A Fund may be required to pay income, withholding and other taxes
imposed by foreign countries, generally at rates from 10% to 40%, which would
reduce its investment income. Tax conventions between certain countries and the
U.S. may reduce or eliminate such taxes. A Fund may "pass through" to its
stockholders the amount of foreign income taxes it pays, 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 do so, 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:

--------------------------------------------------------------------------
TRANSACTION                                         TAX STATUS
--------------------------------------------------------------------------
Income dividends                                   Ordinary income
--------------------------------------------------------------------------
Short-term capital gains
distributions                                      Ordinary income
--------------------------------------------------------------------------
Long-term capital gains
distributions                                      Capital gains
--------------------------------------------------------------------------
Sales or exchanges of
shares owned for more
than one year                                      Capital gains or losses
--------------------------------------------------------------------------
Sales or exchanges of                              Gains are treated
shares owned for one year                          as ordinary income;
or less                                            losses are subject
                                                   to special rules
--------------------------------------------------------------------------

         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 Funds and made payable to you in that 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 a Fund's shares shortly before the record date for a
dividend or other distribution on those shares, 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.

         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 a 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 from
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 a Fund.


46
<PAGE>

FINANCIAL HIGHLIGHTS

         The following financial highlights tables show the Funds' financial
performance. This information has been audited by PriceWaterhouseCoopers LLP,
whose report, along with the Funds' financial statements, are included in the
Funds' Annual Report, which is available upon request and incorporated by
reference into the SAI.



                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

[this page left intentionally blank]

<PAGE>

   FINANCIAL HIGHLIGHTS

   FOR A SHARE OUTSTANDING THROUGHOUT
   EACH FISCAL YEAR OR PERIOD ENDED DECEMBER 31

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                        LARGE CAP GROWTH FUND                             TAX MANAGED GROWTH FUND
                                              --------------------------------------------------    --------------------------------
                                                             CLASS I                     CLASS N           CLASS I         CLASS N
                                              --------------------------------------    ---------    ------------------    ---------
                                                1999      1998      1997     1996(3)     1999(9)       1999     1998(5)    1999(10)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>       <C>        <C>      <C>         <C>          <C>        <C>       <C>
 PER SHARE OPERATING PERFORMANCE:(1)
------------------------------------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period           $16.14    $12.53     $10.00    $10.00      $16.60      $10.00     $10.00     $10.34
------------------------------------------------------------------------------------------------------------------------------------
 Income from investment operations:
------------------------------------------------------------------------------------------------------------------------------------
      Net investment income (loss)              (0.05)    (0.02)       0.01        --      (0.08)      (0.06)         --      (0.29)
------------------------------------------------------------------------------------------------------------------------------------
      Net realized and unrealized gain (loss)
      on investments                              6.95      5.51       3.17        --        6.45        5.28         --       5.13
------------------------------------------------------------------------------------------------------------------------------------
 Total from investment operations                 6.90      5.49       3.18        --        6.37        5.22         --       4.84
------------------------------------------------------------------------------------------------------------------------------------
 Less distributions:
------------------------------------------------------------------------------------------------------------------------------------
      From net investment income                    --    (0.01)     (0.01)        --          --      (0.21)         --      (0.21)
------------------------------------------------------------------------------------------------------------------------------------
      From net realized gain on investments     (3.97)    (1.87)     (0.64)        --      (3.97)      (0.02)         --      (0.02)
------------------------------------------------------------------------------------------------------------------------------------
      Total distributions                       (3.97)    (1.88)     (0.65)        --      (3.97)      (0.23)         --      (0.23)
------------------------------------------------------------------------------------------------------------------------------------
 NET ASSET VALUE, END OF PERIOD                 $19.07    $16.14    $12.53     $10.00      $19.00      $14.99     $10.00      $14.95
------------------------------------------------------------------------------------------------------------------------------------
 TOTAL RETURN(7)                                44.84%    44.11%     31.99%     0.00%      40.48%      52.44%      0.00%      47.07%
------------------------------------------------------------------------------------------------------------------------------------
 RATIOS AND SUPPLEMENTAL DATA:
------------------------------------------------------------------------------------------------------------------------------------
 Net assets, end of period (in 000's)          $14,898    $7,935     $5,025    $4,000        $926      $1,499     $1,000        $759
------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
------------------------------------------------------------------------------------------------------------------------------------
       With waiver & reimbursement(15)           0.95%     0.95%      0.95%     0.00%       1.20%       1.25%      0.00%(8)    1.50%
------------------------------------------------------------------------------------------------------------------------------------
       Without waiver & reimbursement(15)        2.45%     3.04%      2.63%        --      60.04%      14.36%         --      35.08%
------------------------------------------------------------------------------------------------------------------------------------
 Ratio of net investment income to average
 net assets:
------------------------------------------------------------------------------------------------------------------------------------
      With waiver & reimbursement(15)          (0.26)%   (0.11)%      0.10%     0.00%(8)  (0.55)%     (0.47)%      0.00%(8)  (2.66)%
------------------------------------------------------------------------------------------------------------------------------------
      Without waiver & reimbursement(15)       (1.76)%   (2.20)%    (1.58)%        --    (59.39)%    (13.58)%         --    (36.24)%
------------------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover                            109.29%    99.58%    119.87%     0.00%     109.29%      43.35%      0.00%      43.35%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

 (1)  Calculated using the average share method.
 (2)  Commencement of operations was December 27, 1995.
 (3)  Commencement of operations was December 31, 1996.
 (4)  Commencement of operations was December 30, 1997.
 (5)  Commencement of operations was December 31, 1998.
 (6)  Stock split 10:1 at close of business on June 17, 1996. All prior period
      per share amounts were restated to reflect the stock split.
 (7)  Total return measures the change in value of an investment over the period
      indicated. For periods less than one year, the total return is not
      annualized.
 (8)  Not annualized. Fund was in operation for less than five days.
 (9)  Commencement of operations was March 2, 1999.
 (10) Commencement of operations was February 12, 1999.
 (11) Commencement of operations was March 9, 1999.
 (12) Commencement of operations was January 20, 1999.
 (13) The operating expenses for the Dresdner RCM Europe Fund include certain
      non-recurring legal expenses of 0.46% and 0.32% of average net assets for
      the years ended December 31, 1998 and 1999, respectively, for which the
      insurance carrier has agreed to reimburse the Fund 0.78% ($800,000) of
      average net assets for the year ended December 31, 1999.
 (14) Commencement of operations was December 15, 1999.
 (15) Annualized for periods of less than one year.


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

   FINANCIAL HIGHLIGHTS

   FOR A SHARE OUTSTANDING THROUGHOUT
   EACH FISCAL YEAR OR PERIOD ENDED DECEMBER 31


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                            INTERNATIONAL GROWTH EQUITY FUND
                                                         ---------------------------------------------------------------------------
                                                                                  CLASS I                                  CLASS N
                                                         ------------------------------------------------------------      ---------
                                                             1999       1998       1997        1996(6)       1995          1999(11)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>       <C>          <C>          <C>           <C>          <C>
 PER SHARE OPERATING PERFORMANCE:(1)
-----------------------------------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period                      $14.98    $13.70       $12.72        $11.56        $10.00        $14.78
-----------------------------------------------------------------------------------------------------------------------------------
 Income from investment operations:
-----------------------------------------------------------------------------------------------------------------------------------
      Net investment income                                  0.02      0.06         0.06          0.04          0.12          0.01
-----------------------------------------------------------------------------------------------------------------------------------
      Net realized and unrealized gain
      on investments                                         8.91      1.80         2.22          2.16          1.68          9.08
-----------------------------------------------------------------------------------------------------------------------------------
 Total from investment operations                            8.93       1.86        2.28          2.20          1.80          9.09
 -----------------------------------------------------------------------------------------------------------------------------------
Less distributions:
-----------------------------------------------------------------------------------------------------------------------------------
      From net investment income                           (0.07)     (0.23)      (0.14)        (0.16)        (0.11)        (0.07)
-----------------------------------------------------------------------------------------------------------------------------------
      In excess of net investmnet income                   (0.10)         --          --            --            --        (0.09)
-----------------------------------------------------------------------------------------------------------------------------------
      From net realized gain on investments                (1.40)     (0.35)      (1.16)        (0.88)        (0.13)        (1.40)
-----------------------------------------------------------------------------------------------------------------------------------
      Total distributions                                  (1.57)     (0.58)      (1.30)        (1.04)        (0.24)        (1.56)
-----------------------------------------------------------------------------------------------------------------------------------
 NET ASSET VALUE, END OF PERIOD                            $22.34     $14.98      $13.70        $12.72        $11.56        $22.31
 -----------------------------------------------------------------------------------------------------------------------------------
 TOTAL RETURN(7)                                           60.66%     13.81%      17.93%        19.31%        17.98%        62.48%
-----------------------------------------------------------------------------------------------------------------------------------
 RATIOS AND SUPPLEMENTAL DATA:
-----------------------------------------------------------------------------------------------------------------------------------
 Net assets, end of period (in 000's)                    $285,561   $121,975     $98,443       $52,605       $34,347        $1,738
-----------------------------------------------------------------------------------------------------------------------------------
 Ratio of expenses to average net assets:
-----------------------------------------------------------------------------------------------------------------------------------
      With waiver & reimbursement(15)                       1.00%      1.00%       1.00%         0.99%         0.75%         1.25%
-----------------------------------------------------------------------------------------------------------------------------------
      Without waiver & reimbursement(15)                    1.06%      1.06%       1.06%         1.25%         1.11%        10.89%
-----------------------------------------------------------------------------------------------------------------------------------
 Ratio of net investment income to average net assets:
-----------------------------------------------------------------------------------------------------------------------------------
      With waiver & reimbursement(15)                       0.12%      0.37%       0.41%         0.32%         1.19%         0.07%
-----------------------------------------------------------------------------------------------------------------------------------
      Without waiver & reimbursement(15)                    0.06%      0.31%       0.35%         0.06%         0.83%       (9.56)%
-----------------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover                                       139.69%     84.49%     122.43%       119.09%        87.40%       139.69%
-----------------------------------------------------------------------------------------------------------------------------------

For footnote references, see page 49.


50
<PAGE>


<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                                   BIOTECHNOLOGY FUND            BALANCED FUND
                                                          --------------------------------       -------------
                                                                         CLASS N                     CLASS I
                                                          --------------------------------          --------
                                                              1999        1998      1997(4)         1999(14)
---------------------------------------------------------------------------------------------------------------
<S>                                                       <C>        <C>          <C>           <C>
 PER SHARE OPERATING PERFORMANCE:(1)
---------------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period                       $11.44       $10.00      $10.00           $10.00
---------------------------------------------------------------------------------------------------------------
 Income from investment operations:
---------------------------------------------------------------------------------------------------------------
      Net investment income                                 (0.15)       (0.10)          --             0.01
---------------------------------------------------------------------------------------------------------------
      Net realized and unrealized gain
      on investments                                         12.03         1.86          --             0.64
---------------------------------------------------------------------------------------------------------------
 Total from investment operations                            11.88         1.76          --             0.65
---------------------------------------------------------------------------------------------------------------
 Less distributions:
---------------------------------------------------------------------------------------------------------------
      From net investment income                                --           --          --               --
---------------------------------------------------------------------------------------------------------------
      In excess of net investmnet income                        --           --          --               --
---------------------------------------------------------------------------------------------------------------
      From net realized gain on investments                 (3.30)       (0.32)          --               --
---------------------------------------------------------------------------------------------------------------
      Total distributions                                       --           --          --               --
---------------------------------------------------------------------------------------------------------------
 NET ASSET VALUE, END OF PERIOD                             $20.02       $11.44      $10.00           $10.65
---------------------------------------------------------------------------------------------------------------
 TOTAL RETURN(7)                                           111.39%       17.76%          --            6.50%
---------------------------------------------------------------------------------------------------------------
 RATIOS AND SUPPLEMENTAL DATA:
---------------------------------------------------------------------------------------------------------------
 Net assets, end of period (in 000's)                      $14,870       $3,911      $3,000           $1,009
---------------------------------------------------------------------------------------------------------------
 Ratio of expenses to average net assets:
---------------------------------------------------------------------------------------------------------------
      With waiver & reimbursement(15)                        1.50%        1.50%       0.01%(8)         0.90%
---------------------------------------------------------------------------------------------------------------
      Without waiver & reimbursement(15)                     4.53%        4.87%          --           41.29%
---------------------------------------------------------------------------------------------------------------
 Ratio of net investment income to average net assets:
---------------------------------------------------------------------------------------------------------------
      With waiver & reimbursement(15)                      (1.09)%      (0.95)%       0.01%(8)         1.41%
---------------------------------------------------------------------------------------------------------------
      Without waiver & reimbursement(15)                   (4.12)%      (4.32)%          --         (38.97)%
---------------------------------------------------------------------------------------------------------------
 Portfolio turnover                                        431.27%      127.21%       0.00%           59.94%
---------------------------------------------------------------------------------------------------------------


<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                                                                GLOBAL SMALL CAP FUND
                                                          ----------------------------------------------------------------
                                                                                 CLASS I                         CLASS N
                                                          --------------------------------------------------     --------
                                                              1999          1998        1997         1996(3)     1999(11)
--------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>           <C>         <C>            <C>        <C>
 PER SHARE OPERATING PERFORMANCE:(1)
--------------------------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period                      $12.37        $11.09        $10.00        $10.00       $11.63
--------------------------------------------------------------------------------------------------------------------------
 Income from investment operations:
--------------------------------------------------------------------------------------------------------------------------
      Net investment income                                (0.17)        (0.13)        (0.13)            --       (0.21)
--------------------------------------------------------------------------------------------------------------------------
      Net realized and unrealized gain
      on investments                                        12.96          2.23          2.64            --        13.67
--------------------------------------------------------------------------------------------------------------------------
 Total from investment operations                           12.79          2.10          2.51            --        13.46
--------------------------------------------------------------------------------------------------------------------------
 Less distributions:
--------------------------------------------------------------------------------------------------------------------------
      From net investment income                               --            --            --            --           --
--------------------------------------------------------------------------------------------------------------------------
      In excess of net investmnet income                       --            --            --            --           --
--------------------------------------------------------------------------------------------------------------------------
      From net realized gain on investments                (1.78)        (0.82)        (1.42)            --       (1.78)
--------------------------------------------------------------------------------------------------------------------------
      Total distributions                                      --            --            --            --           --
--------------------------------------------------------------------------------------------------------------------------
 NET ASSET VALUE, END OF PERIOD                            $23.38        $12.37        $11.09        $10.00       $23.31
--------------------------------------------------------------------------------------------------------------------------
 TOTAL RETURN(7)                                          104.63%        19.29%        25.48%         0.00%      116.97%
--------------------------------------------------------------------------------------------------------------------------
 RATIOS AND SUPPLEMENTAL DATA:
--------------------------------------------------------------------------------------------------------------------------
 Net assets, end of period (in 000's)                     $24,073      $ 5,479        $ 4,456       $ 4,000       $1,430
--------------------------------------------------------------------------------------------------------------------------
 Ratio of expenses to average net assets:
--------------------------------------------------------------------------------------------------------------------------
      With waiver & reimbursement(15)                       1.50%        1.75%          1.75%         0.00%(8)     1.75%
--------------------------------------------------------------------------------------------------------------------------
      Without waiver & reimbursement(15)                    4.10%         3.86%         3.09%            --       16.71%
--------------------------------------------------------------------------------------------------------------------------
 Ratio of net investment income to average net assets:
--------------------------------------------------------------------------------------------------------------------------
      With waiver & reimbursement(15)                     (1.13)%       (1.03)%       (1.14)%         0.00%(8)   (1.49)%
--------------------------------------------------------------------------------------------------------------------------
      Without waiver & reimbursement(15)                  (3.73)%       (3.14)%       (2.49)%            --     (16.44)%
--------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover                                       161.61%       184.38%       153.49%         0.00%      161.61%
--------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

   FINANCIAL HIGHLIGHTS

   FOR A SHARE OUTSTANDING THROUGHOUT
   EACH FISCAL YEAR OR PERIOD ENDED DECEMBER 31

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                            GLOBAL TECHNOLOGY FUND
                                                       -------------------------------------------------------------------------
                                                                                  CLASS I                               CLASS N
                                                       ----------------------------------------------------------     ----------
                                                           1999         1998       1997        1996      1995(2)        1999(12)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>          <C>         <C>         <C>         <C>           <C>
 PER SHARE OPERATING PERFORMANCE:(1)
-----------------------------------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period                     $21.40      $13.69      $12.60      $10.04     $10.00          $24.01
-----------------------------------------------------------------------------------------------------------------------------------
 Income from investment operations:
-----------------------------------------------------------------------------------------------------------------------------------
      Net investment income (loss)                        (0.35)      (0.16)      (0.16)      (0.15)         --          (0.49)
-----------------------------------------------------------------------------------------------------------------------------------
           Net realized and unrealized gain (loss)
           on investments                                  39.54        8.44        3.46        2.80       0.04           36.99
-----------------------------------------------------------------------------------------------------------------------------------
      Total from investment operations                     39.19        8.28        3.30        2.65       0.04           36.50
-----------------------------------------------------------------------------------------------------------------------------------
      Less distributions:
-----------------------------------------------------------------------------------------------------------------------------------
           From net investment income                         --          --          --          --         --              --
-----------------------------------------------------------------------------------------------------------------------------------
           From net realized gain on investments          (1.38)      (0.57)      (2.21)      (0.09)         --          (1.38)
-----------------------------------------------------------------------------------------------------------------------------------
           Total distributions                                --          --          --          --         --              --
-----------------------------------------------------------------------------------------------------------------------------------
 NET ASSET VALUE, END OF PERIOD                           $59.21      $21.40      $13.69      $12.60     $10.04          $59.13
-----------------------------------------------------------------------------------------------------------------------------------
 TOTAL RETURN(7)                                         182.95%      60.53%      27.08%      26.41%      0.40%         152.69%
-----------------------------------------------------------------------------------------------------------------------------------
 RATIOS AND SUPPLEMENTAL DATA:
-----------------------------------------------------------------------------------------------------------------------------------
 Net assets, end of period (in 000's)                   $197,897     $18,558      $6,950      $5,117       $954         $82,330
-----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
-----------------------------------------------------------------------------------------------------------------------------------
      With waiver & reimbursement(15)                      1.50%       1.75%       1.75%       1.73%      0.00%(8)        1.75%
-----------------------------------------------------------------------------------------------------------------------------------
      Without waiver & reimbursement(15)                   1.50%       2.49%       2.45%       7.75%         --           1.99%
-----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets:
-----------------------------------------------------------------------------------------------------------------------------------
      With waiver & reimbursement(15)                    (1.02)%     (0.99)%     (1.15)%     (1.34)%    (0.02)%(8)      (1.32)%
-----------------------------------------------------------------------------------------------------------------------------------
      Without waiver & reimbursement(15)                 (1.02)%     (1.73)%     (1.86)%     (7.36)%         --         (1.56)%
-----------------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover                                      119.32%     265.99%     189.41%     155.58%      0.00%         119.32%
-----------------------------------------------------------------------------------------------------------------------------------

For footnote references, see page 49.

52
<PAGE>


<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                                    GLOBAL HEALTH CARE FUND
                                                      -------------------------------------------------------
                                                                        CLASS I                     CLASS N
                                                      ---------------------------------------      ----------
                                                          1999           1998            1997       1996(3)
---------------------------------------------------------------------------------------------------------------
<S>                                                    <C>           <C>             <C>           <C>
 PER SHARE OPERATING PERFORMANCE:(1)
---------------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period                   $13.42         $11.65          $10.00       $10.00
---------------------------------------------------------------------------------------------------------------
 Income from investment operations:
---------------------------------------------------------------------------------------------------------------
      Net investment income (loss)                      (0.11)         (0.09)          (0.06)           --
---------------------------------------------------------------------------------------------------------------
           Net realized and unrealized gain (loss)
           on investments                                 3.53           3.02            3.03           --
---------------------------------------------------------------------------------------------------------------
      Total from investment operations                    3.42           2.93            2.97
---------------------------------------------------------------------------------------------------------------
      Less distributions:
           From net investment income                       --             --              --           --
---------------------------------------------------------------------------------------------------------------
           From net realized gain on investments        (2.59)         (1.16)          (1.32)           --
---------------------------------------------------------------------------------------------------------------
           Total distributions                              --             --              --           --
---------------------------------------------------------------------------------------------------------------
 NET ASSET VALUE, END OF PERIOD                         $14.25         $13.42          $11.65       $10.00
---------------------------------------------------------------------------------------------------------------
 TOTAL RETURN(7)                                        28.74%         25.57%          30.00%        0.00%
---------------------------------------------------------------------------------------------------------------
 RATIOS AND SUPPLEMENTAL DATA:
---------------------------------------------------------------------------------------------------------------
 Net assets, end of period (in 000's)                    $6,284        $5,487          $4,671       $4,000
---------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
---------------------------------------------------------------------------------------------------------------
      With waiver & reimbursement(15)                    1.50%          1.50%           1.50%        0.00%(8)
---------------------------------------------------------------------------------------------------------------
      Without waiver & reimbursement(15)                 4.85%          3.65%           2.93%           --
---------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets:
---------------------------------------------------------------------------------------------------------------
      With waiver & reimbursement(15)                  (0.81)%        (0.69)%         (0.55)%        0.00%(8)
---------------------------------------------------------------------------------------------------------------
      Without waiver & reimbursement(15)               (4.16)%        (2.84)%         (1.98)%           --
---------------------------------------------------------------------------------------------------------------
 Portfolio turnover                                    393.83%        153.92%         157.65%        0.00%
---------------------------------------------------------------------------------------------------------------


<CAPTION>
------------------------------------------------------------------------------------------------------------------
                                                                   EMERGING MARKETS FUND
                                                        ----------------------------------------------------------
                                                                         CLASS I                          CLASS N
                                                        -----------------------------------------       ----------
                                                          1999            1998           1997(4)          1999(11)
------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>          <C>               <C>              <C>
 PER SHARE OPERATING PERFORMANCE:(1)
------------------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period                    $9.06           $9.99           $10.00            $9.13
------------------------------------------------------------------------------------------------------------------
 Income from investment operations:
------------------------------------------------------------------------------------------------------------------
      Net investment income (loss)                      (0.01)            0.12               --           (0.06)
------------------------------------------------------------------------------------------------------------------
           Net realized and unrealized gain (loss)
           on investments                                 8.29          (0.97)           (0.01)             8.24
------------------------------------------------------------------------------------------------------------------
      Total from investment operations                    8.28          (0.85)           (0.01)             8.18
------------------------------------------------------------------------------------------------------------------
      Less distributions:
------------------------------------------------------------------------------------------------------------------
           From net investment income                       --          (0.08)               --               --
------------------------------------------------------------------------------------------------------------------
           From net realized gain on investments         (0.47)             --               --           (0.47)
------------------------------------------------------------------------------------------------------------------
           Total distributions                           (0.47)         (0.08)               --           (0.47)
------------------------------------------------------------------------------------------------------------------
 NET ASSET VALUE, END OF PERIOD                          $16.87         $9.06             $9.99           $16.84
------------------------------------------------------------------------------------------------------------------
 TOTAL RETURN(7)                                         92.12%        (8.50)%               --           90.31%
------------------------------------------------------------------------------------------------------------------
 RATIOS AND SUPPLEMENTAL DATA:
------------------------------------------------------------------------------------------------------------------
 Net assets, end of period (in 000's)                    $5,154         $2,734           $2,996             $299
------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
------------------------------------------------------------------------------------------------------------------
      With waiver & reimbursement(15)                     1.50%          1.50%            0.01%(8)         1.75%
------------------------------------------------------------------------------------------------------------------
      Without waiver & reimbursement(15)                  9.33%          8.29%               --           79.18%
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets:
------------------------------------------------------------------------------------------------------------------
      With waiver & reimbursement(15)                   (0.13)%          1.23%               --          (0.68)%
------------------------------------------------------------------------------------------------------------------
      Without waiver & reimbursement(15)                (7.96)%        (5.56)%               --         (78.11)%
------------------------------------------------------------------------------------------------------------------
 Portfolio turnover                                     215.64%        279.25%               --(8)       215.64%
------------------------------------------------------------------------------------------------------------------
</TABLE>


                                                       -------------------------
                                                 [LOGO]Dresdner RCM Global Funds
                                                       -------------------------
<PAGE>

   FINANCIAL HIGHLIGHTS

   FOR A SHARE OUTSTANDING THROUGHOUT
   EACH FISCAL YEAR OR PERIOD ENDED DECEMBER 31

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                           EUROPE FUND
                                                                   -----------------------------------------------------------------
                                                                                             CLASS N
                                                                   -----------------------------------------------------------------
                                                                    1999(1)      1998(1)     1997(1)          1996(1)          1995
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>       <C>           <C>              <C>             <C>
 PER SHARE OPERATING PERFORMANCE:
------------------------------------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period                               $13.66       $12.59       $10.66           $9.20           $9.20
------------------------------------------------------------------------------------------------------------------------------------
 Income from investment operations:
------------------------------------------------------------------------------------------------------------------------------------
      Net investment income (loss)                                  (0.01)       (0.05)         0.01            0.03            0.07
------------------------------------------------------------------------------------------------------------------------------------
      Net realized and unrealized gain (loss) on investments          5.66         4.60         2.70            1.45          (0.07)
------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations                                      5.65         4.55         2.71            1.48            0.00
------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------------------------------------------
      From net investment income                                        --       (0.17)       (0.06)          (0.02)              --
------------------------------------------------------------------------------------------------------------------------------------
      In excess of net investmnet income                            (0.02)           --           --              --              --
------------------------------------------------------------------------------------------------------------------------------------
      From net realized gain on investments                         (3.17)       (3.31)       (0.72)              --              --
------------------------------------------------------------------------------------------------------------------------------------
      Total distributions                                           (3.19)       (3.48)       (0.78)          (0.02)              --
------------------------------------------------------------------------------------------------------------------------------------
 NET ASSET VALUE, END OF PERIOD                                     $16.12      $13.66        $12.59          $10.66           $9.20
------------------------------------------------------------------------------------------------------------------------------------
 TOTAL RETURN(7)                                                    43.59%      37.23%        25.70%          15.87%           1.33%
------------------------------------------------------------------------------------------------------------------------------------
 RATIOS AND SUPPLEMENTAL DATA:
------------------------------------------------------------------------------------------------------------------------------------
 Net assets, end of period (in 000s)                               $67,910    $191,338      $176,414        $149,299        $128,932
------------------------------------------------------------------------------------------------------------------------------------
      With waiver and reimbursement                                  1.03%          --            --              --              --
------------------------------------------------------------------------------------------------------------------------------------
      Without waiver and reimbursement                               2.01%       1.97%         1.30%           1.42%           1.51%
------------------------------------------------------------------------------------------------------------------------------------
 Ratio of net investment income to average net assets:(13)
------------------------------------------------------------------------------------------------------------------------------------
      With waiver and reimbursement                                (0.11)%          --            --              --              --
------------------------------------------------------------------------------------------------------------------------------------
      Without waiver and reimbursement                             (1.08)%     (0.31)%         0.06%           0.33%           0.76%
------------------------------------------------------------------------------------------------------------------------------------
 Portfolio turnover                                                202.90%     114.00%        85.00%          51.00%          40.00%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

For footnote references, see page 49.

54
<PAGE>

NOTES







<PAGE>

NOTES








56
<PAGE>

NOTES










<PAGE>

For more information about Dresdner RCM Global Funds, Dresdner RCM Capital Funds
and Dresdner RCM Investment Funds, the following documents are available free
upon request:

ANNUAL/SEMI-ANNUAL REPORTS:

         The Funds' annual and semi-annual reports to shareholders contain
detailed information on each Fund's investments. The annual report includes a
discussion of the market conditions and investment strategies that significantly
affected the Funds' performance during their last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI):

         The SAI provides more detailed information about the Funds, including
operations and investment policies. It is incorporated by reference and is
legally considered as part of this Prospectus.

         You can get free copies of the reports and the SAI, or request other
information and discuss your questions about the Funds, by contacting us at:

                      Dresdner RCM Global Funds
                      P.O. Box 8025
                      Boston, MA 02266-8025
                      1-800-726-7240
                      www.DRCMFunds.com

         You can review the Funds' Reports and SAIat 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 ([email protected]).

                   -  Free from the Commission's Website at http://www.sec.gov/.

Investment Company Act file nos. 811-2913, 811-9100 and 811-06038.


<PAGE>

                                            Dresdner RCM Global Funds, Inc.
                                            Four Embarcadero Center
                                            San Francisco, California 94111-4189
                                            (800) 726-7240

DRESDNER RCM MIDCAP FUND
DRESDNER RCM SMALL CAP FUND



                       STATEMENT OF ADDITIONAL INFORMATION
                                October 30, 2000


Dresdner RCM MidCap Fund (the "MidCap Fund") and Dresdner RCM Small Cap Fund
(the "Small Cap Fund") are series of Dresdner RCM Global Funds, Inc. (the
"Company"), an open-end management investment company. The Company presently
consists of fourteen series, two of which are discussed in this SAI. The
Funds' investment manager is Dresdner RCM Global Investors LLC (the
"Investment Manager"). Both the MidCap Fund and the Small Cap Fund (each, a
"Fund" and together, "the Funds") are diversified.

This Statement of Additional Information ("SAI") is not a prospectus, and
should be read in conjunction with the Prospectus of the Funds dated
October 30, 2000. The Prospectus may be obtained without charge by writing
or calling the Company at the address and phone number above.


Incorporated herein by reference are the financial statements of the Funds
prior to their proposed reorganization as series of the Capital Company to
newly created series of the Global Company (each, a "predecessor fund").
contained in the Annual Report to Shareholders of Dresdner RCM Capital Funds,
Inc. for the year ended December 31, 1999, including the Report of
Independent Accountants dated February 18, 2000, the Statement of Assets and
Liabilities, including the Portfolio of Investments and the related Statement
of Operations, the Statement of Changes in Net Assets and the Financial
Highlights. Also incorporated herein by reference are the unaudited financial
statements of the Funds' predecessors contained in the Semi-Annual Report to
Shareholders of Dresdner RCM Capital Funds, Inc., for the six months ended
June 30, 2000. Copies of the Funds' Annual and Semi-Annual Reports to
Shareholders are available upon request, by calling (800) 726-7240, or by
writing to Four Embarcadero Center, San Francisco, CA 94111.

Table of Contents

                                                                            PAGE


     Investment Objectives and Policies........................................1
     Risk Considerations......................................................13
     Investment Restrictions..................................................18
     Execution of Portfolio Transactions......................................20
     Directors and Officers...................................................22
     Control Persons and Principal Holders of Securities......................25
     Investment by Employee Benefit Plans.....................................26
     The Investment Manager...................................................26
     The Distributor..........................................................28
     The Administrator........................................................27
     Other Service Providers..................................................27
     Net Asset Value..........................................................30
     Purchase and Redemption of Shares........................................31
     Dividends, Distributions and Tax Status..................................32
     Investment Results.......................................................34
     General Information......................................................36
     Additional Information...................................................37
     Financial Statements.....................................................37

<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

       Each Fund may invest up to 10% of its total assets in foreign securities,
including securities of issuers that are organized or headquartered in emerging
market countries. 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
objectives of the Funds, the Investment Manager allocates the Funds' assets
among securities of countries and in currency denominations where it expects
opportunities for meeting the Funds' investment objectives to be the most
attractive, subject to the percentage limitations set forth in the Prospectus.
In addition, from time to time a 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. Each of the Funds may invest
in securities of foreign companies that are organized or headquartered in
developed foreign countries. A 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.

       INVESTMENT IN EMERGING MARKETS. Each Fund may invest in securities of
companies organized or headquartered in developing countries with emerging
markets. As a general matter, countries that are not considered to be developed
foreign countries by the Investment Manager will be deemed to be emerging market
countries. Emerging market countries include any country generally considered to
be an emerging market or developing country by the World Bank, the International
Finance Corporation, the United Nations or its authorities, or other recognized
financial institutions. As of the date of this SAI, emerging market countries
are deemed to include for purposes of this SAI, all foreign countries other than
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland,
Italy, Japan, Luxembourg, The Netherlands, New Zealand, Norway, Singapore,
Spain, Sweden, Switzerland, and the United Kingdom. (See INVESTMENT IN DEVELOPED
FOREIGN COUNTRIES.) As their economies grow and their


                                     Page 1
<PAGE>

markets grow and mature, some countries that currently may be characterized by
the Investment Manager as emerging market countries may be deemed by the
Investment Manager to be developed foreign countries. In the event that the
Investment Manager deems a particular country to be a developed foreign country,
any investment in securities issued by that country's government or by an issuer
located in that country would not be subject to a Fund's overall limitations on
investments in emerging market countries.

       Securities of issuers organized or headquartered in emerging market
countries may, at times, offer excellent opportunities for current income and
capital appreciation. However, prospective investors should be aware that the
markets of emerging market countries historically have been more volatile than
the markets of the United States and developed foreign countries. Thus, the
risks of investing in securities of issuers organized or headquartered in
emerging market countries may be far greater than the risks of investing in
developed foreign markets. (See RISK CONSIDERATIONS--EMERGING MARKET SECURITIES
for a more detailed discussion of the risk factors associated with investments
in emerging market securities.) In addition, movements of emerging market
currencies historically have had little correlation with movements of developed
foreign market currencies. Prospective investors should consider these risk
factors carefully before investing in a Fund. Some emerging market countries
have currencies whose value is closely linked to the U.S. dollar. Emerging
market countries also may issue debt denominated in U.S. dollars and other
currencies.

       It is unlikely that a Fund will be invested in securities in all emerging
market countries at any time. Moreover, investing in some emerging markets
currently may not be desirable or feasible due to lack of adequate custody
arrangements for Fund assets, overly burdensome repatriation or similar
restrictions, the lack of organized and liquid securities markets, unacceptable
political risks, poor values of investments in those markets relative to
investments in other emerging markets, in developed foreign markets or in the
United States, or for other reasons.


CURRENCY MANAGEMENT

       Securities purchased by the Funds may be denominated in U.S. dollars,
foreign currencies, or multinational currencies such as the Euro, and the Funds
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 a Fund's net currency positions may expose it to risks
independent of its securities positions.

       A 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 Funds are
redeemable in U.S. dollars each day the Funds determine their net asset value,
the Funds 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, a
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. To the extent that a substantial portion of a
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.




                                     Page 2
<PAGE>

FUTURES TRANSACTIONS


         Each Fund may purchase and sell stock index futures contracts and
options on such futures contracts as a hedge against changes in market
conditions that may result in changes in the value of the Fund's portfolio
securities and not for speculation. A stock index (such as the Standard & Poor's
500 Stock Price Index) assigns relative values to the common stocks included in
the index, and the index fluctuates with changes in the market values of the
common stocks so included.


         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 index at the close of the last
trading day of the contract and the price at which the 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 index.
No physical delivery of the underlying stocks in the index is made.


         Unlike when a Fund purchases or sells a security, no price is paid or
received by a 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 a 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 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 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 a Fund has purchased a stock index futures contract
and the price of the underlying index 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 a Fund has purchased a
stock index futures contract and the price of the underlying index 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, a Fund may elect to close the position by taking an identical
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. Each Fund may also purchase call
options and put options on stock index futures contracts ("futures options"). 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. When the Investment Manager anticipates a
significant stock market or stock market sector advance, a 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. Each Fund may sell stock index futures contracts in
anticipation of or during a general stock market or stock 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.

                                     Page 3
<PAGE>


         PURCHASE OF PUT OPTIONS ON FUTURES. The purchase of put options on
stock index futures contracts 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 a 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.


         PURCHASE OF CALL OPTIONS ON FUTURES. The purchase of call options on
stock index futures contracts represents a means of obtaining 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 stock,
which can be used as a substitute for a position in the stock 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 stock 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 stock index
futures contract or the underlying stock. Like the purchase of a stock index
futures contract, a Fund would purchase a call option on a stock index futures
contract to hedge against a market advance when the Fund is not fully invested.


         LIMITATIONS ON PURCHASE AND SALE OF FUTURES AND FUTURES OPTIONS. The
Funds will not engage in transactions in stock index futures contracts or
futures options for speculation, but only as a hedge against changes in the
value of securities held in each Fund's portfolio, or securities which the
Investment Manager intends to purchase for the portfolio, resulting from actual
or anticipated changes in general market conditions. Such transactions will only
be effected when, in the view of the Investment Manager, they are economically
appropriate in the reduction of risks inherent in the ongoing management of a
Fund's investment portfolio.


         A 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, a 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. Such segregated accounts
will be marked to market daily.


         REGULATORY MATTERS. The Company has filed a claim of exemption from
registration of the Funds as commodity pools with the Commodity Futures Trading
Commission (the "CFTC"). Each 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


         Each Fund may invest up to 20% of its total assets in U.S. Government
debt obligations. The timing of purchase and sale transactions in debt
obligations may result in capital appreciation or depreciation because the value
of debt obligations varies inversely with prevailing interest rates. The debt
obligations in which the Funds will invest will be rated, at the time of
purchase, BBB or higher by Standard & Poor's, a division of The McGraw-Hill
Companies, Inc. ("Standard & Poor's"), or Baa or higher by Moody's Investors
Service, Inc. ("Moody's") or equivalent ratings by other rating organizations,
or, if unrated, will be determined by the Investment Manager to be of comparable
investment quality. If the rating of an investment grade security held by a 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.


         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


                                     Page 4
<PAGE>


by a Fund will be treated as investment grade if they are rated by at least
one major rating agency 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 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.


         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 Investment Manager does not intend to purchase U.S. debt securities
(other than cash-equivalent instruments with a maturity of one year or less),
except on an occasional basis when the Investment Manager believes that
unusually attractive investments are available.


CONVERTIBLE SECURITIES AND WARRANTS

       Each 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, no Fund will invest more than 10% 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

       Each 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, a Fund may purchase a non-convertible debt security and
a warrant or option, which enables a 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 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. A 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.


                                    Page 5
<PAGE>

PREFERRED STOCK

       Each 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 a Fund to borrow money
rather than sell portfolio securities to raise the cash to meet redemption
requests. In order to meet such redemption requests, each Fund may borrow from
banks or enter into reverse repurchase agreements. Each 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 Funds will not borrow money for
leveraging purposes. A Fund may continue to purchase securities while borrowings
are outstanding. The 1940 Act permits a 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 a 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 of the Company (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

       Each 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 its 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.


ILLIQUID SECURITIES


       Each Fund may invest up to 5% of the value of its net assets in illiquid
securities. Securities may be considered illiquid if a 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 a 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).


                                    Page 6
<PAGE>

       The Funds' 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 a 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 a 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 Funds
are not restricted with regard to the types of cash-equivalent investments they
may make. When the Investment Manager believes that such investments are an
appropriate part of a 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, a 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 a 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.




                                    Page 7
<PAGE>

RISK CONSIDERATIONS


FOREIGN SECURITIES

       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 a 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 a 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.

       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 a Fund, including the withholding of tax on
interest, dividends and other distributions and limitations on the repatriation
of currencies. In addition, a 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.

       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 a Fund
due to subsequent declines in the value of the portfolio security or, if a 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 a 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.


                                    Page 8
<PAGE>




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 a 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.

       A depositary receipt will be treated as an illiquid security for purposes
of a Fund's restriction on the purchases of such securities unless the
depositary receipt is convertible into cash by the Fund within seven days.


EMERGING MARKET SECURITIES

       There are special risks associated with investments in securities of
companies organized or headquartered in developing countries with emerging
markets that are in addition to the usual risks of investing in securities of
issuers located in developed foreign markets around the world, and investors in
the Funds are strongly advised to consider those risks carefully. The securities
markets of emerging market countries are substantially smaller, less developed,
less liquid, and more volatile than the securities markets of the United States
and developed foreign markets. As a result, the prices of emerging market
securities may increase or decrease much more rapidly and much more dramatically
than the prices of securities of issuers located in developed foreign markets.
Disclosure and regulatory standards in many respects are less stringent than in
the United States and developed foreign markets. There also may be a lower level
of monitoring and regulation of securities markets in emerging market countries
and the activities of investors in such markets, and enforcement of existing
regulations has been extremely limited.

       Many emerging market countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have very negative
effects on the economies and securities markets of certain emerging market
countries. Economies in emerging markets generally are heavily dependent upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values, and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been and may continue
to be adversely affected by economic conditions in the countries with which they
trade. In addition, custodial services and other costs related to investment in
foreign markets may be more expensive in emerging markets than in many developed
foreign markets, which could reduce the Funds' investment returns from such
securities.

       In many cases, governments of emerging market countries continue to
exercise a significant degree of control over the economies of such countries,
and government actions relative to the economy, as well as economic developments
generally, also may have a major effect on an issuer's prospects. In addition,
certain of such governments have in the past failed to recognize private
property rights and have at times naturalized or expropriated the assets of
private companies. There is also a heightened possibility of confiscatory
taxation, imposition of withholding taxes on dividend and interest payments, or
other similar developments that could affect investments in


                                    Page 9
<PAGE>

those countries. As a result, there can be no assurance that adverse political
changes will not cause a Fund to suffer a loss with respect to any of its
holdings. In addition, political and economic structures in many of such
countries may be undergoing significant evolution and rapid development, and
such countries may lack the social, political and economic stability
characteristics of more developed countries. Unanticipated political or social
developments may affect the values of a Fund's investments in those countries
and the availability of additional investments in those countries.


INVESTMENTS IN SMALLER COMPANIES

       Investment in the securities of companies with smaller market
capitalizations 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 a Fund may invest may
have limited or unprofitable operating histories, limited financial resources,
and inexperienced 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, a 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.

       The Small Cap Fund generally will not purchase the securities of issuers
with market capitalizations below $200 million, except in rare circumstances or
when the Investment Manager believes that an unusual investment opportunity is
available.


CONVERTIBLE SECURITIES

       Investment in convertible securities involves certain risks. 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 a 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.


OTHER DEBT OBLIGATIONS

       Although securities rated below 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 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.


                                    Page 10
<PAGE>




FUTURES TRANSACTIONS


         There are several risks in connection with the use of stock index
futures contracts in the Funds. One risk arises because the correlation between
movements in the price of a futures contract and movements in the price of the
securities which are the subject of the hedge is not always perfect. The price
of the futures contract acquired by a Fund may move more than, or less than, the
price of the securities being hedged. If the price of the future moves less than
the price of the securities which are the subject of the hedge, the hedge will
not be fully effective but, if the price of the securities 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 securities 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 securities, 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 securities which are the subject of the hedge.


         To compensate for the imperfect correlation of movements in the price
of securities being hedged and movements in the price of the futures, a Fund may
buy or sell futures contracts in a greater dollar amount than the dollar amount
of the securities being hedged, if the historical volatility of the price of
such securities has been greater than the historical volatility of the
securities. Conversely, a Fund may buy or sell fewer futures contracts if the
historical volatility of the price of the securities being hedged is less than
the historical volatility of the securities.


         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 a 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 securities underlying the index and sold the instrument after the
decline.


         When futures are purchased by a Fund to hedge against a possible
unfavorable movement in the price of stock before the Fund is able to invest its
cash (or cash equivalents) in stock in an orderly fashion, it is possible that
the market may decline instead. If the Fund then decides not to invest in stock
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.


         In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the futures and the
securities which are the subject of a hedge, the price of futures contracts may
not correlate perfectly with movements in the stock index 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 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 securities 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 stock index and
movements in the price of stock index 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.


                                    Page 11
<PAGE>


         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 a 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 a 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.


         A 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 Funds is subject to the Investment
Manager's ability to predict correctly movements in the direction of the
securities markets. For example, if a 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 a 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. 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 12

<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 a Fund might not be
able to dispose of such securities promptly or at reasonable prices.

       A number of transactions in which the Funds 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 a 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 a 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, a 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
a Fund enters into reverse repurchase agreements, the Fund is subject to risks
that are similar to those of borrowing.



INVESTMENT RESTRICTIONS


FUNDAMENTAL POLICIES

Each 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.


                                    Page 13
<PAGE>

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. The restrictions for the Funds are as follows.


The MidCap Fund may not:


1.   Invest in securities of any one issuer (other than the United States of
     America, its agencies and instrumentalities), if immediately after and as a
     result of such investment the value of the holdings of the Fund in the
     securities of such issuer exceeds 5% of the value of the Fund's total
     assets;


2.   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);


3.   Invest in foreign securities if immediately after and as a result of such
     investment the value of the holdings of the Fund in foreign securities
     exceeds 10% of the value of the Fund's total assets;


4.   Acquire more than 10% of the outstanding voting securities, or 10% of all
     of the securities, of any one issuer;


5.   Invest in companies for the purpose of exercising control or management;


6.   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;


7.   Borrow amounts in excess of 5% of the total assets taken at cost or at
     market value, whichever is lower, and only from banks as a temporary
     measure for extraordinary or emergency purposes. The Fund will not
     mortgage, pledge, hypothecate or in any other manner transfer as security
     for an indebtedness any of its assets;


8.   Issue senior securities as defined in the 1940 Act, except that the Fund
     may borrow money as permitted by restriction 8 above. For this purpose,
     futures and other transactions covered by segregated accounts are not
     considered to be senior securities.


9.   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;


10.  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.
     The Fund will not lend portfolio securities which, when valued at the time
     of loan, have a value in excess of 10% of the value of the Fund's total
     assets;


11.  Make short sales of securities;


12.  Act as an underwriter of securities issued by other persons, or invest more
     than 5% of the value of its net assets in securities that are illiquid;


13.  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 5% 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;


14.  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 Investment Manager to save brokerage costs or average prices among
     them, is not deemed to result in a securities trading account);


15.  Purchase from or sell portfolio securities to its officers, directors, or
     other "interested persons" (as defined in the 1940 Act) of the Company,
     other than otherwise unaffiliated broker-dealers;


16.  Purchase or sell stock index futures or purchase related options if,
     immediately thereafter, more than 30% of the value of its net assets would
     be hedged, or the sum of the amount of "margin" deposits on the Fund's
     existing futures positions and premium paid for related options would
     exceed 5% of the market value of the Fund's total assets; or


17.  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 only for hedging purposes. The Fund has no current
     intention of entering into commodities contract except for stock index
     futures and related options.


                                    Page 14
<PAGE>


The Small Cap Fund may not:


1.   Invest in securities of any one issuer (other than the United States of
     America, its agencies and instrumentalities), if immediately after and as a
     result of such investment the value of the holdings of the Fund in the
     securities of such issuer exceeds 5% of the value of the Fund's total
     assets;


2.   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);


3.   Invest in foreign securities if immediately after and as a result of such
     investment the value of the holdings of the Fund in foreign securities
     exceeds 10% of the value of the Fund's total assets;


4.   Acquire more than 10% of the outstanding voting securities, or 10% of all
     of the securities, of any one issuer;


5.   Invest in companies for the purpose of exercising control or management;


6.   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;


7.   Issue senior securities, except that the Fund may borrow amounts, up to 5%
     of the total assets taken at cost or at market value, whichever is lower,
     and only from banks as a temporary measure for extraordinary or emergency
     purposes. For this purpose, futures and other transactions covered by
     segregated accounts are not considered to be senior securities. The Fund
     may engage in activities listed in Investment Restriction 10, but will not
     mortgage, pledge, hypothecate or in any other manner transfer as security
     for an indebtedness any of its assets;


8.   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;


9.   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; and (ii) the purchase of bank
     obligations such as certificates of deposit, bankers' acceptances and other
     short-term debt obligations. Notwithstanding the foregoing, the Fund may:
     (i) enter 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 (ii) loan 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 and other
     illiquid securities exceeds 5% of the value of the Fund's total assets. The
     Fund will not lend portfolio securities which, when valued at the time of
     loan, have a value in excess of 10% of the Fund's net assets;


10.  Make short sales of securities;


11.  Act as an underwriter of securities issued by other persons, or invest more
     than 5% of the value of its net assets in securities that are illiquid;


12.  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 5% 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;


                                    Page 15
<PAGE>



13.  Participate on 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 Investment Manager to save brokerage costs or average prices among
     them, is not deemed to result in a securities trading account);


14.  Purchase from or sell portfolio securities to its officers, directors, or
     other "interested persons" (as defined in the 1940 Act) of the Company,
     other than otherwise unaffiliated broker-dealers;


15.  Purchase or sell stock index futures or purchase related options if,
     immediately thereafter, more than 30% of the value of its net assets would
     be hedged, or the sum of the amount of "margin" deposits on the Fund's
     existing futures positions and premium paid for related options would
     exceed 5% of the market value of the Fund's total assets; or


16.  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 only for hedging purposes. The Fund has no current
     intention of entering into commodities contracts except for stock index
     futures and related options.


         The Funds are 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
Company's Board of Directors, makes each Fund's investment decisions and selects
the broker or dealer for 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
each 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
that a particular broker or dealer is in a position to obtain the best
execution, the order is placed with that broker or dealer. This may or may not
be a broker or dealer that has provided investment information and research
services to the Investment Manager. Such investment information and research
services may include, among other things, a wide variety of written reports or
other data on the 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; 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


                                    Page 16
<PAGE>

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 best available price and execution,
the Investment Manager may, in circumstances in which two or more brokers are in
a position to offer comparable prices and 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
a Fund to pay an amount of commission in excess of the amount of commission
another broker would have charged. In selecting 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
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 Manager exercises investment discretion. The Investment
Manager continually evaluates all commissions paid in order to ensure that the
commission represents 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 Funds), and it is recognized that a Fund may be
charged a commission paid to a broker or dealer who supplied research services
not utilized by such Fund. However, the Investment Manager expects that the
Funds will benefit overall by such practice because they are receiving the
benefit of research services and the execution of such transactions not
otherwise available to them without the allocation of transactions based on the
recognition of such research services.

       Subject to the requirement of seeking the best available prices and
execution, the Investment Manager may also place orders with brokerage firms
that have sold shares of the Funds. However, to date the Funds have not marketed
any of their shares through brokers and the Investment Manager has thus not
utilized the above authority. The Investment Manager has not made and will not
make any commitments to place orders with any particular broker or group of
brokers. It is anticipated that a substantial portion of all brokerage
commissions will be paid to brokers who supply investment information to the
Investment Manager. During 1999, all brokerage commissions paid by the Funds
were paid to such brokers.

       Each Fund may, in some instances, invest in U.S. and/or foreign
securities that are not listed on a national securities exchange but are traded
in the over-the-counter market. Each 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 primary market-makers for each security; however,
when necessary in order to obtain the best price and execution, it will utilize
the services of others. In all cases, the Investment Manager will attempt to
negotiate the best market price and execution.

       For the Fiscal Years ended December 31, 1997, 1998 and 1999, the
predecessor to the MidCap Fund paid total brokerage commissions of $2,415,659,
$2,617,257 and $2,991,915, respectively. All commissions paid during the fiscal
year ended December 31, 1999, were paid to firms which provided research,
statistical or other services to the Investment Manager. The Investment Manager
has not separately identified a portion of such commissions as applicable to the
provision of such research, statistical or otherwise.

       For the Fiscal Years ended December 31, 1997, 1998 and 1999, the
predecessor to the Small Cap Fund paid total brokerage commissions of $889,316,
$1,614,907 and $937,205, respectively. All commissions paid during the fiscal
year ended December 31, 1999, were paid to firms which provided research,
statistical or other services to the Investment Manager. The Investment Manager
has not separately identified a portion of such commissions as applicable to the
provision of such research, statistical or otherwise.


       During fiscal year ended 1999 the predecessors to the MidCap Fund and the
Small Cap Fund each acquired the securities of one of its regular broker-dealers
(as defined in Rule 10b-1 under the 1940 Act). At December 31, 1999, the MidCap
Fund and the Small Cap Fund both had holdings in State Street Bank and Trust
Company valued at $27,648,000 and $780,000, respectively.

       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 Funds to have the ability to
execute brokerage transactions, when appropriate, through the


                                    Page 17
<PAGE>

Dresdner Affiliates. Accordingly, the Investment Manager intends to execute
brokerage transactions on behalf of the Funds 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
Funds, and the Investment Manager will not enter into any transaction on behalf
of the Funds 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 Funds.

       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 a 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 a Fund participates will be effected only when the Investment Manager
believes that to do so 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. Although the
Investment Manager will use its best efforts to be fair and equitable to all
clients, including the Funds, there can be assurance that any investment will be
proportionately allocated among clients according to any particular or
predetermined standard or criteria. The Investment Manager will not include
orders on behalf of any affiliated or related entity in any aggregated
transaction that includes orders placed on behalf of a Fund.



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, (69), 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.

     * ROBERT J. BIRNBAUM, (72), Director. Director, Chicago Board Options
Exchange (since 1998); Director, Dresdner RCM Investment Funds, Inc. (1990 to
2000); Director, Chicago Mercantile Exchange (1990 to 1998); Trustee, Liberty
All-Star Growth Fund, Inc. (since 1995); Trustee, Colonia Funds (since 1995);
Trustee, Liberty All-Star Equity Fund, Inc. (since 1994); Special Counsel,
Dechert Price & Rhoads (law firm) (1988 to 1993); President and Chief Operating
Officer, New York Stock Exchange, Inc. (1985 to 1988); President and Chief
Operating Officer, American Stock Exchange, Inc. (1977 to 1985).


                                    Page 18
<PAGE>

     * THEODORE J. COBURN (46), Director. Partner, Brown Coburn & Co., a
consulting firm (since 1991); education associate at Harvard University Graduate
School of Education (since 1996); Director, Nicholas-Applegate Fund, Inc. (since
1987); Trustee, Nicholas-Applegate Mutual Funds (since 1992); Director,
Measurement Specialities, Inc. (since 1995); Director, Moovies, Inc. (since
1995); Director, Dresdner RCM Investment Funds, Inc. (1991 to 2000); Senior Vice
President, Prudential Securities Inc. (1986 to 1991); Managing Director of the
Global Equity Transactions Group and a member of the Board of Directors,
Prudential Securities (1986 to 1991); Managing Director, Merrill Lynch Capital
Markets (1983 to 1986).

       PAMELA A. FARR, (54), 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.

     * ALFRED W. FIORE (62), Director. General Manager, Hirschfeld, Stern, Moyer
& Ross, Inc. (employee benefit consulting firm) (since 1988); Director, Dresdner
RCM Investment Funds Inc. (1996 to 2000); Consultant, Lois/U.S.A. (creative
advertising agency) (1987 to 1988); Executive Vice President and Chief Financial
Officer, Parlux Fragrances, Inc. (1987); Executive Vice President and Chief
Financial Officer, Concord Assets Group, Inc. (real estate manager) (1986);
President and Chief Operating Officer, Amerigroup Financial Services, Inc.
(financial services) (1984 to 1986); Partner, KPMG Peat Marwick, LLP (1973 to
1984).

       GEORGE B. JAMES, (62), Director. Mr. James serves as a director of Basic
Vegetable Products, California Sun Dry Foods, 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. From 1985 to
1999 Mr. James was a Senior Vice President and Chief Financial Officer of Levi
Strauss & Co. Mr. James previously was Chair of the Advisory Committee to the
California Public Employees Retirement System.

     + JOHN A. KRIEWALL (59) Director. Mr. Kriewall is retired from his position
as Managing Director of Dresdner RCM, with which he had been associated since
1973. He also served Dresdner RCM as Co-Chief Investment Officer of the Mid Cap
Team and was a member of the Mid Cap Team Management Committee. He received his
BS degree from Stanford University and in 1971 received his MBA from Stanford
University. Following graduation, he joined the Trust Division of United
California Bank and assisted in the founding of its investment counseling
subsidiary, Western Asset Management. Mr. Kriewall is an "interested person" (as
defined in the 1940 Act) by virtue of his affiliation with the Investment
Manager.

       GEORGE G.C. PARKER, (61), 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.

     + KENNETH E. SCOTT, (71), Director. Mr. Scott is the Ralph M. Parsons
Professor of Law and Business at Stanford Law School, with which he has been
associated since 1967. He is also a director of certain registered investment
companies managed by Benham Capital Management.

       ANTHONY AIN, (40), President. Mr. Ain is a Managing Director and General
Counsel of Dresdner RCM, with which he has been associated since 1992. From 1988
to 1992, 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. From 1984 to 1988, he was an
associate in the Washington, D.C. office of Fried, Frank, Harris, Shriver &
Jacobson, where he practiced securities and banking law.

       ROBERT J. GOLDSTEIN, (37), Vice President and Secretary. Mr. Goldstein is
a Director and Associate General Counsel of Dresdner RCM, with which he has been
associated since 1997. From 1990 to 1996, Mr. Goldstein was an associate in the
New York, London and Prague offices of Weil, Gotshal & Manges where his


                                    Page 19
<PAGE>

practice primarily focused on private investment and hedge funds, and
international transactional and general corporate matters.

       KARIN L. BROTMAN, (33), Assistant Secretary. Ms. Brotman is Assistant
Fund Counsel of Dresdner RCM, with which she has been associated since 1997.
From 1995 to 1997, Ms. Brotman was a Product Manager at Fidelity Investments in
their Legal Department, where she was involved in providing legal and compliance
for 1940 Act registered management investment companies. From 1993 to 1995, 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.

       JENNIE W. KLEIN, (35), Vice President and Treasurer. Ms. Klein is
Director of Commingled Fund Services and at Director of Dresdner RCM, with which
she has been associated since 1994. She is responsible for fund administration
and shareholder record keeping for the Dresdner RCM products. From 1991 to 1994,
Ms. Klein was employed at G.T. Capital Management as the Manager of Financial
Reporting and Compliance for their mutual funds. From 1988 to 1991, she was an
auditor at KPMG Peat Marwick.

       STEVEN L. WONG, (33), Assistant Treasurer. Mr. Wong is a Manager in
Commingled Fund Services and has been associated with Dresdner RCM since 1994.
He is responsible for overseeing Dresdner RCM's mutual fund administration which
includes financial reporting, compliance, tax reporting, fund accounting,
budgeting and shareholder servicing. From 1992 to 1994, Mr. Wong was a senior
auditor at KPMG Peat Marwick specializing in the audit of investment companies.
From 1991 to 1992, he was a fund accountant with Franklin Funds.

    * Nominated for election at a stockholders' meeting scheduled for
December 18, 2000, pending the reorganization of the predecessor funds.


    + Nominated for election at a stockholders' meeting scheduled for
December 18, 2000.


      Regular meetings of the Board of Directors are held on a quarterly basis.
The Company's Audit Committee, whose present members are Messrs. Bowman and
Parker, meet 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 per series 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 earned by
the Directors for the fiscal year ended December 31, 1999, for their service
on the Board(s) of Directors of the funds in the "Company complex" (as
defined in Schedule 14A under the Securities Exchange Act of 1934):

<TABLE>
<CAPTION>
                                                        Pension or
                                                        Retirement                                      Total Compensation
                                Aggregate            Benefits Accrued                                    from the Company
                               Compensation             as Part of            Estimate Annual              and Company
       Director              from the Global          the Company's            Benefits Upon                 Complex
         Name                   Company(1)              Expenses                Retirement               Paid to Director
---------------------       -----------------       -------------------      -----------------         --------------------
<S>                         <C>                     <C>                      <C>                       <C>
DeWitt F. Bowman                 $21,250                 $24,125                    N/A                     $48,250(2)

Robert J. Birnbaum                 N/A                     N/A                      N/A                     $30,500(3)

Theodore J. Coburn                 N/A                     N/A                      N/A                     $30,000(3)

Pamela A. Farr                   $19,000                 $46,000                    N/A                     $46,000(2)

Alfred W. Fiore                    N/A                     N/A                      N/A                     $30,500(3)

John Kriewall                      N/A                     None                     N/A                          $0

George B. James                  $19,000                   None                     N/A                     $48,250(2)

George G.C. Parker               $19,000                 $47,500                    N/A                     $47,500(2)

Kenneth E. Scott                   N/A                   $14,250                    N/A                     $28,500(2)
                            -----------------------------------------------------------------------------------------------
Total                            $78,250                 $83,250                                           $309,500
</TABLE>

----------------------------


                                     Page 20
<PAGE>

(1)   As of December 31, 1999, there were 10 funds in the Global Company.

(2)   Includes compensation earned as a Director of the Dresdner RCM Capital
      Funds, Inc. Upon election as Directors, these individuals will be
      compensated by the Global Company.


(3)   Represents compensation earned as a Director of the Dresdner RCM
      Investment Funds, Inc. Upon election as Directors, these individuals
      will be compensated by the Global Company.


       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, 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 the Company pursuant to
the Directors' Plan is a general obligation of the Company. Each 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 August 9, 2000, 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.



CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

       As of August 9, 2000, there were 132,505,241 shares of the MidCap Fund
outstanding and 33,032,157 shares of the Small Cap Fund outstanding; on that
date the following were known to the Company to own of record more than 5% of
the Funds' capital stock:

<TABLE>
<CAPTION>
                                                                                                                % of Shares
Name and Address of Beneficial Owner                                                           Shares Held      Outstanding
------------------------------------                                                           -----------      -----------
<S>                                                                                            <C>              <C>
MIDCAP FUND

Ernst & Young Master Trust                                                                      22,272,764      16.81%%
c/o The Chase Manhattan Bank, N.A.
770 Broadway, 10th Floor
New York, New York 10003

American Stores Retirement Portfolio                                                            21,703,875      16.38%%
c/o Fidelity Management Trust Co.
82 Devonshire Street
Boston, Massachusetts 02109

Boeing Company Employee Retirement Plan                                                         12,322,187       9.30%
c/o The Chase Manhattan Bank, N.A.
3 Metrotech Center
Brooklyn, New York 11245

Chevron Corp. Annuity Trust                                                                      8,730,596       6.59%
c/o Bankers Trust Company
BT Services Tennessee
648 Grassmere Park Road
Nashville, Tennessee 37211


                                   Page 21
<PAGE>

Tektronix Inc.                                                                                   8,218,690       6.20%
c/o Northern Trust Company
P.O., Box 3577
Terminal Annex
Los Angeles, California 90051

Consolidated Natural Gas Company Pension Trust                                                   8,084,587       6.10%%
c/o Bankers Trust Company
BT Services Tennessee
648 Grassmere Park Road
Nashville, Tennessee 37211


SMALL CAP FUND


American Stores Retirement Portfolio                                                            11,634,333      35.22%
c/o Fidelity Management Trust Co.
82 Devonshire Street
Boston, Massachusetts 02109


Chevron Corp. Annuity Trust                                                                      2,357,195       7.14%
c/o Bankers Trust Company
BT Services Tennessee
648 Grassmere Park Road
Nashville, Tennessee 37211

Richard and Rhoda Goldman Fund                                                                   2,077,408       6.29%
1 Lombard Street Suite 303
San Francisco, California 94111-1130

Hughes Aircraft                                                                                  2,008,452       6.08%
P.O. Box 2458
Culver City, California 90231-2458
</TABLE>






THE INVESTMENT MANAGER

       The Board of Directors has overall responsibility for the operation of
the Company's Funds. 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 Funds. The
Company has retained as the Funds' 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. 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.


                                    Page 22
<PAGE>

       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, 1999, of EUR 397 billion ($463 billion), and
approximately 1,500 offices and 51,000 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,
Susan C. Gause and Luke D. Knecht.

       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 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 Funds with investment supervisory
services pursuant to Investment Management Agreements, Powers of Attorney and
Service Agreements (the "Management Agreements") dated as of June 14, 1996. The
Investment Manager manages the Funds' investments, provides various
administrative services, and supervises the Funds' daily business affairs,
subject to the authority of the Board of Directors.

       The Investment Manager is also the investment manager for Dresdner RCM
International Growth Equity Fund, Dresdner RCM Europe Fund,  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 Balanced Fund, Dresdner RCM Global Equity
Fund and Dresdner RCM Strategic Income Fund, each a series of the Company.;
Dresdner RCM Global Strategic Income Fund, Inc., RCM Strategic Global
Government Fund, Inc. and Bergstrom Capital Corporation, each a closed-end
management investment company.


       Each Fund's Management Agreement was approved by its sole stockholder
and will continue in effect until December 2002.  All management fees paid
for periods prior to the Funds' reorganizations were made under similar
management agreements with different advisory fees.  The management
agreements may be renewed from year-to-year thereafter, 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.

       Each Fund, pursuant to its Management Agreement, has assumed the
obligation for payment of the following ordinary operating expenses: (a)
brokerage and commission expenses, (b) federal, state, or local taxes incurred
by, or levied on, each Fund, (c) interest charges on borrowings, (d) charges and
expenses of the Fund's custodian (e) payment of all investment advisory fees
(including fees payable to the Investment Manager under the Management
Agreement), (f) fees pursuant to the Fund's Rule 12b-1 plan, (g) legal and audit
fees, (h) SEC and "Bluesky" registration expenses, and (i) compensation, if any,
paid to officers and employees of the Company who are not employees of the
Investment Manager.. Each Fund is also responsible for expenses of an
extraordinary nature subject to good faith determination of the Company's Board
of Directors. Each Fund's expenses are charged against its assets. General
expenses of the Company are allocated among its series in a manner proportionate
to the net assets of each series,


                                    Page 23
<PAGE>

on a transactional basis, or on such other basis as the Board of Directors deems
equitable. The Investment Manager is also responsible for all of its own
expenses in providing services to the Funds.

       For the services rendered by the Investment Manager under the Management
Agreements, each Fund pays management fees at an annualized rate of its average
daily net assets. These fees are computed daily and paid monthly. The MidCap
Fund pays investment management fees monthly at an annualized rate of 0.75% of
the Fund's average daily net assets. For the years ended December 31, 1999,
1998, and 1997, the Fund's predecessor incurred investment management fees
aggregating $7,410,131, $7,043,731, and $7,008,712 , respectively. The Small Cap
Fund pays investment management fees monthly at an annualized rate of 1.00% of
the Fund's average daily net assets. For the years ended December 31, 1999,
1998, and 1997, the Fund's predecessor incurred investment management fees
aggregating $4,309,277, $5,821,282, and $5,759,180, respectively. During the
years noted, the management fees paid by the predecessors to the Funds were paid
under a different expense structure that previously provided that the Funds pay
for certain of their ordinary operating expenses while the Investment Manager
was responsible for all of the other ordinary operating expenses (ie. legal and
audit fees, and SEC and "Blue Sky" registration expenses), including the
compensation of the directors of the Company.

       The Investment Manager has agreed to limit each Fund's expenses as
described in the Prospectus. The Funds have 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.

       Each Management Agreement is terminable as to Fund without penalty on 60
days' written notice by a vote of the majority of the Fund's outstanding voting
securities, 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.

       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 a 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
each 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 a 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.



THE DISTRIBUTOR

       Funds Distributor, Inc., 60 State Street, Suite 1300, Boston,
Massachusetts 02109 (the "Distributor") serves as Distributor to each 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.

       Pursuant to the Distribution Agreement with the Company, the Distributor
has agreed to use its best efforts to effect sales of shares of the Funds, 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 each Fund's Management Agreement discussed above. Pursuant to the
Distribution Agreement, the Company has agreed to indemnify the


                                    Page 24
<PAGE>

Distributor out of the assets of each 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 Agreements.

       The Company, on behalf of its Class N shares, has adopted a distribution
and service plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. Under
the Plan, each Fund pays the Distributor an annual fee of up to 0.25% of the
average daily net assets of its Class N shares as reimbursement for certain
expenses 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 and marketing the N Class of shares of
the Funds, including but not limited to any 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 Funds' 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 of the respective Company, 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 amendments
are required to be approved by the Board of Directors 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 the Funds 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 of
shares of each Fund held in the accounts of their customers.

       Pursuant to the Plan, the Board of Directors will review at least
quarterly a written report of the distribution expenses incurred on behalf of
the Class N shares of the Fund 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

       The administrator of the Company is State Street Bank and Trust Company
("State Street"), 1776 Heritage Drive, North Quincy, Massachusetts 02109.


                                    Page 25
<PAGE>

       Pursuant to an Sub-administration Agreement with the Company, State
Street is responsible for performing various 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 Funds. 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.

       Fees payable to State Street for administrative services performed on
behalf of the Funds are paid by the Investment Manager.


OTHER SEVICE PROVIDERS



       State Street acts as the transfer agent, redemption agent, dividend
paying agent and custodian for the Funds. The custodian is responsible for the
safekeeping of a fund's assets and the appointment of any subcustodian banks and
clearing agencies. State Street's principal business address in 1776 Heritage
Drive, North Quincy, Massachusetts 02171.

       PricewaterhouseCoopers LLP ("PwC") acts as the independent public
accountants for the Funds. The accountant examines financial statements for the
Funds and provides other audit, tax and related services. PwC's principal
business address is 160 Federal Street, Boston, Massachusetts 02110.



NET ASSET VALUE


       For purposes of the computation of the net asset value of each share of
each 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 Funds will be
valued at current market value, if current market quotations are readily
available for such securities. To the extent that market quotations are not
readily available such securities will be valued by whatever means a duly
constituted committee of the Board of Directors 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 Funds 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.


                                    Page 26
<PAGE>

       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.

       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 Funds 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 one or more of its Funds' 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 stockholders.


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 a 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 a 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.


                                    Page 27
<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAX STATUS

       Each income dividend and capital gain distribution, if any, declared by a
Fund will be paid in full and fractional shares based on the net asset value as
determined on the ex-dividend date for such distribution, unless the stockholder
or 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 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

       Each Fund has qualified and intends to continue to qualify for treatment
as a "regulated investment company" under Subchapter M of the Internal revenue
Code of 1986 (the "Code"). Each 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 Funds. 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 each Fund. By complying with the applicable provisions of the
Code, a 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 a 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 a 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 Funds expect to so distribute all
of such income and gains on an annual basis and thus will generally avoid any
such taxation.

       Even if a 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 a Fund from its current year's ordinary income
and capital gain net income and (ii) any amount on which a Fund pays income tax
for the year. The Funds intend to meet these distribution requirements to avoid
Excise Tax liability.


                                    Page 28
<PAGE>

       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 a Fund whether paid in additional shares of the Fund or in
cash. To the extent that dividends received by a 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
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 Funds under federal, state, and local tax laws.


WITHHOLDING

       Dividends paid by a 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
a 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.


SECTION 1256 CONTRACTS

       Many of the futures contracts and related options entered into by the
Funds 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 a 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
a 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, transactions in futures contracts and related options
undertaken by the Funds 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 a Fund. In addition, losses realized
by a 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 Funds are
not entirely clear.

       Transactions in futures contracts and related options may increase the
amount of short-term capital gain realized by a Fund, which is taxed as ordinary
income when distributed to stockholders. A Fund may make one or more elections
available under the Code which are applicable to straddle positions. If a 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 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


                                    Page 29
<PAGE>

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 a 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 a Fund's investment company taxable income to be
distributed to stockholders as ordinary income.


FOREIGN TAXES

       A 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 a
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 a 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 Funds, their stockholders and dividend and
capital gain distributions by the Funds. 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 Funds.



INVESTMENT RESULTS

       Average annual total return ("T") of a 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 a 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:

                                        n
                                  P(1+T)  = ERV

       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


                                    Page 30
<PAGE>

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 a Fund's performance
or more accurately compare such performance to other measures of investment
return, a 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. A Fund's investment
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 a 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 a Fund's investment objective and policies.

       Each of the Funds may from time to time compare its investment results
with data and mutual fund rankings published or prepared by Lipper Inc. and
Morningstar, Inc., which rank mutual funds by overall performance, investment
objectives, and assets.

       The MidCap Fund may from time to time compare its investment results
with:

       1.     THE RUSSELL MIDCAP INDEX, which is composed of the smallest 800
              companies in the Russell 1000 Index. The Russell 1000 Index is
              made up of the 1,000 largest companies in the Russell 3000 Index,
              which is composed of the 3,000 largest U.S. companies by market
              capitalization and represents approximately 98% of the investable
              U.S. equity market.

       2.     RUSSELL MIDCAP GROWTH INDEX, which measures the performance of
              companies included in the Russell Midcap Index that have higher
              price-to-book ratios and higher forecasted growth values. The
              stocks are also included in the Russell 1000 Growth index.

       3.     THE S&P 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.

       4.     THE S&P MIDCAP 400 INDEX, which is comprised of the smallest 400
              companies in the S&P 500 Index.

       5.     THE DOW JONES INDUSTRIAL AVERAGE, which is a price-weighted
              average of the price of 500 of the largest publicly traded stocks
              in the United States.

       6.     THE RUSSELL 2000 INDEX, which is composed of the 2,000 smallest
              securities in the Russell 3000 Index, which is composed of the
              3,000 largest U.S. companies based on market capitalization and
              represents approximately 98% of the investable U.S. equity market.

       7.     THE VALUE LINE COMPOSITE INDEX, which consists of approximately
              1,700 common equity securities.

       8.     THE NASDAQ OVER-THE-COUNTER INDEX, which is a value-weighted index
              compose of 4,500 stocks traded over the counter.

       9.     Data and mutual fund rankings published by Lipper Inc. and
              Morningstar, which rank mutual funds by overall performance,
              investment objectives, and assets.


                                    Page 31
<PAGE>

       The Small Cap Fund may from time to time compare its investment results
with:

       1.     THE RUSSELL 2000 INDEX.

       2.     THE S&P 500 INDEX.

       3.     THE VALUE LINE COMPOSITE INDEX.

       4.     THE NASDAQ OVER-THE-COUNTER INDEX.

       5.     Data and mutual fund rankings published or prepared by Lipper
              Analytical Services, Inc. and Morningstar, which rank mutual funds
              by overall performance, investment objectives, and assets.



GENERAL INFORMATION



       The Global Company was incorporated in Maryland as an open-end management
investment company on September 17, 1995. The authorized capital stock of the
Global Company is 3,000,000,000 shares of capital stock (par value $.0001 per
share) of which 100,000,000 shares have been designated as shares of the
International Growth Equity Fund and the Small Cap Fund, 400,000,000 shares have
been designated as shares of the MidCap Fund, 200,000,000 shares have been
designated as shares of the Europe Fund, 50,000,000 shares have been designated
as shares of each of the Global Technology Fund, Global Small Cap Fund, Global
Health Care Fund, Large Cap Fund, Biotechnology Fund, Emerging Markets Fund, Tax
Managed Growth Fund, Global Equity Fund and Strategic Income Fund and 25,000,000
shares have been designated as shares of the Balanced Fund.


DESCRIPTION OF CAPITAL SHARES

       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.

       Shares of the Funds 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 directors can elect 100% of the directors if they wish to do so.
In such event, the holders of the remaining less than 50% of the shares voting
for the election of directors will not be able to elect any person or persons to
the Board of Directors.

       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, or to assist in communicating with its
stockholders as required by Section 16(c) of the 1940 Act.

       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 Companies 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 affected 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


                                    Page 32
<PAGE>

ratification of independent public 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 Fund.

       Each share of each Class of a Fund represents an equal proportional
interest in the Fund with each other share of the same Class and is entitled to
such dividends and distributions out of the income earned on the assets
allocable to the Class as are declared in the discretion of the Board of
Directors. In the event of the liquidation or dissolution of the Global Company,
stockholders of a 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 a particular Fund that are available for
distribution, in such manner and on such general basis as the Board of Directors
may determine.

       In the event of the liquidation or dissolution of the Company,
stockholders of a 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 a particular Fund that are available for
distribution, in such manner and on such general basis as the Board of Directors
may determine.

       Stockholders are not entitled to any preemptive rights. All shares, when
issued, will be fully paid and nonassessable by the Company.



ADDITIONAL INFORMATION


COUNSEL

       Certain legal matters in connection with the capital shares offered by
the Prospectus have been passed upon for the Funds by Paul, Hastings, Janofsky &
Walker LLP, 555 South Flower Street, Los Angeles, California 90071. The validity
of the capital stock offered by the Funds has been passed upon by Venable,
Baetjer and Howard, LLP, 1800 Mercantile Bank & Trust Building, 2 Hopkins Plaza,
Baltimore, Maryland 21201. Paul, Hastings, Janofsky & Walker LLP has acted and
will continue to act as counsel to the Investment Manager in various matters.
Wilmer, Cutler & Pickering acts as counsel to the independent directors.


LICENSE AGREEMENT

       Under a License Agreement 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.


FINANCIAL STATEMENTS

       Incorporated by reference herein are the financial statements of the
Funds' predecessors contained in the Annual Reports to Shareholders of the
Capital Funds for the year ended December 31, 1999, including the Report of
Independent Accountants, dated February 18, 2000, the Statements of Assets
and Liabilities, including the Portfolios of Investments and the related
Statements of Operations, the Statements of Changes in Net Assets and the
Financial Highlights. Also incorporated by reference herein are the unaudited
financial statements of the Funds' predecessors contained in the Semi-Annual
Report to Shareholders of the Capital Funds for the six-month period ended
June 30, 2000. Copies of the Funds' Annual and Semi-Annual Reports to
Shareholders will be available, upon request, by calling (800) 726-7240, or
by writing to Four Embarcadero Center, San Francisco, California 94111.



                                    Page 33
<PAGE>

REGISTRATION STATEMENT

       The Funds' 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 or by writing the Public Reference
Section of the Commission, Washington, D.C. 20549-6009, calling 1-800-SEC-0330
or by email at [email protected] 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 34
<PAGE>


                         DRESDNER RCM GLOBAL FUNDS, INC.
                       SUPPLEMENT DATED OCTOBER 30, 2000
          TO THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 2000


THE FOLLOWING INFORMATION REPLACES ALL SIMILAR REFERENCES THROUGHOUT THE SAI:


Upon approval of the reorganizations by shareholders and satisfaction of
normal closing conditions, the Dresdner RCM International Growth Equity Fund
will be reorganized from a series of the Dresdner RCM Capital Funds, Inc.
(the "Capital Company") to a series of the Dresdner RCM Global Funds, Inc.
(the "Global Company") and the Dresdner RCM Europe Fund will be reorganized
from a series of the Dresdner RCM Investment Funds Inc. (the "Investment
Company") to a series of the Global Company. As a result of the
reorganizations, the Capital Company and the Investment Company will be
dissolved as Maryland corporations.


THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN THE
SECTION ENTITLED "SHORT SALES" BEGINNING ON PAGE 8 OF THE SAI.


After the reorganization, the International Fund may engage in short sales
transactions. Please refer to pages 8-9 of the SAI for further details on
these transactions and their associated risks.


THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN THE SECTION
ENTITLED "DELAYED-DELIVERY TRANSACTIONS" BEGINNING ON PAGE 9 OF THE SAI.


After the reorganization, the Europe Fund may purchase securities on a
delayed delivery or "when issued" basis and may enter into firm commitment
agreements. Please refer to page 9 of the SAI for further details on these
transactions and their associated risks described on page 25 of the SAI.


THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN THE SECTION
ENTITLED "FUTURES TRANSACTIONS" BEGINNING ON PAGE 10 OF THE SAI.


After the reorganization, the Europe 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. Please refer to page 10 of the SAI for further details on these
transactions and their associated risks described on pages 26 and 27 of the
SAI.


THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN THE SECTION
ENTITLED "DEBT SECURITIES" BEGINNING ON PAGE 13 OF THE SAI.

The Large Cap Fund, Tax Managed Growth Fund, Biotechnology Fund, Global Small
Cap Fund, Global Technology Fund, Global Health Care Fund and Europe Fund
(after the reorganization) may each invest up to 20% its total assets in
short-term debt obligations. The Emerging Markets Fund may invest up to 20%
of its assets in emerging market debt securities. Please refer to page 13 of
the SAI for a description of these securities and their associated risks
described on page 24 and 25 of the SAI.

THE FOLLOWING INFORMATION REPLACES THE INFORMATION FOUND IN THE SECTION
ENTITLED "FUNDAMENTAL POLICIES" BEGINNING ON PAGE 28 OF THE SAI.


After the reorganization, the fundamental policies previously applicable
to the Europe Fund beginning on page 29 of the SAI will be eliminated. The
Europe Fund will be subject to fundamental restrictions 1-14 beginning on page
28 of the SAI.


THE FOLLOWING INFORMATION REPLACES THE INFORMATION FOUND IN THE SECTION
ENTITLED "OPERATING POLICIES" BEGINNING AT PAGE 30 OF THE SAI.



After the reorganizations, the Funds will be subject to the following
operating policies that provide that a Fund may not:


1.       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 Investment Manager to save brokerage costs, or to
         average prices among them, is not deemed to result in a securities
         trading account).

2.       Invest more than 15% of the value of its net assets in securities
         that are illiquid (this restriction applies only to the Balanced
         Fund; the other Funds are subject to a similar fundamental policy).

<PAGE>

THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN THE SECTION
ENTITLED "DIRECTORS AND OFFICERS" BEGINNING AT PAGE 34 OF THE SAI.


Upon approval of the shareholders at a meeting scheduled to be held on
December 18, 2000, the members constituting the Board of Directors of the
Global Company will be DeWitt F. Bowman, Pamela A. Farr, George B. James,
John A. Kriewall, George G.C. Parker and Kenneth E. Scott. Upon approval of
the shareholders at a meeting to be held on December 18, 2000 for
reorganization of the Europe Fund, the Board of Directors will be expanded to
include Robert J. Birnbaum, Theodore J. Coburn and Alfred W. Fiore. The
officers of the Global Company are Anthony Ain, Robert J. Goldstein, Karin L.
Brotman, Jennie W. Klein and Steven L. Wong. For professional biographical
information on these individuals, please refer to the SAI.



Each Director of the Global Company receives a fee of $1,000 per year plus
$500 for each Board meeting attended and $250 for each Audit Committee
meeting attended. The current members of the Global Company's Audit Committee
are DeWitt F. Bowman and George B. James. Each Director is reimbursed for
travel and other expenses in connection with attending Board meetings.

THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN THE SECTION
ENTITLED "CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES" BEGINNING AT PAGE
39 OF THE SAI.

As of August 9, 2000, there were 17,670,584 shares of the International Growth
Equity Fund outstanding, 11,747,911 shares of the Global Technology Fund
outstanding, 1,871,110 shares of the Global Small Cap Fund outstanding,
4,811,695 shares of the Global Health Care Fund outstanding, 1,930,445 shares of
the Large Cap Growth Fund outstanding, 16,016,991 shares of the Biotechnology
Fund outstanding, 577,448 shares of the Emerging Markets Fund outstanding,
2,223,071 shares of the Tax Managed Growth Fund outstanding, 1,593,026 shares of
the Balanced Fund outstanding and 4,938,916 shares of the Europe Fund
outstanding. On that date the following were known to the Company to own of
record more than 5% of the Funds' outstanding capital stock:

<TABLE>
<CAPTION>

Name and Address of                                                             % of Shares
Beneficial Owner                            Shares Held                         Outstanding
<S>                                         <C>                                 <C>
LARGE CAP GROWTH FUND

Pacific Maritime Association                428,300                             22.18%
P.O. Box 7861
San Francisco, California 94120-786

Jomei Chang & Dale Skeen Trustees           341,131                             17.67%

Congoleum Corp Master Trust                 280,445                             14.52%
3705 Quakerbridge Road
Mercerville, New Jersey 08619-0127

AAA Washington                              185,335                             9.60%
1745 114th Avenue SE
Bellevue, Washington 98004-6968

Charles Schwab & Co., Inc.                  158,773                             9.33%
FBO Customers
101 Montgomery Street
San Francisco, California 94104

TAX MANAGED GROWTH FUND

Boston & Company                            1,757,833                           79.28%
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA

<PAGE>

Charles Schwab & Co., Inc.                  117,383                             5.28%
FBO Customers
101 Montgomery Street
San Francisco, California 94104

BIOTECHNOLOGY FUND

Charles Schwab & Co., Inc.                  7,232,117                           45.15%
FBO Customers
101 Montgomery Street
San Francisco, California 94104

National Financial Services Corp.           3,738,902                           23.34%
FBO Customers
200 Liberty Street
One World Financial Center
New York, New York 10281-1003

National Investors Service Corp.            1,082,898                           6.76%
FBO Customers
55 Water Street
New York, New York 10041-0098

BALANCED FUND

Pacific Northwest Employers                 1,384,962                           86.94%
Pension Plan

Pacific Maritime Association                155,751                             9.78%
Compensation Plan
P.O. Box 7861
San Francisco, California

GLOBAL SMALL CAP FUND

Dean Witter Discover & Co.                  528,360                             28.78%
333 Market Street 25th Floor
San Francisco, California 94105-2102

Charles Schwab & Co.                        527,574                             28.20%
FBO Customers
101 Montgomery Street
San Francisco, California 94104

National Financial Services Corp.           398,858                             21.32%
FBO Customer
200 Liberty Street
One World Financial Center
New York, New York 10281-1003

National Investors Service Corp.            119,995                             6.41%
FBO Customers
55 Water Street
New York, New York 10041-0098

GLOBAL TECHNOLOGY FUND


<PAGE>

Charles Schwab & Co., Inc.                  4,113,758                           35.02%
FBO Customers
101 Montgomery Street
San Francisco, California 94104

National Financial Services Corp.           2,550,890                           21.71%
FBO Customers
200 Liberty Street
One World Financial Center
New York, New York 10281-1003

National Investors Service Corp.            641,046                             5.46%
FBO Customers
55 Water Street
New York, New York 10041-0098

GLOBAL HEALTH CARE FUND

Charles Schwab & Co., Inc.                  1,900,703                           39.50%
FBO Customers
101 Montgomery Street
San Francisco, California 94104

National Financial Services Corp.           1,528,420                           31.76%
FBO Customers
200 Liberty Street
One World Financial Center
New York, New York 10281-1003

National Investors Service Corp.            462,749                             9.62%
FBO Customers
55 Water Street
New York, New York 10041-0098

INTERNATIONAL GROWTH EQUITY FUND

Citigroup Inc. Pension Plan                 3,397,203                           19.23%
1 Court Square 15th Floor
Long Island City, New York 11120-0001

JM Family Enterprises Inc.                  1,615,782                           9.14%
100 NW 12th Avenue
Deerfield Beach, Florida 33442

Boston Safe Deposit and Trust Company       1,170,340                           6.62%
FBO Blue Cross and Blue Shield of
Massachusetts Retirement Income Trust
Boston, Massachusetts 02110

EMERGING MARKETS FUND

Clients of Dresdner Bank AG/                300,000                             51.95%
Investment Management
Institutional Asset Management Division
Jorgen-Ponto-Platz
60301 Frankfurt
Germany


<PAGE>

Charles Schwab & Co., Inc.                  123,350                             21.36%
FBO Customers
101 Montgomery Street
San Francisco, California 94104

National Financial Services Corp.           88,169                              15.27%
FBO Customers
200 Liberty Street
One World Financial Center
New York, New York 10281-1003

EUROPE FUND

Charles Schwab & Co., Inc.                  1,082,453                           21.92%
FBO Customers
101 Montgomery Street
San Francisco, California 94104
National Financial Services Corp.           432,659                             8.76%
FBO Customers
200 Liberty Street
One World Financial Center
New York, New York 10281-1003

Smith Barney                                294,192                             5.96%
388 Greenwich Street
New York, New York 10013-2339

Marshcove & Co.                             290,930                             5.89%
P.O. Box 5756
Boston, Massachusetts 02206-0001
</TABLE>

THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND IN THE SECTION
ENTITLED "THE INVESTMENT MANAGER" BEGINNING AT PAGE 44 OF THE SAI.


All management fees paid by the International Fund and Europe Fund prior to
their proposed reorganizations, from series of the Capital Company and the
Investment Company, respectively, to series of the Global Company, will be
paid under their investment management agreements.


THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN THE SECTION
ENTITLED "THE DISTRIBUTOR" AT PAGE 46 OF THE SAI.


After the reorganizations, the Dresdner RCM International Growth Equity Fund
and Dresdner RCM Europe Fund will be included in the Global Company's
Distribution and Service Plan adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940.


THE FOLLOWING INFORMATION REPLACES THE INFORMATION FOUND IN THE SECTION ENTITLED
"GENERAL INFORMATION" AT PAGE 56 OF THE SAI.

The Global Company was incorporated in Maryland as an open-end management
investment company on September 17, 1995. The authorized capital stock of the
Global Company is 3,000,000,000 shares of capital stock (par value $.0001 per
share) of which 100,000,000 shares have been designated as shares of the
International Growth Equity Fund and the Small Cap Fund, 400,000,000 shares have
been designated as shares of the MidCap Growth Fund, 200,000,000 shares have
been designated as shares of the Europe Fund, 50,000,000 shares have been


<PAGE>

designated as shares of each of the Global Technology Fund, Global Small Cap
Fund, Global Health Care Fund, Large Cap Fund, Biotechnology Fund, Emerging
Markets Fund, Tax Managed Growth Fund Global Equity Fund and Strategic Income
Fund and 25,000,000 shares have been designated as shares of the Balanced Fund.

THE FOLLOWING INFORMATION REPLACES THE INFORMATION FOUND IN THE SECTION ENTITLED
"COUNSEL" AT PAGE 57 OF THE SAI.


Certain legal matters in connection with the capital shares offered by the
Global Company have been passed upon by Paul, Hastings, Janofsky & Walker LLP,
555 South Flower Street, Los Angeles, California 90071. The validity of the
capital stock offered by the Global Company has been passed upon by Venable,
Baetjer and Howard, LLP, 1800 Mercantile Bank & Trust Building, 2 Hopkins Plaza,
Baltimore, Maryland 21201. Paul, Hastings, Janofsky & Walker LLP has acted and
will continue to act as counsel to the Investment Manager in various matters.
Wilmer, Cutler & Pickering acts as counsel to the independent directors of the
Global Company.



THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND IN THE SECTION
ENTITLED "FINANCIAL STATEMENTS' AT PAGE 58 OF THE SAI.

Incorporated by reference herein are the financial statements of the Funds'
contained in the Funds' Semi-Annual Report to Shareholders for the six-month
period ended June 30, 2000, including the Statements of Assets and
Liabilities, including the Portfolios of Investments and the related
Statements of Operations, the Statements of Changes in Net Assets and the
Financial Highlights.

<PAGE>

                                  [LETTERHEAD]


DRESDNER RCM LARGE CAP GROWTH FUND
DRESDNER RCM TAX MANAGED GROWTH FUND
DRESDNER RCM BIOTECHNOLOGY FUND
DRESDNER RCM BALANCED FUND
DRESDNER RCM GLOBAL SMALL CAP FUND
DRESDNER RCM GLOBAL TECHNOLOGY FUND
DRESDNER RCM GLOBAL HEALTH CARE FUND
DRESDNER RCM INTERNATIONAL GROWTH EQUITY FUND
DRESDNER RCM EMERGING MARKETS FUND
DRESDNER RCM EUROPE FUND

                       STATEMENT OF ADDITIONAL INFORMATION

                                   May 1, 2000


Dresdner RCM International Growth Equity Fund (the "International Fund") is a
series of Dresdner RCM Capital Funds, Inc. (the "Capital Company"), an open-end
management investment company. Dresdner RCM Europe Fund (the "Europe Fund") is a
series of Dresdner RCM Investment Funds Inc. (the "Investment Company"), an
open-end management investment company. Dresdner RCM Large Cap Growth Fund (the
"Large Cap Fund"), Dresdner RCM Tax Managed Growth Fund (the "Tax Managed Growth
Fund"), Dresdner RCM Biotechnology Fund (the "Biotechnology Fund"), Dresdner RCM
Balanced Fund (the "Balanced Fund"), Dresdner RCM Global Small Cap Fund (the
"Global Small Cap Fund"), Dresdner RCM Global Technology Fund (the "Global
Technology Fund"), Dresdner RCM Global Health Care Fund (the "Global Health Care
Fund"), and Dresdner RCM Emerging Markets Fund (the "Emerging Markets Fund"),
are series (each, together with the International Fund and the Europe Fund, a
"Fund" and, together, the "Funds") of Dresdner RCM Global Funds, Inc. (the
"Global Company" and, with the Capital Company and the Investment Company, the
"Companies"), an open-end management investment company. The Funds' investment
manager is Dresdner RCM Global Investors LLC (the "Investment Manager"). All the
Funds are diversified except the Global Technology Fund, the Global Health Care
Fund, the Biotechnology Fund, the International Fund and the Europe Fund.

This Statement of Additional Information ("SAI") is not a prospectus, and should
be read in conjunction with the Prospectus of the Funds dated May 1, 2000. This
SAI relates to the Funds' Non-Institutional Class ("Class N") and Institutional
Class ("Class I") of shares. The Prospectus may be obtained without charge by
writing or calling the Companies at the address and phone number above.

Incorporated by reference herein are the financial statements of the Funds
contained in the Funds' Annual Report to Shareholders for the year ended
December 31, 1999, including the Report of Independent Accountants, dated
February 18, 2000, the Statements of Assets and Liabilities, including the
Portfolio of Investments and the related Statements of Operations, Statements of
Changes in Net Assets, and the Financial Highlights. Copies of the Funds' Annual
and Semi-Annual Reports to Shareholders are available, upon request, by calling
(800) 726-7240, or by writing to Four Embarcadero Center, San Francisco,
California 94111.


<PAGE>

TABLE OF CONTENTS

                                                                            Page

         Investment Objectives and Policies....................................3
         Risk Considerations..................................................22
         Investment Restrictions..............................................28
         Executions of Portfolio Transactions.................................31
         Directors and Officers...............................................34
         Control Persons and Principal Holders of Securities..................39
         The Investment Manager...............................................44
         The Distributor......................................................46
         The Administrator....................................................47
         Other Service Providers..............................................48
         Net Asset Value......................................................48
         Purchase and Redemption of Shares....................................49
         Dividends, DIstributions and Tax Status..............................50
         Investment Results...................................................53
         General Information..................................................56
         Description of Capital Shares........................................56
         Additional Information...............................................57
         Financial Statements.................................................58



                                     Page 2
<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
objectives of the Funds, the Investment Manager allocates the Funds' assets
among securities of countries and in currency denominations where it expects
opportunities for meeting the Funds' investment objectives to be the most
attractive, subject to the percentage limitations set forth in the Prospectus.
In addition, from time to time a 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 Large Cap Fund, Tax
Managed Growth Fund, Biotechnology Fund, Balanced Fund and Emerging Markets Fund
may, and each of the other Funds will, invest in securities of foreign
governments and companies that are organized or headquartered in developed
foreign countries. A 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.
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.

         INVESTMENT IN EMERGING MARKETS. Each Fund (except the Balanced Fund)
may, and the Emerging Markets Fund will, invest in securities of developing
countries with emerging markets and companies organized or headquartered in such
countries. As a general matter, countries that are not considered to be
developed foreign countries by the Investment Manager will be deemed to be
emerging market countries. Emerging market countries include any country
generally considered to be an emerging market or developing country by the World
Bank, the International Finance Corporation, the United Nations or its
authorities, or other recognized financial institutions. As of the date of this
SAI, emerging market countries are deemed to include for purposes of this SAI,
all foreign countries other than Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Ireland, Italy, Japan, Luxembourg, The Netherlands,
New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, and the United
Kingdom. (See INVESTMENT IN DEVELOPED FOREIGN COUNTRIES.) As their economies
grow and their markets grow and mature, some countries that currently may be
characterized by the Investment Manager as emerging market countries may be
deemed by the Investment Manager to be developed foreign countries. In the event
that the Investment Manager


                                     Page 3
<PAGE>

deems a particular country to be a developed foreign country, any investment in
securities issued by that country's government or by an issuer located in that
country would not be subject to a Fund's overall limitations on investments in
emerging market countries.

         Securities of issuers organized or headquartered in emerging market
countries may, at times, offer excellent opportunities for current income and
capital appreciation. However, prospective investors should be aware that the
markets of emerging market countries historically have been more volatile than
the markets of the United States and developed foreign countries, and thus the
risks of investing in securities of issuers organized or headquartered in
emerging market countries may be far greater than the risks of investing in
developed foreign markets. (See RISK CONSIDERATIONS--EMERGING MARKET SECURITIES
for a more detailed discussion of the risk factors associated with investments
in emerging market securities.) In addition, movements of emerging market
currencies historically have had little correlation with movements of developed
foreign market currencies. Prospective investors should consider these risk
factors carefully before investing in a Fund. Some emerging market countries
have currencies whose value is closely linked to the U.S. dollar. Emerging
market countries also may issue debt denominated in U.S. dollars and other
currencies.

         It is unlikely that a Fund will be invested in securities in all
emerging market countries at any time. Moreover, investing in some emerging
markets currently may not be desirable or feasible, due to lack of adequate
custody arrangements for Fund assets, overly burdensome repatriation or similar
restrictions, the lack of organized and liquid securities markets, unacceptable
political risks, poor values of investments in those markets relative to
investments in other emerging markets, in developed foreign markets, or in the
United States, or for other reasons.


CURRENCY MANAGEMENT

         Securities purchased by the Funds may be denominated in U.S. dollars,
foreign currencies, or multinational currencies such as the Euro, and the Funds
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 a Fund's net currency positions may expose it to risks
independent of its securities positions.

         From time to time, the Funds may employ currency management techniques
(other than currency futures contracts in the case of the Europe Fund) to
enhance their total returns, although there is no current intention to do so. A
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.

         A 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 Funds are
redeemable in U.S. dollars each day the Funds determine their net asset value,
the Funds 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, a
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 a Fund's total assets, adjusted to reflect the
Fund's net position after giving effect to currency transactions, is denominated
or


                                     Page 4
<PAGE>

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. Each 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, a Fund may enter into forward contracts in order to
protect against anticipated changes in future foreign currency exchange rates.

         Each 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. Each such Fund may also engage in proxy
hedging, by using forward contracts in a series of foreign currencies for
similar purposes.

         Each 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. Each such 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 a Fund if the value of the hedged currency increased.

         If a 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 a 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.

         OPTIONS ON FOREIGN CURRENCIES. Each 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. Each such 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 Funds 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; a
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 a
Fund's position, the Fund may forfeit the entire amount of the premium plus
related transaction costs.


                                     Page 5
<PAGE>

         Each 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 a 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. Each Fund (other than the Europe Fund) may
enter into currency futures contracts, as described under "Futures Transactions"
below.

         CURRENCY SWAPS. Each 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 Funds expect 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. Each 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 a 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 a Fund entering into a currency swap would be less
favorable than it would have been if this investment technique were not used.

         INTEREST RATE SWAPS. The Balanced Fund may enter into interest rate
swaps, caps and floors and will usually enter into interest rate swaps on a net
basis (i.e. the two payment streams are netted out, with the Fund receiving or
paying, as the case may be, only the net amount of the two payments). The net
amount of the excess, if any, of the Fund's obligations over its entitlement
with respect to each interest rate swap will be calculated on a daily basis and
an amount of cash or other liquid assets having an aggregate net asset value at
least equal to the accrued excess will be maintained in a segregated account by
the Fund's custodian. If the Fund enters into an interest rate swap on other
than a net basis it will maintain a segregated account in the full amount
accrued on a daily basis of its obligations with respect to the swap. The Fund
will not enter into any interest rate swap, cap or floor transaction unless the
unsecured senior debt or the claims-paying ability of the other party thereto is
rated in one of the three highest rating categories of at least one Nationally
Recognized Rating Organization at the time of entering into such transaction.
The Investment Manager will monitor the creditworthiness of all counterparties
on an ongoing basis. If there is a default by the other party to such a
transaction, the Fund will have contractual remedies pursuant to the agreements
related to the transaction.

         The swap market has grown substantially in recent years with a large
number of banks and investment banking firms acting as principals and as agents
using standardized swap documentation. The Investment Manager has determined
that, as a result, the swap market has become relatively liquid. Cap and floors
are more recent innovations for which standardized documentation has not been
developed and, accordingly, they are less liquid than swaps. To the extent the
Fund sells (i.e. writes) caps and floors, it will segregate cash or other liquid
assets having an aggregate net asset value at least equal to the full amount,
accrued on a daily basis, of its obligations with respect to any caps or floors.


                                     Page 6
<PAGE>

         There is no limit on the amount of interest rate swap transactions that
may be entered into by the Fund. These transactions may in some instances
involve the delivery of securities or other underlying assets by the Fund or its
counterparty to collateralize obligations under the swap. Under the
documentation currently used in the swap markets, the risk of loss with respect
to interest rate swaps is limited to the net amount of the payments that the
Fund is contractually obligated to make. If the other party to an interest rate
swap that is not collateralized defaults, the Fund would risk the loss of the
net amount of the payments that it contractually is entitled to receive. The
Fund may buy and sell (i.e. write) caps and floors without limitation, subject
to the segregation requirement described above.


OPTIONS TRANSACTIONS

         Each 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 a Fund may not
in each case exceed 5% of the value of the net assets of the Fund as of the date
of purchase. In addition, a 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.

         A Fund may effectively terminate its right or obligation under an
option by entering into a closing transaction. For example, a Fund may terminate
its obligation under a put or call option that it had written by purchasing an
identical put or call option; this is known as a closing purchase transaction.
Conversely, a Fund may terminate a position in a put or call option that it had
purchased by writing an identical put or call option; this is known as a closing
sale transaction. A Fund realizes a gain from a closing transaction if the cost
of the closing transaction is less than the premium received from writing the
option or if the proceeds from the closing transaction are more than the premium
paid to purchase the option.

PURCHASING PUT AND CALL OPTIONS

         PUT OPTIONS. If a 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 a 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 a 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 a 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


                                     Page 7
<PAGE>

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.

         WRITING PUT AND CALL OPTIONS. Writing covered put or call options can
enable a Fund to enhance income by reason of the premiums paid by the purchasers
of such options. When a Fund writes a put option, the purchaser acquire the
right to sell to the Fund the underlying security at a specified price at any
time during the term of the option or on the option expiration date. When a Fund
writes a call option, the purchaser acquires the right to purchase from the Fund
the underlying security at a specified price at any time during the term of the
option. In return for the premium received for a call option, a Fund foregoes
the opportunity for profit from a price increase in the underlying security
above the exercise price so long as the option remains open, but retains the
risk of loss should the price of the security decline. In return for the premium
received for a put option, a Fund assumes the risk that the price of the
underlying security will decline below the exercise price, in which case the put
would be exercised and the Fund would suffer a loss.

         STOCK INDEX OPTIONS. Each Fund may purchase put and call options with
respect to stock indices such as the S&P 500 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 a 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 a 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 a 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, a 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 could
result in substantial losses to the Fund. It is the policy of the Funds 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. Each 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
a 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

         Each Fund, except the International Fund, may engage in short sales
transactions. Although the International Fund may not make short sales of
securities, it may maintain short positions in connection with its use of
options, futures contracts, options on futures contracts, forward foreign
currency exchange transactions, and currency options. A short sale that is not
made "against the box" is a transaction in which a Fund sells a security it does
not own in anticipation of a decline in market price. When a Fund makes a short
sale, the proceeds it receives are retained by the broker until the Fund
replaces the borrowed security. In order to deliver the security to the buyer,
the Fund must arrange through a broker to borrow the security and, in 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.


                                     Page 8
<PAGE>

         The value of securities of any issuer in which a 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. A 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 a 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
a 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 a Fund may mitigate
such losses by replacing the securities sold short before the market price has
increased significantly. Under adverse market conditions, a 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 a 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. A 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.

         To avoid limitations under the 1940 Act on borrowing by investment
companies, short sales by each 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. A 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

         Each Fund (other than the Europe 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 Funds
generally do 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.

         A 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


                                     Page 9
<PAGE>

segregated for this purpose, a Fund's liquidity and the ability of the
Investment Manager to manage its portfolio may be adversely affected.


FUTURES TRANSACTIONS

         The Funds (other than the Europe 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 a Fund owns Treasury bonds and the portfolio manager
expects interest rates to increase, that Fund may take a short position in
interest rate futures contracts. Taking such a position would have much the same
effect as that 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 that Fund's interest rate futures contract will increase, thereby
keeping the net asset value of that 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 a 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.

         The Europe Fund may enter into futures contracts for the purchase or
sale of foreign stock or bond indices or other financial indices that the
Investment Manager determines are appropriate to hedge the risks associated with
changes in interest rates or general fluctuations in the value of its portfolio
securities. Pursuant to the regulations of the Commodity Futures Trading
Commission ("CFTC"), and subject to certain restrictions, the Fund may purchase
or sell futures contracts that are traded on U.S. exchanges that have been
designated as contract markets by the CFTC. The Fund may also generally purchase
or sell futures contracts that are subject to the rules of any foreign board of
trade ("foreign futures contracts"). The Fund may not, however, trade a foreign
futures contract based on a foreign stock index unless the contract has been
approved by the CFTC for trading by U.S. persons. The Investment Manager may
comply with such different standards as may be established by the CFTC with
respect to the purchase or sale of futures contracts and foreign futures
contracts.

         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 a Fund purchases or sells a security, no price is paid or
received by a 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 a 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 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 a 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 a 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


                                    Page 10
<PAGE>

contract, a 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. Each Fund (other than the Europe
Fund) may also purchase call options and put options on securities or index
futures contracts ("futures options"), and each Fund (other than the Europe
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. Each Fund (other than the Europe 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, a 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. Each Fund (other than the Europe 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 a 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, a 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 a 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 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, a 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.


                                    Page 11
<PAGE>

         LIMITATIONS ON PURCHASE AND SALE OF FUTURES AND FUTURES OPTIONS. A 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, a 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.

         The International Fund will not engage in transactions in stock index
futures contracts and futures options for speculation, but only as a hedge
against changes in the value of securities held in the Fund's portfolio, or
securities which the Investment Manager intends to purchase for the portfolio,
resulting from actual or anticipated changes in general market conditions. Such
transactions will only be effected when, in the view of the Investment Manager,
they are economically appropriate to the reduction of risks inherent in the
ongoing management of the Fund's portfolio.

         REGULATORY MATTERS. The Companies have filed claims of exemption from
registration of the Funds as commodity pools with the Commodity Futures Trading
Commission (the "CFTC"). Each 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.

SWAPS

         The Europe Fund may engage in securities index total return swaps with
approved counterparties. Securities index total return swaps involve an
agreement between two parties to exchange payments that are based on a specified
securities index and that are calculated on the basis of a set amount (the
"notional amount") for a specified period of time. The Fund may enter into
securities index total return swaps only to the extent that the notional amount
of all current swaps does not exceed 30% of the Fund's net assets. Generally,
the Fund will base its securities index total return swaps on its benchmark
index, MSCI Europe, or a separate market index such as the DAX100 or CAC100. The
Fund may, among other purposes, use securities index total return swaps to
provide the Fund with sufficient liquidity to meet cash redemptions of shares
while maintaining its investments in securities and foreign currencies or to
provide the Fund with sufficient exposure to the equity markets when it is
holding cash that is being held to meet redemptions or when incoming cash is not
yet invested. Swaps are subject to risks comparable to the risks involved with
respect to hedging transactions.

         The Europe Fund may enter into securities index total return swaps and
will usually enter into securities index total return swaps on a net basis,
I.E., the two payment streams are netted out, with the Fund receiving or paying,
as the case may be, only the net amount of the two payments. Inasmuch as
segregated accounts will be established with respect to such transactions, the
Investment Manager believes such obligations do not constitute senior securities
and, accordingly, will not treat them as being subject to the Fund's borrowing
restrictions. The net amount of the excess, if any, of the Fund's obligations
over its entitlements with respect to each securities index total return swap
will be accrued on a daily basis, and appropriate Fund assets having an
aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account. The Fund also will establish and maintain
such segregated accounts with respect to its total obligations under any swaps
that are not entered into on a net basis.

         The Europe Fund will enter into swaps only with banks and recognized
securities dealers believed by the Investment Manager to present minimal credit
risk in accordance with guidelines established by the Board of Directors of the
Investment Company. If there is a default by the approved counterparty to such a
transaction, the Fund will have to rely on its contractual remedies (which may
be limited by bankruptcy, insolvency or similar laws) pursuant to the agreements
related to the swap.


                                    Page 12
<PAGE>

DEBT SECURITIES

         Under normal market conditions, the Balanced Fund will invest at least
25%, the International Fund may invest up to 20%, and each other Fund except the
Emerging Markets 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 government entities, and
debt obligations of corporate issuers. The timing of purchase and sale
transactions in debt obligations may result in capital appreciation or
depreciation because the value of debt obligations varies inversely with
prevailing interest rates. The debt obligations in which each Fund may invest
will be rated, at the time of purchase, BBB or higher by Standard & Poor's, a
division of The McGraw-Hill Companies, Inc. ("Standard & Poor's"), or Baa or
higher by Moody's Investors Service, Inc. ("Moody's") or equivalent ratings by
other rating organizations, or, if unrated, will be determined by the Investment
Manager to be of comparable investment quality. If the rating of an investment
grade security held by any 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. 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. The
Investment Manager does not currently intend to purchase U.S. or foreign debt
securities on behalf of the International Fund except on an occasional basis
when the Investment Manager believes that unusually attractive investments are
available.

         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
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.

         The Emerging Markets Fund may invest up to 5% of its total assets in
debt securities issued or guaranteed by an emerging market company or government
(including such government's agencies, instrumentalities, authorities and
political subdivisions), or denominated in the currencies of emerging market
countries that the Investment Manager believes present attractive investment
opportunities for capital growth. There is no limit on the average maturity of
the debt securities in the Emerging Markets Fund's portfolio. Such debt
obligations may be unrated or rated, at the time of purchase, below investment
grade by Standard & Poor's, Moody's or another recognized international rating
organization. The Balanced Fund may invest up to 5% of its total assets in debt
securities rated, at the time of purchase, below investment grade by Standard
and Poor's, Moody's or another recognized international rating organization.
Bonds rated below investment grade are often referred to as "junk bonds," and
involve greater risk of default or price declines than investment grade
securities. The Balanced Fund will not invest in securities rated lower than B.

         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 a Fund will be treated as investment grade if they are rated
by at least one major rating agency 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 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. If the rating of an investment grade security held
by a 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. The Emerging Markets Fund and the Balanced Fund may invest
in debt


                                    Page 13
<PAGE>

securities rated, at the time of purchase, below investment grade. Refer to the
section entitled "Risk Considerations" for the risks associated with below
investment grade debt securities.

         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.

         Each 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. Such sovereign debtors also may be dependent on expected disbursements
from foreign governments, multilateral agencies and other entities abroad to
reduce principal and interest arrearages on their debt. The commitments on 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.

         ZERO COUPON, PAY-IN-KIND AND STEP COUPON SECURITIES. The Balanced Fund
may invest in zero coupon, pay-in-kind and step coupon securities. Zero coupon
bonds are issued and traded at a discount from their face value. They do not
entitle the holder to any periodic payment of interest prior to maturity. Step
coupon bonds trade at a discount from their face value and pay coupon interest.
The coupon rate is low for an initial period and then increases to a higher
coupon rate. The discount from the face amount or par value depends on the time
remaining until cash payments begin, prevailing interest rates, liquidity of the
security and the perceived credit quality of the issuer. Pay-in-kind bonds
normally give the issuer an option to pay cash at a coupon payment date or
securities with a face value equal to the amount of the coupon payment that
would have been made.

         Current federal income tax law requires holders of zero coupon
securities and step coupon securities to report the portion of the original
issue discount on such securities that accrues during a given year as interest
income, even though the holders receive no cash payments of interest during the
year. In order to qualify as a "regulated investment company" under the Internal
Revenue Code of 1986 and the regulations thereunder (the "Code"), the Fund must
distribute its investment company taxable income, including the original issue
discount accrued on zero coupon bonds or step coupon bonds. Because the Fund
will not receive cash payments on a current basis in respect of accrued
original-issue discount on zero coupon bonds or step coupon bonds during the
period before interest payments begin, in some years the Fund may have to
distribute cash obtained from other sources in order to satisfy the distribution
requirements under the Code. The Fund might obtain such cash from selling other
portfolio holdings, which might cause the Fund to incur capital gains or losses
on the sale. Additionally, these actions are likely to reduce the assets to
which Fund expenses could be allocated and to reduce the rate of return for the
Fund. In some circumstances, such sales might be necessary in order to satisfy
cash distribution requirements even though investment considerations might
otherwise make it undesirable for the Fund to sell the securities at the time.

         Generally, the market prices of zero coupon, step coupon and
pay-in-kind securities are more volatile than the prices of securities that pay
interest periodically and in cash and are likely to respond to changes in
interest rates to a greater degree than other types of debt securities having
similar maturities and credit quality.

         PASS THROUGH SECURITIES. The Balanced Fund may invest in various types
of pass-through securities, such as mortgage-backed securities, asset-backed
securities and participation interests. A pass-through security is a share or
certificate of interest in a pool of debt obligations that have been repackaged
by an intermediary, such as a


                                    Page 14
<PAGE>

bank or broker-dealer. The purchaser of a pass-through security receives an
undivided interest in the underlying pool of securities. The issuers of the
underlying securities make interest and principal payments to the intermediary
which are passed through to purchasers, such as the Fund. The most common type
of pass-through securities are mortgage-backed securities, including those
issued by the Government National Mortgage Association ("GNMA"), the Federal
Home Loan Mortgage Corporation ("FHLMC"), and the Federal National Mortgage
Association ("FNMA").

         GNMA Certificates are mortgage-related securities that evidence an
undivided interest in a pool of mortgage loans. GNMA Certificates differ from
bonds in that principal is paid back monthly by the borrowers over the term of
the loan rather than returned in a lump sum at maturity. The Fund will generally
purchase "modified pass-through" GNMA Certificates, which entitle the holder to
receive a share of all interest and principal payments paid on the mortgage
pool, net of fees paid to the intermediary and GNMA, regardless of whether or
not the mortgagor actually makes the payment. GNMA Certificates are backed as to
the timely payment of principal and interest by the full faith and credit of the
U.S. Government.

         FHLMC issues two types of mortgage pass-through securities: mortgage
participation securities ("PCs") and guaranteed mortgage securities ("GMCs").
PCs resemble GNMA Certificates in that each PC represents a pro rata share of
all interest and principal payments made on the underlying pool. FHLMC
guarantees timely payments of interest on PCs and the full return of principal.
GMCs also represent a pro rata interest in a pool of mortgages. However, these
instruments pay interest semiannually and return principal once a year in
guaranteed minimum payments. This type of security is guaranteed by FHLMC as to
timely payment principal and interest but it is not guaranteed by the full faith
and credit of the U.S. Government.

         FNMA issues guaranteed mortgage pass-through certificates ("FNMA
Certificates"). FNMA Certificates resemble GNMA Certificates in that each FNMA
Certificate represents a pro rata share of all interest and principal payments
made and owned on the underlying pool. This type of security is guaranteed by
FNMA as to timely payment of principal and interest, but it is not guaranteed by
the full faith and credit of the U.S.
Government.

         Except for GMCs, each of the mortgage-backed securities described above
is characterized by monthly payments to the holder, reflecting the monthly
payments made by the borrowers who received the underlying mortgage loans. The
payments to the security holders (such as the Fund), like the payments on the
underlying loans, represent both principal and interest. Pass-through securities
are subject to prepayment risk. Although the underlying mortgage loans are for
specified periods of time, such as 20 or 30 years, the borrowers can, and
typically do, pay them off sooner. Thus, the security holders frequently receive
prepayments of principal in addition to the principal that is part of the
regular monthly payments. A portfolio manager will consider estimated prepayment
rates in calculating the average weighted maturity of the Fund. A borrower is
more likely to prepay a mortgage that bears a relatively high rate of interest.
This means that in times of declining interest rates, higher yielding
mortgage-backed securities held by the Fund might be converted to cash and that
Fund will be forced to accept lower interest rates when that cash is used to
purchase additional securities in the mortgage-backed securities sector or in
other investment sectors. Additionally, prepayments during such periods will
limit the Fund's ability to participate in as large a market gain as may be
experienced with a comparable security not subject to prepayment.

         MUNICIPAL SECURITIES. The Balanced Fund may invest in municipal
securities issued by states, territories and possessions of the United States
and the District of Columbia. The value of municipal obligations can be affected
by changes in their actual or perceived credit quality. The credit quality of
municipal obligations can be affected by, among other things, the financial
condition of the issuer or guarantor, the issuer's future borrowing plans and
sources of revenue, the economic feasibility of the revenue bond project or
general borrowing purpose, political or economic developments in the region
where the security is issued, and the liquidity of the security. Because
municipal securities are generally traded over-the-counter, the liquidity of a
particular issue often depends on the willingness of dealers to make a market in
the security. The liquidity of some municipal obligations may be enhanced by
demand features, which would enable the Fund to demand payment on short notice
from the issuer or a financial intermediary. Such securities must be rated at
least A by Standard & Poor's or Moody's.


                                    Page 15
<PAGE>

         The Fund may purchase insured municipal debt in which scheduled
payments of interest and principal are guaranteed by a private, non-governmental
or governmental insurance company. The insurance does not guarantee the market
value of the municipal debt or the value of the shares of the Fund.

         Securities of issuers of municipal obligations are subject to the
provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the Bankruptcy Reform Act of 1978. In addition,
the obligations of such issuers may become subject to laws enacted in the future
by Congress, state legislatures or referenda extending the time for payment of
principal or interest, or imposing other constraints upon enforcement of such
obligations or upon the ability of municipalities to levy taxes. Furthermore, as
a result of legislation or other conditions, the power or ability of any issuer
to pay, when due, the principal of and interest on its municipal obligations may
be materially affected.

         MORAL OBLIGATION SECURITIES. Municipal securities may include "moral
obligation" securities which are usually issued by special purpose public
authorities. If the issuer of moral obligation bonds cannot fulfill its
financial responsibilities from current revenues, it may draw upon a reserve
fund, the restoration of which is a moral commitment but not a legal obligation
of the state or municipality which created the issuer.

         INDUSTRIAL DEVELOPMENT AND POLLUTION CONTROL BONDS. The Balanced Fund
may invest in tax exempt industrial development bonds and pollution control
bonds which, in most cases, are revenue bonds and generally are not payable from
the unrestricted revenues of an issuer. They are issued by or on behalf of
public authorities to raise money to finance privately operated facilities for
business, manufacturing, housing, sport complexes, and pollution control.
Consequently, the credit quality of these securities depend upon the ability of
the user of the facilities financed by the bonds and any guarantor to meet its
financial obligations.

         MUNICIPAL LEASE OBLIGATIONS. The Balanced Fund may invest in lease
obligations or installment purchase contract obligations of municipal
authorities or entities ("municipal lease obligations"). Although lease
obligations do not constitute general obligations of the municipality for which
its taxing power is pledged, a lease obligation is ordinarily backed by the
municipality's covenant to budget for, appropriate and make the payment due
under the lease obligation. The Fund may also purchase "certificates of
participation," which are securities issued by a particular municipality or
municipal authority to evidence a proportionate interest in base rental or lease
payments relating to a specific project to be made by the municipality, agency
or authority. However, certain lease obligations contain "non-appropriation"
clauses which provide that the municipality has no obligation to make lease or
installment purchase payments in any year unless money is appropriated for such
purpose for such year. Although "non-appropriation" lease obligations are
secured by the leased property, disposition of the property in the event of
default and foreclosure might prove difficult. In addition, these securities
represent a relatively new type of financing and certain lease obligations may
therefore be considered to be illiquid securities.

         SHORT-TERM OBLIGATIONS. The Balanced Fund may invest in short-term
municipal obligations. These securities include the following:

         Tax Anticipation Notes are used to finance working capital needs of
municipalities and are issued in anticipation of various seasonal tax revenues,
to be payable from these specific future taxes. They are usually general
obligations of the issuer, secured by the taxing power of the municipality for
the payment of principal and interest when due.

         Revenue Anticipation Notes are issued in expectation of receipt of
other kinds of revenue, such as federal revenues available under the Federal
Revenue Sharing Program. They also are usually general obligations of the
issuer.

         Bond Anticipation Notes normally are issued to provide interim
financing until long-term financing can be arranged. The long-term bonds then
provide the money for the repayment of the notes.


                                    Page 16
<PAGE>

         Construction Loan Notes are sold to provide construction financing for
specific projects. After successful completion and acceptance, many such
projects receive permanent financing through FNMA or GNMA.

         Short-Term Discount Notes (tax-exempt commercial paper) are short-term
(365 days or less) promissory notes issued by municipalities to supplement their
cash flow.

         MORTGAGE-BACKED SECURITIES The Balanced Fund may purchase
mortgage-backed securities issued by government and non-government entities such
as banks, mortgage lenders, or other financial institutions. A mortgage-backed
security may be an obligation of the issuer backed by a mortgage or pool of
mortgages or a direct interest in an underlying pool of mortgages. Some
mortgage-backed securities, such as collateralized mortgage obligations or CMOs,
make payments of both principal and interest at a variety of intervals; others
make semiannual interest payments at a predetermined rate and repay principal at
maturity (like a typical bond). Mortgage-backed securities are based on various
types of mortgages, including those on commercial real estate or residential
properties. Other types of mortgage-backed securities will likely be developed
in the future, and the Fund may invest in them if the Investment Manager
determines they are consistent with the Fund's investment objectives and
policies.

         The value of a mortgage-backed security may change due to shifts in the
market's perceptions of the issuer. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Mortgage-backed
securities are subject to prepayment risk as described above under "Pass Through
Securities." Prepayment, which occurs when unscheduled or early payments are
made on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns. The Fund will invest in CMOs and
mortgage-backed securities only if the Investment Manager determines that they
are marketable.

         FOREIGN MORTGAGE-RELATED SECURITIES. Foreign mortgage-related
securities are interests in pools of mortgage loans made to residential home
buyers domiciled in a foreign country. These include mortgage loans made by
trust and mortgage loan companies, credit unions, chartered banks, and others.
Pools of mortgage loans are assembled as securities for sale to investors by
various governmental, government-related and private organizations (e.g. Canada
Mortgage and Housing Corporation and First Australian National Mortgage
Acceptance Corporation Limited). The mechanics of these mortgage-related
securities are generally the same as those issued in the United States. However,
foreign mortgage markets may differ materially from the U.S. mortgage market
with respect to matters such as the sizes of loan pools, pre-payment experience,
and maturities of loans.

         ASSET-BACKED SECURITIES The Balanced Fund may purchase asset-backed
securities, which include undivided fractional interests in pools of consumer
loans (unrelated to mortgage loans) held in a trust. Payments of principal and
interest are passed through to certificate holders and are typically supported
by some form of credit enhancement, such as a letter of credit, surety bonds or
limited guarantees. The degree of credit enhancement varies, but generally
amounts to only a fraction of the asset-backed security's par value until
exhausted. If the credit enhancement is exhausted, certificate holders may
experience losses or delays in payment if the required payments of principal and
interest are not made to the trust with respect to the underlying loans. The
value of these securities also may change because of changes in the market's
perception of the creditworthiness of the servicing agent for the loan pool, the
originator of the loans, or the financial institution providing the credit
enhancement. Asset-backed securities ultimately depend upon payment of consumer
loans by individuals, and the certificate holder generally has no recourse to
the entity that originated the loans. The underlying loans are subject to
prepayments which shorten the securities' weighted average life and may lower
their returns. (As prepayments flow through at par, total returns would be
affected by the prepayments; if a security were trading at a premium, its total
return would be lowered by prepayments, and if a security were trading at a
discount, its total return would be increased by prepayments.) The Fund will
invest in asset backed securities only if the Investment Manager determines that
they are marketable.


                                    Page 17
<PAGE>

OTHER INCOME-PRODUCING SECURITIES

         Other types of income producing securities that the Balanced Fund may
purchase include, but are not limited to, the following types of securities:

         VARIABLE OR FLOATING RATE OBLIGATIONS. These types of securities bear
variable or floating interest rates and carry rights that permit holders to
demand payment of the unpaid principal balance plus accrued interest from the
issuers of certain financial intermediaries. Floating rate instruments have
interest rates that change whenever there is a change in a designated base rate
while variable rate instruments provide for a specified periodic adjustment in
the interest rate. These arrangements are designed to result in a market value
for the instrument that approximates its par value.

         STANDBY COMMITMENTS. These instruments, which are similar to a put,
give the Fund the option to obligate a broker, dealer or bank to repurchase a
security held by the Fund at a specified price.

         TENDER OPTION BONDS. Tender option bonds are relatively long-term bonds
that are coupled with the agreement of a third party (such as a broker, dealer,
or bank) to grant the holders of such securities the option to tender the
securities to the institution at periodic intervals.

         INVERSE FLOATERS. Inverse floaters are debt instruments whose interest
bears an inverse relationship to the interest rate on another security or an
index.

         The Fund will purchase standby commitments, tender option bonds,
inverse floaters and instruments with demand features primarily for the purpose
of increasing the liquidity of their portfolios.

         INDEX AND CURRENCY-LINKED SECURITIES. The Fund may invest in
"index-linked" or "commodity-linked" notes, which are debt securities of
companies that call for interest payments and/or payment at maturity in
different terms than the typical note where the borrower agrees to make fixed
interest payments and to pay a fixed sum at maturity. Principal and/or interest
payments on an index-linked note depend on the performance of one or more market
indices, such as the S&P 500 Index or a weighted index of commodity futures such
as crude oil, gasoline and natural gas. The Fund may also invest in "equity
linked" and "currency-linked" debt securities. At maturity, the principal amount
of an equity-linked debt security is exchanged for common stock of the issuer or
is payable in an amount based on the issuer's common stock price at the time of
maturity. Currency-linked debt securities are short-term or intermediate term
instruments having a value at maturity, and/or an interest rate, determined by
reference to one or more foreign currencies. Payment of principal or periodic
interest may be calculated as a multiple of the movement of one currency against
another currency, or against an index.

         Index floaters and index and currency-linked securities are derivative
instruments which may entail substantial risks. Such instruments may be subject
to significant price volatility. The company issuing the instrument may fail to
pay the amount due on maturity. The underlying investment or security may not
perform as expected by the Investment Manager. Markets, underlying securities
and indexes may move in a direction that was not anticipated by the Investment
Manager. Performance of the derivatives may be influenced by interest rate and
other market changes in the U.S. and abroad. Certain derivative instruments may
be illiquid.


CONVERTIBLE SECURITIES AND WARRANTS

         Each 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


                                    Page 18
<PAGE>

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, no Fund will 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

         Each 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, a Fund may purchase a non-convertible debt security and
a warrant or option, which enables a 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 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. A 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

         Each 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 a Fund to borrow money
rather than sell portfolio securities to raise the cash to meet redemption
requests. In order to meet such redemption requests, each Fund may borrow from
banks or enter into reverse repurchase agreements. Each 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 Funds will not borrow money for
leveraging purposes. A Fund may continue to purchase securities while borrowings
are outstanding. The 1940 Act permits a 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
(except for the Europe Fund).


                                    Page 19
<PAGE>

         A reverse repurchase agreement involves a transaction by which a
borrower (such as a 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 of the Capital Company, the Global
Company or the Investment Company, as applicable (each, a "Board of Directors"
or collectively, the "Boards 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.

"ROLL" TRANSACTIONS

         The Balanced Fund may enter into "roll" transactions, which are the
sale of GNMA certificates and other securities together with a commitment to
purchase similar, but not identical, securities at a later date from the same
party. During the roll period, the Fund forgoes principal and interest paid on
the securities. The Fund is compensated by the difference between the current
sales price and the forward price for the future purchase, as well as by the
interest earned on the cash proceeds of the initial sale. Like when-issued
securities or firm commitments, roll transactions involve the risk that the
market value of the securities sold by the Fund may decline below the price at
which the Fund is committed to purchase similar securities. Additionally, in the
event the buyer of securities under a roll transaction files for bankruptcy or
becomes insolvent, the Fund's use of the proceeds of the transactions may be
restricted pending a determination by the other party, or its trustee or
receiver, whether to enforce the Fund's obligation to repurchase the securities.

         The Fund will engage in roll transactions for the purpose of acquiring
securities for its portfolio consistent with its investment objective and
policies and not for investment leverage. Nonetheless, roll transactions are
speculative techniques and are considered to be the economic equivalent of
borrowings by the Fund. To avoid leverage, the Fund will establish a segregated
account with its Custodian in which it will maintain liquid assets in an amount
sufficient to meet its payment obligations with respect to these transactions.
The Fund will not enter into roll transactions if, as a result, more than 50% of
the Fund's net assets would be segregated to cover such contracts.


LENDING PORTFOLIO SECURITIES

         Each 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 its 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.


INVESTMENT IN ILLIQUID SECURITIES

         Each Fund may invest up to 15% (10% for the International Fund) of the
value of its net assets in illiquid securities. Securities may be considered
illiquid if a 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 a Fund
are liquid or illiquid pursuant to standards adopted by the Boards 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 Funds' 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 a
Fund purchases unregistered securities, it may, in appropriate circumstances,
obtain the right to register such securities at the expense


                                    Page 20
<PAGE>

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 Boards 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 a 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 Funds
are not restricted with regard to the types of cash-equivalent investments they
may make. When the Investment Manager believes that such investments are an
appropriate part of a 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 each Company's 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, a 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 a
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 a 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 influenced by sound investment practices, a
Fund's investment objective, and the need for funds for the redemption of a
Fund's shares, although the Tax Managed Growth Fund will also be influenced by
its strategy of holding securities long enough to avoid higher, short-term
capital gains taxes, selling shares with a higher cost basis first, and
offsetting gains realized in one security by selling another security at a
capital loss. In an attempt to minimize capital gains on other holdings, the Tax
Managed Growth Fund may also realize accrued losses on some stocks.

         For example, a 150% portfolio turnover rate would occur if the value of
purchases or sales of portfolio securities (whichever is less) by a Fund for a
year (excluding purchases of U.S. Treasury issues and securities with a maturity
of one year or less) were equal to 150% 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 a Fund's operations, and during periods when a Fund's assets are growing
or shrinking. A high portfolio turnover rate would increase a Fund's brokerage
commission expenses and other transaction costs, and may increase its taxable
capital gains.


                                    Page 21
<PAGE>

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 a 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 a 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, each 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 a Fund, including the withholding of tax on
interest, dividends and other distributions and limitations on the repatriation
of currencies. In addition, a 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.

         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 a Fund due to subsequent declines in the value of the portfolio security or,
if a 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 a 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


                                    Page 22
<PAGE>

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. Therefore, for purposes of each Fund's investment policies
and restrictions, they are treated as foreign equity securities, based on the
country in which the underlying issuer is organized or headquartered. In
addition, to the extent that a 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 a Fund's restriction on the purchases of such securities unless the
depositary receipt is convertible into cash by the Fund within seven days.


EMERGING MARKET SECURITIES

         There are special risks associated with investments in securities of
companies organized or headquartered in developing countries with emerging
markets that are in addition to the usual risks of investing in securities of
issuers located in developed foreign markets around the world, and investors in
the Funds are strongly advised to consider those risks carefully. The securities
markets of emerging market countries are substantially smaller, less developed,
less liquid, and more volatile than the securities markets of the United States
and developed foreign markets. As a result, the prices of emerging market
securities may increase or decrease much more rapidly and much more dramatically
than the prices of securities of issuers located in developed foreign markets.
Disclosure and regulatory standards in many respects are less stringent than in
the United States and developed foreign markets. There also may be a lower level
of monitoring and regulation of securities markets in emerging market countries
and the activities of investors in such markets, and enforcement of existing
regulations has been extremely limited.

         Many emerging market countries have experienced substantial, and in
some periods extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates have had and may continue to have very
negative effects on the economies and securities markets of certain emerging
market countries. Economies in emerging markets generally are heavily dependent
upon international trade and, accordingly, have been and may continue to be
affected adversely by trade barriers, exchange controls, managed adjustments in
relative currency values, and other protectionist measures imposed or negotiated
by the countries with which they trade. These economies also have been and may
continue to be adversely affected by economic conditions in the countries with


                                    Page 23
<PAGE>

which they trade. In addition, custodial services and other costs related to
investment in foreign markets may be more expensive in emerging markets than in
many developed foreign markets, which could reduce the Funds' investment returns
from such securities.

         In many cases, governments of emerging market countries continue to
exercise a significant degree of control over the economies of such countries,
and government actions relative to the economy, as well as economic developments
generally, also may have a major effect on an issuer's prospects. In addition,
certain of such governments have in the past failed to recognize private
property rights and have at times naturalized or expropriated the assets of
private companies. There is also a heightened possibility of confiscatory
taxation, imposition of withholding taxes on dividend and interest payments, or
other similar developments that could affect investments in those countries. As
a result, there can be no assurance that adverse political changes will not
cause a Fund to suffer a loss with respect to any of its holdings. In addition,
political and economic structures in many of such countries may be undergoing
significant evolution and rapid development, and such countries may lack the
social, political and economic stability characteristics of more developed
countries. Unanticipated political or social developments may affect the values
of a Fund's investments in those countries and the availability of additional
investments in those countries.


INVESTMENTS IN SMALLER COMPANIES

         Investment in the securities of companies with smaller market
capitalizations 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 a Fund may invest may
have limited or unprofitable operating histories, limited financial resources,
and inexperienced 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, a 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
a 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.


BELOW INVESTMENT GRADE DEBT SECURITIES

         The Emerging Markets Fund and the Balanced Fund may invest up to 5% of
their total assets in debt securities rated below "Baa" by Moody's, below "BBB"
by Standard & Poor's, or investment grade by another recognized rating


                                    Page 24
<PAGE>

agency or, if unrated, judged by the Investment Manager to be of comparable
quality, if the Investment Manager believes that the financial condition of the
issuer or the protection afforded to the particular securities is stronger than
would otherwise be indicated by such low ratings or the lack thereof. Debt
securities rated below investment grade or equivalent ratings, commonly referred
to as "junk bonds," are subject to greater risk of loss of income and principal
than higher-rated bonds and are considered to be predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal, which may
in any case decline during sustained periods of deteriorating economic
conditions or rising interest rates. Junk bonds are generally considered to be
subject to greater market risk in times of deteriorating economic conditions,
and to wider market and yield fluctuations, than higher-rated securities. Junk
bonds may also be more susceptible to real or perceived adverse economic and
competitive industry conditions than investment grade securities. The market for
such securities may be thinner and less active than that for higher-rated
securities, which can adversely affect the prices at which these securities can
be sold. To the extent that there is no established secondary market for
lower-rated securities, a Fund may experience difficulty in valuing such
securities and, in turn, its assets. In addition, adverse publicity and investor
perceptions about junk bonds, whether or not based on fundamental analysis, may
tend to decrease the market value and liquidity of such securities. The
Investment Manager will try to reduce the risk inherent in a Fund's investments
in such securities through credit analysis, diversification and attention to
current developments and trends in interest rates and economic conditions.
However, there can be no assurance that losses will not occur. Since the risk of
default is higher for lower-rated bonds, the Investment Manager's research and
credit analysis are a correspondingly more important aspect of its program for
managing a Fund's investments in such debt securities. The Investment Manager
will attempt to identify those issuers of high-yielding securities whose
financial conditions are adequate to meet future obligations, or have improved
or are expected to improve in the future.

         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.


DELAYED-DELIVERY TRANSACTIONS

         Each of the Funds (other than the Europe Fund) may buy and sell
securities on a delayed-delivery or when-issued basis. These transactions
involve a commitment by a 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. A Fund may receive fees for entering into
delayed-delivery transactions. When purchasing securities on a delayed-delivery
basis, a Fund assumes the rights and risks of ownership, including the risk of
price and yield fluctuations. Because a 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 a 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, a Fund will set aside appropriate
liquid assets in a segregated custodial account to cover its purchase
obligations. When a 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. A 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


                                    Page 25
<PAGE>

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 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 Funds. 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 a 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, a 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, a 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 a 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 a 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


                                    Page 26
<PAGE>

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.

         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 a 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 a 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.

         A 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 Funds is subject to the Investment
Manager's ability to predict correctly movements in the direction of the
security and currency markets. For example, if a 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 a 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 a 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 27
<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 a Fund might not be
able to dispose of such securities promptly or at reasonable prices.

         A number of transactions in which the Funds 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 a 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 a 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, a 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
a Fund enters into reverse repurchase agreements, the Fund is subject to risks
that are similar to those of borrowing.


INVESTMENT RESTRICTIONS


FUNDAMENTAL POLICIES

         Each 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. In the case of the Funds other than the Europe
Fund, these restrictions provide that a 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) (this
         restriction does not apply to the Global Technology Fund, Global Health
         Care Fund, Biotechnology Fund or International Fund).

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. A 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 a Fund from engaging in futures


                                    Page 28
<PAGE>

         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.
         A 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% (15%, in the case of the Tax Managed Growth
         Fund) 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.       Invest more than 15% (10% for the International Fund) of the value of
         its net assets in securities that are illiquid (this restriction does
         not apply to the Balanced Fund, which is subject to a similar
         non-fundamental restriction.);

9.       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.

10.      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.

11.      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.

12.      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 market value of the Fund's net assets (this
         restriction applies to the International Fund only);

13.      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.

14.      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.

         IN THE CASE OF THE EUROPE FUND, THESE RESTRICTIONS PROVIDE THAT THE
FUND MAY NOT:

1.       Purchase any security (other than obligations of the Federal Republic
         of Germany, the German Federal Railways and the German Federal Post
         Office, which in the aggregate shall not represent more than 25% or


                                    Page 29
<PAGE>

         more of the Fund's total assets, or obligations of the U.S. government,
         its agencies or instrumentalities) if as a result more than 10% of the
         Fund's total assets would then be invested in securities of any single
         issuer.

2.       Invest 25% or more of the value of its total assets in a particular
         industry. This restriction does not apply to securities issued or
         guaranteed by the U.S. government, its agencies or instrumentalities,
         but will apply to foreign government obligations until such time as the
         Securities and Exchange Commission permits their exclusion.

3.       Purchase more than 10% of the outstanding voting securities of any
         issuer.

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 not 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 futures
         contracts, options on futures contracts, forward foreign currency
         exchange transactions, and currency options.

5.       Purchase or sell real estate or real estate mortgage loans, except that
         the Fund may purchase and sell securities of companies that deal in
         real estate or interests therein.

6.       Purchase securities on margin, except short-term credits as may be
         necessary or routine for the clearance or settlement of transactions,
         and except for margin posted in connection with hedging transactions
         consistent with its investment policies.

7.       Underwrite securities of other issuers, except insofar as the Fund may
         be deemed an underwriter under the U.S. Securities Act of 1933 in
         selling portfolio securities.

8.       Buy or sell commodities, commodity contracts or futures contracts
         (other than futures contracts with respect to foreign stock or bond
         indices or other financial indices that the Investment Manager
         determines are appropriate to hedge the risks associated with interest
         rates or general fluctuations in the value of its portfolio
         securities).


OPERATING POLICIES

         Each 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. In the case of the Funds
other than the Europe Fund, these restrictions provide that a Fund may not:

1.       Invest in interests in oil, gas, or other mineral exploration or
         development programs (this restriction does not apply to the Emerging
         Markets Fund).

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 (including the operation of any predecessor) (this
         restriction does not apply to the Emerging Markets Fund);

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 Investment Manager to save brokerage costs, or to
         average prices among them, is not deemed to result in a securities
         trading account).


                                    Page 30
<PAGE>

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 (this restriction does
         not apply to the International Fund).

5.       Invest more than 15% of the value of its net assets in securities that
         are illiquid (this restriction applies only to the Balanced Fund; the
         other Funds are subject to a similar fundamental policy).

         IN THE CASE OF THE EUROPE FUND, THESE RESTRICTIONS PROVIDE THAT THE
FUND MAY NOT:

1.       Invest in interests in oil, gas, or other mineral exploration or
         development programs;

2.       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 Investment Manager to save brokerage costs, or to
         average prices among them, is not deemed to result in a securities
         trading account).

3.       Purchase or sell futures if, immediately thereafter, the sum of the
         amount of "margin" deposits on the Fund's existing futures positions
         would exceed 5% of the value of the Fund's total assets.

4.       Invest more than 15% of the value of its net assets in securities that
         are illiquid.

         The Funds are 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 of each Company, makes each 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


                                    Page 31
<PAGE>

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 a 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 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
Funds), and a 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 each 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 Funds. 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 a Fund
any security that it, or its officers of employees, may purchase or 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 client's, subject to the Investment Manager's and the
Fund's Code of Ethics.

         The Funds also invest 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 Funds 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.

         For the fiscal years ended December 31, 1997, 1998 and 1999, the Funds
paid total brokerage commissions as follows:
<TABLE>
<CAPTION>
--------------------------------- ------------------------------ ------------------------------- ------------------------------
FUND NAME                                     1997                            1998                           1999
--------------------------------- ------------------------------ ------------------------------- ------------------------------
<S>                                     <C>                            <C>                            <C>
Dresdner RCM Large Cap Growth                $8,344                         $8,963                         $15,209
Fund
--------------------------------- ------------------------------ ------------------------------- ------------------------------
Dresdner RCM Tax Managed Growth                N/A                            N/A                           $1,221
Fund
--------------------------------- ------------------------------ ------------------------------- ------------------------------
Dresdner RCM Biotechnology Fund                N/A                           $6,028                         $18,207
--------------------------------- ------------------------------ ------------------------------- ------------------------------
Dresdner RCM Balanced Fund                     N/A                            N/A                            $287
--------------------------------- ------------------------------ ------------------------------- ------------------------------


                                    Page 32
<PAGE>

<CAPTION>
--------------------------------- ------------------------------ ------------------------------- ------------------------------
FUND NAME                                     1997                            1998                           1999
--------------------------------- ------------------------------ ------------------------------- ------------------------------
<S>                                     <C>                            <C>                            <C>
--------------------------------- ------------------------------ ------------------------------- ------------------------------
Dresdner RCM Global Small Cap                $19,389                        $23,322                         $32,714
Fund
--------------------------------- ------------------------------ ------------------------------- ------------------------------
Dresdner RCM Global Technology               $12,641                        $27,683                        $150,279
Fund
--------------------------------- ------------------------------ ------------------------------- ------------------------------
Dresdner RCM Global Health Care              $12,833                        $14,634                         $27,897
Fund
--------------------------------- ------------------------------ ------------------------------- ------------------------------
Dresdner RCM International                  $518,944                        $438,519                       $966,834
Growth Equity Fund
--------------------------------- ------------------------------ ------------------------------- ------------------------------
Dresdner RCM Emerging Markets                $3,913                         $31,302                         $50,468
Fund
--------------------------------- ------------------------------ ------------------------------- ------------------------------
Dresdner RCM Europe Fund                    $761,708                       $1,282,143                     $1,203,995
--------------------------------- ------------------------------ ------------------------------- ------------------------------
</TABLE>


         All of the commissions paid during the fiscal year ended December 31,
1999, were paid to firms which provided research, statistical or other services
to the Investment Manager.

         During the fiscal year ended 1999 the Large Cap Growth Fund, the Tax
Managed Growth Fund, the Biotechnology Fund, the Global Small Cap Fund, the
Global Technology Fund and the Global Health Care Fund each acquired the
securities of one of its regular broker-dealers (as defined in Rule 10b-1 under
the 1940 Act), the International Fund acquired the securities of five of its
regular broker-dealers and the Europe Fund acquired the securities of four of
its regular broker-dealers. At December 31, 1999 the Large Cap Growth Fund, the
Tax Managed Growth Fund, the Biotechnology Fund, the Global Small Cap Fund, the
Global Technology Fund and the Global Health Care Fund each had holdings in
State Street Bank and Trust Company valued at $525,000, $22,000, $1,348,000,
$897,000, $19,390,000 and $187,000, respectively. At December 31, 1999 the
International Fund's holdings in State Street Bank and Trust Company, Nomura
Securities, Deutsche Bank, Daiwa Securities and HSBC Holdings were valued at
$7,359,000, $1,209,000, $3,564,000, $5,615,000 and $1,876,000, respectively. At
December 31, 1999, the Europe Fund's holdings in Julius Baer Holdings Ltd.,
Banque Nationale de Paris, State Street Bank and Trust Company, and Deutsche
Bank were valued at $453, 000, $554,000, $412, 000 and $1,098,000, respectively.

         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 Funds 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 Funds 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
Funds, and the Investment Manager will not enter into any transaction on behalf
of the Funds 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 Funds.

         During fiscal 1999, the Europe Fund paid its affiliated broker,
Dresdner RCM Kleinwort Benson North America LLC, total brokerage commissions of
$386,779, which represents 32.12% of the Fund's aggregate brokerage commissions
paid and 0.06% of the Fund's aggregate dollar amount of transactions effected
during its most recent fiscal year.


                                    Page 33
<PAGE>

         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 a 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 a Fund participates will be effected only when the Investment Manager
believes that to do so 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

CAPITAL COMPANY AND GLOBAL COMPANY

         The names and addresses of the Directors and officers of the Capital
Company and the Global 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, (69), 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, (54), 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, (62), Director. Mr. James serves as a director of
Basic Vegetable Products, California Sun Dry Foods, 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. From
1985 to 1999 Mr. James was a Senior Vice President and Chief Financial Officer
of Levi Strauss & Co. Mr. James, previously, was Chair of the Advisory Committee
to the California Public Employees Retirement System.

         JOHN A. KRIEWALL (59) Director. (Capital Company only) Mr. Kriewall is
retired from his position as Managing Director of Dresdner RCM, with which he
had been associated since 1973. He also served Dresdner RCM as Co-Chief
Investment Officer of the Mid Cap Team and was a member of the Mid Cap Team
Management Committee. He received his BS degree from Stanford University and in
1971 received his MBA from Stanford University. Following graduation, he joined
the Trust Division of United California Bank and assisted in the founding of its
investment counseling subsidiary, Western Asset Management. Mr. Kriewall is an
"interested person" (as defined in the 1940 Act) by virtue of his affiliation
with the Investment Manager.


                                    Page 34
<PAGE>

         GEORGE G.C. PARKER, (61), 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.

         KENNETH E. SCOTT, (71), Director (Capital Company only). Mr. Scott is
the Ralph M. Parsons Professor of Law and Business at Stanford Law School, with
which he has been associated since 1967. He is also a director of certain
registered investment companies managed by Benham Capital Management.

         ANTHONY AIN, (40), President. Mr. Ain is a Managing Director and
General Counsel of Dresdner RCM, with which he has been associated since 1992.
From 1988 to 1992, 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. From 1984 to
1988, he was an associate in the Washington, D.C. office of Fried, Frank,
Harris, Shriver & Jacobson, where he practiced securities and banking law.

         ROBERT J. GOLDSTEIN, (37), Vice President and Secretary. Mr. Goldstein
is a Director and Associate General Counsel of Dresdner RCM, with which he has
been associated since 1997. From 1990 to 1996, Mr. Goldstein 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.

         KARIN L. BROTMAN, (33), Assistant Secretary. Ms. Brotman is Assistant
Fund Counsel of Dresdner RCM, with which she has been associated since 1997.
From 1995 to 1997, Ms. Brotman was a Product Manager at Fidelity Investments in
their Legal Department, where she was involved in providing legal and compliance
for 1940 Act registered management investment companies. From 1993 to 1995, 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.

         JENNIE W. KLEIN, (35), Vice President and Treasurer. Ms. Klein is
Director of Commingled Fund Services and a Director of Dresdner RCM, with which
she has been associated since 1994. She is responsible for fund administration
and shareholder record keeping for the Dresdner RCM products. From 1991 to 1994,
Ms. Klein was employed at G.T. Capital Management as the Manager of Financial
Reporting and Compliance for their mutual funds. From 1988 to 1991, she was an
auditor at KPMG Peat Marwick.

         STEVEN L. WONG, (33), Assistant Treasurer. Mr. Wong is a Manager in
Commingled Fund Services and has been associated with Dresdner RCM since 1994.
He is responsible for overseeing Dresdner RCM's mutual fund administration which
includes financial reporting, compliance, tax reporting, fund accounting,
budgeting and shareholder servicing. From 1992 to 1994, Mr. Wong was a senior
auditor at KPMG Peat Marwick specializing in the audit of investment companies.
From 1991 to 1992, he was a fund accountant with Franklin Funds.

         Regular meetings of each Company's Board of Directors are held on a
quarterly basis. Each Company's Audit Committee, whose present members are
George G.C. Parker and Kenneth E. Scott for the Capital Company and DeWitt F.
Bowman and George B. James, for the Global Company, 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 Capital Company receives a fee of $9,000 per
year plus $1,500 per series for each Board meeting attended and $500 for each
Audit Committee meeting attended and each Director of the Global 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.


                                    Page 35
<PAGE>

         The following table sets forth the aggregate compensation paid by the
Capital Company and the Global Company for the fiscal year ended December 31,
1999, 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>
                                                                        Pension or                            Total Compensation
                                                                        Retirement                             from the Capital
                             Aggregate            Aggregate          Benefits Accrued                           Company, Global
                           Compensation          Compensation           as Part of        Estimate Annual     Company and Company
        Director          from the Global         from the            the Companies'       Benefits Upon            Complex
          Name                Company          Capital Company           Expenses            Retirement       Paid to Director (1)
---------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>                 <C>                   <C>                 <C>                   <C>
DeWitt F. Bowman               $21,250             $27,000               $24,125                N/A                $48,250

Pamela A. Farr                 $19,000             $27,000               $46,000                N/A                $46,000

George B. James                $21,250             $27,000                 None                 N/A                $48,250

John A. Kriewall                   N/A                $0                   None                 N/A                     $0

George G.C. Parker             $19,000             $28,500               $47,500                N/A                $47,500

Kenneth E. Scott                   N/A             $28,500               $14,250                N/A                $28,500

Total                          $80,500             $138,000              $131,875                                 $218,500
---------------------
</TABLE>

(1)      During the fiscal year ended December 31, 1999, there were thirteen
         funds in the Company complex.

         Each Director of the Capital Company or the Global 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. Each Fund may, to the
extent permitted by the 1940 Act, invest in 90-day U.S. Treasury bills or the
Common Stock of the Capital Company and/or the Global Company, to match its
share of the deferred compensation obligation under the Directors' Plan. As of
December 31, 1998, no Director or officer of either Company was a beneficial
owner of any shares of the outstanding Common Stock of any series of the
Companies.


INVESTMENT COMPANY

         The names and addresses of the Directors and officers of the Investment
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.

         ROBERT J. BIRNBAUM (72), DIRECTOR. Director, Chicago Board Options
Exchange (since 1998); Director, Chicago Mercantile Exchange (1990 to 1998);
Trustee, Liberty All-Star Growth Fund, Inc. (since 1995); Trustee, Colonial
Funds (since 1995); Trustee, Liberty All-Star Equity Fund, Inc. (since 1994);
Special Counsel, Dechert Price & Rhoads (law firm) (1988 to 1993); President and
Chief Operating Officer, New York Stock Exchange, Inc. (1985 to 1988); President
and Chief Operating Officer, American Stock Exchange, Inc. (1977 to 1985).


                                    Page 36
<PAGE>

         CARROLL BROWN (71), DIRECTOR. President, The American Council on
Germany (since 1988); Executive Director, John J. McCloy Fund (since 1988);
Foreign Service Officer, United States Department of State with service in
Yugoslavia, Poland, Austria, and Germany (1957 to 1988); U.S. Consul General,
Dusseldorf and Munich; Deputy Assistant Secretary of State, U.S. State
Department (1986 and 1987).

         THEODORE J. COBURN (46), DIRECTOR. Partner, Brown, Coburn & Co., a
consulting firm (since 1991); education associate at Harvard University Graduate
School of Education (since 1996); Director, Nicholas-Applegate Fund, Inc. (since
1987); Trustee, Nicholas-Applegate Mutual Funds (since 1992); Director,
Measurement Specialties, Inc. (since 1995); Director, Moovies, Inc. (since
1995); Senior Vice President, Prudential Securities Inc. (1986 to 1991);
Managing Director of the Global Equity Transactions Group and a member of the
Board of Directors, Prudential Securities (1986 to 1991); Managing Director,
Merrill Lynch Capital Markets (1983 to 1986).

         SIEGFRIED A. KESSLER (82), DIRECTOR. Retired; Chairman. Carl Zeiss Inc.
(New York) (1981 to 1982) and President (1965 to 1981) (sale, distribution and
service of scientific instruments and optical products) (1965 to 1985).

         ALFRED FIORE (62), DIRECTOR. General Manager, Hirschfeld, Stern, Moyer
& Ross, Inc. (employee benefit consulting firm) (since 1988); Consultant,
Lois/U.S.A. (creative advertising agency) (1987 to 1988); Executive Vice
President and Chief Financial Officer, Parlux Fragrances, Inc. (1987); Executive
Vice President and Chief Financial Officer, Concord Assets Group, Inc. (real
estate manager) (1986); President and Chief Operating Officer, Amerigroup
Financial Services, Inc. (financial services) (1984 to 1986); Partner, KPMG Peat
Marwick, LLP (1973 to 1984).

         GOTTFRIED W. PERBIX (70), DIRECTOR. President, Perbix International,
Inc. (management consulting) (1980 to 1994); Director, American Profol Inc.
(plastic film manufacturers) (since 1993); Sole Proprietor, Perbix Associates
(executive search) (since 1978).

         JACOB SALIBA (86), DIRECTOR. Director, Chairman (1988 to 1994) and
Chief Executive Officer (1988 to 1993), Katy Industries, Inc. (diversified
manufacturing and oil and related services); President and Chief Operating
Officer, Katy Industries, Inc. (1968 to 1987); Director, CEGF Compagnie des
Entrepots et Gares Frigorifques (cold storage warehouses) (since 1989);
Director, Schon & Cie AG (manufacturer of machinery) (since 1990); Director,
Sahlman Seafoods (shrimp fishing and shrimp aquaculture) (since 1998); Director,
Syratech Corp. (manufacturer of household furnishings) (1992 to 1998).

         ANTHONY AIN, (40), President. Mr. Ain is a Managing Director and
General Counsel of Dresdner RCM, with which he has been associated since 1992.
From 1988 to 1992, 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. From 1984 to
1988, he was an associate in the Washington, D.C. office of Fried, Frank,
Harris, Shriver & Jacobson, where he practiced securities and banking law.

         ROBERT J. GOLDSTEIN, (37), Vice President and Secretary. Mr. Goldstein
is a Director and Associate General Counsel of Dresdner RCM, with which he has
been associated since 1997. From 1990 to 1996, Mr. Goldstein 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.

         KARIN L. BROTMAN, (33), Assistant Secretary. Ms. Brotman is Assistant
Fund Counsel of Dresdner RCM, with which she has been associated since 1997.
From 1995 to 1997, Ms. Brotman was a Product Manager at Fidelity Investments in
their Legal Department, where she was involved in providing legal and compliance
for 1940 Act registered management investment companies. From 1993 to 1995, 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.

         JENNIE W. KLEIN, (35), Vice President and Treasurer. Ms. Klein is
Director of Commingled Fund Services and a Director of Dresdner RCM, with which
she has been associated since 1994. She is responsible for fund administration
and shareholder record keeping for the Dresdner RCM products. From 1991 to 1994,
Ms. Klein was


                                    Page 37
<PAGE>

employed at G.T. Capital Management as the Manager of Financial Reporting and
Compliance for their mutual funds. From 1988 to 1991, she was an auditor at KPMG
Peat Marwick.

         STEVEN L. WONG, (33), Assistant Treasurer. Mr. Wong 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. From 1992 to 1994, Mr. Wong was a senior auditor at KPMG Peat Marwick
specializing in the audit of investment companies. From 1991 to 1992, he was a
fund accountant with Franklin Funds.

         Effective January 1, 1999, the Fund pays each of its Directors who is
not an interested person of the Fund, as defined in the 1940 Act, an annual fee
of $9,000, plus $1,500 for each Board of Directors meeting attended. Effective
November 4, 1999, the Fund pays each of the members of the Audit Committee of
the Board of Directors who is not an interested person of the Fund, as defined
in the 1940 Act $500 for each Audit Committee meeting attended. During the
fiscal year ended December 31, 1999, all such Directors as a group received from
the Fund aggregate fees amounting to $175,250. In addition, the Fund reimburses
Directors not affiliated with Dresdner RCM for travel and out-of-pocket expenses
incurred in connection with meetings of the Board.

         The following table sets forth for each Director receiving compensation
from the Europe Fund the amount of such compensation paid by the Fund during the
fiscal year ended December 31, 1999.

<TABLE>
<CAPTION>
                                                     PENSION OR RETIREMENT                          TOTAL COMPENSATION
                                     AGGREGATE        BENEFITS ACCRUED AS      ESTIMATED ANNUAL      FROM EUROPE FUND
                                 COMPENSATION FROM          PART OF             BENEFITS UPON        AND FUND COMPLEX
     NAME OF PERSON, POSITION       EUROPE FUND          FUND EXPENSES            RETIREMENT        PAID TO DIRECTORS(1)
  <S>                                <C>                <C>                      <C>                 <C>
  Robert J. Birnbaum                  $30,500                 N/A                     __                 $30,500
  Carroll Brown                       $18,000                 N/A                     __                 $18,000
  Theodore J. Coburn                  $30,000                 N/A                     __                 $30,000
  James E. Dowd(2)                    $11,250                 N/A                     __                 $11,250
  Alfred W. Fiore                     $30,500                 N/A                     __                 $30,500
  Siegfried A. Kessler                $18,500                 N/A                     __                 $18,500
  Gottfried W. Perbix                 $18,500                 N/A                     __                 $18,500
  Jacob Saliba                        $18,500                 N/A                     __                 $18,500
                                -----------------------------------------------------------------------------------------

         TOTAL                       $175,750                                                            $175,250
</TABLE>

(1) During the fiscal year ended December 31, 1999, there were thirteen funds in
the complex.
(2) Mr. Dowd served as Director of the Company from 1990 through May 1999.

         During the fiscal year ended December 31, 1998, the Board of Directors
met five times and during the fiscal year ending December 31, 1999, the Board of
Directors met six times. Each Director, except Mr. Dowd, attended at least 75%
of the total number of meetings of the Board and each Committee of the Board of
which he was a


                                    Page 38
<PAGE>

member held during the period in which he served. Mr. Dowd passed away in May
1999. The Board wishes to express its appreciation for his long and valuable
service to the Fund.

         The Board of Directors has an Audit Committee presently composed of
Messrs. Perbix, Fiore, Birnbaum and Kessler, none of whom is an interested
person of the Fund (as defined in the 1940 Act). The Audit Committee makes
recommendations to the full Board with respect to the engagement of independent
accountants and reviews with the independent accountants the plan and results of
the audit engagement and matters having a material effect upon the Fund's
financial operations. The Audit Committee held two meetings during the fiscal
year ended December 31, 1998 and two meetings during the fiscal year ending
December 31, 1999.

         In 1998, the Board of Directors established an ad hoc Strategic
Planning and Communications Committee, composed of Messrs. Birnbaum, Coburn, and
Fiore, none of whom is an interested person of the Fund (as defined in the 1940
Act), to communicate with stockholders on behalf of the full Board of Directors
and to consider various strategic options for the future of the Fund, including,
whether the Fund should convert from a closed-end investment company to an
open-end investment company. Strategic Planning and Communications Committee
members received $1,500 per meeting in 1998. There were 8 such meetings in 1999.

         The Board of Directors has no compensation committee, or other
committee performing a similar function. Upon conversion of the Fund to an
open-end structure, a Nominating Committee was established, which consists of
the Directors who are not interested persons of the Fund (as defined in the 1940
Act).


Control Persons and Principal Holders of Securities

         As of March 31, 2000, there were 14,622,094 shares of the International
Growth Equity Fund outstanding, 9,846,845 shares of the Global Technology Fund
outstanding, 1,954,227 shares of the Global Small Cap Fund outstanding,
1,931,779 shares of the Global Health Care Fund outstanding, 1,278,662 shares of
the Large Cap Growth Fund outstanding, 10,073,071 shares of the Biotechnology
Fund outstanding, 572,368 shares of the Emerging Markets Fund outstanding,
697,423 shares of the Tax Managed Growth Fund outstanding, 311,228 shares of the
Balanced Fund outstanding and 4,872,928 shares of the Europe Fund outstanding.
On that date the following were known to the Companies to own of record more
than 5% of the Funds' outstanding capital stock:

<TABLE>
<CAPTION>
         Name and Address of                                                                  % of Shares
         Beneficial Owner                                        Shares Held                  Outstanding
         <S>                                                     <C>                          <C>

         LARGE CAP GROWTH FUND

         Pacific Maritime Association                                415,233                       32.47%
         P.O. Box 7861
         San Francisco, California 94120-786

         Congoleum Corp Master Trust                                 280,445                       21.93%
         3705 Quakerbridge Road
         Mercerville, New Jersey 08619-0127

         AAA Washington                                              176,968                       13.84%
         1745 114th Avenue SE
         Bellevue, Washington 98004-6968


                                    Page 39
<PAGE>

<CAPTION>
         Name and Address of                                                                  % of Shares
         Beneficial Owner                                        Shares Held                  Outstanding
         <S>                                                     <C>                          <C>

         Charles Schwab & Co., Inc.                                   88,097                        6.89%
         FBO Customers
         101 Montgomery Street
         San Francisco, California 94104


         TAX MANAGED GROWTH FUND

         Boston & Company                                            370,514                       53.13%
         Mutual Fund Operations
         P.O. Box 3198
         Pittsburgh, PA

         Clients of Dresdner Bank AG/                                100,000                       14.34%
         Investment Management
         Institutional Asset Management Division
         Jorgen-Ponto-Platz
         60301 Frankfurt
         Germany

         Madre Lode                                                   66,094                        9.48%
         731 Madre Street
         Pasadena, California 91107-5662

         Charles Schwab & Co., Inc.                                   39,023                        5.60%
         FBO Customers
         101 Montgomery Street
         San Francisco, California 94104


         BIOTECHNOLOGY FUND

         Charles Schwab & Co., Inc.                                4,724,992                       46.91%
         FBO Customers
         101 Montgomery Street
         San Francisco, California 94104

         National Financial Services Corp.                         2,254,639                       22.38%
         FBO Customers
         200 Liberty Street
         One World Financial Center
         New York, New York 10281-1003

         National Investors Service Corp.                            692,026                        6.87%
         FBO Customers
         55 Water Street
         New York, New York 10041-0098



                                    Page 40
<PAGE>

<CAPTION>
         Name and Address of                                                                  % of Shares
         Beneficial Owner                                        Shares Held                  Outstanding
         <S>                                                     <C>                          <C>

         BALANCED FUND

         Pacific Maritime Association Deferred                       206,889                       66.48%
         Compensation Plan
         P.O. Box 7861
         San Francisco, California 94120-7861

         Bank of New York                                            104,339                       33.52%
         FBO Joseph W. Saunders IRA
         1 Wall Street 23rd Floor
         New York, New York 10286-0001


         GLOBAL SMALL CAP FUND

         Dean Witter Discover & Co.                                  528,360                       27.04%
         333 Market Street 25th Floor
         San Francisco, California 94105-2102

         Charles Schwab & Co., Inc.                                  452,604                       23.16%
         FBO Customers
         101 Montgomery Street
         San Francisco, California 94104

         National Financial Services Corp.                           372,835                       19.08%
         FBO Customers
         200 Liberty Street
         One World Financial Center
         New York, New York 10281-1003

         Clients of Dresdner Bank AG/                                320,064                       16.38%
         Investment Management
         Institutional Asset Management Division
         Jorgen-Ponto-Platz
         60301 Frankfurt
         Germany

         National Investors Service Corp.                            106,547                        5.45%
         FBO Customers
         55 Water Street
         New York, New York 10041-0098


         GLOBAL TECHNOLOGY FUND

         Charles Schwab & Co., Inc.                                3,504,522                       35.59%
         FBO Customers
         101 Montgomery Street
         San Francisco, California 94104


                                    Page 41
<PAGE>

<CAPTION>
         Name and Address of                                                                  % of Shares
         Beneficial Owner                                        Shares Held                  Outstanding
         <S>                                                     <C>                          <C>

         National Financial Services Corp.                         2,400,394                       24.38%
         FBO Customers
         200 Liberty Street
         One World Financial Center
         New York, New York 10281-1003

         National Investors Service Corp.                            572,185                        5.81%
         FBO Customers
         55 Water Street
         New York, New York 10041-0098


         GLOBAL HEALTH CARE FUND

         Charles Schwab & Co., Inc.                                  758,042                       39.24%
         FBO Customers
         101 Montgomery Street
         San Francisco, California 94104

         Clients of Dresdner Bank AG/                                400,000                       20.71%
         Investment Management
         Institutional Asset Management Division
         Jorgen-Ponto-Platz
         60301 Frankfurt
         Germany

         National Financial Services Corp.                           346,398                       17.93%
         FBO Customers
         200 Liberty Street
         One World Financial Center
         New York, New York 10281-1003

         National Investors Service Corp.                            119,017                        6.16%
         FBO Customers
         55 Water Street
         New York, New York 10041-0098


         INTERNATIONAL GROWTH EQUITY FUND

         Citigroup Inc. Pension Plan                               3,397,203                       23.23%
         1 Court Square 15th Floor
         Long Island City, New York 111120-0001

         JM Family Enterprises, Inc.                               1,615,782                       11.05%
         100 NW 12th Avenue
         Deerfield Beach, Florida 33442


                                    Page 42
<PAGE>

<CAPTION>
         Name and Address of                                                                  % of Shares
         Beneficial Owner                                        Shares Held                  Outstanding
         <S>                                                     <C>                          <C>

         Boston Safe Deposit and Trust Company                     1,170,340                        8.00%
         FBO Blue Cross and Blue Shield of
         Massachusetts Retirement Income Trust
         100 Summer Street
         Boston, Massachusetts 02110


         EMERGING MARKETS FUND

         Clients of Dresdner Bank AG/                                300,000                       52.41%
         Investment Management
         Institutional Asset Management Division
         Jorgen-Ponto-Platz
         60301 Frankfurt
         Germany

         National Financial Services Corp.                           101,298                       17.70%
         FBO Customers
         200 Liberty Street
         One World Financial Center
         New York, New York 10281-1003

         Charles Schwab & Co., Inc.                                   89,686                       15.67%
         FBO Customers
         101 Montgomery Street
         San Francisco, California 94104

         Madre Lode                                                   51,943                        9.00%
         731 Madre Street
         Pasadena, California 91107-5662


         EUROPE FUND

         Charles Schwab & Co., Inc.                                  987,589                       20.27%
         FBO Customers
         101 Montgomery Street
         San Francisco, California 94104

         National Financial Services Corp.                           344,467                        7.07%
         FBO Customers
         200 Liberty Street
         One World Financial Center
         New York, New York 10281-1003

         Smith Barney Inc.                                           300,863                        6.17%
         388 Greenwich Street
         New York, New York 10013-2339


                                    Page 43
<PAGE>

<CAPTION>
         Name and Address of                                                                  % of Shares
         Beneficial Owner                                        Shares Held                  Outstanding
         <S>                                                     <C>                          <C>

         Marshcove & Co.                                             290,930                        5.97%
         P.O. Box 5756
         Boston, Massachusetts 02206-0001
</TABLE>


THE INVESTMENT MANAGER

         The Board of Directors of each Company has overall responsibility for
the operation of such Company's Funds. Pursuant to such responsibility, the
Board of Directors of each Company has approved various contracts for designated
financial organizations to provide, among other things, day to day management
services required by the Funds. Each Company has retained as the Funds'
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, 1999, of EUR 397 billion (USD 463
billion), and approximately 1,500 offices and 51,000 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 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 Funds with investment supervisory
services pursuant to Investment Management Agreements, Powers of Attorney and
Service Agreements (the "Management Agreements") dated as of June 14, 1996 for
the Global Technology Fund and International Fund, December 27, 1996 for the
Global Small Cap Fund, Global Health Care Fund and Large Cap Fund, December 30,
1997 for the Biotechnology Fund and Emerging Markets Fund, December 30, 1998 for
the Tax Managed Growth Fund, January 26, 1999 for the Europe Fund and December
15, 2000 for the Balanced Fund. The Investment Manager manages the Funds'
investments, provides various administrative services, and supervises the Funds'
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, each a series of Dresdner RCM Capital
Funds, Inc.; Dresdner RCM Global Equity Fund and Dresdner RCM Strategic Income
Fund, each a series of Dresdner RCM Global Funds, Inc.; and RCM Strategic Global
Government Fund, Inc., Bergstrom Capital Corporation, and Dresdner RCM Global
Strategic Income Fund, Inc., each closed-end management investment companies. A
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


                                    Page 44
<PAGE>

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.

         Each Fund has, under its respective 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) fees
pursuant to the Fund's Rule 12b-1 plan, (g) legal and audit fees, (h) SEC and
"Blue Sky" registration expenses, and (i) 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 Funds. Expenses attributable to a
Fund are charged against the assets of the Fund.

         For the services rendered by the Investment Manager under each Fund's
Investment Management Agreement, each Fund pays management fees at an annualized
rate of its average daily net assets, as described in the Prospectus. For the
fiscal years ended December 31, 1999, 1998 and 1997, the International Fund
incurred fees of $1,233,869, $878,692 and $611,884 and the Global Technology
Fund incurred fees of $683,211, $104,008 and $61,204, the Global Small Cap Fund
incurred fees of $72,416, $52,418, and $45,183 the Global Health Care Fund
incurred fees of $54,854, $50,736 and $46,238, the Large Cap Growth Fund
incurred fees of $85,913, $40,991 and $33,041, the Biotechnology Fund incurred
fees of $58,217, $31,260 and $165, the Emerging Markets Fund incurred fees of
$34,657, $28,446 and $164 and the Europe Fund incurred fees of $927,995,
$1,915,266 and $1,555,539. For fiscal 1999 and 1998, the Tax Managed Growth Fund
incurred fees of $10,058 and $21. For fiscal 1999 the Balanced Fund incurred
fees of $279.

         The Investment Manager has agreed to limit each Fund's expenses as
described in the Prospectus. Each 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 a 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 a Fund fall below the expense cap, the
reimbursement to the Investment Manager will be accrued by the Fund as a
liability.

         Each 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 each 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 a 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.

         Each 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 respective 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).


                                    Page 45
<PAGE>

THE DISTRIBUTOR

         Funds Distributor, Inc., 60 State Street, Suite 1300, Boston,
Massachusetts 02109 (the "Distributor") serves as Distributor to each 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 Distribution Agreements with the Capital Company, the
Global Company and the Investment Company, the Distributor has agreed to use its
best efforts to effect sales of shares of the Funds, but is not obligated to
sell any specified number of shares. Each Distribution Agreement contains
provisions with respect to renewal and termination similar to those in each
Fund's Management Agreement discussed above. Pursuant to the Distribution
Agreements, the Companies have agreed to indemnify the Distributor out of the
assets of each 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 Companies.

         Each 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
Companies. The Investment Manager is required to reimburse the Company for any
fees and expenses of the Distributor pursuant to the Agreements.


DISTRIBUTION PLAN AND DISTRIBUTION AND SERVICE PLAN

         The Global Company, on behalf of its Dresdner RCM Large Cap Growth
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 and Dresdner RCM Tax Managed Growth Fund Class N shares,
and the Capital Company, on behalf of its Dresdner RCM International Growth
Equity Fund Class N shares have adopted distribution and service plans, (the
"Global Plan" and the "Capital Plan") and the Investment Company, on behalf of
its Dresdner RCM Europe Fund Class N shares has adopted a distribution plan
(with the Global Plan and the Capital Plan, collectively, the "Plans") pursuant
to Rule 12b-1 under the 1940 Act. Under the Plans, each Fund pays the
Distributor an annual fee of up to 0.25% of the average daily net assets of its
Class N shares as reimbursement for certain expenses 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 and marketing the N Class of shares of the Funds, including but not
limited to any 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 Funds' prospectus and statement of additional information.

         Each 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 of the respective Company, 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 Plans 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 amendments
are required to be approved by the Board of Directors of


                                    Page 46
<PAGE>

the respective Company in the manner described above. Each Plan will
automatically terminate in the event of its assignment.

         If in any year Funds Distributor is due more from the Fund for such
services than is immediately payable because of the expense limitation under the
Plans, the unpaid amount is carried forward while the Plans are 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
Plans are terminated or not continued. No interest, carrying, or finance charge
will be imposed on any amounts carried forward.

         During fiscal 1999, the International Growth Equity Fund, Global
Technology Fund, Global Small Cap Fund, Global Health Care Fund, Large Cap
Growth Fund, Biotechnology Fund, Emerging Markets Fund, Tax Managed Growth Fund
and Europe Fund reimbursed the Distributor $1,011, $34,870, $541, $13,714, $151,
$14,438, $146, $423 and $91,278, respectively, for certain expenses actually
incurred by the Distributor. These fees reimbursed the Distributor for expenses
actually incurred in connection with the Funds' participation in fund
supermarket platforms. Unreimbursed expenses on behalf of each of the above
referenced funds for fiscal 1999 amounted to $130,215.91, $184,884.78,
$117,925.96, $103,457.88, $120,519.72, $111,164.32, $129,279.79, $132,742.31 and
$35,469.97 representing 0.04%, 0.07%, 0.46%, 1.69%, 0.76%,0.75%, 2.37%, 5.88%
and 0.05 %, respectively, of each Fund's net assets.

         The Distributor may pay broker-dealers and others, out of the fees it
receives under the Plans, quarterly trail commissions of up to 0.25%, on an
annual basis, of the average daily net assets attributable to the N class of
shares of each Fund held in the accounts of their customers.

         Pursuant to the Plans, the Board of Directors of each Company will
review at least quarterly a written report of the distribution expenses incurred
on behalf of shares of the N Class of 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 each 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

         The administrator of the Capital Company, the Global Company (except
for the Emerging Markets Fund) and the Investment Company is State Street Bank
and Trust Company ("State Street"), 1776 Heritage Drive, North Quincy,
Massachusetts 02109.

         Pursuant to an Administration Agreement with each Company, State Street
is responsible for performing all administrative services required for the daily
operation of the Companies, subject to the control, supervision and direction of
the Companies and the review and comment by each Company's auditors and legal
counsel. State Street has no supervisory responsibility over the investment
operations of the Funds. Administrative services performed by State Street
include, but are not limited to, the following: overseeing the determination and
publication of each Company's net asset value; overseeing the maintenance by
each Company's custodian of certain book and records of the Company; preparing
each Company's federal, state and local income tax returns; arrange for payment
of each Company's expenses; and preparing each financial information for each
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:

<TABLE>
<CAPTION>
                                                                       ANNUAL FEE
         Average Assets                                       Expressed in Basis Points: 1/100 of 1%
         <S>                                                    <C>


                                    Page 47
<PAGE>

<CAPTION>
                                                                       ANNUAL FEE
         Average Assets                                       Expressed in Basis Points: 1/100 of 1%
         <S>                                                    <C>
         First $250 Million/Fund                                       2.50
         Next $250 Million/Fund                                        1.75
         Thereafter                                                    1.00
         Minimum/Fund                                                  $57,500
</TABLE>

         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 all the
Funds 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 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.

         Brown Brothers Harriman & Co. ("BBH") serves as administrator of the
Emerging Markets Fund. BBH provides administrative services similar to those
provided by State Street, as described above. For its services, which include
fund accounting services, BBH receives annual fees pursuant to the following
schedule:

<TABLE>
<CAPTION>
          Average Assets              ANNUAL FEE
                                      Expressed in Basis Points: 1/100 of 1%
          <S>                         <C>
          First $100 Million                         2.50
          Next $400 Million                          3.75
          Thereafter                                 2.50
          Minimum                                    $70,000
</TABLE>

          $1,500 per month for first additional class


         Total net assets of the Fund will be used to calculate the fee by
multiplying the net assets of the Fund by the basis point fees in the above
schedule. The greater of the basis point fee or the minimum fee will be
allocated to the Fund.


OTHER SERVICE PROVIDERS

         State Street acts as the transfer agent, redemption agent and dividend
paying agent for the Funds. State Street also acts as custodian for all the
Funds, except the Emerging Markets Fund. Brown Brothers Harriman & Co. ("Brown
Brothers") acts as custodian for the Emerging Markets Fund. Each custodian is
responsible for the safekeeping of a 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. Brown Brothers' principal business address is 40
Water Street, Boston, Massachusetts 02109.

         PricewaterhouseCoopers LLP ("PwC") acts as the independent public
accountants for the Funds. The accountant examines financial statements for the
Funds and provides other audit, tax, and related services. PwC's principal
business address is 160 Federal Street, Boston, Massachusetts 02110.


NET ASSET VALUE

         For purposes of the computation of the net asset value of each share of
each 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


                                    Page 48
<PAGE>

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 Funds will be valued at
current market value, if current market quotations are readily available for
such securities. To the extent that market quotations are not readily available
such securities will be valued by whatever means a duly constituted committee of
the Board of Directors 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 Funds 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.

         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 Companies 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 each 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 Funds 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


                                    Page 49
<PAGE>

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. Each Company reserves the right in its
sole discretion to suspend the continued offering of one or more of its Funds'
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 a 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 a 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.

         Each Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Fund's Net Asset Value next
computed after they are accepted by an authorized broker or the broker's
authorized designee provided they are transmitted to the Fund's transfer agent
on the same day.


DIVIDENDS, DISTRIBUTIONS AND TAX STATUS

         Each income dividend and capital gain distribution, if any, declared by
a Fund will be paid in full and fractional shares based on the net asset value
as determined on the ex-dividend date for such distribution, unless the
stockholder or 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

         Each Fund has qualified and intends to continue to qualify for
treatment as a "regulated investment company" under Subchapter M of the Code.
Each 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 Funds. 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 each Fund. By
complying with the applicable provisions of the Code, a 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 a 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


                                    Page 50
<PAGE>

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 a 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 Funds expect to so distribute all
of such income and gains on an annual basis and thus will generally avoid any
such taxation.

         Even if a 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 a Fund from its current year's ordinary income
and capital gain net income and (ii) any amount on which a Fund pays income tax
for the year. The Funds intend 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 a Fund whether paid in additional shares of the Fund or in
cash. To the extent that dividends received by a 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
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 Funds under federal, state, and local tax laws.


WITHHOLDING

         Dividends paid by a 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
a 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 a Fund with respect


                                    Page 51
<PAGE>

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 Funds 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 a 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 a 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 Funds 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 a Fund. In
addition, losses realized by a 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 Funds are not entirely clear.

         Hedging transactions may increase the amount of short-term capital gain
realized by a Fund, which is taxed as ordinary income when distributed to
stockholders. A Fund may make one or more elections available under the Code
which are applicable to straddle positions. If a 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 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 a 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 a Fund's investment company taxable income to
be distributed to stockholders as ordinary income.


                                    Page 52
<PAGE>

FOREIGN TAXES

         A 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 a
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 a 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 Funds, their stockholders and dividend and
capital gain distributions by the Funds. 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 Funds.


INVESTMENT RESULTS

         Average annual total return ("T") of a 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 a 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:

                                        n
                                  P(1+T)  = ERV

         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.


         Quotations of the Balanced Fund's yield are based on the investment
income per share earned during a particular 30-day period (including dividends,
if any, and interest), less expenses accrued during the period ("net investment
income"), and are computed by dividing net investment income by the net asset
value per share on the last day of the period, according to the following SEC
formula:

                                                6
                           YIELD = 2[(a - b + 1)  - 1]
                                      -----
                                       cd

Where    a = dividend and interest income during the period
         b = expenses accrued during the period (net of reimbursements)


                                    Page 53
<PAGE>

         c = average daily number of shares outstanding during the period that
             were entitled to receive dividends
         d = maximum net offering price per share on the last day of the period

         In addition, in order to more completely represent a Fund's performance
or more accurately compare such performance to other measures of investment
return, a 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. A 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 a 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 a Fund's investment objective and
policies.

         Each of the Funds may from time to time compare its investment results
with data and mutual fund rankings published or prepared by Lipper Inc. and
Morningstar, Inc., which rank mutual funds by overall performance, investment
objectives, and assets.

         In addition, the Funds may from time to time compare their performance
with one or more of the following:

         1.       THE S&P 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 SALOMON BROTHERS EXTENDED MARKET INDEX ("EMI"), which is a
                  component of the Salomon Brothers Broad Market Index ("BMI")
                  which includes listed shares of 5,409 companies with a total
                  available market capitalization of at least the local
                  equivalent of US$100 million on the last business day of May
                  each year. The BMI consists of two components: the Primary
                  Market Index ("PMI") is the large capitalization stock
                  component and the EMI is the small capitalization stock
                  component. The PMI universe is defined as those stock falling
                  within the top 80% of the cumulative available capital level
                  in each country. The EMI includes the bottom 20% of the
                  cumulative available capital level in each country.

         3.       THE RUSSELL MIDCAP INDEX , which is composed of the smallest
                  800 companies in the Russell 1000 Index. The Russell 1000
                  Index is made up of the 1,000 largest companies in the Russell
                  3000 Index, which is composed of the 3,000 largest U.S.
                  companies by market capitalization and represents
                  approximately 98% of the investable U.S. equity market.

         4.       THE RUSSELL MIDCAP GROWTH INDEX, which measures the
                  performance of those Russell Midcap companies with higher
                  price-to-book ratios and higher forecasted growth values. The
                  stocks are also members of the Russell 1000 Growth index.

         5.       THE LIPPER SCIENCE & TECHNOLOGY FUND INDEX, which is an
                  equally weighted index of the 10 largest U.S. science and
                  technology mutual funds.

         6.       THE RUSSELL MIDCAP HEALTH CARE INDEX, which is composed of all
                  medium and medium/small health care companies in the Russell
                  1000 Index. The Russell 1000 Index measures the performance of
                  the 1,000 largest companies in the Russell 3000 Index, which
                  represents approximately 90% of the total market
                  capitalization of the Russell 3000 Index.

         7.       THE AMERICAN STOCK EXCHANGE BIOTECHNOLOGY INDEX, which is an
                  equal-dollar weighted index that attempts to measure the
                  performance of a cross section of companies in the
                  biotechnology


                                    Page 54
<PAGE>

                  industry that are primarily involved in the use of biological
                  processes to develop products or provide services. This index
                  was developed with a base level of 200 stocks as of October
                  18, 1991.

         8.       THE NASDAQ BIOTECHNOLOGY INDEX, which is a
                  capitalization-weighted index that attempts to measure the
                  performance of all NASDAQ stocks in the biotechnology sector.
                  This index was developed with a base value of 200 stocks as of
                  November 1, 1993.

         9.       THE RUSSELL 2000 INDEX, which is composed of the 2,000
                  smallest securities in the Russell 3000 Index, which is
                  composed of the 3,000 largest U.S. companies based on market
                  capitalization and represents approximately 98% of the
                  investable U.S. equity market.

         10.      THE MSCI EMERGING MARKETS FREE INDEX, which is a market
                  capitalization-weighted index composed of 981 companies in 26
                  emerging market countries. The average market capitalization
                  size of the listed companies is US$800 million.

         11.      THE IFC INDEX OF INVESTABLE EMERGING MARKETS, which represents
                  the IFC investable regional total return composite. The term
                  "investable" indicates that the stocks and the weights in the
                  IFCI index represent the amount that the foreign institutional
                  investors might buy by the virtue of the foreign institutional
                  restrictions (either at the national level or by the
                  individual company's corporate statute) plus factoring in
                  minimum market capitalization and liquidity screens.

         12.      THE MSCI-EAFE INDEX, which is an arithmetic, market
                  value-weighted average of the performance of over 900
                  securities listed on the stock exchanges of the countries in
                  Europe, Australasia, and the Far East. The index is calculated
                  on a total return basis, which includes reinvestment of gross
                  dividends before deduction of withholding taxes.

         13.      THE MSCI-ACWI EX-U.S. INDEX, which is a market
                  capitalization-weighted index composed of companies
                  representative of the market structure of 47 developed and
                  emerging market countries excluding the United States. Stock
                  selection excludes securities which are not purchasable by
                  foreigners. The index is calculated on a total return basis,
                  which includes reinvestment of gross dividends before
                  deduction of withholding taxes.

         14.      THE MSCI WORLD SMALL CAP INDEX, which is a market
                  capitalization weighted index composed of companies
                  representative of the market structure of 22 developed market
                  countries in North America, Europe, and the Asia/Pacific
                  region. The Index is created by selecting companies within the
                  market capitalization range of US $200 - $800 million. The
                  Index aims to represent 40% of the small cap universe within
                  each country by capturing 40% of each industry.

         15.      THE DAX 100 INDEX, an unmanaged index which is commonly used
                  as a performance comparison for funds that invest primarily in
                  Germany and which measures the total rate of return of the 100
                  most highly capitalized stocks traded on the Frankfurt Stock
                  Exchange.

         16.      THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE INDEX, which
                  measures the total rate of return of nearly 600 stocks from 15
                  developed European countries.

         17.      THE LEHMAN BROTHERS AGGREGATE BOND INDEX which is a market
                  value weighted performance benchmark for investment-grade
                  fixed-rate debt issues, including government, corporate,
                  asset-backed, and mortgage-backed securities, with maturities
                  of at least one year.

         18.      THE LIPPER BALANCED INDEX, which is a composite prepared by
                  Lipper Inc. of mutual funds with the same objective as the
                  Balanced Fund.


                                    Page 55
<PAGE>

         19.      THE BLENDED S&P 500 INDEX/LEHMAN BROTHERS AGGREGATE BOND
                  INDEX, which is a blended index comprised of the performance
                  of the two indexes weighted 60% Standard & Poor's 500 Index
                  and 40% Lehman Brothers Aggregate Bond Index.


GENERAL INFORMATION

         The Global Company and the Capital Company were incorporated in
Maryland as open-end management investment companies on September 17, 1995 and
March 16, 1979, respectively.

         The authorized capital stock of the Capital Company is 1,000,000,000
shares of capital stock (par value $.0001 per share), of which 100,000,000
shares have been designated as shares of the International Fund. The authorized
capital stock of the Global Company is 1,000,000,000 shares of capital stock
(par value $.0001 per share), of which 50,000,000 shares have been designated as
shares of each of the Global Technology Fund, Global Small Cap Fund, Global
Health Care Fund, Large Cap Fund, Biotechnology Fund, Emerging Markets Fund and
the Tax Managed Growth Fund and 25,000,000 shares of capital stock (par value
$.0001 per share) have been designated as shares of the Balanced Fund. The Board
of Directors of each Company may, in the future, authorize the issuance of other
classes of shares of such Funds, or of other series of capital stock
representing shares of additional investment portfolios or funds.

         The Investment Company was organized as a closed-end management
investment company incorporated under the laws of the State of Maryland on
February 2, 1990. On December 4, 1998, the Board of Directors, including the
Directors who are not interested persons of the Investment Company (as defined
in the 1940 Act), approved the final plan for the conversion of the Fund to an
open-end investment company. At the Company's Annual Meeting on January 26,
1999, the Company's stockholders approved, among other things, (a) changing the
Fund's investment strategy from a predominately German investment portfolio to a
broader European investment portfolio, (b) changing the Fund's name to Dresdner
RCM Europe Fund, (c) changing the Fund from a closed-end investment company to
an open-end investment company, (d) modifying and eliminating certain
fundamental investment restrictions of the Fund, (e) the Investment Management
Agreement between the Fund and the Investment Manager, and (f) the Rule 12b-1
Distribution Plan of the Fund. The Fund converted to an open-end investment
company on May 3, 1999. The Board of Directors of the Investment Company has
authority to issue an unlimited number of shares of separate series and classes.
The Europe Fund is currently the only series of the Company. Upon conversion to
an open-end fund, the Fund commenced offering two classes of stock: Class N and
Class I, as described in the Prospectus. Outstanding shares of the Fund on the
date of conversion were automatically redesignated Class N shares.


DESCRIPTION OF CAPITAL SHARES

         All shares of each 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
Funds when duly issued will be fully paid and non-assessable. The rights of the
holders of shares of each Fund may not be modified except by vote of the
majority of the outstanding shares of such 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 each Company have non-cumulative voting rights, which means
that the holders of more than 50% of all series of a 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.

         None of the Companies are 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. A 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


                                    Page 56
<PAGE>

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.

         Because the Capital Company, Global Company and Investment Company are
registered separately under the 1940 Act but are using a combined Prospectus and
SAI there is a possibility that the series of any Company may be liable for any
misstatements, inaccuracies or incomplete disclosures in such documents
concerning any other Company.

         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, each 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 Companies 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 affected 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 public 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 Fund.

         Each share of each Class of a Fund (Class N - Non-Institutional and
Class I - Institutional) represents an equal proportional interest in the Fund
with each other share of the same Class and is entitled to such dividends and
distributions out of the income earned on the assets allocable to the Class as
are declared in the discretion of the Board of Directors. In the event of the
liquidation or dissolution of either Company, stockholders of a 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 a
particular Fund that are available for distribution, in such manner and on such
general basis as the Board of Directors may determine.


ADDITIONAL INFORMATION


COUNSEL

         Certain legal matters in connection with the capital shares offered by
the Capital Company and Global Company have been passed upon by Paul, Hastings,
Janofsky & Walker LLP, 555 South Flower Street, Los Angeles, California 90071.
The validity of the capital stock offered by the Global Company and the Capital
Company has been passed upon by Venable, Baetjer and Howard, LLP, 1800
Mercantile Bank & Trust Building, 2 Hopkins Plaza, Baltimore, Maryland 21201.
Certain legal matters in connection with the capital shares offered by the
Investment Company have been passed upon for the Fund by Shaw Pittman, 2300 N
Street N.W. Washington, DC 20037. The validity of the capital stock by the
Investment Company has been passed upon by Kirkpatrick & Lockhart LLP, 1800
Massachusetts Avenue, N.W., Washington, DC 20036. 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 each 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, each


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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.


FINANCIAL STATEMENTS

         Incorporated by reference herein are the financial statements of the
Funds contained in the Funds' Annual Report to Shareholders for the year ended
December 31, 1999, including the Report of Independent Accountants, dated
February 18, 2000, the Statements of Assets and Liabilities, including the
Portfolio of Investments and the related Statements of Operations and Changes in
Net Assets, and the Financial Highlights. Copies of the Funds' Annual and
Semi-Annual Reports to Shareholders will be available, upon request, by calling
(800) 726-7240, or by writing to Four Embarcadero Center, San Francisco,
California 94111.


REGISTRATION STATEMENT

         The Funds' Prospectus and this SAI do not contain all of the
information set forth in each 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 each Company's registration statement, each such statement being
qualified in all respects by such reference.






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