<PAGE>
Dresdner RCM Global
Strategic Income Fund, Inc.
Semi-Annual Report
Directors and Officers
SIR ROBERT C. COTTON
DIRECTOR AND CHAIRMAN OF THE BOARD
SYDNEY, AUSTRALIA
LUKE D. KNECHT, C.F.A.
DIRECTOR AND PRESIDENT
SAN FRANCISCO, CA
JAMES J. FOLEY
DIRECTOR
BELMONT, MA
LEONARD T. HINDE
DIRECTOR
MOSMAN, NSW, AUSTRALIA
THE EARL OF LIMERICK
DIRECTOR
LONDON, ENGLAND
G. WILLIAM MILLER
DIRECTOR AND DEPUTY CHAIRMAN OF THE BOARD
WASHINGTON, DC
STEPHEN K. WEST
DIRECTOR
NEW YORK, NY
ROBERT J. GOLDSTEIN
SECRETARY
SAN FRANCISCO, CA
JENNIE W. KLEIN
TREASURER
SAN FRANCISCO, CA
Investment Advisor
DRESDNER RCM GLOBAL INVESTORS LLC
SAN FRANCISCO, CA
DRESDNER RCM GLOBAL STRATEGIC INCOME FUND, INC.
FOUR EMBARCADERO CENTER
SAN FRANCISCO, CA 94111
(800) 237-4218
April 30, 2000
2520-Q2-4/00
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Report to Shareholders
Dear Shareholders:
The restructuring of the portfolio which shareholders approved last fall
has been completed. In the course of the restructuring, some 90% of the
portfolio's holdings in Australian and New Zealand bonds were sold with the
proceeds re-deployed to U.S. dollar denominated mortgage backed, corporate, high
yield and emerging market debt securities. As you will note in the attached
materials, the overall quality of the portfolio remains investment grade while
the portfolio's sensitivity to changes in interest rates is that of an
intermediate maturity bond. More details regarding the restructuring are covered
in the Manager's Discussion and analysis.
Going forward, we believe the restructured portfolio is much better
positioned to generate a high and sustainable level of income for shareholders.
As a result, the Board last fall took the step of increasing the regular monthly
dividend from $0.04 per share to $0.05 per share, a 25% increase. We are pleased
to report that at its June meeting, the Board decided to increase the monthly
dividend, for the months of June through August, to $0.055 per share, a further
10% increase and will again consider a further increase in the regular dividend
in the coming months.
As previously reported, all dividends paid through this fiscal year
(10-31-00) are expected to be characterized as return of capital and therefore
not subject to U.S. federal or state income tax. Moreover, a recent analysis of
the portfolio indicates that the dividends paid through the first quarter of the
fund's next fiscal year (1-31-01) are likely to also be characterized as return
of capital. Again, this is the result of the Fund's ability for tax purposes to
offset the taxable income earned by the portfolio with losses realized in the
restructuring of the portfolio.
Lastly, we wish to offer our comments with respect to the fixed income
markets during the past six months and the share price performance of the Fund.
As you will read in the Manager's analysis, the six months ended April 30th were
a difficult period for bond investors. In the first three months of this period,
rates rose sharply as the stock market powered ahead and non-government bonds
generally performed well. In the second half of the period, rates on
intermediate and long debt reversed course and fell while the equity markets
began to show signs of weakness. Indeed, it has been a volatile and difficult
period as more fully described in the following pages.
We are pleased that the NAV of the Fund was relatively stable during the
period. Since calendar year end, the NAV has declined modestly from $7.51 to
$7.28 or about 3.06%. Meanwhile, the value of most intermediate fixed income
securities also fell. For example, the Merrill Lynch index of Government Agency
securities maturing in 5-7 years fell by 1.18% while their index of corporate
bonds maturing between 5 and 7 years fell by 2.24%. Of course, if rates rise
further the market value of the portfolio's holdings will be adversely impacted,
as are all fixed income securities. It is our belief however, that the current
diversified structure of the portfolio will help it to perform well in the
coming months while continuing to provide shareholders with high levels of
income.
At the end of the first six months in this fiscal year, the Fund's share
price stood at $5.875. This was down slightly from the prior fiscal year end
($6.188) and up slightly from calendar year end ($5.813). We feel the share
price between the date of the announced restructuring and calendar year end was
adversely impacted by two factors. First, year-end tax loss selling was
prevalent in fixed income markets as investors sought to offset gains in stocks.
Second, some shareholders who had used the Fund as a means to gain exposure to
Australian/New Zealand markets began selling shares once the restructuring was
confirmed. With these factors behind us, we are hopeful the share price will
improve in relation to the Fund's NAV to reflect the inherent value of the Fund
and the non-taxable status of the dividends through January 31, 2001.
The Fund's share-price discount to NAV is the result of many factors,
most of which are beyond the control of Management. However, we do monitor this
measure which, at 19.3%, is virtually unchanged from the prior fiscal year
Page 1
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Report to Shareholders
end. Management views this discount as unacceptably high and is looking at a
variety of ways to bring the share price up in relation to the NAV. The manager
has already initiated some actions including more contact with fund analysts and
the introduction of a Web Site to update current and potential investors as to
the status of the portfolio. In the coming months, additional steps will be
considered as appropriate to achieve the goal of narrowing the discount over
time to the benefit of all shareholders.
We encourage shareholders to access the Fund's Internet website at
WWW.DSFFUND.Com. There, you will find updated profiles of the portfolio and news
of interest to shareholders. As always, we welcome your feedback.
Sincerely,
/s/ Luke D. Knecht
Luke D. Knecht, C.F.A.
President
June 8, 2000
PORTFOLIO SUMMARY
At April 30, 2000, the average maturity of the Fund's portfolio was
12.9 years with an average duration of 4.8 years and a current yield to
maturity of 10.7%. Securities rated AAA comprised 36.0%, BBB 4.4%,
BB 21.4%, B 31.0%, and CCC 7.2% of the portfolio.
Page 2
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Portfolio Management Discussion
OVERVIEW
Investment activities for the six-month period ended April 30, 2000 were
devoted to restructuring Fund assets in accordance with the broadened investment
mandate approved by shareholders last fall. This involved the liquidation of
approximately 90% of the Fund's previous Australian and New Zealand dollar bond
holdings and the corresponding purchase of mortgage-backed securities, corporate
bonds, high-yield securities, and emerging market debt. Financial leverage was
introduced to the Fund to enhance yield (with associated funding costs
subsequently locked in via an interest rate swap). This transition was
effectively completed around the turn of the calendar year and resulted in a
significant increase in the Fund's yield while maintaining its overall
intermediate duration profile and an investment-grade credit quality.
Financial markets were generally mixed and volatile during this period,
effectively divisible into two discrete stages. The first stage (encompassing
the period from November-to-mid-January) was characterized by sharply rising
bond yields, surging equity markets, and rallies in commodity-related currencies
(such as the Australian dollar). The fundamental underpinnings for these asset
movements were continued strength in world economic activity, an uptick in
inflation across most developed markets, and intensifying fears regarding the
pace of future rate hikes by central banks (led by the Federal Reserve).
The second stage (mid-January-to-April) saw little change in underlying
fundamental dynamics, but significant shifts in financial market behavior.
Equity markets cooled, most dramatically in the technology-driven sectors that
had rallied most sharply in 1999. U.S. bond yields stabilized and began to turn
lower in response. Perhaps more importantly, the path of government and
non-government bond yields began to diverge (briefly in direction, more
sustainably in terms of relative magnitude) due to powerful structural factors
that materially altered the supply/demand equation between fixed income sectors.
10-year U.S. Treasury yields fell approximately 100 basis points from their
January peak to their April trough. 10-year U.S. swap yields did not peak until
mid-February, with peak-to-trough yield change less than one-half of its
Treasury counterpart. Yield spreads between government and non-government bonds
widened significantly as a result. Partly for supply/demand reasons, and partly
for marginal shifts in relative economic expectations, the Australian dollar
came under severe pressure during this 'second stage', depreciating over 14%
from its mid-January peak to its April lows.
For the six-month period ended April 30, as a whole, U.S. and Australian
bond yields moved higher. Since December 31, 1999 (roughly coinciding with the
restructuring of the Fund), U.S. non-government bond sectors generally
underperformed comparable U.S. Treasury securities (the notable exception was an
outperforming emerging market sector). Amongst Fund components, emerging markets
were by far the best performer, followed by mortgage-backed securities,
corporate bonds, with high-yield bonds lagging other sectors. Australian bonds
marginally outperformed comparable U.S. bonds on a local currency basis, but
these relative gains were overwhelmed by the sharp depreciation of the
Australian currency versus the U.S. dollar.
Restructuring the Fund's portfolio during this period proved to be
fortunate timing and better served the Fund's primary investment objective of
income generation in two main ways. First, Fund yield was increased
significantly. Second, the Fund's exposure to Australian dollar volatility was
materially reduced. A summary comparison of primary Fund characteristics is
given on the next page (we again assigned calendar year-end as an arbitrary
'before' and 'after' delineator for Fund restructuring).
Page 3
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Portfolio Management Discussion
<TABLE>
<CAPTION>
OCTOBER 1999 DECEMBER 1999 APRIL 2000
<S> <C> <C> <C>
Yield (to Maturity) 6.9% 10.1% 10.7%
Credit Quality AA+ A- BBB
Duration 4.5 years 5.2 years 4.8 years
NAV $7.68 $7.51 $7.28
Stock Price $6.188 $5.813 $5.875
Discount -19.4% -22.6% -19.3%
AUD/USD Exch. Rate 0.6395 0.6569 0.5841
</TABLE>
OUTLOOK
Dresdner RCM believes that the Federal Reserve is likely to continue
raising interest rates in an attempt to slow economic growth to a
non-inflationary pace. The fundamental backdrop for bonds therefore remains
bearish. With the backup in yields already seen, however, market valuations seem
more 'in line'. Additionally, equity markets have fallen (quite substantially in
the case of the NASDAQ), which could exert a moderating influence upon both the
economy and Fed policy at the margin. Correspondingly, the Fund's duration
stance is essentially neutral.
The Fund's portfolio strategy relies on four primary bond market
sectors: U.S. mortgage-backed securities, emerging market bonds, U.S. high-yield
securities, and investment-grade corporate and agency bonds. The structural
liquidity and supply/demand pressures that have caused most sector spreads to
widen relative to comparable U.S. Treasury securities recently are still in
evidence. But valuations have adjusted sharply and are extremely attractive on
an historical basis. Amongst investment-grade spread sectors, mortgage-backed
securities continue to offer a viable, credit-'efficient' way of generating
income for the Fund. With interest rates having risen, prepayment risk is
presently very low. Emerging market bonds have performed extremely well,
diversifying Fund risk by generally being beneficiaries of a strong economic
growth environment (typically a negative influence for bonds as an asset class).
Tighter global liquidity and falling equity valuations may temporarily slow or
reverse recent outperformance, but emerging markets continue to enjoy a positive
long-term fundamental outlook, reasonably attractive valuations, and still offer
the highest yields of any U.S. spread sector. Portfolio investments in emerging
market debt remain well-diversified.
High-yield bonds have struggled since the beginning of the calendar
year. Unfavorable supply/demand dynamics (primarily regarding mutual fund
outflows) and a modest uptick in default rates have exerted pressure upon this
sector. Valuations have become commensurately more attractive in response.
Historically, high-yield bonds have been perhaps the pre-eminent fixed income
asset class in terms of risk/reward. We believe a structural holding in this
sector is warranted for both of these reasons. The Fund's high-yield holdings
are highly diversified and have not experienced any defaults to date. Our view
on corporate bonds is somewhat less sanguine than other sectors, with event risk
potential evident with proportionately less income to potentially garner. That
said, valuations have become considerably more attractive for both corporate and
agency securities and could offer selective opportunities for the Fund going
forward.
While the outlook for Australian bonds is sanguine, current dynamics
pressuring the Australian currency are expected to persist in the near-term.
Again, after restructuring, the Fund's income and NAV are far less exposed to
currency fluctuations. The positions that remain in the Fund do so for two main
reasons: first, the book yield on these specific securities is very high,
helping the Fund maintain its primary objective of generating high income;
second, there are potential tax benefits for the Fund if these investments are
not disposed of until next fiscal year.
Page 4
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Portfolio Management Discussion
Already-realized currency losses associated with the restructuring can be offset
against the current year's taxable income and therefore dividends through
October 31st will likely be classified as return of capital and therefore tax
free. No additional benefit can be gained in this fiscal year by disposing of
the remaining Australian securities, so we plan to wait to sell until the Fund
can see future tax benefits through the sales.
Finally, financial leverage represents an integral part of the income
and duration management of the Fund. Transactions that are financed allow the
Fund to garner additional income by earning the spread between the yield of the
underlying security and the level of short-term interest rates. It also
increases duration and adds sensitivity to rising short-term rates (which
represents the cost of financing leveraged positions). Dresdner RCM has engaged
in both mortgage dollar rolls to produce leverage and has entered into an
interest rate swap agreement to manage financing costs. To limit the effect of
leverage, the Fund has segregated a commensurate offsetting amount in high-
quality, liquid assets.
Page 5
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Total Return Performance from Inception through April 30, 2000 (Unaudited)
From its inception until October 31, 1999, the Fund operated under a
mandate of investing primarily in high quality Australian debt securities. At
the Fund's 1999 Annual Stockholders' Meeting, stockholders approved a broadening
of the Fund's investment mandate to permit investment in countries and
investment sectors where meeting the Fund's primary investment objective of high
current income is considered to be the most attractive. For the six-month period
ended April 30, 2000, the Fund has been operating under its new global
investment mandate. The implementation of the Fund's new mandate began in early
December 1999 and was substantially completed by year-end. The performance of
the Fund will be measured, from November 1, 1999 forward, against the Lehman
Brothers U.S. Universal Index, an index that represents the sectors in which the
Fund is now authorized to invest.
The chart below demonstrates, for the period from inception through
October 31, 1999, the total return performance of the Fund versus the relevant
performance indices under its old investment mandate. For the period from
November 1, 1999 through April 30, 2000, the chart reflects the Fund's total
return performance versus the Lehman Brothers U.S. Universal Index. For the
six-month period ended April 30, 2000, the Fund achieved an unannualized return
on market value of 1.72% as compared to the Lehman Brothers U.S. Universal
Index's return of 1.76%. On a net asset value basis, which measures the
performance of the Fund's underlying portfolio, the Fund achieved an
unannualized return of 0.25% for this period.
ANNUALIZED TOTAL RETURN PERFORMANCE
<TABLE>
<CAPTION>
6 10 SINCE
MONTHS* 1 YEAR 3 YEARS 5 YEARS YEARS INCEPTION**
<S> <C> <C> <C> <C> <C> <C>
Fund Market Value (1) 1.72% -5.03% -4.15% 3.13% 6.72% 7.80%
Fund Net Asset Value (2) 0.25% -6.52% -1.97% 4.44% 7.83% 9.63%
Salomon Brothers U.S. Gov't Bond
Index (3) N/A 2.28% 6.57% 6.88% 8.06% 7.54%
Salomon Brothers Australian Gov't
Bond Index (3) N/A -10.44% -2.16% 5.19% 8.90% 11.14%
Lehman Brothers U.S. Universal
Index (4) 1.76% N/A N/A N/A N/A N/A
</TABLE>
* Not annualized
** Fund commenced operations November 28, 1986
(1) Based on market value per share, adjusted for rights offering, and assumes
reinvestment of all distributions at reinvestment plan prices.
(2) Based on net asset value per share, adjusted for rights offering, and
assumes reinvestment of all distributions at the ex-dividend date net asset
value. This measures the performance of the underlying Fund portfolio and
may not be indicative of returns to investors.
(3) The Salomon Brothers U.S. and Australian Government Bond Indices are US$
based unmanaged indices.
(4) The Lehman Brothers U.S. Universal Index is an unmanaged market
value-weighted index that represents the broadest measure of the
U.S. dollar denominated securities market. The Index combines the Lehman
Brothers Aggregate Index, which is concentrated in AAA-rated and government
quality issues, with the following sub-sectors: High Yield, Emerging Market,
Rule 144a and Eurodollars.
PLEASE REMEMBER THAT PAST PERFORMANCE MAY NOT BE INDICATIVE OF FUTURE RESULTS.
Page 6
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Total Return Performance from Inception through April 30, 2000 (Unaudited)
The graph below reflects the change in value of an initial $10,000
investment in the Fund from its inception date thru April 30, 2000 assuming
reinvestment of all distributions.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
$10,000 Investment (11/30/86 - 4/30/00)
<TABLE>
<CAPTION>
MARKET VALUE N.A.V.
<S> <C> <C>
11/86 $10,000 $10,000
10/87 $9,165 $11,102
10/88 $14,679 $15,899
10/89 $15,010 $15,993
10/90 $14,664 $18,470
10/91 $20,969 $23,178
10/92 $21,388 $22,775
10/93 $23,363 $25,656
10/94 $23,776 $26,482
10/95 $27,518 $31,231
10/96 $30,144 $36,508
10/97 $30,029 $36,162
10/98 $26,276 $34,552
10/99 $26,943 $34,304
11/99 $26,565 $34,434
12/99 $26,246 $34,572
1/00 $27,279 $34,066
2/00 $27,502 $34,899
3/00 $27,733 $34,759
4/00 $27,407 $34,384
</TABLE>
Page 7
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Invesment Income Summary (Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
APRIL 30, 2000 OCTOBER 31, 1999
-------------------------- --------------------------
% $ % $
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRALIA/NEW ZEALAND 25.2% $1,034,712 100.0% $6,588,565
----------------------------------------------------------------------------------------------------------------
Total Australia/New Zealand 25.2% 1,034,712 100.0% 6,588,565
----------------------------------------------------------------------------------------------------------------
UNITED STATES
Government/Mortgage Backed 18.1% 744,342 -- --
High Yield 15.0% 617,904 -- --
Corporate Bonds 6.8% 278,139 -- --
Cash & Other 3.5% 146,023 -- --
----------------------------------------------------------------------------------------------------------------
Total United States 43.4% 1,786,408 -- --
----------------------------------------------------------------------------------------------------------------
EMERGING MARKETS
Brazil 7.2% 296,374 -- --
Russia 5.2% 213,663 -- --
Argentina 3.7% 150,385 -- --
Venezuela 3.4% 139,596 -- --
Mexico 3.4% 138,855 -- --
Turkey 2.2% 89,850 -- --
Philippines 2.0% 81,198 -- --
Bulgaria 1.7% 71,545 -- --
Korea 0.9% 35,904 -- --
Panama 0.6% 25,354 -- --
Trindad & Tobago 0.4% 17,336 -- --
India 0.4% 16,909 -- --
Peru 0.3% 11,908 -- --
----------------------------------------------------------------------------------------------------------------
Total Emerging Markets 31.4% 1,288,877 -- --
----------------------------------------------------------------------------------------------------------------
Total Fund's Investment Income 100.0% $4,109,997 100.0% $6,588,565
----------------------------------------------------------------------------------------------------------------
</TABLE>
Page 8
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
Page 9
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Portfolio of Investments
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
FACE % OF NET MARKET
AMOUNT COUNTRY (1) ISSUER RATE MATURITY ASSETS VALUE
----------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C> <C> <C>
DEBT INVESTMENTS
AUSTRALIA GOVERNMENT BONDS 9.2%
3,300,000 AU Export Finance & Insurance
Corp.* 9.00% 03/26/03 $ 2,033,134
5,580,000 AU Queensland Treasury Corp.* 6.50% 06/14/05 3,234,340
4,000,000 AU Victoria Public Finance
Authority * 12.50% 10/15/03 2,751,681
------------
8,019,155
------------
CORPORATE BONDS 2.7%
1,500,000 MY Malaysia 8.75% 06/01/09 1,531,722
1,000,000 US Waste Management Inc. 6.88% 05/15/09 819,127
------------
2,350,849
------------
EMERGING MARKETS BONDS 37.2%
2,825,000 BG National Republic of
Bulgaria, Step-Up Coupon 2.75% 07/28/12 1,972,943
4,530,000 BR Federal Republic of Brazil
DCB 7.44% 04/15/12 3,284,381
7,351,518 BR Federal Republic of Brazil,
C Bond 8.00% 04/15/14 5,303,627
450,000 BR Federal Republic of Brazil,
Floating Rate Bond, Par Z 5.75% 04/15/24 289,725
727,000 KR Cho Hung Bank, 144A 11.07% 01/07/05 736,088
310,000 KR Korea Telecom 7.63% 04/15/07 291,947
2,500,000 MX Mexican United States 11.50% 05/15/26 2,962,500
1,230,000 MX Mexican United States 10.38% 02/17/09 1,295,805
455,000 MX Mexican United States 9.88% 02/01/10 469,788
575,000 MX Nuevo Grupo Iusacell SA,
144A 14.25% 12/01/06 602,313
555,000 PH Globe Telecom, 144A 13.00% 08/01/09 596,625
1,402,500 PH Republic of Philippines
FLIRB, Series B 6.00% 06/01/08 1,389,176
1,236,000 PO Republic of Peru PDI 4.50% 03/07/17 833,598
3,973,000 RU Russia Federation, 144A 12.75% 06/24/28 3,228,063
4,290,000 RU Russia Federation 11.00% 07/24/18 3,076,938
1,755,000 TR Republic of Turkey 11.88% 01/15/30 1,901,981
475,000 TT Republic of Trinidad &
Tobago, 144A 9.88% 10/01/09 490,438
4,666,620 VE Republic of Venezuela FLIRB,
Series A 7.44% 03/31/07 3,623,019
------------
32,348,955
------------
HIGH YIELD BONDS 24.1%
475,000 BM Flag Limited 8.25% 01/30/08 391,875
400,000 BM Global Crossing Hldg Ltd,
144A 9.13% 11/15/06 390,000
500,000 CA Gulf Canada Resources Ltd. 8.35% 08/01/06 492,500
475,000 CA IMAX Corp. 7.88% 12/01/05 434,625
400,000 US Adelphia Communications 9.38% 11/15/09 376,000
500,000 US AES Corp. 9.50% 06/01/09 492,500
500,000 US AK Steel Corp. 7.88% 02/15/09 460,000
</TABLE>
See Notes to Financial Statements.
Page 10
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Portfolio of Investments
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
FACE % OF NET MARKET
AMOUNT COUNTRY (1) ISSUER RATE MATURITY ASSETS VALUE
----------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C> <C> <C>
DEBT INVESTMENTS (CONTINUED)
400,000 US American Standard Inc. 7.38% 02/01/08 $ 369,000
500,000 US Avis Group Holdings Inc. 11.00% 05/01/09 523,750
750,000 US Azurix Corp., 144A 10.38% 02/15/07 759,375
400,000 US Building Materials Corp.,
Series B 8.00% 10/15/07 342,000
500,000 US Canandaigua Brands, Series C 8.75% 12/15/03 483,750
450,000 US Charter Communications
Holdings LLC 8.25% 04/01/07 402,750
500,000 US Circus Circus/Mandalay
Resort Group 9.25% 12/01/05 486,250
250,000 US CMS Energy Corp. 7.50% 01/15/09 218,876
400,000 US Cogentrix Energy Inc. 8.75% 10/15/08 394,500
250,000 US Dade International Inc.,
Series B 11.13% 05/01/06 231,250
550,000 US Echostar DBS Corp. 9.38% 02/01/09 536,250
500,000 US Fisher Scientific
International 7.13% 12/15/05 452,464
350,000 US Foodmaker Inc. 8.38% 04/15/08 321,090
400,000 US Fox Family Worldwide Inc. 9.25% 11/01/07 354,000
250,000 US Fox/Liberty Networks LLC 0.01% 08/15/07 199,375
450,000 US Georgia Gulf Corporation,
144A 10.38% 11/01/07 463,500
500,000 US HMH Properties, Series B 7.88% 08/01/08 435,000
250,000 US Intermedia Communication,
Series B 8.50% 01/15/08 228,750
500,000 US International Game
Technology 7.88% 05/15/04 473,900
525,000 US K-Mart Corp. 8.38% 12/01/04 509,467
500,000 US Lear Corp., 144A 7.96% 05/15/05 460,233
500,000 US Level 3 Communications Inc. 9.13% 05/01/08 437,500
200,000 US Lyondell Chemical Co, Series
A 9.63% 05/01/07 197,750
250,000 US Mediacom LLC / Capital,
Series B 8.50% 04/15/08 233,750
500,000 US Metromedia Fiber Network,
Series B 10.00% 11/15/08 477,500
450,000 US Michaels Stores Inc. 10.88% 06/15/06 456,750
500,000 US Navistar International 8.00% 02/01/08 472,500
250,000 US Nextel Communications Corp. 9.38% 11/15/09 240,000
425,000 US Nextel Communications Corp.
144A 9.38% 11/15/09 408,000
200,000 US Nortek Inc. Series B 9.13% 09/01/07 186,000
475,000 US Nuevo Energy Co, 144A 9.50% 06/01/08 469,063
25,000 US Nuevo Energy Co, Series B 9.50% 06/01/08 24,688
300,000 US Perkins Family Restaurants,
Series B 10.13% 12/15/07 291,000
500,000 US Pioneer Natural Resource 9.63% 04/01/10 512,525
450,000 US Psinet Inc. 10.50% 12/01/06 397,125
500,000 US RBF Finance Co 11.00% 03/15/06 528,750
400,000 US RCN Corp. 10.13% 01/15/10 358,000
250,000 US Sbarro Inc., 144A 11.00% 09/15/09 251,875
400,000 US Scotts Co, 144A 8.63% 01/15/09 378,000
</TABLE>
See Notes to Financial Statements.
Page 11
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Portfolio of Investments
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
FACE % OF NET MARKET
AMOUNT COUNTRY (1) ISSUER RATE MATURITY ASSETS VALUE
----------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C> <C> <C>
DEBT INVESTMENTS (CONTINUED)
250,000 US Sinclair Broadcast Group 8.75% 12/15/07 $ 220,313
500,000 US Stater Brothers Holdings 10.75% 08/15/06 498,750
400,000 US Station Casinos 8.88% 12/01/08 386,000
500,000 US Tenet Healthcare Corp.,
Series B 8.13% 12/01/08 467,500
475,000 US United Rentals Inc., Series
B 8.80% 08/15/08 420,375
250,000 US Voicestream Wireless Co,
144A 10.38% 11/15/09 255,000
250,000 US Westpoint Stevens Inc. 7.88% 06/15/08 207,500
500,000 US Williams Communication Group
Inc. 10.70% 10/01/07 512,500
------------
20,971,744
------------
MORTGAGE BACKED SECURITIES 54.6%
4,500,000 US FNMA * 7.13% 01/15/30 4,466,250
9,800,000 US FNMA TBA 7.50% 08/01/28 9,591,750
16,500,000 US FNMA TBA 8.00% 05/05/28 16,474,219
2,000,001 US FNMA Pool # 512726 * 7.50% 09/01/29 1,959,269
3,485,973 US FNMA Pool # 516272 * 7.50% 09/01/29 3,414,978
411,362 US FNMA Pool # 517089 * 7.50% 10/01/29 402,984
588,718 US FNMA Pool # 517782 * 7.50% 11/01/29 576,728
4,713,567 US FNMA Pool # 520655 * 7.50% 11/01/29 4,617,570
2,950,282 US FNMA Pool # 522618 * 7.50% 11/01/29 2,890,197
3,206,585 US FNMA Pool # 521225 * 7.50% 12/01/29 3,141,280
------------
47,535,225
------------
TOTAL PORTFOLIO OF INVESTMENTS (Cost $113,637,232) 127.8% 111,225,928
------------
OTHER ASSETS LESS LIABILITIES (27.8)% (24,197,877)
------------
NET ASSETS 100.0% $ 87,028,051
============
</TABLE>
Glossary of Terms:
144A -- Security is purchased pursuant to Rule 144A of the Securities Act of
1933 and may be resold only to qualified institutional buyers.
FNMA -- Federal National Mortgage Association
TBA -- Settlement of mortgage backed securities is on a delayed delivery
basis with the final maturity to be announced (TBA) in the future. At
April 30, 2000, the value of the Fund's forward commitment purchases
was $26,065,969.
(1) Country Code Legend:
AU -- Australia
BG -- Bulgaria
BM -- Bermuda
BR -- Brazil
See Notes to Financial Statements.
Page 12
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Portfolio of Investments
April 30, 2000 (Unaudited)
(1) Country Code Legend: (Continued)
CA -- Canada
KR -- Korea
MX -- Mexico
MY -- Malaysia
PH -- Philippines
PO -- Peru
RU -- Russia
TR -- Turkey
TT -- Trinidad & Tobago
US -- United States
VE -- Venezuela
* All or a portion of these securities have been segregated to cover the Fund's
leverage transactions.
The fund's investments in securities at April 30, 2000 categorized by country:
<TABLE>
<CAPTION>
% OF
NET ASSETS
-------------------------------
COUNTRY SHORT-TERM
COUNTRY CODE DEBT AND OTHER TOTAL
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Australia AU 9.2% 9.2%
Bulgaria BG 2.3% 2.3%
Bermuda BM 0.9% 0.9%
Brazil BR 10.2% 10.2%
Canada CA 1.1% 1.1%
Korea KR 1.1% 1.1%
Mexico MX 6.1% 6.1%
Malaysia MY 1.8% 1.8%
Philippines PH 2.3% 2.3%
Peru PO 1.0% 1.0%
Russia RU 7.2% 7.2%
Turkey TR 2.2% 2.2%
Trinidad & Tobago TT 0.6% 0.6%
United States US 77.6% (27.8)% 49.8%
Venezuela VE 4.2% 4.2%
-------------------------------
TOTAL 127.8% (27.8)% 100.0%
===============================
</TABLE>
As of April 30, 2000, the Fund had the following outstanding swap agreement
denominated in U.S. dollars (Note 1):
<TABLE>
<CAPTION>
COUNTER-
PARTY SWAP
NOTIONAL CREDIT TERMINATION MATURITY RATE RATE UNREALIZED
AMOUNT RATING ISSUER DATE DATE RECEIVED PAID DEPRECIATION
-----------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C> <C> <C> <C>
$15,000,000 A Treasury Index (a) 2/15/01 2/15/01 5.75% 6.60% $(516,360)
</TABLE>
(a) Total return swap with J.P. Morgan Securities Inc. The Fund pays fixed
interest rates periodically and receives a floating rate periodically. At
termination, the Fund will receive or pay the total return of the J.P.
Morgan Government Bond Index adjusted for interest received or paid.
See Notes to Financial Statements.
Page 13
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
(UNAUDITED)
APRIL 30, OCTOBER 31,
2000 1999
------------ ----------------
<S> <C> <C>
ASSETS:
Investments, at value (cost
$113,637,232 and $95,168,242,
respectively) $111,225,928 $89,318,814
Cash and cash equivalents 1,203,331 59,757
Foreign currency (cost $141,551 and
$4,668,923, respectively) 139,331 4,588,424
Interest receivable 2,050,005 2,361,153
Prepaid expenses 7,566 --
------------ -----------
Total Assets 114,626,161 96,328,148
------------ -----------
LIABILITIES:
Payables:
Investments purchased (Note 1) 26,224,063 3,658,588
Dividends payable (Note 1) 597,729 478,183
Interest rate swap contract (Note 1) 516,360 --
Accrued expenses:
Investment advisory fees (Note 2) 50,842 54,762
Directors' fees and expenses 6,178 3,290
Other accrued expenses 183,197 350,046
Deferred fee income on dollar rolls
(Note 1) 19,741 --
------------ -----------
Total liablities 27,598,110 4,544,869
------------ -----------
NET ASSETS $ 87,028,051 $91,783,279
============ ===========
NET ASSETS:
Net assets were comprised of:
Common stock, at $0.001 par $ 11,955 $ 11,955
Paid-in capital (Note 4) 97,148,607 97,148,607
------------ -----------
97,160,562 97,160,562
Accumulated distribution in excess of
net investment income (813,494) (826,136)
Accumulated net realized gain (loss)
on investment and foreign foreign
currency transactions (6,383,695) 1,340,220
Net unrealized depreciation on
investments, foreign currencies, and
interest rate swap (2,935,322) (5,891,367)
------------ -----------
NET ASSETS $ 87,028,051 $91,783,279
============ ===========
Shares of common stock issued and
outstanding 11,954,566 11,954,566
------------ -----------
Net asset value per share $ 7.28 $ 7.68
============ ===========
</TABLE>
See Notes to Financial Statements.
Page 14
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Statement of Operations
<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE SIX
MONTHS ENDED
APRIL 30, 2000
--------------
<S> <C>
NET INVESTMENT INCOME:
Investment Income:
Interest and discount earned (net of foreign
withholding taxes of $172,841) $ 4,009,937
Fee income on dollar rolls (Note 1) 100,060
-----------
Total investment income 4,109,997
-----------
Expenses:
Investment advisory fees (Note 2) 314,651
Custodian fees 103,740
Directors' fees and expenses 87,156
Audit and tax services 27,666
Legal fees 24,934
Transfer agent fees 22,740
Miscellaneous 11,921
Stock exchange listing fee 11,248
Postage 11,070
Shareholder reports 7,840
Insurance 3,815
Subscriptions 3,750
-----------
Total operating expenses 630,531
-----------
Net Investment Income 3,479,466
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES:
Net realized loss on:
Investment transactions (1,363,991)
Foreign currency transactions (4,805,830)
-----------
Total net realized loss (6,169,821)
-----------
Change in unrealized appreciation (depreciation)
on:
Investments (1,497,713)
Foreign currency translations and interest
rate swap 4,453,758
-----------
Total net change in unrealized appreciation 2,956,045
-----------
Net realized and unrealized loss on
investments and foreign currencies (3,213,776)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 265,690
===========
</TABLE>
See Notes to Financial Statements.
Page 15
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE SIX FISCAL YEAR
MONTHS ENDED ENDED
APRIL 30, OCTOBER 31,
2000 1999
------------ --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 3,479,466 $ 5,255,712
Net realized loss on investments and
foreign currency transactions (6,169,821) (1,092,599)
Change in unrealized appreciation
(depreciation) on investments,
foreign currency translations, and
interest rate swaps 2,956,045 (4,823,615)
----------- ------------
Net increase (decrease) in net assets
resulting from operations 265,690 (660,502)
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,466,824) (5,080,691)
From net realized gain on investments
and foreign currency transactions (1,554,094) (2,522,413)
----------- ------------
Net decrease in net assets resulting
from distributions to shareholders (5,020,918) (7,603,104)
----------- ------------
Total decrease In Net Assets (4,755,228) (8,263,606)
NET ASSETS:
Beginning of period 91,783,279 100,046,885
----------- ------------
End of period* $87,028,051 $ 91,783,279
=========== ============
--------------------------------
* Includes distributions in excess of
net investment income. $ (813,494) $ (826,136)
=========== ============
</TABLE>
See Notes to Financial Statements.
Page 16
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Financial Highlights
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED FISCAL YEARS ENDED OCTOBER 31,
APRIL 30, ---------------------------------------------------
2000 1999 1998 1997 1996 1995
----------- -------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:(1)
Net asset value at
beginning of period $ 7.68 $ 8.37 $ 9.51 $ 10.41 $ 10.08 $ 9.99
------- ------- -------- -------- -------- -------
Net investment income 0.29 0.44 0.53 0.72 0.85 0.84
Net realized and
unrealized gain (loss)
on investments and
foreign currencies (0.27) (0.49) (0.97) (0.82) 0.79 0.82
------- ------- -------- -------- -------- -------
Total increase
(decrease) from
operations: 0.02 (0.05) (0.44) (0.10) 1.64 1.66
------- ------- -------- -------- -------- -------
Distribution to
shareholders:
From net investment
income (0.29) (0.43) (0.54) (0.78) (0.89) (0.89)
From net realized gains
on investment and
foreign currency
transactions (0.13) (0.21) (0.16) (0.03) -- --
------- ------- -------- -------- -------- -------
Total distributions
to shareholders (0.42) (0.64) (0.70) (0.81) (0.89) (0.89)
------- ------- -------- -------- -------- -------
Decrease in net assets
from capital stock
transactions -- -- -- -- (0.39) (0.65)
------- ------- -------- -------- -------- -------
Offering expenses
charged to capital -- -- -- 0.01 (0.03) (0.03)
------- ------- -------- -------- -------- -------
Net increase (decrease)
in net asset value (0.40) (0.69) (1.14) (0.90) 0.33 0.09
------- ------- -------- -------- -------- -------
NET ASSET VALUE AT END
OF PERIOD $ 7.28 $ 7.68 $ 8.37 $ 9.51 $ 10.41 $ 10.08
======= ======= ======== ======== ======== =======
Per share market value
at end of period $ 5.875 $ 6.188 $ 6.625 $ 8.313 $ 9.125 $ 9.250
======= ======= ======== ======== ======== =======
TOTAL INVESTMENT
RETURN (2) 1.73% 2.56% (12.50)% (0.38)% 9.54% 15.74%
Net asset value
return (3) 0.25% (0.72) (4.45)% (0.95)% 16.90% 17.93%
Net assets at end of
period (in 000's) $87,028 $91,783 $100,047 $113,639 $124,501 $96,390
Number of shares
outstanding at end of
period (in 000's) 11,955 11,955 11,955 11,955 11,955 9,564
RATIOS TO AVERAGE NET
ASSETS:
Operating expenses (4) 1.41% 1.38% 1.21% 1.14% 1.22% 1.32%
Net investment
income (4) 7.78% 6.92% 6.25% 7.21% 8.22% 8.51%
Portfolio turnover 247.92% (5) 46.08% 37.05% 26.67% 16.00% 56.55%
</TABLE>
--------------------------------
(1) Calculated on average shares outstanding.
(2) Based on market value per share, adjusted for reinvestment of distributions
at reinvestment plan prices and for rights offerings, assuming full
subscription by shareholder and is not annualized for periods less than one
year.
(3) Based on net asset value per share, adjusted for reinvestment of
distributions at ex-dividend date net asset value and for rights offering,
assuming full subscription by shareholder and is not annualized for periods
less than one year.
(4) Annualized
(5) Turnover rate higher than prior periods due to the change in investment
mandate.
See Notes to Financial Statements.
Page 17
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Notes to Financial Statements (Unaudited)
April 30, 2000
Dresdner RCM Global Strategic Income Fund, Inc. (formerly Kleinwort
Benson Australian Income Fund, Inc.) (the "Fund") was incorporated in Maryland
on August 12, 1986 and is registered as a closed-end, non-diversified management
investment company under the Investment Company Act of 1940, as amended. On
October 29, 1999, the stockholders of the Fund approved a change in the Fund's
investment mandate to eliminate the requirement that the Fund invest primarily
in Australian debt securities and to permit the Fund to invest in a broad range
of fixed-income investment sectors on a global basis. In connection with the
Fund's new investment mandate, the Fund now trades under its new name and ticker
symbol [DSF] .
1. ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
by the Fund in the preparation of its financial statements.
A. BASIS OF PRESENTATION:
The financial statements of the Fund are prepared in accordance with
accounting principles generally accepted in the United States using the U.S.
dollar as both the functional and reporting currency. (For tax purposes the Fund
uses the Australian dollar and U.S. dollar as its functional currency -- see
TAXES.) The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates of certain
reported amounts in the financial statements. Actual amounts could differ from
those estimates.
B. INVESTMENT VALUATION:
Investment securities are stated at value. Investments for which market
quotations are readily available are valued at the last reported sales prices.
If there is no sales price on the date of valuation, then investments are valued
at the most recently available sales price or at fair value as determined in
good faith by or under the direction of the Fund's Board of Directors.
Short-term securities, which mature in more than 60 days, are valued at
current market quotations. Short-term securities, which mature in 60 days or
less, are valued at amortized cost, if their term to maturity from date of
purchase was 60 days or less, or by amortizing their value on the 61st day prior
to maturity, if their original term to maturity exceeded 60 days.
C. FOREIGN CURRENCY TRANSLATION:
The books and records of the Fund are maintained in U.S. dollars.
Foreign currencies, investments and other assets and liabilities, if any, are
translated into U.S. dollars ("US$") on the following basis:
(i) market value of investment securities and other assets and
liabilities -- at the current prevailing rate of exchange.
(ii) purchases and sales of investment securities and income and
expenses -- at the rates of exchange prevailing on the respective
dates of such transactions.
Page 18
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Notes to Financial Statements (Unaudited)
April 30, 2000
1. ACCOUNTING POLICIES (CONTINUED)
The investment securities of the Fund are presented at the foreign
exchange rates and market values at the close of the period. The Fund isolates
that portion of the results of operations arising as a result of changes in
foreign exchange rates from the fluctuations arising from changes in the market
prices of securities held or sold during the period.
The foreign currency transactions element of net realized gains or
losses represents net foreign exchange gains or losses from the disposition of
portfolio securities, foreign currencies and forward currency contracts and net
currency gains or losses realized between the trade and settlement dates on
security transactions between the amounts of interest, discount and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar equivalent
amounts actually received or paid. The foreign currency denominated assets and
liabilities element of the change in unrealized appreciation or depreciation
represents the change in the value of portfolio securities, foreign currencies,
and other assets and liabilities arising as a result of changes in foreign
exchange rates.
D. MARKET AND CURRENCY RISK:
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of domestic origin
as a result of, among other factors, the level of governmental supervision and
regulation of foreign securities markets and the possibility of political or
economic instability. The abilities of the issuers of debt securities held by
the Fund to meet their obligations may be affected by economic or political
developments in a particular country.
E. INVESTMENT TRANSACTIONS AND INVESTMENT INCOME:
Investment security transactions are recorded on the trade date.
Realized and unrealized gains and losses on investments and foreign currencies
are calculated on the identified cost basis. Interest income is recorded on the
accrual basis and interest receivable is reflected in the Statement of Assets
and Liabilities net of accrued withholding taxes. Premiums and discounts on debt
securities are amortized over the life of the security.
F. FORWARD CURRENCY CONTRACTS:
The Fund may enter into forward currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings. A forward contract is a commitment to purchase or sell a foreign
currency at a future date at a negotiated forward rate. Forward currency
contracts are valued based on the current forward rate of exchange. Fluctuations
in the value of such contracts are recorded as unrealized foreign exchange gain
or loss. At April 30, 2000 there were no forward contracts outstanding.
G. FORWARD COMMITMENTS:
The Fund enters into dollar rolls in which the Fund sells securities for
delivery in the current month and simultaneously contracts to repurchase
substantially similar (same type, same or similar interest rate and maturity)
Page 19
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Notes to Financial Statements (Unaudited)
April 30, 2000
1. ACCOUNTING POLICIES (CONTINUED)
securities on a specified future date. During the roll period, the Fund forgoes
principal and interest paid on the securities. The Fund accounts for dollar
rolls as financing transactions. Dollar rolls enhance the Fund's yield by
earning a spread between the yield on the underlying mortgage securities and
short-term interest rates. The fee income earned for the period on these
transactions was $100,060. At April 30, 2000, there were $26,065,969 in dollar
roll commitments on liquid mortgage pass-throughs outstanding.
H. INTEREST RATE SWAPS:
The Fund enters into interest rate swaps for investment, hedging and
risk management purposes. Interest rate swaps involve the exchange of
commitments to pay or receive interest-e.g., an exchange of floating rate
payments for fixed rate payments. If forecasts of interest rates and other
market factors are incorrect, investment performance will diminish compared to
what performance would have been if these investment techniques were not used.
Even if the forecasts are correct, there are risks that the positions may
correlate imperfectly with the asset or liability being hedged, a liquid
secondary market may not always exist, or a counterparty to a transaction may
not perform. The Fund records, as an increase or decrease to interest income,
the net amount due or owed by the Fund on each periodic payment. The market
valuations represent the net present value of all future cash settlement amounts
based on implied forward interest rates.
At April 30, 2000, the Fund had entered into one swap with $15 million
in notional amount to provide exposure to interest rates. The swap is U.S.
dollar-denominated to provide interest rate exposure. The difference between
rates received and paid by the Fund constitutes investment income, and is a
component of interest income on the Statement of Operations of ($28,301) for the
six months ended April 30, 2000. Net unrealized depreciation on the swap
position was $516,360 at April 30, 2000.
I. LEVERAGE:
Forward sale commitments, dollar rolls, interest rate swaps, reverse
repurchase agreements and other transactions may involve leverage. Transactions
that are financed by the Fund result in financial leverage that the Fund uses to
manage income and duration exposures of the Fund. The use of leverage increases
the overall duration risk of the Fund, and an increased sensitivity to rising
short-term interest-rates. The Fund's use of leverage is limited to 30% of net
assets. In order to limit leverage, the Fund segregated $29,488,411 in high
credit quality, liquid investments against outstanding obligations, resulting in
$0 net leverage at April 30, 2000.
J. DIVIDENDS AND DISTRIBUTIONS:
The Fund declares and pays dividends of net investment income on a
monthly basis. Distributions of net realized capital gains, if any, are made
annually. Dividends and distributions are recorded on their ex-dividend date.
The amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These
Page 20
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Notes to Financial Statements (Unaudited)
April 30, 2000
1. ACCOUNTING POLICIES (CONTINUED)
"book/tax" differences are either temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their tax-basis treatment; temporary
differences do not require a reclassification.
The Fund accounts for and reports distributions to shareholders in
accordance with the Statement of Position 93-2: "Determination, Disclosure, and
Financial Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies." The effect of applying this statement
for the years ended October 31, 1999 and 1998 was to decrease undistributed net
investment income by $1,001,157 and increase undistributed net investment income
by $164,184 respectively, and increase undistributed capital gain by $2,673,290
and $8,444,975 and decrease paid in capital by $1,672,133 and $8,609,159. The
adjustments are primarily attributable to re-designation of foreign currency
gains/losses for tax purposes. Net investment income, net realized gains and net
assets of the Fund were not affected by these changes.
K. TAXES:
For Federal income tax purposes, the Fund's transactions are accounted
for using the U.S. and Australian dollar as the functional currency.
Accordingly, only realized currency gains and losses resulting from the
repatriation of A$ into US$ or NZ$ into A$ or US$ are recognized for tax
purposes.
No provision has been made for U.S. income taxes because it is the
Fund's policy to meet the requirements of the U.S. Internal Revenue Code
applicable to regulated investment companies and to distribute, within allowable
time limits, all of its taxable income to shareholders. As the Fund uses the
U.S. and Australian dollar as its functional currency for tax purposes, there
are character differences between taxable income and net investment income and
net realized gain (loss) on investments and foreign currencies as computed for
financial statement purposes. Australia imposes a withholding tax of 10% on most
interest and discount earned. Eurobonds and New Zealand government bonds are
generally not subject to withholding taxes.
2. AGREEMENTS
On October 15, 1999, shareholders of the Fund approved a new investment
advisory agreement between the Fund and Dresdner RCM Global Investors ("Dresdner
RCM") and a new subadvisory agreement with Kleinwort Benson Investment
Management Americas Inc. ("KBIMA"). The terms of the new investment advisory
agreement are substantially the same as the old agreement. The Fund will
continue to pay an investment advisory fee based on weekly average net assets of
0.70% annually for assets up to $100 million and 0.65% annually thereafter. The
fee will be computed weekly and paid monthly to Dresdner RCM. For services
rendered pursuant to the new subadvisory agreement with KBIMA, Dresdner RCM will
pay to KBIMA the percentage of Dresdner RCM's investment advisory fee equal to
the percentage of the Fund's weekly net assets sub-advised by KBIMA. For the six
months ended April 30, 2000 the Fund paid $314,651.
Page 21
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Notes to Financial Statements (Unaudited)
April 30, 2000
3. PORTFOLIO TRANSACTIONS
Purchases of investment securities, other than short-term investments,
for the six months ended April 30, 2000 and the year ended October 31, 1999,
aggregated $273,653,641 and $43,962,146, respectively. Sales of investment
securities, other than short-term investments, totaled $249,684,588 and
$46,272,432, respectively.
The U.S. Federal income tax basis of the Fund's investments and foreign
currency cash deposits at April 30, 2000 and October 31, 1999, was as listed
below.
<TABLE>
<CAPTION>
APRIL 30, 2000 OCTOBER 31, 1999
----------------- -------------------
<S> <C> <C>
Tax cost basis $112,339,553 $89,491,994
============ ===========
Unrealized appreciation $ 1,635,874 $ 2,377,566
Unrealized depreciation (3,126,529) (2,550,746)
------------ -----------
Net unrealized depreciation $ (1,490,655) $ (173,180)
============ ===========
</TABLE>
4. CAPITAL STOCK
There are 100 million shares of $0.001 par value common stock authorized
and 11,954,566 such shares outstanding. There were no transactions in the Fund's
capital stock for the six months ended April 30, 2000.
Page 22
<PAGE>
Dresdner RCM Global Strategic Income Fund, Inc.
Dividend Reinvestment and Cash Purchase Plan
Foreign Tax Credits (Unaudited)
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The Fund offers to shareholders a Dividend Reinvestment Plan, which
provides participants with a prompt and simple way to reinvest their income
dividends and capital gain distributions in additional Fund shares. If you
choose to participate in the Plan, your income dividends and capital gain
distributions will automatically be reinvested in Fund shares at the lower of
market price or net asset value, at up to a 5% discount for market price, on
valuation date. The Plan also includes a Cash Purchase option, which provides
Reinvestment Plan participants with the opportunity to make additional cash
investments in Fund shares directly through the Plan Agent.
The Plan is entirely voluntary and, subject to the terms and conditions
of the Plan, you may join or withdraw at any time. A brochure with more
information, including the full terms and conditions, and an application is
available from the Plan Agent, Boston EquiServe, telephone (800) 730-6001.
If you wish to participate and your shares are registered in your name,
simply complete and return the application form. If your shares are held in the
name of a brokerage firm, bank or other nominee, your shares may need to be
re-registered in your own name in order for you to participate. Please consult
your broker to determine what needs to be done to arrange for you to join the
Plan.
FOREIGN TAX CREDITS
The Fund will generally elect to treat all foreign taxes paid by it as
having been paid proportionately by its shareholders. As a result, the Form
1099-DIV's issued to shareholders by the Fund will likely include an amount of
foreign taxes paid by the Fund on the behalf of its shareholders. Shareholders
can generally use the foreign tax amount to either claim a deduction or a tax
credit on their U.S. Federal tax return.
The Fund issues its 1099-DIV tax forms in January of each year. In
February, the Fund will inform shareholders of the breakdown between foreign
taxes, dividends and distributions paid for the preceding calendar year.
Shareholders whose shares are held in "street name" should contact their broker
for foreign tax credit reporting information.
Page 23
