(File Nos. 33-33320 and 811-06038)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
The Emerging Germany Fund Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11
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computed pursuant to Exchange Act Rule 0-11 (set forth the
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
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offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
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1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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TO OUR FELLOW STOCKHOLDERS:
The annual meeting of the stockholders of The Emerging Germany Fund (the "Fund")
will be held on January 26, 1999. At the meeting, the following non-routine
matters have been recommended by the Board of Directors to the stockholders of
the Fund for your approval:
o Broadening the investment objective of the Fund to permit investment
on a pan-European basis
o Converting the Fund from a closed-end structure to an open-end
structure
The new year will bring a time of historic change in Europe, and these changes
will have a major impact on the Fund. On January 1, 1999, European Economic and
Monetary Union will take effect. With that change, European markets, which
historically have operated independently on a country basis, will move towards
unification. As a result, a single, unified market will be realized through
which people, goods, and money can move freely, creating a market with a
population greater than that of the United States and, with the likely future
addition of the United Kingdom, the world's largest economy.
As European unification emerges, the fortunes of more and more German companies
will no longer be linked as closely to the fortunes of the German economy.
Instead, they will be evaluated against their competitors in other European
countries, and their fortunes will be linked to the strength or weakness of the
overall European economy. In this environment, from an investor's standpoint,
intensified European industry and company analysis will be critical to
successful money management.
Viewed against this backdrop, the Board believes that single European country
funds will have a reduced purpose and will tie an investor's fortunes to a
limited and somewhat arbitrary group of issuers. In contrast, pan-European funds
will serve as a core investment option, with managers seeking within that
economic area to identify the promising investment opportunities of the future.
Proposal No. 1 seeks to permit the Fund to take advantage of these changes by
expanding the Fund's investment objective to allow it to invest on a broader,
pan-European basis. Your Board recommends strongly that you vote "FOR" Proposal
No. 1.
In recent years, the Fund has had excellent investment performance. In fact, the
Fund was the #1 U.S. German fund in 1997 and again through the first three
quarters of 1998, measured by its total return. Despite the excellent
performance, however, the discount between the market price of the Fund's shares
and the net asset value of those shares has not substantially narrowed.
Converting from a closed-end structure to an open-end structure would eliminate
that discount.
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As a single country fund, the Board believed strongly that open-ending could be
harmful to stockholders because of concerns in satisfying redemption requests
with a portfolio of securities trading in a less liquid and overall smaller
market. Indeed, as a historical matter, the vast majority of single country
funds have been structured as closed-end funds. If the stockholders approve the
Board's proposal to broaden the Fund's investment objective, however, the Fund
will be able to operate in an open-end structure without disadvantage.
The Board recommends strongly that the stockholders vote "FOR" Proposal No. 2,
to convert to an open-end structure. You should know that every voting member of
the Board of Directors intends to vote "FOR" both Proposal No. 1 and Proposal
No. 2, for reasons articulated in the accompanying Proxy Statement.
In addition, the accompanying Proxy Statement contains routine proposals to
elect four Directors, ratify the selection of the Fund's independent
accountants, and a shareholder proposal to terminate the Fund's current
investment advisory agreement. The Board recommends strongly that you vote "FOR"
Proposal Nos. 3 and 4, and "AGAINST" Proposal No. 5.
The full details of these proposals and a comprehensive explanation of the
Board's recommendations are contained in the accompanying Proxy Statement, which
we urge you to read carefully.
Your vote is very important to help decide these critical issues for the future
of the Fund. Since the meeting will be held soon, please take a moment now to
sign and return promptly your proxy card in the enclosed postage-paid envelope.
Thank you.
Sincerely,
[ ]
Chairman of the Board of Directors
The Emerging Germany Fund
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THE EMERGING GERMANY FUND INC.
FOUR EMBARCADERO CENTER
SAN FRANCISCO, CA 94111
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 26, 1999
------------------------
To Our Stockholders:
Notice is hereby given that an Annual Meeting of Stockholders (the
"Meeting") of The Emerging Germany Fund Inc. (the "Fund") will be held at 10:00
a.m. on January 26, 1999 at 75 Wall Street (Lower Level), New York, New York
10005, for the following purposes:
(1) To approve or disapprove a proposal to change the Fund's
investment strategy, which proposal includes the following:
a. Expanding the Fund's investment objective from a
predominantly German investment portfolio to a broader
European investment portfolio; and
b. Amending the Fund's Articles of Incorporation to change
the Fund's name to Dresdner RCM Europe Fund Inc.
(2) To approve or disapprove a proposal to convert the Fund from a
closed-end investment company to an open-end investment
company, which proposal includes the following:
a. C hanging the Fund's subclassification under the
Investment Company Act of 1940, as amended (the "1940
Act"), from a closed-end investment company to an
open-end investment company and amending and restating
the Fund's Articles of Incorporation to provide for
such conversion;
b. Modifying and eliminating certain fundamental
investment restrictions of the Fund in connection with
such conversion;
c. Approving or disapproving the Investment Management
Agreement between the Fund and Dresdner RCM Global
Investors LLC ("Dresdner RCM"); and
d. Approving or disapproving the Rule 12b-1 Distribution
Plan (the "Plan") of the Fund.
(3) To elect four Directors of the Fund, each to hold office for a
term of three years and until his successor is duly elected
and qualified.
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(4) To ratify the selection of PricewaterhouseCoopers LLP as
independent accountants of the Fund for the fiscal year ending
December 31, 1999.
(5) To approve or disapprove, if presented, a stockholder
proposal.
(6) To consider and act upon any other business that may properly
come before the Meeting or any adjournment thereof.
Only holders of common stock of record at the close of business on
December 4, 1998 are entitled to notice of, and to vote at, this Meeting or any
adjournment thereof.
By Order of the Board of Directors
Robert J. Goldstein
Secretary
Dated: December [ ], 1998
San Francisco, California
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN
THE ENCLOSED PROXY AND RETURN IT TO THE FUND. TO
SAVE THE FUND THE ADDITIONAL EXPENSE OF FURTHER
SOLICITATION, PLEASE MAIL IN YOUR PROXY PROMPTLY.
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THE EMERGING GERMANY FUND INC.
FOUR EMBARCADERO CENTER
SAN FRANCISCO, CA 94111
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 26, 1999
------------------------
PROXY STATEMENT
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This Proxy Statement is furnished by the Board of Directors of The
Emerging Germany Fund Inc. (the "Fund") in connection with the solicitation of
proxies for use at the Annual Meeting of Stockholders (the "Meeting") to be held
at 10:00 a.m. on January 26, 1999 at 75 Wall Street (Lower Level), New York, New
York 10005. The purpose of the Meeting and the matters to be acted upon are set
forth in the accompanying Notice of Annual Meeting.
If the accompanying form of proxy is executed properly and returned,
shares represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. However, if no instructions are specified, shares
will be voted "FOR" the expansion of the Fund's investment objective, "FOR" the
amendment of the Fund's Articles of Incorporation to change the Fund's name,
"FOR" the conversion of the Fund from an closed-end investment company to an
open-end investment company and the amendment and restatement of the Fund's
Articles of Incorporation, "FOR" the modification and elimination of certain of
the Fund's fundamental investment restrictions, "FOR" the approval of the
Investment Management Agreement, "FOR" the approval of the Rule 12b-1
Distribution Plan, "FOR" the election of the nominees for Director listed below,
"FOR" ratification of selection of the Fund's independent accountants, "AGAINST"
the stockholder proposal, and "FOR" authorizing the persons serving as proxies
to vote on any other business that may come before the Meeting based on their
discretion. A proxy may be revoked at any time prior to the time it is voted by
written notice to the Secretary of the Fund or by attendance at the Meeting.
The close of business on December 4, 1998 has been fixed as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Meeting. On that date, the Fund had 14,008,334 shares of Common Stock
outstanding and entitled to vote. Each share of Common Stock is entitled to one
vote at the Meeting, and fractional shares are entitled to proportionate shares
of one vote. It is expected that the Notice of Annual Meeting, Proxy Statement,
and form of proxy will first be mailed to stockholders on or about December 28,
1998.
The expansion of the Fund's fundamental investment objective from a
predominantly German focus to a broader European focus (Proposal No. 1(a))
requires approval by a vote of a majority of the outstanding voting securities
of the Fund as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"). Under the 1940 Act, a majority of the outstanding voting securities
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of the Fund is defined as the lesser of (i) 67% of the Fund's outstanding shares
represented at a meeting at which more than 50% of the outstanding shares are
present in person or represented by proxy, or (ii) more than 50% of the Fund's
outstanding shares (hereinafter referred to as "1940 Act majority vote"). The
amendment of the Fund's Articles of Incorporation to change the Fund's name
(Proposal No. 1(b)) requires approval by the affirmative vote of two-thirds of
all the votes entitled to be cast on the matter. The change of the Fund's
subclassification under the 1940 Act (Proposal No. 2(a)) and the amendment and
restatement of the Fund's Articles of Incorporation (Proposal No. 2(b)) require
approval by the affirmative vote of the holders of a majority of the outstanding
shares of the Common Stock. The approval of the modification and elimination of
certain of the Fund's investment restrictions, the new Investment Management
Agreement, and the new Rule 12b-1 Distribution Plan (Proposal Nos. 2(b), 2(c),
and 2(d)) each require a 1940 Act majority vote. However, the Fund will not
effect the open-ending according to Proposal Nos. 2(a), 2(b), 2(c), and 2(d)
unless Proposal Nos. 1(a) is also approved. The election of Directors (Proposal
No. 3) requires approval by a plurality of the votes cast at the Meeting. The
ratification of PricewaterhouseCoopers LLP as independent accountants of the
Fund (Proposal No. 4) requires the affirmative vote of a majority of the shares
cast at the Meeting on the matter. Approval of the stockholder proposal, if
presented, (Proposal No. 5) requires a 1940 Act majority vote.
If a proxy is properly executed and returned accompanied by
instructions to withhold authority to vote, it represents a broker "non-vote"
(that is, a proxy from a broker or nominee indicating that such person has not
received instructions from the beneficial owner or other person entitled to vote
shares on a particular matter with respect to which the broker or nominee does
not have discretionary power). The Fund intends to treat properly executed
proxies that are marked "abstain" and broker "non-votes" as present at the
Meeting for the purposes of determining whether a quorum has been achieved at
the Meeting. Under Maryland law, abstentions do not constitute a vote "for" or
"against" a matter and will be disregarded in determining the "votes cast" on an
issue. Broker "non-votes" will be treated the same as abstentions. With respect
to proposals to be determined by an affirmative vote of a specified majority of
the total shares outstanding, such as proposal Nos. 1(a), 1(b), 2(a), 2(b),
2(c), 2(d), and 5, an abstention or broker "non-vote" will be considered present
for purposes of determining a quorum but will have the effect of a vote
"against" such matters. With respect to proposals to be determined by a
specified majority or plurality of the votes cast at the Meeting, such as
Proposal Nos. 3 and 4, an abstention or broker "non-vote" will be considered
present for purposes of determining a quorum but will have no effect on the
outcome of such matters.
In the event that a quorum is present at the Meeting but sufficient
votes to approve one or more proposals are not cast, the persons named as
proxies may propose one or more adjournments of such Meeting to permit further
solicitation of proxies with respect to such proposal or proposals. Any such
adjournment will require the affirmative vote of a majority of the shares
present at the Meeting or represented by proxy. In such case, the persons named
as proxies will vote those proxies which they are entitled to vote "for" any
such proposal in favor of such an adjournment, and will vote those proxies
required to be voted "against" any such proposal against any such adjournment. A
stockholder vote may be taken on one of the proposals in this Proxy Statement
prior to any such adjournment if sufficient votes have been received and it is
otherwise appropriate.
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As of the date of this Proxy Statement, management does not know of any
other matters that will properly come before the Meeting. The Fund is aware of
the possibility that one or more stockholders may try to bring a proposal that
has not been included in this Proxy Statement before the Meeting. As the Fund
has not received prior notice of any such proposals in accordance with the
Fund's amended By-Laws, any attempt by a stockholder to present a proposal will
be called out of order and will not be heard at the Meeting. If any other matter
properly comes before the Meeting, the proxy holders intend to vote all proxies
in accordance with their best judgment on such matters.
CHANGE IN INVESTMENT OBJECTIVE
(PROPOSAL NO. 1)
The Board of Directors of the Fund has concluded that the Fund should
change its investment strategy to take advantage of investment opportunities
throughout Europe. Accordingly, it proposes a change in the Fund's investment
objective from a predominantly German-focused strategy to a broader
European-focused strategy (Proposal No. 1(a)). In addition, to formalize this
change, the Fund's Articles of Incorporation must be amended to change the
Fund's name to reflect the broader objective (Proposal No. 1(b)). The Board has
decided that this change of investment objective is so integral to the fund's
future success that if Proposal No. 1 is approved, the Fund will change its
investment objective irrespective of the approval of Proposal No. 2. The Fund
will effect Proposal Nos. 1(a) and 1(b) as soon as possible after stockholder
approval. Below is a more detailed description of the proposals and the Board's
basis for its determination that such proposals will benefit the Fund and its
stockholders.
PROPOSAL NO. 1(a). EXPANDING THE FUND'S INVESTMENT OBJECTIVE FROM A
PREDOMINANTLY GERMAN INVESTMENT PORTFOLIO TO A BROADER EUROPEAN INVESTMENT
PORTFOLIO
The Board of Directors believes that the Fund's investment objective
should be expanded. Currently, the Fund's investment objective is to obtain
long-term capital appreciation by investing primarily in equity securities of
German companies. The Board recommends that the Fund maintain its investment
objective to obtain long-term appreciation but also broaden the investment
focus, so that the objective would become long-term capital appreciation by
investing primarily in equity securities of European companies. If approved, the
Fund would invest in common stocks of European companies, and not just primarily
German companies. The Board understands that a pan-European fund is more likely
to capture fully the investment opportunities expected as a result of a unified
European continent and that single country European funds have a reduced purpose
in light of this new investment opportunity. The Board also realizes that the
change of the investment objective of the Fund, as described herein, will permit
the Fund to diversify its country and sector allocation and provide a more
liquid market in which to invest. Finally, the Board believes that an expanded
investment objective will assist the Fund in its operations as an open-end
investment company under Proposal No. 2.
5
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The continent of Europe has both a larger economy and population than
the United States. Although the countries within Europe are relatively small,
together they offer many different types of investment opportunities for the
Fund and its stockholders everything from agriculture to heavy industry within
both developed and developing markets. In addition, stockholders of the Fund may
be able to take advantage of the unprecedented merging of the economies of most
of the major developed European countries with the implementation of European
Economic and Monetary Union ("EMU"). Of course, there is no guarantee that
investment by the Fund in other European countries will result in similar or
higher rates of return than the Fund's prior investment in primarily German
securities.
The Board of Directors and Dresdner RCM Global Investors LLC ("Dresdner
RCM"), the Fund's investment adviser, believe that the EMU likely will have a
significant impact on the economies of both participating and non-participating
European countries. The EMU's objective is to create a single, unified market
through which people, goods, and money can move freely. Each country will act as
a "state" within the greater "Union." The EMU already has a larger population
than the United States, and with the possible future addition of the United
Kingdom, it will be the world's largest economy. Eleven countries will
participate initially: Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, the Netherlands, Portugal, and Spain. The Board and Dresdner
RCM expect that, over time, the EMU area will expand to include most of the
fifteen European Union members as well as some countries from the former Eastern
Bloc.
Participation in the EMU is predicated upon countries meeting certain
financial criteria outlined in the Maastricht treaty. Such criteria include: an
inflation rate below 3.3%, a public debt below 60% of GDP, and a deficit of 3%
or less of GDP. These criteria will also serve as an impetus for
non-participating European countries, especially Eastern European countries, to
adopt strict monetary and fiscal policies. The EMU will begin officially on
January 1, 1999 with, among other things, the adoption of a common currency, the
Euro. After a three-year transition period, the Euro will begin to circulate
among the general public on January 1, 2002. On July 1, 2002, each country's
individual currency will cease to exist. The EMU will also have one central bank
to guide monetary policy for all EMU members.
Dresdner RCM believes that the following changes may occur due to the
EMU, which could create positive economic opportunities for the Fund, although
there can be no guarantee that this will be the case. These changes and
opportunities may include:
o the disappearance of cross-border price discrepancies;
o stricter budgetary control;
o lower tax rates;
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o deregulation and privatization of certain industries and markets;
o lower interest rates;
o corporate restructuring, especially mergers and acquisitions;
o the increased use of share buy backs;
o the increased use of management incentive and share option schemes to
focus company management on profitability;
o companies becoming more stockholder-friendly by focusing on investor
relations; and
o increased public equity issuances by private companies.
Besides the developed countries that are members of the EMU, the Fund
may also invest in other developed European countries such as, for example,
Denmark, Norway, Sweden, and the United Kingdom under the proposed expanded
investment objective. These countries have also taken steps to standardize their
economies via their membership in the European Union ("EU") (except Norway) and
may join the EMU in the future. The United Kingdom is the world's sixth largest
economy, has a well-developed securities market, and has recently recovered from
an economic slowdown. The Scandinavian countries have strong export markets and
are endowed with abundant natural resources.
In addition, under the proposed investment objective, the Fund may
invest in the developing securities markets of Eastern European countries. Such
countries are continuing their transition from state-controlled economies to
capitalism. Some Eastern European countries have made greater strides in this
process than others, such as Croatia, the Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Poland, and Slovenia. Many of these countries have expressed
the desire to become EMU participants and are gradually bringing their economies
in-line with the Maastricht criteria. Dresdner RCM, as the Fund's investment
manager, will limit the Fund's amount of investment in Eastern European
securities within these relatively stable and market-friendly countries, but
will also constantly search for investment opportunities for the Fund within all
Eastern European countries.
The Fund is well positioned to take advantage of the changes expected
to occur throughout Europe as a result of the EMU. Dresdner RCM has many years
of experience in European investment research and portfolio management. This,
together with its affiliation with a major European bank, Dresdner Bank AG
("Dresdner Bank"), should facilitate the Fund's discovery of the European
investment opportunities of the future. The terms of the Fund's proposed
advisory arrangements are described at length in Proposal No. 2(c) below, and
the proposed contract is attached hereto as Exhibit B.
This change in investment objective will necessitate a restructuring of
the Fund's portfolio. Upon approval and implementation of an expanded objective,
a substantial portion of the Fund's German holdings will be sold. The Fund will
then purchase securities of issuers located in other European countries. The
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Fund will use the MSCI Europe Index, [an unmanaged index of securities traded in
the major European securities markets,] as its benchmark. However, the Fund will
not duplicate MSCI Europe Index's country and sector allocations. Dresdner RCM
will invest the assets of the Fund, upon change of the Fund's objective, based
on its then-current judgment about the relative investment merits of different
industries and companies in Europe.
The substantial restructuring of the Fund's portfolio that is necessary
to implement the proposed European investment objective will generate expenses
for the Fund, including brokerage and other transactional expenses that are not
reflected in the Fund's expense ratio. Such sales of portfolio securities could
also result in capital gains (or losses). The gains would normally be
distributed to Fund stockholders, who would be subject to federal and state
income tax thereon, as applicable to the stockholder. As of November 30, 1998,
the Fund had approximately $42 million of net unrealized appreciation.
Investment in foreign markets involves certain risks that may affect
the Fund's overall performance. Not all European countries are as stable as
Germany and investments by the Fund in other European countries may potentially
be riskier and more volatile than German investments. Such risks may generally
include certain government actions like expropriation, nationalization,
confiscatory taxes, limits on the use and removal of the Fund's assets, and
restrictions on ownership of securities by foreign entities. In addition,
certain European markets may be relatively illiquid and unforeseen changes in
economic conditions may occur. Differences in the regulation of financial
markets such as less mandated disclosure, different accounting and financial
recordkeeping standards, less governmental supervision of exchanges and
broker/dealers, and higher regulatory fees may also hinder the performance of
the Fund. Fluctuations in the value of European currencies, including the new
Euro, relative to the U.S. dollar will also affect the value of the Fund's
holdings in European currencies.
There are certain specific risks that may be encountered when investing
in EMU countries. The transition to EMU may be troubled as eleven separate
nations adjust to the reduction in flexibility, independence, and sovereignty
that the EMU mandates. High unemployment and a sense of "deculturalization"
within the general public of the participating countries could lead to political
unrest and continuing labor disturbances.
While the Board and Dresdner RCM appreciate the foreign market risks
detailed above, they believe that the standardization of regulation and
stabilization of the financial, monetary, and economic sectors entailed by the
EMU will likely reduce such risks over the longer term throughout Europe.
Investments in other European markets could be even more profitable and stable
than investments in Germany. Dresdner RCM will use its experience in dealing
with European securities markets and its research expertise to attempt to
mitigate such risks within EMU and non-EMU European securities markets.
If this proposal is approved, the investment objective change will
occur as soon as possible. This will provide the Fund and its stockholders the
potential investment advantages of this change expeditiously. The change will
also position the Fund with a more attractive focus prior to open-ending, if
approved at the Meeting, that should increase the likely cash flows to the Fund.
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VOTE REQUIRED
The expansion of the Fund's fundamental investment objective requires
approval by a 1940 Act majority. IF YOU WANT TO CHANGE THE FUND'S INVESTMENT
OBJECTIVE, YOU SHOULD VOTE "FOR" EACH OF THE SUBPARTS OF PROPOSAL NO. 1,
INCLUDING 1(a). IF PROPOSAL NO. 1(a) IS NOT APPROVED BY THE STOCKHOLDERS, THE
FUND WILL CONTINUE TO OPERATE AS A CLOSED-END FUND, AND THE FUND'S GERMAN
INVESTMENT OBJECTIVE AND NAME WILL REMAIN IN EFFECT. IF PROPOSAL NO. 1(b) IS NOT
APPROVED, THE FUND WILL SEEK TO CHANGE ITS OBJECTIVE AND THE BOARD WILL MAKE
EVERY EFFORT TO TAKE OTHER ACTIONS TO ADDRESS THE ISSUE OF STILL HAVING A
CORPORATE NAME RELATED TO GERMAN INVESTMENTS, INCLUDING THE POSSIBLE USE OF A
TRADE NAME RELATING TO EUROPE. Additionally, because the implementation of
Proposal No. 2 is contingent on the approval of Proposal No. 1(a), the
disapproval of Proposal No. 1(a) by stockholders will mean that the Fund will
remain a closed-end investment company. If Proposal No. 1(a) is approved, the
Fund will change its investment objective as expeditiously as possible following
stockholder approval. Therefore, the expansion of the investment objective will
occur before the conversion to open-end status even if Proposal No. 2 is also
approved at the Meeting, because the Fund anticipates that the open-end
conversion will take effect approximately ninety days after stockholder
approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL NO. 1(a).
PROPOSAL NO. 1(b). AMENDING THE FUND'S ARTICLES OF INCORPORATION TO CHANGE THE
FUND'S NAME.
The change in investment objective requires a change in the Fund's name
from "The Emerging Germany Fund Inc." to "Dresdner RCM Europe Fund Inc." in
order to market the Fund adequately and accurately. The Board has advised the
amendment of the Fund's Articles of Incorporation to reflect this name change.
If approved by stockholders, the Fund's Articles of Incorporation will be
amended by striking ARTICLE SECOND and inserting the following:
"The name of the Corporation is Dresdner RCM Europe Fund Inc."
VOTE REQUIRED
The amendment of the Fund's Articles of Incorporation to change the
Fund's name to "Dresdner RCM Europe Fund Inc." requires the affirmative vote of
two-thirds of all the votes entitled to be cast on the matter. IF YOU WANT TO
CHANGE THE FUND'S INVESTMENT OBJECTIVE, YOU SHOULD VOTE "FOR" EACH OF THE
SUBPARTS OF PROPOSAL NO. 1, INCLUDING 1(b). IF PROPOSAL NO. 1(b) IS NOT APPROVED
BY THE STOCKHOLDERS, BUT PROPOSAL NO. 1(a) IS APPROVED, THE FUND WILL SEEK TO
CHANGE ITS OBJECTIVE AND THE BOARD WILL MAKE EVERY EFFORT TO TAKE OTHER ACTIONS
TO ADDRESS THE ISSUE OF STILL HAVING A CORPORATE NAME RELATED TO GERMAN
INVESTMENTS, INCLUDING THE POSSIBLE USE OF A TRADE NAME RELATING TO EUROPE.
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 1(b).
CONVERSION OF THE FUND FROM A CLOSED-END
INVESTMENT COMPANY TO AN OPEN-END INVESTMENT COMPANY
(PROPOSAL NO. 2)
The Board of Directors believes that if the Fund's investment objective
is expanded pursuant to Proposal No. 1(a), the Fund also should be converted
from a closed-end investment company to an open-end investment company. The
Board of Directors and Dresdner RCM believe that this conversion will allow the
Fund to take advantage of new opportunities likely to develop as a result of a
unified Europe, yet not hinder the Fund's ability to continue to provide the
investment vehicle and to seek the investment goals that stockholders sought
when they invested in the Fund.
Stockholders of the Fund are now being asked to consider the conversion
of the Fund from a closed-end to an open-end investment company and related
matters approved by the Board of Directors in connection with the conversion. In
this regard, the Board is concurrently seeking stockholder approval of: a change
of the Fund's 1940 Act subclassification to an open-end investment company and
corresponding amending and restating of the Fund's Articles of Incorporation
(Proposal 2(a)), the modification and elimination of certain of the Fund's
fundamental investment restrictions (Proposal No. 2(b)), a proposed Investment
Management Agreement (Proposal No. 2(c)), and a proposed Rule 12b-1 Distribution
Plan (Proposal No. 2(d)), each of which is considered a necessary element, in
the view of the Board and Dresdner RCM, of operating as an open-end investment
company. Furthermore, although the change in investment objective to a European
focus is a separate and independent proposal (Proposal No. 1(a)), that change
must be approved by stockholders before the Fund may open-end. It is anticipated
that if both Proposal Nos. 1(a) and 2 are approved, the Fund would implement the
open-ending approximately ninety days after stockholder approval, which is the
time frame during which the Fund expects its registration statement to be
declared effective by the Securities and Exchange Commission. IF ANY SUBPART OF
PROPOSAL NO. 2 IS NOT APPROVED BY STOCKHOLDERS, OR IF ALL OF THE SUBPARTS ARE
APPROVED BUT PROPOSAL NO. 1(a) IS NOT ALSO APPROVED, THE FUND WILL REMAIN A
CLOSED-END INVESTMENT COMPANY.
It is anticipated that approximately ninety days after stockholder
approval the Fund will convert to an open-end investment company. On the day
that the Fund converts to open-end status, every stockholder will hold Class N
shares in the same number as held immediately beforehand. Trading of the shares
on the New York Stock Exchange ("NYSE") will cease. The Fund anticipates that it
will commence a continuous offering of its shares to the public, including
current stockholders. The price of the shares will be based on their net asset
value computed daily on all business days. The shares of the Fund will be
redeemable at a price also based on their net asset value as computed after
receipt of the redemption order. During the first six months following the
conversion, a redemption fee, payable to the Fund, of 1% of the net asset value
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will be assessed on all redemptions. It is also anticipated that the Fund's
Class N shares will be exchangeable for Class N shares being offered by other
funds in the Dresdner RCM family of funds. Upon conversion, there will be no
changes to the investment objective of the Fund, the investment adviser for the
Fund, or the principal investment strategies the Fund will employ.
Below is (1) a further explanation of why the Board and Dresdner RCM
are recommending that the Fund convert to open-end status, (2) a description of
the steps the Fund must take to effect the conversion from a closed-end
investment company to an open-end investment company, and (3) a description of
the differences of operating as an open-end investment company.
BACKGROUND OF THE PROPOSAL
When the Fund was organized in 1990, a closed-end structure was chosen
as most appropriate to achieving the Fund's investment objective and intended
method of operation. The Board believed that such a structure, among other
things, would permit management of the Fund's portfolio consistent with its
investment objective to seek long-term capital appreciation by investing
primarily in equity and equity-linked securities of small to middle
capitalization German companies, without the pressures and constraints,
primarily as a result of cash inflows and outflows, to which open-end investment
companies are subject. Further, as a closed-end investment company, the Fund was
expected to have greater flexibility than an open-end investment company both to
invest in restricted, illiquid, or less liquid securities and to engage in
borrowing. The Board and the Fund's investment adviser at that time, Asset
Management Advisors of Dresdner Bank, recognized and disclosed to stockholders
that the shares of closed-end investment companies frequently trade at a
discount from net asset value.
The Fund has owned and managed a portfolio of German equities since its
inception; its investment results have been quite successful, especially after
the Fund's investment focus was changed on April 26, 1996 to permit the Fund to
invest significantly in larger capitalization German companies. The Fund has
achieved net asset value returns of 29.28% in 1998 (through October 31, 1998),
26.27% in 1997, and [____________]. The DAX100, an unmanaged index measuring the
total rate of return index of the 100 most highly capitalized stocks traded on
the Frankfurt Stock Exchange, had a total return lower than the Fund's: 18.44%
in 1998 (through October 31, 1998) and 22.4% in 1997 and [____________].
Measured by the market price changes, the Fund returned 30.13% in 1998 (through
October 31, 1998), 48.00% in 1997 and [____________].
Throughout this period, as well as throughout much of the Fund's
history, however, its shares have traded at prices representing a discount to
net asset value. In 1998, for example, its shares have traded on the NYSE at
discounts ranging from approximately 7% to 18% below their net asset value.
The Board of Directors has periodically evaluated various mechanisms
that closed-end investment companies have employed to attempt to reduce or
eliminate a market discount, including special dividend policies, dividend
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reinvestment plans, use of leverage, tender offers, an enhanced public
communications effort, stock repurchase programs, rights offerings, and
conversion to an open-end investment company. Most recently, on February 12,
1998, after considering these various options, the Board of Directors adopted a
10% managed distribution plan as a strategy to reduce the net asset value
discount. Under that plan, the Fund agreed to distribute to stockholders on a
quarterly basis approximately 2.5% (at least 10% annually) of the Fund's net
assets. Through the short period during which the plan operated until the
open-end proposal was announced, the managed distribution plan failed to reduce
substantially the Fund's market discount. Subsequently, the Board gave further
consideration to the various alternatives whereby the discount at which the
Fund's shares trade might be reduced or eliminated.
As described above, following a period of study by the Board and
Dresdner RCM, at a meeting on November 5, 1998, the Board of Directors of the
Fund determined to change the objective of the Fund as soon as practical. Please
see Proposal No. 1 above. The Board also considered the ability of the Fund, and
its proposed distributor, Funds Distributor Inc., to distribute shares of the
Fund if it were to engage in a public offering. Given the more attractive
investment objective proposed for the Fund and the initial marketing and
distriubution proposal for the Fund presented by Funds Distributor at the same
meeting, the Board concluded that it would be in the best interest of the Fund
and its stockholders for the Fund to convert to an open-end investment company.
This conversion would eliminate the issue of the discount because stockholders
would have the right to retain ownership of the Fund and dispose of Fund shares
at prices based on the then-current net asset value of the shares.
The Board also considered costs to the Fund of operating as an open-end
investment company, including the potential adverse effects on the Fund's
expense ratio, which likely would increase as an open-end investment company and
would increase further if assets decreased in the period shortly following
conversion to open-end status, as is expected. The Board noted, in addition to
the adverse effects of the likely significant levels of redemptions on Fund
expense levels, the potential realization of capital gains from the sale of
portfolio securities, which taxable capital gains would be distributed to
stockholders of record later in the year. The Board also considered the expenses
of converting to open-end status, which were estimated at approximately
$600,000. The Board noted the commitment of Dresdner RCM to defer its fees from
the Fund and reimburse the Fund's expenses for at least the first three years
following open-ending to the extent needed to limit annual Fund expenses to
1.60% of average net assets. Taxes, interest, and extraordinary expenses would
be excluded from Fund expenses for purposes of this limitation.
Additionally, the Board considered other benefits to the Fund that
could result from open-ending besides the elimination of the market discount.
First, Fund stockholders would benefit by owning shares of a fund that would be
part of a family of Dresdner RCM-advised funds. Such benefits include the
ability to exchange shares among the Dresdner RCM family of open-end funds, each
of which has a different investment objective and focus. Second, the Fund's
liquidity will increase due to the 1940 Act open-end investment company
requirements and the broader European investment objective, which would give the
Fund more flexibility in its portfolio management. Finally, an open-end
structure will help the Fund compete in the marketplace against the universe of
pan-European funds, thereby possibly increasing the Fund's net assets over time.
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<PAGE>
Accordingly, on November 5, 1998, the Board of Directors unanimously
approved Dresdner RCM's recommendation to convert the Fund to an open-end
investment company. In addition, the Board of Directors authorized Dresdner RCM
to submit the proposal to stockholders and recommended approval of the proposal
at the Annual Meeting of stockholders. On December 4, 1998, the Board of
Directors, including the Directors who are not interested persons of the Fund as
defined in the 1940 Act (the "Independent Directors"), approved the final plan
for conversion to an open-end investment company including the proposed Amended
and Restated Articles of Incorporation, the modification and elimination of
certain of the Fund's fundamental investment restrictions, the proposed
Investment Management Agreement, and the proposed Rule 12b-1 Distribution Plan.
Below is a more detailed description of the differences between
closed-end and open-end investment companies. This description includes an
explanation of how the Fund intends to operate upon conversion to open-end
status.
DIFFERENCES BETWEEN FUND OPERATIONS AS AN OPEN-END AND CLOSED-END INVESTMENT
COMPANY
The Fund is currently registered as a "closed-end" investment company
under the 1940 Act. Closed-end investment companies neither redeem their
outstanding stock nor engage in the continuous sale of new stock and thus
operate with a relatively fixed capitalization. The stock of a closed-end
investment company is normally bought and sold on a national securities
exchange; the Fund's shares are currently traded on the NYSE under the listing
"FRG." Upon conversion, the Fund's shares will be delisted from the NYSE and it
is unlikely that any other trading market in such shares will exist, although
shares may be purchased and sold (redeemed) as described below.
In contrast, open-end investment companies (commonly referred to as
"mutual funds") issue redeemable securities. The holders of redeemable
securities have the right to surrender those securities to the mutual fund and
obtain in return their proportionate share of the value of the fund's net assets
(less any redemption fee charged by the fund). Most mutual funds (including the
Fund, if the proposed conversion is effected) also continuously issue new shares
of stock to investors based on the fund's net asset value at the time of such
issuance.
Some of the legal and practical differences between operations of the
Fund as a closed-end and open-end investment company are as follows:
a) ACQUISITION AND DISPOSITION OF SHARES; TEMPORARY REDEMPTION FEES;
REDEMPTIONS-IN-KIND. If the Fund were converted into a mutual fund, stockholders
and new investors wishing to acquire shares of the Fund would be able to
purchase them initially from the Fund's principal underwriter at their public
offering price. It is anticipated that the public offering price of the shares
of the Fund will be at its net asset value, with no front-end sales load.
Stockholders desiring to sell or redeem their shares would be able to do so by
exercising their right to have such shares redeemed by the Fund at a price based
on their current net asset value less any redemption fee as may be determined by
the Board of Directors. The Fund's net asset value per share would be calculated
daily by dividing (i) the value of its portfolio securities plus all cash and
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other assets (including accrued interest and dividends received but not
collected) less all liabilities (including accrued expenses) by (ii) the number
of outstanding shares of the Fund.
THE FUND INTENDS TO IMPOSE A FEE PAYABLE TO THE FUND OF 1% OF NET ASSET
VALUE ON ALL REDEMPTIONS OF FUND SHARES DURING THE FIRST SIX MONTHS AFTER
COMMENCEMENT OF OPERATIONS AS AN OPEN-END INVESTMENT COMPANY, AND NO SUCH FEE
THEREAFTER. The temporary redemption fee would be retained by the Fund and would
be used to offset expenses incurred by the Fund arising out of the redemption,
including brokerage and transactional costs associated with selling portfolio
securities when cash is needed to satisfy the redemption request. The Board of
Directors believes that the redemption fee may also limit the level of
redemptions during the first six months of operations as an open-end company,
thereby limiting the potential disruption of the Fund's portfolio management and
its operations caused by significant reductions in Fund assets.
Payment for any redemption, minus the temporary 1% redemption fee, will
be made by the Fund within seven days after receipt of a proper request for
redemption (in accordance with redemption procedures specified in the
prospectus). Such payment may be postponed or the right of redemption suspended
at times (a) when the NYSE is closed for other than customary weekends and
holidays, (b) when trading on the NYSE is restricted (as determined by SEC rules
and regulations), (c) when an emergency exists as a result of which disposal by
the Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund to determine the value of its net assets, or
(d) during any other period when the SEC, by order, so permits.
Although the Fund does not initially intend to redeem any stockholders
in-kind, that is, giving redeeming stockholders a portion of the Fund's
portfolio securities equal to the net asset value of their shares instead of
cash, the Fund reserves the right in the future to redeem stockholders in-kind
in accordance with its Amended and Restated Articles of Incorporation.
b) DETERMINATION OF NET ASSET VALUE. The 1940 Act and its rules
generally require open-end investment companies to value their assets on each
business day in order to determine the current net asset value on the basis of
which their shares may be redeemed by stockholders or purchased by investors.
Net asset values of most mutual funds are published daily by the leading
financial publications. It is anticipated that the net asset value of the Fund
would be published daily following its conversion to an open-end investment
company.
c) EXPENSES; AND POTENTIAL NET REDEMPTIONS. The Fund's expenses will
likely increase as a result of open-ending due to the cost of additional
services available to stockholders of a mutual fund. Open-ending also could
result in immediate, substantial redemptions and hence a marked reduction in the
size of the Fund, with a consequent increase in the Fund's expense ratio, i.e.,
the Fund's ratio of operating costs to average net assets. On the other hand,
this result could be offset by new sales of the Fund's shares and reinvestment
of dividends and capital gains distributions in shares of the Fund. An asset
base of decreased size, with an increased expense ratio, would produce a lower
total return than is currently being produced.
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<PAGE>
Importantly, Dresdner RCM, as noted above, has agreed to defer all or a
portion of its advisory fee if the Fund's operating expenses (excluding
interest, taxes, and extraordinary expenses) were to exceed 1.60% of the Fund's
average daily net assets in any fiscal year for at least three years after
open-ending. Dresdner RCM is not required otherwise to defer its fee or to
reimburse the Fund for any part of its respective fee. For a detailed
description of the proposed Investment Management Agreement and estimated Fund
expenses, please refer to Proposal No. 2(c) below.
In addition, the Fund might be required to sell portfolio securities in
order to meet redemptions, as a result of which it could incur brokerage and
other transactional expenses not reflected in its expense ratio. Such sales of
portfolio securities could also result in the realization of capital gains (or
losses). Such gains would normally be distributed to Fund stockholders, who
would be subject to federal and state income tax thereon, as applicable to the
stockholder.
For the six month period ended June 30, 1998, the Fund's annualized
total expenses aggregated about 1.38% of its average net assets. Assuming that
the Fund's asset base remains at approximately over $200 million, it is
estimated that the Fund's expenses as an open-end investment company would
amount to 1.62% of its average daily net assets. However, if assets decreased to
$100 million, the gross expenses are estimated to be 2.06% of such average net
assets.
Significant net redemptions could ultimately render the Fund an
uneconomical venture by virtue of its diminished size. Dresdner RCM considers
this possibility unlikely. In the event, however, that the Fund were to become
too small to be considered economically viable, the Board of Directors would
consider alternatives to continuing the Fund's operations, ranging from merger
of the Fund with another investment company to liquidation of the Fund. The Fund
has no plans to pursue such alternatives at this time, and any such merger or
liquidation would require stockholder approval.
d) ELIMINATION OF DISCOUNT. Since stockholders who wish to realize the
value of their shares will be able to do so by redemption, any market discount
from net asset value (less the temporary redemption fee) will be eliminated.
Subject to the approval of this proposal, redemptions will also eliminate any
possibility that the Fund's shares will trade at a premium over net asset value.
Prior to the date of actual conversion to open-end status, the discount may be
reduced to the extent that purchasers of shares in the open market are willing
to pay less of a discount in anticipation of a prospective open-ending.
e) DIVIDENDS; OTHER DISTRIBUTIONS; AND DIVIDEND REINVESTMENT. The Fund
expects to declare a dividend from undeclared net investment income and a
distribution of net capital gain to the Fund's stockholders prior to the
conversion to open-end status. The distributions will be in accordance with the
Fund's 10% managed distribution plan, and therefore will be at least equal to
2.5% of the Fund's net assets.
The Fund will continue to provide the opportunity for stockholders to
receive dividends and capital gain distributions in cash or, at no charge to
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<PAGE>
stockholders, in shares of the Fund. Currently, stockholders who hold of record
automatically receive dividends and other distributions in the form of
additional shares of the Fund unless they have opted out of the current
arrangement in order to receive cash. Effective upon conversion, the Fund will
continue to pay dividends and other distributions in additional shares
automatically unless stockholders elect to receive cash by written notice to the
Fund. Any "opt-out" elections made by stockholders under the current
arrangements will remain in effect following conversion. Additionally, upon
conversion to an open-end investment company, reinvestments in shares would
simply be made at net asset value (without any discount).
As an open-end investment company, the Fund will distribute
substantially all of its net investment income and net capital gain, if any,
annually. The Fund will terminate the 10% managed distribution plan, which has
no purpose after the Fund commences operation as a open-end investment company.
f) PORTFOLIO MANAGEMENT. Unlike mutual funds, closed-end investment
companies are not subject either to pressures to sell portfolio securities at
disadvantageous times or to hold cash or cash equivalents uninvested in
securities consistent with their primary investment objectives, in order to meet
net redemptions. Because closed-end investment companies do not have to meet
redemptions, their cash reserves can be substantial or minimal, depending
primarily on management's perception of market conditions and on decisions to
use fund assets to pay dividends or repurchase shares. The larger reserves of
cash or cash equivalents required to operate prudently as an open-end fund when
net redemptions are anticipated could reduce the Fund's investment flexibility
and the scope of its investment opportunities. Additionally, the Fund may have
to reduce the proportion of its portfolio held in securities in order to
accommodate the need for larger reserves of cash or cash equivalents. In
connection with this needed liquidity and changing cash flow, there may also be
an increase in transaction costs and portfolio turnover.
g) ILLIQUID SECURITIES. An open-end investment company registered under
the 1940 Act is required by the SEC to limit its holding of illiquid securities
to no more than 15% of its total assets. The Fund is currently subject to a 25%
limitation. If the Fund is converted to a mutual fund it will be required to
meet the 15% limitation, but Dresdner RCM anticipates no difficulties in
complying with this stricter limitation. Please refer to Proposal No. 2(b) below
for a more detailed discussion of this issue.
h) SENIOR SECURITIES AND BORROWINGS. The 1940 Act prohibits mutual
funds from issuing "senior securities" representing indebtedness (i.e., bonds,
debentures, notes, and other similar securities), other than indebtedness to
banks where there is an asset coverage of at least 300% for all borrowings.
Closed-end investment companies, on the other hand, are permitted to issue
senior securities representing indebtedness to any lender if the 300% asset
coverage is met. In addition, closed-end investment companies may issue
preferred stock (subject to various limitations), whereas open-end investment
companies generally may not issue preferred stock. This ability to issue senior
securities may give closed-end investment companies more flexibility than mutual
funds in the "leveraging" of their stockholders' investments. To date, although
it has the authority to do so, the Fund has neither engaged in borrowing nor
issued any senior securities. Dresdner RCM does not believe that the greater
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<PAGE>
limitations on mutual funds in this respect will have any significant effect
upon the Fund's operation.
The Board of Directors has approved an amendment to the Fund's
investment restrictions that would grant the Fund the maximum borrowing
flexibility permitted for an open-end investment company under the 1940 Act. See
Proposal No. 2(b) below for a more detailed discussion of the amendment. The
Fund may borrow from banks or enter into reverse repurchase agreements to meet
redemption requests.
i) STOCKHOLDER SERVICES. If Proposal No. 2 is approved and the Fund
becomes a mutual fund, the Board of Directors will permit the provision of
various services that are often available to stockholders in an open-end
investment company. These services will include participation in an exchange
privilege which would allow stockholders of the Fund to exchange their shares
for shares of the same class of shares of certain investment companies in the
Dresdner RCM group of open-end funds ("Dresdner RCM Mutual Funds").
j) DISTRIBUTION PLAN. An open-end investment company, unlike a
closed-end investment company, is permitted to finance the distribution of its
shares by adopting a plan of distribution pursuant to Rule 12b-1 under the 1940
Act. If Proposal No. 2 is approved by stockholders, the Fund will adopt a Rule
12b-1 Distribution Plan in order to reimburse the Fund's distributor for costs
incurred by it in distributing the Class N shares of the Fund. See Proposal No.
2(d) below for a more detailed discussion of the Rule 12b-1 Distribution Plan.
k) SHARES OF CAPITAL STOCK; MINIMUM INVESTMENT; AND CLASS I SHARES. If
the Fund is converted to an open-end fund, it will adopt requirements that an
initial investment in the Fund's shares and any subsequent investment must be in
a specified minimum amount, in order to reduce the administrative costs and
burdens incurred in monitoring numerous small accounts. It is anticipated that
the minimum initial investment in Class N shares of the Fund will be $5,000, and
the minimum subsequent investment will be $250 (other than investments through
the Fund's dividend reinvestment plan). It is anticipated that the minimum
initial investment in Class I shares of the Fund will be $1 million and the
minimum subsequent investment will be $50,000 (other than through the Fund's
dividend reinvestment plan). However, the minimum initial investment amount may
differ for investors purchasing shares through a broker-dealer or other
intermediary having a service agreement with Dresdner RCM and maintaining an
omnibus account with any of the Dresdner RCM Mutual Funds.
All shares of the Fund that are outstanding on the date that the Fund
converts to an open-end investment company will be redesignated Class N shares.
The net asset value of these shares will not change as a result of the
redesignation. Holders of Class N shares who would meet the eligibility
requirements for purchasing Class I shares may convert Class N shares to Class I
shares upon submission of satisfactory proof to the Fund of their eligibility.
l) VOTING RIGHTS. The voting rights of holders of shares of the Fund
will not change if the Fund converts to open-end status, except for minor
operational matters. For example the Board of Directors will have the authority
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<PAGE>
to amend the Fund's Articles of Incorporation to authorize issuance of
additional shares of the Fund's Common Stock or to change the name of the Fund
without submitting such amendments to stockholder vote.
By virtue of the provisions of Maryland corporate law applicable to
investment companies, opportunities to vote will probably become less frequent
if the Fund converts to open-end status, since the Fund will not normally hold
annual stockholder meetings. Maryland corporate law provides that, if the
Articles of Incorporation or By-Laws of either an open-end or closed-end fund
registered under the 1940 Act so provide, the fund is not required to hold an
annual stockholder meeting in any year in which the election of directors is not
required to be acted upon under the 1940 Act. Currently, the amended By-Laws of
the Fund provide that the annual meeting of stockholders shall be held at such
time and date as the Board designates. The Board of Directors will adopt Amended
and Restated By-Laws, that will become effective if the conversion is
implemented. These By-Laws provide that the Fund will not be required to hold an
annual meeting in any year in which it is not required to do so under the 1940
Act. Maryland law generally requires the Directors to call a special meeting of
stockholders when requested in writing to do so by stockholders entitled to cast
25% of all of the shares.
m) QUALIFICATION AS A REGULATED INVESTMENT COMPANY. The Fund intends to
continue to qualify for treatment as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), after
conversion to open-end status, so that it will continue to be relieved of
federal income tax on that part of its investment company taxable income and net
capital gain that it distributes to its stockholders.
PROPOSAL NO. 2(a). CHANGING THE FUND'S 1940 ACT SUBCLASSIFICATION AND AMENDING
AND RESTATING THE FUND'S ARTICLES OF INCORPORATION
If the proposed conversion to open-end status is approved, the Board
will take all actions necessary to effect the conversion. The conversion of the
Fund to an open-end investment company will be accomplished by (1) changing the
Fund's subclassification under the 1940 Act from a closed-end investment company
to an open-end investment company and (2) approving Amended and Restated
Articles of Incorporation for the Fund. The Amended and Restated Articles of
Incorporation will not be made effective until shortly before a registration
statement under the Securities Act of 1933, as amended ("1933 Act"), covering
the offering of the shares of the Fund and appropriate state securities law
qualifications and registrations are expected to become effective. It is
anticipated that the Fund's registration statement relating to these securities
will be filed shortly after stockholder approval of Proposal Nos. 1 and 2 is
obtained.
If Proposal No. 2(a) is approved, the conversion of the Fund to an
open-end investment company will be accomplished by amending and restating the
Fund's Articles of Incorporation to, among other matters, (1) authorize the
issuance of redeemable securities, (2) provide that all of the Fund's
outstanding shares will be redeemable at the option of the stockholders, (3)
change the Fund's name, and (4) change the Fund's subclassification under the
1940 Act from a closed-end investment company to an open-end investment company.
In connection with the amendment and restatement of the Articles of
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Incorporation, the Board of Directors will also make conforming changes to the
Fund's By-Laws. The proposed Amended and Restated Articles of Incorporation are
set forth at Exhibit A.
Certain related changes would also be made in the Amended and Restated
Articles of Incorporation. All of the existing assets will become assets of a
series of Dresdner RCM Investment Funds Inc. and all of the Fund's outstanding
shares at the time of the conversion to an open-end investment company will
become shares of a series of Dresdner RCM Investment Funds Inc. known as the
Dresdner RCM Europe Fund. The Board of Directors would have the right in the
future to create additional series of the Dresdner RCM Investment Funds Inc.
Such additional series would be separate from the Dresdner RCM Europe Fund
series, and would represent entirely different assets and liabilities,
investment objectives, and other features than the initial series, Dresdner RCM
Europe Fund. As an open-end investment company, the Fund will have the right
under Maryland law to change its corporate, series, or class names at any time
without stockholder approval. It is expected that the Fund would immediately
change its corporate and series names if Dresdner RCM ceased to provide the Fund
with investment management services.
Additionally, as noted above, the Board of Directors has decided that
upon conversion to an open-end fund, the Fund will offer two classes of shares:
Class N and Class I. The Fund's Amended and Restated Articles of Incorporation
reflect the creation of these two classes and outline the class rights and
privileges of Fund stockholders. All current shares of the Fund will
automatically become Class N shares upon conversion. Class N shares will be the
Fund's non-institutional class and will be offered to all investors. In most
respects Class N and Class I shares will be the same, however Class I will be
the Fund's institutional class and its shares will initially be available only
to investors who invest $1 million or more in the Fund. The Board has authorized
Class I shares because it anticipates that institutional investors, who would
add assets to the Fund, would require unique features. Class I's per-share
expenses will be lower than Class N's per-share expenses and its dividends will
be higher than those of Class N because only Class N shareholders will be
subject to Rule 12b-1 fees for distribution services provided to the Fund. Class
N shareholders will be able to exchange their Class N shares for Class I shares
of the Fund, if they so choose, provided that they meet the minimum investment
requirements for Class I shares discussed in subheading (k) of "Differences
Between Fund Operations as an Open-End and Closed-End Investment Company,"
above. The Board of Directors reserves the right in the future to create and
offer for sale additional classes of shares with separate features, such as
sales loads and other distribution fees.
The Amended and Restated Articles of Incorporation also reflect the
changes that will substantially conform the structure of the Fund's Articles of
Incorporation to the Articles of Incorporation of the Dresdner RCM Mutual Funds
that are incorporated in the State of Maryland. In many aspects of the
conversion, the Fund has decided to conform its arrangements to the arrangements
already in-place for the Dresdner RCM Mutual Funds. Such conformation will
facilitate Fund stockholders' exchange of shares with these funds and smooth the
management of the Fund. To effect this conformity, The Amended and Restated
Articles of Incorporation no longer require an affirmative vote of 75% of the
outstanding shares of the Common Stock if less than two-thirds of the Directors
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<PAGE>
approve the merger, consolidation, dissolution, or liquidation of the Fund; the
sale, lease, exchange or other transfer of all or substantially all of the
assets of the Fund; or the amendment of the Articles of Incorporation to convert
the Fund to an open-end investment company under the 1940 Act.
Neither the current nor the proposed Articles of Incorporation contain
provisions concerning the removal of directors by the stockholders. The Fund's
By-Laws, however, do have such a provision that follows Maryland law. Other
proposed changes to the Articles of Incorporation include: (1) the deletion of
the provision providing for the Class-based structure of the Fund's
Directorships and the inclusion of a provision noting the initial slate of
Directors; (2) a provision allowing the Fund, at its option, to redeem Fund
shares, as determined by Board resolution; and (3) an increase in the total
number of shares authorized. Refer to Exhibit A for a complete list of the terms
of the proposed Articles.
If Proposal Nos. 1(a), 2(a), 2(b), 2(c), and 2(d) are all approved by
stockholders, the proposed Amended and Restated Articles of Incorporation, a
copy of which is attached to this proxy statement as Exhibit A, are expected to
be filed with the State of Maryland to become effective simultaneously with the
conversion. Such filing will not be made, however, until shortly before a
registration statement under the 1933 Act covering the offering of the shares of
the Fund is anticipated to become effective. The Fund expects to implement the
conversion to open-end status approximately ninety days after stockholder
approval of Proposal No. 1 and 2, but there is no guarantee that the open-ending
will follow this timeline.
EXPENSES OF THE FUND
The expenses of the Fund as an open-end investment company will be
higher than the expenses of the Fund as a closed-end investment company. Set
forth below is a summary of the Fund's estimated stockholder transaction
expenses as an open-end fund for Class N and Class I shares and a comparison of
annual operating expenses as of June 30, 1998 as a closed-end fund and those
expenses that would apply to current stockholders holding Class N and Class I
shares of the Fund after open-ending on a pro forma (estimated) basis.
OPEN-END STOCKHOLDER TRANSACTION EXPENSES
CLASS N CLASS I
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).................. None None
Maximum Sales Load Imposed on Reinvested Dividends... None None
Redemption Fees...................................... 1%(*) 1%(*)
Exchange Fee......................................... None None
20
<PAGE>
* The redemption fee will be imposed for the six-month period immediately
following the conversion; redemptions will be free-of-charge thereafter.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
CLOSED-END OPEN-END (4)
---------- -----------
CLASS N CLASS I
------- -------
Management Fees (1) (2) (3)............. 0.90% 1.00% 1.00%
Rule 12b-1 Fees......................... N/A 0.25% N/A
Other Expenses.......................... 0.48% (3) 1.48% 1.48%
--------- ------ -----
Total Fund Operating Expenses...........
1.38%(3) 2.73% 2.48%
Fee Deferral and Expense Reimbursement.. 1.48% 1.13% 1.13%
--------- ------ ------
Net Fund Operating Expenses............. 1.38% 1.60% 1.35%
- --------------------------------------------------------------------------------
(1) The Fund's fee structure for investment advisory and management services
provided by Dresdner RCM is as follows:
1.0% on the first $100 million
0.8% on amounts in excess of $100 million
(2) The Fund's investment advisory and management fees are calculated as a
percentage of the average WEEKLY net assets of the Fund. This fee is computed
weekly and paid monthly. In contrast, upon conversion, the investment management
fees will be calculated as a percentage of the average DAILY net assets of the
Fund. This fee will be computed daily and paid monthly.
(3) These totals are based on financial data for the six-month period ended June
30, 1998.
(4) The open-end figures assume that average net assets will be $50 million in
the first year following the Fund's conversion to open-end status.
Set forth below are examples that show the estimated aggregate expenses
that an investor in the Fund would pay on a $1,000 investment if the Fund
remained closed-end compared to those expenses that an investor would incur if
the Fund were converted to an open-end format, based upon the expense ratios set
forth above but without regard to any brokerage and other transactional costs
that would be paid when purchasing or redeeming shares of the closed-end fund,
or redemption fees or other charges that would be paid when redeeming shares of
the open-end fund.
21
<PAGE>
You would pay the following expenses on a $1,000 investment assuming 5% annual
return:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Closed-End (based on a 1.38%
expense level).................... $14 $44 $76 $166
Open-End Class N (based on a 1.60%
expense level).................... $16 $50 $87 $190
Class I (based on a 1.35% expense
level)............................ $14 $43 $74 $162
The examples are not an illustration of past or future investment
results and should not be considered a representation of past or future
expenses. Actual expenses may be more or less than those shown.
Although Dresdner RCM will use all practicable measures to keep costs
at a minimum, certain non-recurring costs will be incurred in connection with
the conversion from a closed-end to an open-end investment company, including
costs associated with pursuing necessary government clearances, preparing of a
registration statement and prospectuses as required by federal securities laws
(including printing and mailing costs), and complying with the securities laws
of various states. The Fund estimates that these additional costs, which will be
paid by the Fund, will be $600,000 or $0.0428 per share, based on the current
number of shares outstanding. The Board anticipates that substantially all of
these costs will be incurred by the Fund prior to the effective date of
conversion.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Kirkpatrick & Lockhart LLP, special counsel to the
Fund, neither the Fund nor its stockholders will recognize any gain or loss for
United States federal income tax purposes as a result of the Fund's conversion
to open-end status. However, a stockholder will recognize gain or loss if he or
she later redeems his or her shares to the extent that the redemption proceeds
are more or less than the adjusted tax basis of the shares (similar to the tax
treatment of a stockholder that currently sells Fund shares).
VOTE REQUIRED
The proposed conversion of the Fund from a closed-end investment
company to an open-end investment company and the Amended and Restated Articles
of Incorporation, have been approved and advised by more than two-thirds of the
members of the Board of Directors. Under the Fund's Articles of Incorporation,
the amendment and restatement of the Fund's Articles of Incorporation necessary
to implement the conversion as described in Proposal No. 2(a) must be approved
by the affirmative vote of the holders of a majority of the Fund's outstanding
shares of Common Stock.
22
<PAGE>
IF YOU WANT THE OPEN-END CONVERSION TO BE EFFECTED, YOU MUST VOTE "FOR"
PROPOSAL NO. 1(a) AND EACH OF THE SUBPARTS OF PROPOSAL NO. 2, INCLUDING 2(a). IF
PROPOSAL NO. 2(a) IS NOT APPROVED BY THE STOCKHOLDERS, OR IF PROPOSAL NO. 2(a)
IS APPROVED BUT ANY OF PROPOSAL NOS. 1(a), 2(b), 2(c), AND 2(d) ARE NOT ALSO
APPROVED, THE FUND WILL CONTINUE TO OPERATE AS A CLOSED-END FUND, AND THE
CURRENT PROVISIONS OF THE FUND'S ARTICLES OF INCORPORATION AND CURRENT
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT WILL REMAIN IN EFFECT. In that
event, the Board will consider what further actions, if any, are desirable to
reduce the discount at which the Fund's shares have traded and to achieve other
benefits for the Fund and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL NO. 2(a).
PROPOSAL NO. 2(b). MODIFICATION AND ELIMINATION OF CERTAIN OF THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTIONS
The proposed modification and elimination of certain of the Fund's
investment restrictions described below, if approved, will become effective upon
conversion of the Fund to an open-end investment company.
If the stockholders of the Fund vote to approve the conversion of the
Fund to an open-end investment company, it is anticipated that, as discussed
above, the Fund will require additional flexibility in order to meet
stockholders' demands for redemption and will be required to conform to certain
investment restrictions applicable to open-end investment companies under the
1940 Act. Several investment restrictions of the Fund are no longer required by
the 1940 Act. Moreover, state regulations governing investment restrictions were
eliminated in 1996 with the passage of the National Securities Markets
Improvement Act. Accordingly, the Board of Directors believes that authorizing
the Fund to modify and eliminate a few of the fundamental investment
restrictions will provide the Fund with additional flexibility in the management
of its portfolio as an open-end investment company. Because such restrictions
are considered "fundamental policies" under the 1940 Act they may only be
changed by a 1940 Act majority vote. Furthermore, such additions and deletions
will substantially conform the Fund's fundamental investment restrictions to the
fundamental investment restrictions adopted by the funds comprising the Dresdner
RCM Mutual Funds.
The Fund currently has a fundamental investment restriction limiting
the Fund's ability to issue senior securities and borrow money. Because the 1940
Act applies different borrowing restrictions to closed-end investment companies
and open-end investment companies, this investment restriction must be modified
to meet the latter restrictions. If Proposal No. 2(b) is approved by
stockholders, the Fund's fundamental investment restriction concerning borrowing
will be modified so as to read:
The Fund may not 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
23
<PAGE>
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. This investment restriction shall not prohibit the
Fund from engaging in futures contracts, options on futures, forward
foreign currency exchange transactions, and currency options.
If Proposal No. 2(b) is approved by stockholders, the following current
fundamental investment restrictions will be eliminated from the Fund's
fundamental investment restrictions to conform them to the fundamental
investment restrictions of the Dresdner RCM Mutual Funds and to eliminate
restrictions that are not mandatory under current law.
The Fund may not:
(1) Make loans, except through the purchase of debt obligations
consistent with the Fund's investment policies, and except that the
Fund may invest in repurchase agreements consistent with its
investment policies;
(2) Make short sales of securities or maintain a short position in any
security; and
(3) Buy, sell or write put or call options.
It is not anticipated that the investment strategies covered by these
restrictions, if they are eliminated as proposed, will become principal
investment strategies of the Fund. Their elimination will give the Fund more
flexibility if Dresdner RCM proposes to use such strategies in the future.
CERTAIN NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
As noted above, if the proposed conversion to open-end status takes
place, the Fund will adopt a non-fundamental investment restriction limiting its
purchases of illiquid securities to not more than 15% of its total assets. An
open-end investment company, under SEC interpretations, may not hold a
significant amount of illiquid securities because such securities may present
problems of accurate valuation and because it is possible that the investment
company would have difficulty satisfying redemptions within seven days.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the 1933 Act, securities that are otherwise not readily
marketable, and repurchase agreements having a maturity of longer than seven
days. Dresdner RCM has the authority to determine whether certain securities
held by the Fund are liquid or illiquid pursuant to standards adopted by the
Board of Directors.
VOTE REQUIRED
The modification and elimination of certain of the Fund's fundamental
investment restrictions, as described above, require approval by a 1940 Act
majority vote. IF YOU WANT THE OPEN-END CONVERSION TO BE EFFECTED, YOU MUST VOTE
"FOR" PROPOSAL NO. 1(A) AND EACH OF THE SUBPARTS OF PROPOSAL NO. 2, INCLUDING
2(B). IF PROPOSAL NO. 2(B) IS NOT APPROVED OR IF PROPOSAL NO. 2(B) IS APPROVED
24
<PAGE>
BUT ANY OF PROPOSAL NOS. 1(A), 2(A), 2(C), AND 2(D) ARE NOT ALSO APPROVED, THE
FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS WILL NOT CHANGE AND THE FUND WILL
REMAIN A CLOSED-END INVESTMENT COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2(B).
PROPOSAL NO. 2(c). APPROVAL OR DISAPPROVAL OF THE PROPOSED INVESTMENT MANAGEMENT
AGREEMENT
On December 4, 1998, the Board of Directors, including a majority of
the Independent Directors, approved an investment management agreement between
Dresdner RCM Investment Funds Inc., on behalf of Dresdner RCM Europe Fund, and
Dresdner RCM (the "Investment Management Agreement"). Currently, the Fund
operates under an investment advisory and administration agreement between the
Fund and Dresdner RCM dated November 1, 1996 (the "Current Investment Advisory
and Administration Agreement"). If Proposal No. 2(c), along with Proposal Nos.
1(a), 2(a), 2(b), and 2(d), is approved by stockholders of the Fund, the Current
Investment Advisory and Administration Agreement will be terminated and the
Investment Management Agreement will become effective upon the conversion of the
Fund to an open-end investment company.
The Investment Management Agreement is modeled after the investment
advisory agreements between the Dresdner RCM open-end funds and Dresdner RCM.
However, the Investment Management Agreement is not substantially different from
the Fund's Current Investment Advisory and Administration Agreement. Besides the
new names and dates in the Investment Management Agreement, there are three
differences between the two Agreements. First, under the Current Investment
Advisory and Administration Agreement Dresdner RCM paid for expenses incurred in
calculating the net asset value of the Fund, whereas under the Investment
Management Agreement the Fund must pay such expenses. Second, the non-exclusive
list of expenses to be borne by the Fund has been amended to reflect the
addition of expenses typical of an open-end fund and to delete expenses typical
of a closed-end fund. Third, the Investment Management Agreement provides for a
deferral of fees to Dresdner RCM to the extent that the Fund's ordinary
operating expenses (not including taxes, interest or extraordinary expenses)
exceed 1.60% annually for at least three years after the Fund's open-ending; but
the Current Investment Advisory and Administration Agreement does not contain
such a deferral provision. The terms of both Agreements are described in more
detail below and a copy of the proposed Investment Management Agreement appears
as Exhibit B to this Proxy Statement.
TERMS OF THE INVESTMENT MANAGEMENT AGREEMENT
Pursuant to the Investment Management Agreement, subject to the
supervision of the Fund's Board of Directors, and in conformity with the stated
policies of the Fund, Dresdner RCM would be responsible for managing the
investment operations of the Fund and the composition of the Fund's portfolio,
including the purchase, retention, and disposition of portfolio securities. In
25
<PAGE>
this regard, Dresdner RCM would be responsible for supervising the Fund's
investments, furnishing a continuous investment program for the Fund's
portfolio, and placing purchase and sale orders for portfolio securities of the
Fund and other investments. Under the Investment Management Agreement, Dresdner
RCM would also administer the Fund's corporate affairs, subject to the
supervision of the Fund's Board of Directors and, in connection therewith,
furnish the Fund with office facilities, together with those ordinary clerical
and bookkeeping services which are not being furnished by the Fund's
distribution, transfer and dividend disbursing agent, and custodian. Dresdner
RCM would keep certain books and records of the Fund required to be maintained
pursuant to the 1940 Act. The investment management services of Dresdner RCM to
the Fund will not be exclusive under the terms of the Investment Management
Agreement and Dresdner RCM is free to, and already does, render investment
management services to others. Dresdner RCM is permitted to delegate any or all
of its duties under the Investment Management Agreement to a sub-adviser or
sub-custodian according to a sub-advisory or sub-administration contract.
All services furnished by Dresdner RCM under the Investment Management
Agreement may be furnished by any such directors, officers, or employees of
Dresdner RCM. In connection with the administration of the corporate affairs of
the Fund, Dresdner RCM would bear the following expenses:
(a) the salaries and expenses of all of Dresdner RCM's personnel and
its overhead;
(b) the fees and salaries of the Fund's Directors and officers, if any,
who are affiliated with Dresdner RCM (as defined in the 1940 Act);
and
(c) all expenses incurred by Dresdner RCM in connection with managing
the ordinary course of the Fund's business, other than those
assumed by the Fund, as described below.
Except for the expenses specifically assumed by the Investment Manager,
the Fund will pay all of its expenses, including, without limitation, (a) fees
and expenses of the directors not affiliated with the Investment Manager
attributable to the Fund; (b) fees of the Investment Manager; (c) fees of the
Fund's administrator, custodian, and sub-custodians for all services to the Fund
(including safekeeping of funds and securities and maintaining required books
and accounts); (d) transfer agent, registrar, and dividend reinvestment and
disbursing agent fees; (e) interest charges; (f) taxes; (g) charges and expenses
of the Fund's legal counsel and independent accountants; (h) charges and
expenses of legal counsel provided to the non-interested directors of the
Company; (i) expenses of repurchasing shares of the Fund; (j) expenses of
printing and mailing share certificates, stockholder reports, notices, proxy
statements, and reports to governmental agencies; (k) brokerage and other
expenses connected with the execution recording and settlement of portfolio
security transactions; (l) expenses connected with negotiating, or effecting
purchases or sales of portfolio securities or registering privately issued
portfolio securities; (m) expenses of calculating and publishing the net asset
value of the Fund's shares; expenses of membership in investment company
associations; (n) premiums and other costs associated with the acquisition of a
mutual fund directors and officers errors and omissions liability insurance
policy; (o) expenses of fidelity bonding and other insurance premiums; expenses
of stockholders' meetings; (p) SEC, state blue sky, and foreign registration
26
<PAGE>
fees; (q) portfolio pricing services expenses; (r) litigation expenses; and (s)
Rule 12b-1 fees.
Under the Investment Management Agreement, the Fund will pay Dresdner
RCM a fee at the annual rate of 1.00% of the Fund's average daily net assets for
the portion of such assets up to and including $100 million and 0.80% of the
Fund's average daily net assets in excess of $100 million for the services and
facilities provided to the Fund. This fee will be computed daily and paid
monthly. Currently, the Fund's net assets are approximately $200 million.
To limit the total expenses of the Fund, Dresdner RCM has agreed to
waive its fees and to pay the Fund on a quarterly basis the amount, if any, by
which the ordinary operating expenses of the Fund attributable to the Fund for
the quarter (except interest, taxes, and extraordinary expenses) exceed an
expense ratio of 1.60% on an annual basis for at least the first three years of
operation following the conversion of the Fund to open-end status. The Fund will
reimburse Dresdner RCM for deferred fees or other expenses paid by Dresdner RCM
pursuant to the Investment Management Agreement in later years in which
operating expenses are otherwise, and as a result of such reimbursement would
be, less than such expense limitation. Accordingly, until all such amounts are
reimbursed, the Fund's expenses will be higher, and its total return will be
lower, than would otherwise have been the case. No interest, carrying, or
finance charge will be paid by the Fund with respect to any amounts representing
deferred fees or other expenses paid by Dresdner RCM. In addition, the Fund will
not be required to repay any unreimbursed amounts to Dresdner RCM upon
termination of the Investment Management Agreement.
The Investment Management Agreement provides that Dresdner RCM will not
be liable to the Fund or its stockholders for any error of judgment by Dresdner
RCM or for any loss suffered by the Fund in connection with the matters to which
the Investment 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 Dresdner RCM's reckless disregard of its duties and
obligations under the Investment Management Agreement. Dresdner RCM is not
entitled to any such indemnification with respect to any liability to the Fund
or its stockholders resulting from willful misfeasance, bad faith, gross
negligence in the performance of its duties, or its reckless disregard of its
duties and obligations under the Investment Management Agreement.
If approved by stockholders, the Investment Management Agreement will
continue in effect for two years after the date of stockholder approval. The
Investment Management Agreement may be renewed from year-to-year after its
initial term, provided that any such renewals are specifically approved at least
annually by (i) the Board of Directors, or by a vote of the majority of the
outstanding voting securities of the Fund, and (ii)a majority of Independent
Directors cast in person at a meeting called for the purpose of voting on such
approval.
The Investment 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, by a vote of the majority of the Board of Directors, or
by Dresdner RCM on 60 days' written notice, and will automatically terminate in
the event of its assignment (as defined in the 1940 Act).
27
<PAGE>
The Investment Management Agreement also provides that the Fund must
eliminate any reference to "Dresdner RCM" from its corporate name if the
Investment Management Agreement is terminated or upon written notice to the Fund
from Dresdner RCM. Until such time, the Fund will have non-exclusive use of the
name "Dresdner RCM."
INFORMATION ABOUT DRESDNER RCM GLOBAL INVESTORS LLC
It is proposed that Dresdner RCM, a Delaware limited liability company,
with principal offices at 4 Embarcadero Center, San Francisco, CA 94111, act as
the Investment Manager for the Fund. Dresdner RCM, currently the Fund's adviser
and administrator under the Current Investment Advisory Agreement, is a wholly
owned subsidiary of Dresdner Bank AG ("Dresdner Bank"), an international banking
organization with principal executive offices in Frankfurt, Germany. Dresdner
RCM is actively engaged in providing investment supervisory services to
institutional and individual clients. Dresdner RCM was organized in 1996, as the
successor to the business and operations of RCM Capital Management, which, with
its successors, has been in operation since 1970.
Dresdner RCM is also the Investment Manager for the investment
companies set forth below:
APPROX.
NET ASSETS
AS OF
OPEN-END MANAGEMENT 10/31/98 ANNUAL MANAGEMENT FEE
INVESTMENT COMPANIES (IN 000'S) (AS A % OF NET ASSETS)
Dresdner RCM Biotechnology Fund $3,193 1% on the first $500 million
0.95% on the next $500 million
0.90% on amounts in excess of
$1 billion
With a 1.50% expense cap
Dresdner RCM California Tax Exempt
Bond Fund $0 (1) 0.75%
Dresdner RCM Emerging Markets Fund $2,600 1%
With a 1.50% expense cap
Dresdner RCM Global Bond Fund $0 (1) 0.75%
Dresdner RCM Global Equity Fund $0 (1) 0.75%
Dresdner RCM Global Health Care Fund $5,104 1% on the first $500 million
0.95% on the next $500 million
0.90% on amounts in excess of
28
<PAGE>
$1 billion
With a 1.50% expense cap
Dresdner RCM Global Small Cap Fund $4,967 1% on the first $500 million
0.95% on the next $500 million
0.90% on amounts in excess of
$1 billion
With a 1.75% expense cap
Dresdner RCM Global Technology Fund $12,412 1%
With a 1.70% expense cap
Dresdner RCM Growth Equity Fund $11,107 0.75%
With a 1.00% expense cap
Dresdner RCM Intermediate Investment
Grade Bond Fund $0 (1) 0.45%
Dresdner RCM International Growth
Equity Fund $811,107 0.75%
With a 1.00% expense cap
Dresdner RCM Large Cap Growth
Fund $6,043 0.70% on the first $500 million
0.65% on the next $500 million
0.60% on amounts in excess of
$1 billion
With a 0.95% expense cap
Dresdner RCM Small Cap Fund $451,182 1.00%
With a 1.25% expense cap
Dresdner RCM Tax Managed Growth
Fund $0 (1) 0.75%
CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Bergstrom Capital Corporation $171,002 0.70% on the first $10 million
0.60% on the next $10 million
0.50% on the next $20 million
0.35% on the next $20 million
0.30% on the next 40 million
0.25% on amounts in excess of
$40 million
RCM Strategic Global Government
Fund $349,903 0.95%
- --------------------------------------------------------------------------------
29
<PAGE>
(1) These funds currently have no net assets because they are involved in the
initial registration process.
Certain information regarding the directors and principal executive
officers of Dresdner RCM is set forth below:
<TABLE>
<CAPTION>
POSITION WITH
NAME AND ADDRESS DRESDNER RCM PRINCIPAL OCCUPATION
- ---------------- ------------ --------------------
<S> <C> <C>
Gerhard Eberstadt Member of Board of Member of Board of Managers of Dresdner Bank AG
Jurgen-Ponto-Platz 1 Managers
D-60301 Frankfurt-am-Main
Germany
George N. Fugelsang Member of Board of President/Chief Executive Officer/Chairman,
75 Wall Street Managers Dresdner Kleinwort Benson North America LLC
New York, NY 10005
Susan C. Gause Member of Board of
(1) Managers; Chief
Operating Officer; and _______
Senior Managing Director
Luke D. Knecht Member of Board of
(1) Managers; and Managing _______
Director
Joachim Madler Member of Board of Director, Dresdner Bank AG
Mainzer Lanstrass 15-17 Managers
D-60301 Frankfurt-am-Main
Germany
William L. Price Member of Board of
(1) Managers; Chief
Executive Officer; and ________
Global Chief Investment
Officer
Jeffrey S. Rudsten Member of Board of
(1) Managers; and Senior ________
Managing Director
William S. Stack Member of Board of
30
<PAGE>
(1) Managers; Senior
Managing Director; _________
Global Equity Chief
Investment Officer
Kenneth B. Weeman, Jr Member of Board of
(1). Managers; Vice Chairman;
and Senior Managing __________
Director
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) The address for these directors and officers is Four Embarcadero Center, San
Francisco, CA 94111.
The following Directors and officers of the Fund are directors,
officers, employees, or stockholders of Dresdner RCM: Karin Brotman, Robert J.
Goldstein, Caroline M. Hirst, Jennie Klein, Barbel Lenz, Judith O'Connell, and
William S. Stack.
None of the Directors or officers of the Fund own securities of or have
a direct or indirect material interest in Dresdner RCM or Dresdner Bank (not
including Directors of Dresdner RCM).
No Director of the Fund had a material interest in a material
transaction during the fiscal year ended December 31, 1997 or has such an
interest in a proposed material transaction to which Dresdner, Dresdner Bank, or
any subsidiaries thereof were or will be parties.
DIRECTORS' CONSIDERATIONS
In considering the proposed Investment Management Agreement, the Board
of Directors reviewed and analyzed the factors they deemed relevant, including:
(1) the services now being provided by Dresdner RCM; (2) the nature, quality,
and scope of such services as well as the Fund's investment performance; (3) the
nature and scope of the services to be provided to the Fund by Dresdner RCM
under the proposed Investment Management Agreement; (4) the ability of Dresdner
RCM to provide such services and (5) the potential effect of the Investment
Management Agreement on stockholders. The Directors reviewed the proposed fees
payable to Dresdner RCM under the Investment Management Agreement. The Board of
Directors also reviewed the management and/or advisory fees paid by other
investment companies with similar objectives and characteristics.
After full consideration of the above listed and other factors, the
Board of Directors, including the Independent Directors, approved the proposed
Investment Management Agreement and authorized the submission of the Investment
Management Agreement to the Fund's stockholders for their approval at the Annual
Meeting.
31
<PAGE>
If Proposals Nos. 1(a), 2(a), 2(b), 2(c), and 2(d) are not all
approved, the Current Investment Advisory and Administration Agreement will
remain in effect in accordance with their terms. The terms of the Current
Investment Advisory and Administration Agreement are discussed in the following
section.
TERMS OF THE CURRENT INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
The Current Investment Advisory and Administration Agreement between
the Fund and Dresdner RCM, as the Fund's adviser and administrator, first took
effect on November 1, 1996. Unless earlier terminated, it will remain in effect
until October 5, 1999. The last time the Current Investment Advisory and
Administration Agreement was approved by an affirmative vote of stockholders was
October 4, 1996, when it was submitted to stockholders for their initial
approval as a new agreement.
As noted above, the Current Investment Advisory and Administration
Agreement is very similar to the proposed Investment Management Agreement. Under
the direction and control of the Fund's Board of Directors, Dresdner RCM makes
recommendations for purchases and sales of portfolio securities by the Fund
pursuant to the Fund's stated investment objective, policies, and restrictions
and reviews these purchase and sale recommendations for suitability in
accordance with such objectives, policies, and restrictions. Upon determining
such suitability, Dresdner RCM is authorized to transmit purchase and sale
orders and select brokers and dealers to execute portfolio transactions on
behalf of the Fund. Dresdner RCM determines the timing of portfolio transactions
and other matters related to execution. Additionally, pursuant to the Current
Investment Advisory and Administration Agreement, Dresdner RCM is the corporate
administrator of the Fund. Dresdner RCM renders to the Fund such administrative,
accounting, internal auditing, and clerical services as are necessary to provide
for effective operation of the Fund, but the Fund must bear all of its own
expenses. The Current Investment Advisory and Administration Agreement also
contains provisions concerning renewals, terminations, the non-exclusivity of
Dresdner RCM's services, and the power of Dresdner RCM to enter into
sub-advisory or sub-administration contracts that are substantially similar to
provisions in the proposed Investment Management Agreement. The important
differences between the two Agreements are explained above in the introduction
to Proposal No. 2(c).
The fee structure under the Current Investment Advisory and
Administration Agreement is very similar to the fee structure under the proposed
Investment Management Agreement except that the fee is computed daily, not
weekly, under the latter and that Dresdner RCM has promised to defer its fee to
the extent that the Fund's total annual ordinary operating expenses applicable
to Class N shares (not including taxes, interest, or extraordinary expenses)
exceed 1.60% of the Fund's net assets applicable to that class for at least
three years following the conversion.
The aggregate amount of fees received by Dresdner RCM from the Fund
during the fiscal year ended December 31, 1997 was $1,555,539 and for the
six-month period ended June 30, 1998 was $927,962. Dresdner RCM would have
received approximately the same amount from the Fund if the fees under the
proposed Investment Management Agreement had been charged during the same
periods.
32
<PAGE>
PORTFOLIO TRANSACTIONS
Subject to policies established by the Board of Directors of the Fund,
Dresdner RCM, pursuant to the Current Investment Advisory and Administration
Agreement, has arranged for the execution of the Fund's portfolio transactions
and the allocation of brokerage. These arrangements, detailed below, would be
substantially similar if Proposal No. 2(c) is approved and Dresdner RCM becomes
the Fund's investment manager pursuant to the Investment Management Agreement.
Dresdner RCM, subject to the overall supervision of the Board of
Directors, 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, Dresdner RCM 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 Dresdner RCM 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
Dresdner RCM 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 Dresdner RCM.
Subject to the requirement of seeking best execution, Dresdner RCM 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 Dresdner RCM. In so doing, Dresdner RCM may effect
securities transactions that 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, Dresdner RCM 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 Dresdner RCM's
overall responsibility to the accounts for which Dresdner RCM exercises
investment discretion. Dresdner RCM continually 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 and dealers may be used by Dresdner RCM
in servicing all of its clients (including the Fund), and it is recognized that
the Fund may be charged commissions paid to a broker or dealer who supplied
research services not utilized by the Fund. However, Dresdner RCM expects that
the Fund will benefit overall by such practice because it is receiving the
benefit of research services and the execution of such transactions not
otherwise available to it without the allocation of transactions based on the
recognition of such research services.
Subject to the requirement of seeking best execution, Dresdner RCM may
also place orders with brokerage firms that have sold shares of the Fund.
33
<PAGE>
Dresdner RCM has made and will make no 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 that supply
investment information to Dresdner RCM.
Dresdner RCM has no obligation to purchase or sell for the Fund any
security that it, or its officers or employees, may purchase or sell for
Dresdner RCM's or their own accounts or the account of any other client, if in
the opinion of Dresdner RCM such transaction appears unsuitable, impractical, or
undesirable for the Fund. Additionally, Dresdner RCM 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 Dresdner RCM's clients, subject
to Dresdner RCM's and the Fund's Code of Ethics.
Because the Fund will frequently invest in foreign securities that are
not listed on a national securities exchange but are traded in the
over-the-counter market or the third or fourth market, Dresdner RCM will seek in
such instances to deal with the counterparty that Dresdner RCM believes can
provide the best execution, whether or not that counterparty is the primary
market maker for that security.
As noted above, Dresdner RCM is a wholly-owned subsidiary of Dresdner
Bank. Dresdner Kleinwort Benson North America LLC ("Dresdner Kleinwort Benson")
and other Dresdner Bank subsidiaries may be broker-dealers (collectively, the
"Dresdner Bank Affiliates"). Dresdner RCM believes that it is in the best
interest of the Fund to have the ability to execute brokerage transactions, when
appropriate, through the Dresdner Bank Affiliates. Accordingly, Dresdner RCM
intends to execute brokerage transactions on behalf of the Fund through the
Dresdner Bank Affiliates, when appropriate and to the extent consistent with
applicable laws and regulations, including federal banking laws.
In such cases, the Dresdner Bank Affiliates will act as agent for the
Fund, and Dresdner RCM will not enter into any transaction on behalf of the Fund
in which a Dresdner Bank Affiliate is acting as principal for its own account.
In connection with such agency transactions, the Dresdner Bank Affiliates will
receive compensation in the form of brokerage commissions separate from Dresdner
RCM's management fee. It is Dresdner RCM's policy that such commissions 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 Bank Affiliate be no higher than the
commissions paid to that broker by any other similar customer of that broker who
receives brokerage and research services that are similar in scope and quality
to those received by the Fund.
For the six-month period ended June 30, 1998, the Fund paid total
brokerage commissions of $356,527, of which $162,076, or approximately 45.50%,
were paid to Dresdner Kleinwort Benson, the only affiliated broker the Fund used
during this time period.
Investment decisions for the Fund and for other investment accounts
managed by Dresdner RCM are made independently of each other in light of the
differing considerations for the various accounts. However, the same investment
34
<PAGE>
decisions may occasionally be made for two or more such accounts. In such cases
simultaneous transactions are inevitable. Purchases or sales are then averaged
as to price and allocated to accounts according to a formula deemed equitable to
each account. While in some cases this practice could have a detrimental effect
upon the price or value of the security as far as the Fund is concerned, in
other cases it is believed to be beneficial to the Fund.
VOTE REQUIRED
The approval of the Investment Management Agreement requires approval
by a 1940 Act majority vote. IF YOU WANT THE OPEN-END CONVERSION TO BE EFFECTED,
YOU MUST VOTE "FOR" PROPOSAL NO. 1(a) AND EACH OF THE SUBPARTS OF PROPOSAL NO.
2, INCLUDING 2(c). IF PROPOSAL NO. 2(c) IS NOT APPROVED OR IF PROPOSAL NO. 2(c)
IS APPROVED BUT ANY OF PROPOSAL NOS. 1(a), 2(a), 2(B), AND 2(D) ARE NOT ALSO
APPROVED, THE FUND WILL CONTINUE TO FOLLOW THE TERMS OF THE CURRENT INVESTMENT
ADVISORY AND ADMINISTRATION AGREEMENT AND WILL REMAIN A CLOSED-END INVESTMENT
COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL NO. 2(c).
PROPOSAL NO. 2(d). APPROVAL OR DISAPPROVAL OF A RULE 12B-1 DISTRIBUTION PLAN
Funds Distributor Inc. ("Funds Distributor"), 60 State Street, Suite
1300, Boston Massachusetts 02109, is a corporation organized under the laws of
the State of Massachusetts and will serve as distributor of Class N and Class I
shares of the Dresdner RCM Europe Fund, a series of Dresdner RCM Investment
Funds Inc. Funds Distributor is an indirect wholly-owned subsidiary of Boston
Institutional Group Inc., which is not affiliated with Dresdner RCM.
Funds Distributor is the distributor for shares of the Dresdner RCM
Mutual Funds and has successfully provided distribution assistance to many
open-end investment companies. It has a strong, experienced professional staff
of 130 people that would work to distribute shares of the Fund and have sales
contacts in all major channels of distribution. The Fund, combined with the
other Dresdner RCM Mutual Funds, would be one of five full service clients of
Funds Distributor.
The purpose of the Rule 12b-1 Distribution Plan applicable to Class N
shares (the "Plan") is to permit Funds Distributor to offer incentives to the
financial advisers and other qualified broker-dealers that provide distribution
and stockholder assistance to their customers who are investors in Class N
shares of the Fund and to defray the costs and expenses associated with
distribution activities. If Proposal No. 2(d) is approved by stockholders, the
Plan will be applicable to the Class N shares of the Fund (the existing shares
of the Fund) and will become effective upon conversion of the Fund to open-end
status. A copy of the proposed Plan is attached to this Proxy Statement as
Exhibit C.
35
<PAGE>
The Plan authorizes the Fund to pay Funds Distributor on a monthly
basis for all costs incurred by it in distributing the Class N shares of the
Fund at an annual rate not to exceed 0.25% of the Fund's average daily net
assets. In addition, the Plan specifies the services to be provided and the
activities to be undertaken to distribute shares and to provide stockholder
services. Under the Plan, the Fund must reimburse Funds Distributor for the
following expenditures, among others: (a) expenses incurred in connection with
advertising and marketing Class N shares of the Fund, including but not limited
to any advertising by radio, television, newspapers, magazines, telemarketing,
or direct mail solicitations; (b) periodic payments of fees for distribution
assistance made to one or more securities brokers, dealers, or other industry
professionals such as investment advisers, accountants, estate planning firms,
and Funds Distributor itself in respect of the average daily value of Class N
shares owned by clients of such service organizations; and (c) expenses incurred
in preparing, printing, and distributing the Fund's prospectus and statement of
additional information.
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
Plan, the unpaid amount is carried forward from 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 Fund is 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.
Pursuant to the Plan, the Board of Directors of the Fund will review at
least quarterly a written report prepared by Funds Distributor of all of the
distribution expenses incurred pursuant to the Plan. The report will include an
itemization of the distribution expenses and the purposes of such expenditures.
If approved by stockholders, the Plan will continue in effect for two
years after the date of stockholder approval. The Plan may be renewed from
year-to-year after its initial term, provided that any such renewals are
approved at least annually by the vote of a majority of the Board, including a
majority of the Independent Directors, pursuant to a vote cast in person at a
meeting called for the purpose of voting on the continuance of the Plan.
The Plan may be amended at any time by the Board provided that (i) any
amendment to increase materially the costs of the Fund under the Plan shall be
effective only upon approval by a vote of the majority of the outstanding Class
N shares of the Fund, and (ii) any other material amendments of the terms of the
Plan shall become effective only upon approval by a majority of the Board and a
majority of the Independent Directors pursuant to a vote cast in person at a
meeting called for the purpose of voting on the Plan.
The Plan is terminable, without penalty, at any time by (i) the vote of
a majority of the Independent Directors, or (ii) the vote of a majority of the
outstanding Class N shares of the Fund.
DIRECTORS' CONSIDERATIONS
36
<PAGE>
The Board of Directors of the Fund, including a majority of the
Independent Directors who have no direct or indirect interest in the proposed
Plan or any related agreement, by vote cast in person at a meeting held on
December 4, 1998 approved a Rule 12b-1 Distribution Plan and a Distribution
Agreement for the Class N shares of the Fund (the "Distribution Agreement")
between Funds Distributor and Dresdner RCM Investment Funds Inc. on behalf of
Dresdner RCM Europe Fund, and recommended the Plan to the stockholders of the
Fund for approval at this Annual Meeting of Stockholders.
In considering whether or not to approve the Plan, the Board of
Directors reviewed, among other things, the nature, quality, and scope of the
services to be provided by Funds Distributor, the ability of Funds Distributor
to provide such services, and the fees payable to Funds Distributor if the Plan
is adopted. The Board also reviewed the Rule 12b-1 fees paid by other open-end
investment companies with similar objectives and characteristics and found Funds
Distributor's proposed fees to be competitive and reasonable. The Board
considered the potential benefits of the Plan to stockholders, investors, Funds
Distributor, and Dresdner RCM. The Board investigated, among other things, Funds
Distributor's distribution experience, the strength of its distribution base,
staff, and infrastructure, and its track record with the distribution of other
open-end funds. Based upon their review of the factors above, among others, the
Directors, including a majority of the Independent Directors, determined that
there is a reasonable likelihood that the Plan would benefit the Fund and its
stockholders and authorized the submission of the Plan to stockholders for their
approval at the Annual Meeting.
VOTE REQUIRED
The approval of the Rule 12b-1 Distribution Plan requires approval by a
1940 Act majority vote. IF YOU WANT THE OPEN-END CONVERSION TO BE EFFECTED, YOU
MUST VOTE "FOR" PROPOSAL NO. 1(a) AND EACH OF THE SUBPARTS OF PROPOSAL NO. 2,
INCLUDING 2(D). IF PROPOSAL NO. 2(d) IS NOT APPROVED OR IF PROPOSAL NO. 2(d) IS
APPROVED BUT PROPOSAL NOS. 1(a), 2(A), 2(B), AND 2(C) ARE NOT ALSO APPROVED, THE
FUND WILL NOT ADOPT THE PROPOSED RULE 12B-1 DISTRIBUTION PLAN AND WILL CONTINUE
TO OPERATE AS A CLOSED-END INVESTMENT COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL NO. 2(d).
ELECTION OF DIRECTORS
(PROPOSAL NO. 3)
The Fund's Articles of Incorporation and By-Laws provide that the Board
of Directors is to be divided into three classes of Directors. The Directors in
each class serve three-year terms, with one class being elected each year. The
term of one class will expire each year. The term of office for Directors in
Class I expires at the Meeting, for Directors in Class II at the Annual Meeting
37
<PAGE>
of Stockholders in 1999 and for Directors in Class III at the Annual Meeting of
Stockholders in 2000. However, if Proposal Nos. 1 and 2 are approved, the Fund's
Amended and Restated Articles of Incorporation will no longer provide for a
class-based structure of Directorships, and the existing Directors will remain
on the Board, except as noted below.
Four Class I nominees are named in this Proxy Statement. If elected,
the Class I Directors will serve a three-year term to expire at the Annual
Meeting of Stockholders in 2001 and until their successors are duly elected and
qualified. Each of the nominees was last elected to the Board of Directors at
the Annual Meeting of Stockholders in 1995.
Unless authority is withheld, it is the intention of the persons named
in the accompanying form of proxy to vote each proxy for the election of the
nominees listed below. Each nominee has indicated he will serve if elected, but
if any nominee should be unable to serve, proxies will be voted for any other
person determined by the persons named in the accompanying form of proxy in
accordance with their judgment.
If Proposal Nos. 1 and 2 are approved by stockholders and the Fund
open-ends, the initial Directors of "Dresdner RCM Investment Funds Inc." will be
the Fund's current Directors except that Mr. Fugelsang, a Class I Director, and
Mr. Passow, a Class II Director, will resign from the Board prior to the Fund's
commencement of operations as an open-end fund because of restrictions on the
ability of persons who serve as officers of banks regulated in the U.S. also
serving as directors of open-end investment companies. The Board has no current
plans to replace those Directors if and when they resign. Additionally, any
Class I Directors who are not elected by stockholders will cease to be the
Fund's Directors and their names will be deleted from the Fund's Amended and
Restated Articles of Incorporation.
The following table provides information concerning the Class I
nominees for election as Directors.
CLASS I (TERM EXPIRES AT THE MEETING)
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK BENEFICIALLY
PRINCIPAL OCCUPATION OWNED DIRECTLY OR
NAME, ADDRESS POSITION DURING PAST 5 YEARS INDIRECTLY AT
AND AGE WITH FUND AND OTHER AFFILIATIONS SEPTEMBER 30, 1998(1)
- ----------------- --------- ---------------------- ---------------------
<S> <C> <C> <C>
Carroll Brown Director President, The American Council on 1,000
The American Council since 1990 Germany (since 1988); Executive
on Germany Director, John J. McCloy Fund (since
14 East 60th Street 1988); Foreign Service Officer, United
Suite 606 States Department of State with service
New York, NY 10022 in Yugoslavia, Poland, Austria, and
Age: 70 Germany (1957-1988); U.S. Consul
General, Dusseldorf and Munich; Deputy
Assistant Secretary of State, U.S. State
Department (1986 and 1987)
Theodore J. Coburn Director Partner, Brown, Coburn & Co. , a
17 Cotswold Road since 1991 consulting firm (since 1991); education __
Brookline, MA 02146 associate at Harvard University Graduate
Age: 44 School of Education (since 1996);
Director, Nicholas-Applegate Fund, Inc.
(since 1987); Trustee,
Nicholas-Applegate Mutual Funds (since
38
<PAGE>
SHARES OF COMMON
STOCK BENEFICIALLY
PRINCIPAL OCCUPATION OWNED DIRECTLY OR
NAME, ADDRESS POSITION DURING PAST 5 YEARS INDIRECTLY AT
AND AGE WITH FUND AND OTHER AFFILIATIONS SEPTEMBER 30, 1998(1)
- ----------------- --------- ---------------------- ---------------------
1992); Director, Measurement
Specialties, Inc. (since 1995);
Director, Moovies, Inc. (since 1995);
Senior Vice President, Prudential
Securities Inc. (1986-1991); Managing
Director of the Global Equity
Transactions Group and a member of the
Board of Directors, Prudential
Securities (1986-1991); Managing
Director, Merrill Lynch Capital Markets
(1983-1986)
George N. Fugelsang(*) Director Senior General Manager and Chief __
Dresdner Bank AG since 1994 Executive North America, Dresdner Bank
75 Wall Street AG (since 1994); President, Director and
New York, NY 10005 Chief Executive Officer, Dresdner
Age: 57 Kleinwort Benson North America LLC
(since 1994); Director, Dresdner-NY Inc.
(1994-1997); Managing Director, Morgan
Stanley & Company, Inc. (1986-1994)
39
<PAGE>
CONTINUING DIRECTORS. The remaining Directors currently serving on the Board of
Directors consist of three Class II Directors and three Class III Directors.
None of such Directors is a nominee for election at the Meeting. All such
Directors will continue in office after the Meeting for the terms shown below,
except as noted above.
The following table provides information concerning the Class II
Directors.
CLASS II (TERM EXPIRES 1999)
SHARES OF COMMON
STOCK BENEFICIALLY
PRINCIPAL OCCUPATION OWNED DIRECTLY OR
NAME, ADDRESS POSITION DURING PAST 5 YEARS INDIRECTLY AT
AND AGE WITH FUND AND OTHER AFFILIATIONS SEPTEMBER 30, 1998(1)
- ------------------ --------- ---------------------- ---------------------
James E. Dowd Director Attorney/Consultant (since 1982); 1,077
571 Hayward Mill Road since 1990 Director, Trustee or Managing General
Concord, MA 01742 Partner of various registered
Age: 75 investment companies managed by
Federated Investors (since 1982);
President, Boston Stock Exchange
(1969-1982); Member of Panel of
Arbitrators, New York Stock Exchange,
Inc. (since 1986); Member of Panel of
Arbitrators, National Association of
Securities Dealers, Inc. (since 1984)
Siegfried A. Kessler Director Retired; Chairman, Carl Zeiss Inc. (New 1,000
52 Heritage Road since 1990 York) (1981-1982) and President
Hilton Head Island, (1965-1981) (sale, distribution and
SC 29925 service of scientific instruments);
Age: 80 President, Carl Zeiss Canada Ltd.
(sale, distribution and service of
scientific instruments and optical
products) (1965-1985)
40
<PAGE>
SHARES OF COMMON
STOCK BENEFICIALLY
PRINCIPAL OCCUPATION OWNED DIRECTLY OR
NAME, ADDRESS POSITION DURING PAST 5 YEARS INDIRECTLY AT
AND AGE WITH FUND AND OTHER AFFILIATIONS SEPTEMBER 30, 1998(1)
- ----------------- --------- ---------------------- ---------------------
Rolf Passow(*) Chairman and Chief Executive (since 1992) and --
Deutscher Investment- Director Managing Director (1987-1992),
Trust Gesellschaft since 1995 Deutscher Investment-Trust,
fur Wertpapieranlagen Gesellschaft fur Wertpapieranlagen mbH;
mbH Chief Executive, Dresdnerbank
Mainzer Landstrasse investment management
11-13 Kapitalanlagegesellschaft mbH (since
D-60329 1992); Member, Board of Managing
Frankfurt-am-Main Germany Directors, Frankfurter Wertpapierborse
Age: 58 (Frankfurt Stock Exchange) (1992-1993);
Chairman, Supervisory Board, Dresdner
Kleinwort Benson International
Management Services Ltd. (since 1995)
The following table provides information concerning the Class III Directors.
CLASS III (TERM EXPIRES 2000)
SHARES OF COMMON
STOCK BENEFICIALLY
PRINCIPAL OCCUPATION OWNED DIRECTLY OR
NAME, ADDRESS POSITION DURING PAST 5 YEARS INDIRECTLY AT
AND AGE WITH FUND AND OTHER AFFILIATIONS SEPTEMBER 30, 1998(1)
- ------------------ --------- ---------------------- ---------------------
Alfred Fiore Director General Manager, Hirschfeld, Stern,
27 Copper Beech Road since 1996 Moyer & Ross, Inc. (employee benefit
Greenwich, CT 06930 consulting firm) (since 1988);
Age: 60 Consultant, Lois/U.S.A. (creative --
advertising agency) (1987-1988);
Executive Vice President and Chief
Financial Officer, Parlux Fragrances,
Inc. (1987); Executive Vice President
and Chief Financial Officer, Concord
41
<PAGE>
Assets Group, Inc. (real estate
manager) (1986); President and Chief
Operating Officer, Amerigroup Financial
Services, Inc. (financial services)
(1984-1986); Partner, KPMG Peat
Marwick, LLP (1973-1984)
Gottfried W. Perbix Director President, Perbix International, Inc. 1,000
293 Saugatuck Avenue since 1990 (management consulting) (1980-1994);
Westport, CT 06880 Director, American Profol Inc. (plastic
Age: 68 film manufacturers) (since 1993); Sole
Proprietor, Perbix Associates
(executive search) (since 1978)
Jacob Saliba Director Director (since 1994), Chairman --
770 Boylston Street, since 1990 (1988-1994) and Chief Executive Officer
Apt. 11I (1988-1993), Katy Industries, Inc.
Boston, MA 02199 (diversified manufacturing and oil and
Age: 84 related services); President and Chief
Operating Officer, Katy
Industries, Inc. (1968-1987);
Director, CEGF Compagnie des
Entrepots et Gares Frigorifiques
(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) (1992-1998)
</TABLE>
- --------------------------------------------------------------------------------
(1) All Directors and officers as a group beneficially owned 5136 shares of
Common Stock, which constituted less than 1% of the outstanding Common Stock of
the Fund as of September 6, 1998.
42
<PAGE>
(*) Interested person of the Fund (as defined in the "1940 Act"). Mr. Fugelsang
is an interested person of the Fund because of his affiliation with Dresdner
Bank, the parent of Dresdner RCM; Mr. Passow is an interested person of the Fund
because of his affiliation with Deutscher Investment-Trust Gesellschaft fur
Wertpapieranlagen mbH and Dresdnerbank investment management
Kapitalanlagegesellschaft mbH, which are wholly owned subsidiaries of Dresdner
Bank.
OTHER INFORMATION REGARDING DIRECTORS
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 $7,500, plus $750 for
each Board of Directors meeting attended. During the fiscal year ended December
31, 1997, all such Directors as a group received from the Fund aggregate fees
amounting to $88,500. 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 Fund the amount of such compensation paid by the
Fund during the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
COMPENSATION TABLE
PENSION OR TOTAL
RETIREMENT ESTIMATED COMPENSATION
BENEFITS ANNUAL FROM FUND AND
AGGREGATE ACCRUED AS BENEFITS FUND COMPLEX
NAME OF PERSON, COMPENSATION PART OF FUND UPON PAID TO
POSITION FROM FUND EXPENSES RETIREMENT DIRECTORS
- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C>
Directors:
Robert J. Birnbaum $ 11,250 -- -- $11,250
Carroll Brown 11,250 -- -- 11,250
Theodore J. Coburn 10,500 -- -- 10,500
James E. Dowd 10,500 -- -- 10,500
Alfred W. Fiore 11,250 -- -- 11,250
Siegfried A. Kessler 11,250 -- -- 11,250
Gottfried W. Perbix 11,250 -- -- 11,250
Jacob Saliba 11,250 -- -- 11,250
------ ------
TOTAL $88,500 $88,500
====== ======
</TABLE>
During the fiscal year ended December 31, 1997, the Board of Directors
met five times and during the fiscal year ending December 31, 1998, the Board of
43
<PAGE>
Directors met twelve times. Each Director attended at least 75% of the total
number of meetings of the Board and each Committee of the Board of which he was
a member held during the period in which he served. The fees paid to the full
Board in 1998 were at the same rate as the fees paid in 1997.
The Board of Directors has an Audit Committee presently composed of
Messrs. Perbix, Dowd, 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, 1997 and two meetings during the fiscal year ending December 31,
1998. The fees paid to Audit Committee members in 1998 were at the same rate as
the fees paid in 1997.
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, and there were [10] such meetings
in 1998 to date.
The Board of Directors has no compensation or nominating committees, or
other committees performing similar functions. If the Fund converts to an
open-end structure, it would have a Nominating Committee, consisting of all of
the Independent Directors.
EXECUTIVE OFFICERS OF THE FUND
The executive officers of the Fund are typically chosen each year at
the meeting of the Board of Directors held in connection with the Annual Meeting
of Stockholders, to hold office until the meeting of the Board of Directors held
in connection with the next Annual Meeting of Stockholders and until their
successors are chosen and qualified. The current executive officers of the Fund
were appointed by the Board of Directors in March 1997, except that Robert J.
Goldstein was appointed Secretary by the Board of Directors on February 12,
1998. No executive officers of the Fund receive any compensation from the Fund
for their services as executive officers. It is anticipated that the Fund's
current officers will resign upon conversion to open-end status due to
regulatory limitations on Dresdner RCM, which is wholly-owned by a foreign bank,
Dresdner Bank. After the conversion Funds Distributor is expected to provide
personnel who will serve as the Fund's officers.
The following table presents information about the executive officers
of the Fund, other than as shown above.
44
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME, ADDRESS POSITION DURING PAST 5 YEARS
AND AGE WITH FUND AND OTHER AFFILIATIONS
- ------- --------- ----------------------
<S> <C> <C>
William S. Stack President Senior Managing Director, Global Equity Chief
The Emerging Germany Fund since 1997 Investment Officer, Member, Board of Managers,
Four Embarcadero Center and Principal, Dresdner RCM Global Investors
San Francisco, CA 94111 LLC (since 1996); Senior Vice President, RCM
Age: 51 Capital Management, a California Limited
Partnership (1994-1996); Managing Director,
Lexington Management Corporation (1985-1994)
Barbel Lenz Vice President Senior Analyst, Dresdner RCM Global Investors
The Emerging Germany Fund since 1997 LLC (since 1997); Assistant Vice President,
Four Embarcadero Center Dresdner Kleinwort Benson North America LLC
San Francisco, CA 94111 (1996-1997); Assistant Vice President,
Age: 34 Dresdner Securities (USA) Inc. (1995-1996);
Assistant Vice President, Deutscher
Investment-Trust, Gesellschaft fur
Wertpapieranlagen mbH (1991-1995)
Caroline M. Hirst Treasurer Senior Vice President and Director of
The Emerging Germany Fund since 1997 Investment Operations, Dresdner RCM Global
Four Embarcadero Center Investors LLC (since 1996); Director of
San Francisco, CA 94111 Operations, RCM Capital Management, a
Age: 37 California Limited Partnership (1994-1996);
Head of International Administration, Morgan
Grenfell Asset Management, Ltd. (1991-1995)
Robert J. Goldstein Secretary Assistant General Counsel, Dresdner RCM Global
The Emerging Germany Fund since 1998 Investors LLC (since 1997); Associate, Weil,
Four Embarcadero Center Gotshal & Manges (1990-1996)
San Francisco, CA 94111
Age: 35
</TABLE>
45
<PAGE>
LEGAL PROCEEDINGS
On April 8, 1998, the Fund filed a lawsuit against Phillip Goldstein,
Ronald Olin, and three entities affiliated with them. The action is captioned
THE EMERGING GERMANY FUND INC. V. GOLDSTEIN, 98 Civ. 2508 (DC) and is filed in
the United States District Court for the Southern District of New York. In its
complaint, the Fund alleges violations by the defendants of the proxy
solicitation and beneficial ownership disclosure provisions of U.S. federal
securities laws when the defendants used an Internet "chat room" and other means
to conduct an unlawful proxy solicitation in opposition to the Fund's
solicitation for the annual meeting scheduled for April 27, 1998. The Fund seeks
equitable relief against the defendants. The Fund filed this lawsuit, canceled
the annual meeting, and amended its By-Laws in order to protect its stockholders
from the unlawful activities it asserts were undertaken by these defendants.
One of the defendants in the action filed by the Fund, Opportunity
Partners L.P., filed an action against the Fund and its directors on April 24,
1998 in the United States District Court of the Southern District of New York.
The matter is styled OPPORTUNITY PARTNERS L.P. V. THE EMERGING GERMANY FUND
INC., 98 Civ. 2904 (DC). In connection with the factual matters described above,
plaintiff claims that defendants violated the proxy antifraud rule of U.S.
federal securities laws and breached their fiduciary duties by canceling the
annual meeting and amending the Fund's By-Laws as previously described.
Plaintiff seeks equitable relief.
The Fund, as nominal defendant, and each member of the Fund's Board of
Directors, including the four Class I members who are standing for re-election
to the Board at the Meeting, have been named as defendants in a derivative and
purported class action suit filed in the United States District Court for the
Southern District of New York. The matter is captioned STEINER V. FUGELSANG, 98
Civ. 3809 (DC) (the "Steiner Litigation"), and was commenced on May 28, 1998.
The class action allegations in the Steiner Litigation assert that the
defendants violated the Investment Company Act of 1940 and Maryland Corporate
Law by interfering with the voting rights of Fund stockholders when they
canceled the annual meeting scheduled for April 27, 1998 and when they adopted
an amendment to the Fund's By-Laws which requires proposals intended to be made
at stockholders' meetings be provided to the Fund in advance of the meeting
together with materially relevant information. The derivative claims assert that
the defendants breached their fiduciary duties by amending the By-Laws as
described above, by causing the Fund to institute certain litigation described
above, and by failing to take all steps necessary to maximize stockholder value.
Plaintiff seeks equitable relief on the class claims and damages on the
derivative claims.
Discovery has been stayed in the first two actions pending decision on
defendants' motions to dismiss the Fund's action. Plaintiff has filed a motion
for injunction in the Steiner Litigation and the defendants have filed a motion
to dismiss the amended complaint in that action. No discovery has begun in the
Steiner Litigation.
The Fund's Directors believe that they acted appropriately in these
matters and that they have meritorious defenses, and they intend to defend the
two actions vigorously. Under the Fund's chartering documents and under a policy
of insurance, the directors are entitled to indemnification and to advancement
of the costs of defense in certain circumstances. Consistent with state and
federal law and the terms of the insurance policy, the Fund will indemnify the
Directors and advance the costs of their defense to these actions.
46
<PAGE>
VOTE REQUIRED
The election of each Director requires approval by a plurality of the
votes cast at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL NO. 3.
RATIFICATION OF
SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 4)
At a meeting held on December 4, 1998, a majority of the Independent
Directors of the Fund approved the selection of PricewaterhouseCoopers LLP
("PWC") as independent accountants of the Fund for the fiscal year ending
December 31, 1999. Audit services performed for the Fund by Coopers & Lybrand
L.L.P. (PWC's predecessor) during the fiscal year ended December 31, 1997, and
being performed for the fiscal year ending December 31, 1998, include
examination of the Fund's financial statements. PWC has informed the Fund that
it has no material direct or indirect interest in the Fund.
A representative of PWC is expected to be present at the Meeting to
answer appropriate questions concerning the Fund's financial statements and will
have an opportunity to make a statement if such representative chooses to do so.
It is the intention of the persons named in the accompanying form of
proxy to vote each proxy for ratification of the selection of PWC.
VOTE REQUIRED
The ratification of PWC as the Fund's independent accountants for the
fiscal year ending December 31, 1999 requires approval by a majority vote of the
votes cast at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 4.
STOCKHOLDER PROPOSAL
(PROPOSAL NO. 5)
47
<PAGE>
A beneficial owner of Common Stock of the Fund (the "proponent") has
informed the Fund that he intends to present a proposal for action at the
Meeting. The proponent's name and address will be furnished by the Secretary of
the Fund upon request. The proponent proposes that the following resolution be
presented to the stockholders of the Fund:
"RESOLVED: The investment advisory agreement between Dresdner RCM
Global Investors LLC (the "Advisor") and the Fund shall be
terminated."
The proponent has requested that the following statement be included
in the proxy statement in support of the proposal:
"I believe that the Advisor is the main impediment to the ability of
Shareholders to realize net asset value for their shares, through open-ending,
liquidation, merger or self-tender.
Our directors may claim "independence," but they were chosen by the
Advisor or by each other, and I believe they have placed the Advisor's interest
in its fee stream above the interests of the Shareholders in getting the maximum
return on their investment. Consider:
They postponed the 1998 annual meeting indefinitely, "in order to
protect the rights of fund shareholders." Protecting democracy by canceling an
election is like burning a village in order to save it.
They pose as defenders of small, long term shareholders [DELETED].
They point with pride to investment results of the last year or two,
hoping that Shareholders will forget the results of the prior FIVE years, which
even our Directors called "unacceptable performance."
They recently referred to the Advisor as a "new investment manager,"
although it's another Dresdner Bank affiliate, and when the contract came up for
approval in 1996 they called it just a "reorganization," identical in all
material respects," with the same personnel and policies.
[They keep changing the fund's goals. First it was a German Smallcap
fund, now the portfolio is concentrated in large, liquid companies. First it had
to be 90% invested in Germany, now 65%, and in June, 1998, the portfolio manager
told the New York Times that the fund would be converted to a Pan-Europe fund.
There are many successful open-ended Europe funds.]
I do not believe the Board can QUANTIFY any advantage of retaining the
closed-end format that outweighs the value to be gained by Shareholders from
abandoning that format.
While passage of this proposal would not directly result in open-ending
the Fund, it would cut the links between the Advisor and its [DELETED] on the
Board. I believe this would send the Board the message that the Shareholders
demand action to eliminate the deadweight loss of value represented by the
discount.
48
<PAGE>
Interested Shareholders may want to follow and participate in the
discussion at [DELETED].
Thank you for your consideration."
OPPOSING STATEMENT
OPPOSING STATEMENT OF YOUR BOARD OF DIRECTORS
FOR THE REASONS DISCUSSED BELOW, YOUR BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "AGAINST" THIS STOCKHOLDER PROPOSAL.
We believe that this proposal, which was submitted prior to the public
announcement of our plan to recommend conversion to a European, open-end fund,
no longer serves its original purpose and should not be approved. In fact, we
believe that the portfolio manager's investment team and its European investment
strategy are critical to maintaining the Fund's performance during both the
conversion period to an open-end fund with a broader investment objective, and
for the future.
1. THE BOARD AND DRESDNER RCM ARE SUPPORTING ACTIONS THAT WILL ENTIRELY
ELIMINATE THE DISCOUNT.
Given our current proposal in the Proxy Statement to convert the Fund
to an open-end investment company, the proposal does not make sense. The only
impediment to open-ending the Fund would be a majority decision by you, the
stockholders, against this proposal.
Dresdner RCM advocates and supports the changes we are proposing
however, we wish to make it clear that it is not the manager who determines
whether the Fund open-ends. That decision is up to the stockholders, based on
the recommendation of the Board of Directors - eight of ten who are independent
of the investment adviser.
2. WE BELIEVE THAT DRESDNER RCM'S STRONG INVESTMENT TEAM, AND ITS EUROPEAN
INVESTMENT PROCESS ARE CRITICAL TO MAINTAINING THE FUND'S PERFORMANCE BOTH
DURING THE CONVERSION PERIOD AND FOR THE FUTURE.
The proposal, if approved, would pose substantial risk to investment
performance of the Fund both during the conversion period and in the future.
o Dresdner RCM's Performance Has Been Outstanding
Approval of this proposal would remove an investment adviser that has
delivered superior results to Stockholders. Based on total NAV* return, the Fund
was the top performing German fund (open or closed) in the U.S. marketplace for
1997 and the first three quarters of 1998. Comparative percentage performance
for these periods are shown below:
49
<PAGE>
- --------------------------------------------------------------------------------
Emerging Germany Fund DAX100 MSCI Germany Index
- --------------------------------------------------------------------------------
1997 NAV*: 26.3% 22.4% 24.8%
- --------------------------------------------------------------------------------
YTD as of 9/30/98 NAV*: 20.36% 12.60% 15.71%
- --------------------------------------------------------------------------------
*All Market Price and NAV returns include reinvestment of dividends and
distributions.
The Board has a high degree of confidence in Dresdner RCM and believes
that replacing Dresdner RCM would adversely impact the Fund's performance. The
proponent's suggestion that the current investment adviser should be removed
because of the Fund's performance during its initial five years ignores the
Fund's superior performance over the more recent 2 1/2 years.
o Termination of Dresdner RCM is likely to significantly disrupt performance
during the critical conversion period as the Fund converts to open-end status.
If you vote to terminate the investment advisory agreement with
Dresdner RCM, the Board will be required to select another investment adviser
for the Fund, negotiate a new investment advisory agreement, and submit that
agreement to you, the stockholders, for approval. During this process - which
could take several months - the Fund's portfolio management and procedures would
be significantly disrupted. As a result, termination of Dresdner RCM could
significantly harm the Fund's ability to not only manage the portfolio but to
obtain maximum performance during a conversion period.
o Dresdner RCM's European investment capabilities are an essential component of
the Board's recommendation to expand the Fund's objective to Europe, a
significant factor in our decision to recommend converting the Fund to an
open-end investment management company.
In reaching the decision to recommend conversion to a European mandate,
the Board carefully reviewed Dresdner RCM's investment process and personnel. We
noted that Dresdner RCM has an established European investment process and
organization focused on a sector rather than a country basis, which we believe
enables it to take advantage of opportunities in a post-EMU Europe. We further
noted Dresdner RCM's strong global fundamental research base of research
analysts and independent Grassroots (SM) research. This type of investment
process and strong European company and industry research resources will be
necessary in order to anticipate investment opportunities across a rapidly
changing Europe. We therefore believe it would be difficult for the Board to
locate and retain an investment adviser with comparable experience, resources
and demonstrated success in the European market to manage the Fund.
YOUR BOARD STRONGLY URGES YOU TO VOTE AGAINST THIS PROPOSAL.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST"
PROPOSAL NO. 5
50
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of the Fund's
Common Stock as of [December 11, 1998] for each stockholder known to be the
beneficial owner of more than five percent of the Common Stock on that date. The
Fund does not know of any other stockholder with more than 5% of its outstanding
shares.
NAME AND ADDRESS OF
BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF TOTAL
- ---------------- ---------------- ----------------
Bankgesellschaft Berlin AG 2,932,600 (1) 20.90%
Alexanderplatz 2
D-10178 Berlin
Germany
Deep Discount Advisors, Inc. 2,031,150 (2) 14.50%
One West Pack Square
Suite 777
Asheville, NC 28801
Lazard Freres & Co. LLC 1,419,200 (3) 10.13%
30 Rockefeller Plaza
New York, NY 10020
FMR Corp. 1,400,800 (4) 10.00%
82 Devonshire Street
Boston, MA 02109
- ------------------------------------------------------------------------------
(1) As reported in the Schedule 13D/A dated December 4, 1998 filed by
Bankgesellschaft Berlin AG (the "Bank"), the Bank is the beneficial owner of
2,932,600 shares of Common Stock, over each of which it has sole power to vote
and dispose.
(2) As reported in the Schedule 13D/A dated November 6, 1998, filed by Deep
Discount Advisors, Inc. ("DDA") and Ron Olin Investment Management Company
("Olin"), DDA is the beneficial owner of 1,372,150 shares of Common Stock, over
each of which it has sole power to vote and dispose, and Olin is the beneficial
owner of 659,000 shares of Common Stock, over each of which it has sole power to
vote and dispose. As reported in the Schedule 13D dated June 24, 1998, filed by
DDA and Olin, Ronald G. Olin may be deemed to be a control person of DDA and
Olin.
51
<PAGE>
(3) As reported in the Schedule 13G/A dated July 10, 1998, filed by Lazard
Freres & Co. LLC ("Lazard"), Lazard is the beneficial owner of 1,419,200 shares
of Common Stock, over each of which it has sole power to vote and dispose.
(4) As reported in the Schedule 13G/A dated February 10, 1998, filed by FMR
Corp., Fidelity Management & Research Company ("Fidelity"), a wholly owned
subsidiary of FMR Corp., is the beneficial owner of 1,400,800 shares of Common
Stock, none of which it has the power to vote. Fidelity is the beneficial owner
as a result of its serving as investment adviser to various registered
investment funds (the "Funds"). Each of Edward C. Johnson III, Chairman of FMR
Corp., Abigail P. Johnson, a director of FMR Corp., FMR Corp., through its
control of Fidelity, and the Funds has sole power to dispose of such Common
Shares owned by the Funds. Neither FMR Corp., nor Edward C. Johnson III, nor
Abigail P. Johnson has the sole power to vote or direct the voting of the shares
owned directly by the Funds, which power resides with the Funds' Board of
Trustees.
As of October 31, 1998, Cede & Co., a nominee of Depository Trust
Company ("DTC"), held of record 13,772,863, or approximately 98%, of the Fund's
outstanding shares of Common Stock. DTC is a securities depository for brokers,
dealers and other institutional investors. Securities are so deposited for the
purpose of permitting book entry transfers of securities among such investors.
The Fund does not know the names of the beneficial owners of its shares that
have been deposited at DTC.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 30(h) of the 1940 Act requires the Fund's officers, Directors,
investment adviser, affiliated persons of its investment adviser, and the
beneficial owners of more than 10% of the Fund's capital stock to file initial
reports of ownership and reports of changes of ownership with the Securities and
Exchange Commission and the New York Stock Exchange, and to provide copies of
such reports to the Fund.
Based solely on a review of the copies of such reports received by the
Fund and written representations by reporting persons that no additional reports
are due, the Fund is of the opinion that all Section 30(h) requirements for 1997
were satisfied, except as follows:
Eamonn F. Dolan and Joachim Madler, as members of the Board of Managers of
Dresdner RCM, may be required to file reports under Section 30(h), but did not
file on a timely basis an initial report of ownership on Form 3. This
information was subsequently reported on Form 5. Jacob Saliba, a member of the
Board of Directors of the Fund inadvertently failed to file on a timely basis a
change in ownership on Form 4. This information was subsequently reported on
Form 5. The Fund did not receive a Form 5 for 1997 from Bankgesellschaft Berlin
AG, an owner of more than 10% of the Fund's outstanding shares of capital stock,
and the Fund did not receive a written representation from such stockholder that
a Form 5 was not required.
52
<PAGE>
OTHER MATTERS
No business other than as set forth herein is expected to come before
the Meeting, but should any other matter requiring a vote of stockholders
properly come before the Meeting, including any questions as to an adjournment
of the Meeting, the shares represented by proxies will be voted with respect
thereto in accordance with the best judgment of the person or persons voting the
proxies.
THE FUND WILL FURNISH, WITHOUT CHARGE, TO ANY STOCKHOLDER UPON REQUEST
A COPY OF THE FUND'S SEMI-ANNUAL REPORT, DATED JUNE 30, 1998, AND ITS ANNUAL
REPORT CONTAINING AUDITED FINANCIAL STATEMENTS OF THE FUND FOR ITS FISCAL YEAR
ENDED DECEMBER 31, 1997. STOCKHOLDERS SHOULD DIRECT REQUESTS FOR THE ANNUAL AND
SEMI-ANNUAL REPORTS TO ROBERT J. GOLDSTEIN, SECRETARY OF THE FUND, BY WRITING TO
THE FUND IN CARE OF DRESDNER RCM GLOBAL INVESTORS LLC, FOUR EMBARCADERO CENTER,
SAN FRANCISCO, CALIFORNIA 94111, OR BY CALLING THE FUND'S TOLL-FREE TELEPHONE
NUMBER 1-800-356-6122.
ANNUAL MEETINGS AND STOCKHOLDER PROPOSALS
If the Fund becomes an open-end investment company in 1999 in
accordance with Proposal Nos. 1 and 2, it would not expect to hold a stockholder
meeting later in 1999. If stockholders do not approve Proposal Nos. 1 and 2, the
Fund will remain a closed-end investment company and will continue to have
annual stockholders meetings.
According to Rule 14a-8(e) of the Securities Exchange Act of 1934,
stockholder proposals intended to be included in the Fund's proxy statement for
presentation at the Fund's Annual Meeting in 1999 (if the Fund remains
closed-end) must be received at the Fund's principal executive offices no less
than 120 calendar days before the date of the Fund's proxy statement released to
stockholders in connection with the previous year's Annual Meeting. However, if
the date of the 1999 Annual Meeting is changed by more than 30 days from the
date of the previous year's meeting, then the deadline is a reasonable amount of
time before the Fund begins to print and mail its proxy materials. The
submission by a stockholder of a proposal for inclusion in the proxy statement
does not guarantee that it will be included.
According to the Fund's amended By-Laws, stockholder proposals which
will not be included in the Fund's proxy statement can be brought before a
Annual Meeting only if notice of any such matter to be presented by a
stockholder at the stockholders' meeting is delivered to the Secretary of the
Fund at the principal executive offices of the Fund not less than 60 nor more
than 90 days prior to the date of the Annual Meeting for the preceding year;
provided, however, if the Annual Meeting is not scheduled to be held within 30
days of the date of the previous year's meeting such notice shall be given by
the close of business on the later of (i) the date 60 days before this year's
Annual Meeting or (ii) the 10th day following the date this year's Annual
Meeting date is first publicly announced.
If the Fund remains closed-end it expects to hold its 1999 Annual
Meeting of stockholders on September 28, 1999. Consequently, the deadline for
submission of stockholder proposals meant to be included in the proxy statement
53
<PAGE>
is May 14, 1999 and the deadline for submission of stockholder proposals which
will be presented at the Annual Meeting, but not be included in the proxy
statement is June 30, 1999.
PROXY SOLICITATION MATTERS
The Fund may solicit proxies delivered by beneficial owners of the
Fund's Common Stock in the form of a telephonic proxy or "proxygram." In such
event, beneficial stockholders will receive mailgrams from the Fund requesting
each stockholder who wishes to vote by proxygram call the toll-free telephone
number provided, furnish the operator with specified information regarding the
stockholder and the shares to be voted, and instruct the operator how the
stockholder wishes to vote on the proposals described in this Proxy Statement.
The operator will then electronically transmit the stockholder's voting
instructions to the designated broker, depository institution, or other holder
with actual voting authority, which then will vote shares held of record by
returning a signed proxy card. The operators who receive the foregoing voting
instructions will be independent of the Fund.
The cost of preparing, assembling, and mailing materials in connection
with this solicitation will be borne by the Fund. In addition to the use of
mails, proxies may be solicited personally by regular employees of the Fund,
Dresdner RCM, or Dresdner Bank or by telephone or telegraph. Brokerage houses,
banks, and other fiduciaries may be requested to forward proxy solicitation
material to their principals to obtain authorization for the execution of
proxies, and they will be reimbursed by the Fund for out-of-pocket expenses
incurred in this connection. The Fund also has made arrangements with Georgeson
& Company Inc. and, in Canada, CIBC Mellon Trust to assist in the solicitation
of proxies, if called upon by the Fund, at an aggregate estimated fee of
approximately $65,000 plus reimbursement of normal expenses.
By Order of the Board of Directors
Robert J. Goldstein
Secretary
Dated: [_______________, 1998]
San Francisco, California
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING
AND WHO WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT TO THE FUND.
54
<PAGE>
THE EMERGING GERMANY FUND INC.
FOUR EMBARCADERO CENTER
SAN FRANCISCO, CA 94111
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD JANUARY 26, 1999.
The undersigned hereby appoints Robert J. Goldstein and Barbel Lenz as
proxies, each with full power of substitution, and hereby authorizes each of
them to represent and to vote, as designated below, all the shares of Common
Stock of The Emerging Germany Fund Inc. (the "Fund") held of record by the
undersigned on December 4, 1998 at an Annual Meeting of Stockholders to be held
on January 26, 1999 or any adjournment thereof. The undersigned hereby further
authorizes such proxies to vote in their discretion upon such other business as
may properly come before such Annual Meeting or any adjournment thereof. Receipt
of Notice of Annual Meeting and Proxy Statement is hereby acknowledged.
EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSAL NOS.
1(a), 1(b) 2(a), 2(b), 2(c), 2(d), 3, 4, AND 6 AND "AGAINST" PROPOSAL NO. 5.
PLEASE VOTE, DATE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
IMPORTANT: Joint owners EACH must sign. When signing as attorney,
trustee, executor, administrator, or guardian, please give your FULL title. If a
corporation, please provide the full name of the corporation and the signature
of the authorized officer signing on its behalf. If a partnership, please sign
in partnership name by an authorized person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------ -------------------------------
- ------------------------------ -------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 1(a).
(1(a)) EXPANSION OF THE FUND'S INVESTMENT OBJECTIVE FROM A
PREDOMINANTLY GERMAN INVESTMENT PORTFOLIO TO A BROADER EUROPEAN
INVESTMENT PORTFOLIO
[ ] FOR [ ] AGAINST [ ] ABSTAIN
55
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 1(b).
(1(b)) AMENDMENT OF THE FUND'S ARTICLES OF INCORPORATION TO CHANGE THE
FUND'S NAME TO DRESDNER RCM EUROPE FUND INC.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2(a).
(2(a)) CONVERSION OF THE FUND FROM A CLOSED-END INVESTMENT COMPANY TO
AN OPEN-END INVESTMENT COMPANY UNDER THE 1940 ACT AND THE
AMENDMENT AND RESTATEMENT OF THE FUND'S ARTICLES OF
INCORPORATION
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2(b).
(2(b)) MODIFICATION AND ELIMINATION OF CERTAIN OF THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTIONS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2(c).
(2(c)) APPROVAL OR DISAPPROVAL OF THE INVESTMENT MANAGEMENT AGREEMENT
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2(d).
(2(d)) APPROVAL OR DISAPPROVAL OF THE RULE 12B-1 DISTRIBUTION PLAN
56
<PAGE>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 3.
(3) ELECTION OF DIRECTORS
[ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT
Robert J. Birnbaum Carroll Brown Theodore J. Coburn
George N. Fugelsang
If you do not wish your shares voted "FOR" a particular nominee, mark
the "FOR ALL EXCEPT" Box and strike a line through the nominee(s) name. Your
shares will be voted for the remaining nominee(s).
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 4.
(4) RATIFICATION OF THE SELECTION BY THE BOARD OF DIRECTORS OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS OF THE
FUND FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" PROPOSAL NO. 5.
(5) STOCKHOLDER PROPOSAL
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 6.
(6) IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
RECORD DATE SHARES:
(Signature) X: __________________________ Date: __________________
57
<PAGE>
(Signature) X: __________________________ Date: __________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee, or
guardian, please give full title as such.
58
<PAGE>
TABLE OF EXHIBITS
EXHIBIT A................Amended and Restated ArticlEs of Incorporation
EXHIBIT B.................The Investment Management Agreement
EXHIBIT C.................Rule 12b-1 Distribution PlAn
59
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
ARTICLE I
NAME
(1) The name of the Corporation is Dresdner RCM Investment Funds Inc.
(2) The Board of the Directors reserves the right to change its
corporate name or any series or class name thereunder by a majority vote without
action by stockholders in accordance with ss.2-605 of the General Corporation
Law of the State of Maryland.
ARTICLE II
PURPOSES AND POWERS
The purposes for which the Corporation is formed are to act as an
open-end investment company under the Investment Company Act of 1940, as
amended, and the rules and regulations promulgated thereunder (the "1940 Act"),
and to exercise and enjoy all of the general powers, rights, and privileges
granted to, or conferred upon, corporations by the Maryland General Corporation
Law (the "Maryland Law") now or hereafter in force.
ARTICLE III
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office of the Corporation in
the State of Maryland is c/o The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202. The name and address of the resident agent of
the Corporation in the State of Maryland are The Corporation Trust Incorporated,
32 South Street, Baltimore, Maryland 21202. Such resident agent is a Maryland
corporation.
ARTICLE IV
CAPITAL STOCK
(1)(a) As increased from 100,000,000 with a par value of $.001 per
share, the total number of shares of all classes of capital stock which the
Corporation shall have the authority to issue is 1,000,000,000 shares of capital
stock, of the par value of $.001 per share. There shall initially be one series
of shares, designated as the "Dresdner RCM Europe Fund" consisting initially of
200,000,000 shares (such series and any further series of shares from
time-to-time created by the Board of Directors being referred to individually
herein as a "series") and 800,000,000 unclassified shares of capital stock. The
Board of Directors of the Corporation is hereby empowered to increase or
decrease, from time-to-time, the total number of shares of capital stock or the
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number of shares of capital stock of any series that the Corporation shall have
authority to issue without any action by the stockholders but to not less than
the number of shares of capital stock or of such series, as the case may be,
then outstanding.
(b) The aggregate par value of all shares having a par value is
$100,000 before the increase and $1,000,000 as increased.
(2) The Corporation may issue fractional shares, which shall carry
proportionally all the rights of a whole share, excepting any right to receive a
certificate evidencing such fractional shares, but including the right to vote
and the right to receive dividends.
(3) All persons who shall acquire capital stock in the Corporation
shall acquire the same subject to the provisions of these Amended and Restated
Articles of Incorporation and the By-Laws of the Corporation (the "By-Laws").
(4) As used in these Amended and Restated Articles of Incorporation, a
"series" of shares represent interests in the same assets, liabilities, income,
earnings, and profits of the Corporation. The Board of Directors shall have
authority to classify and reclassify any authorized but unissued shares of
capital stock from time-to-time by setting or changing in any one or more
respects the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of the capital stock. Subject to the provisions of
ARTICLE IV and applicable law, the power of the Board of Directors to classify
or reclassify any of the shares of capital stock shall include, without
limitation, authority to classify or reclassify any such stock into one or more
series of capital stock, by determining, fixing, or altering one or more of the
following:
(a) The distinctive designation of such series and the number of shares
to constitute such series; provided that, unless otherwise prohibited by the
terms of such series, the number of shares of any series may be decreased by the
Board of Directors in connection with any classification or reclassification of
unissued shares and the number of shares of such series may be increased by the
Board of Directors in connection with any such classification or
reclassification, and any such shares of any series which have been redeemed,
purchased, or otherwise acquired by the Corporation shall remain part of the
authorized capital stock and be subject to classification and reclassification
as provided herein;
(b) Whether or not and, if so, the rates, amounts, and times at which,
and the conditions under which, dividends shall be payable on shares of such
series;
(c) Whether or not shares of such series shall have voting rights in
addition to any general voting rights provided by law and these Amended and
Restated Articles of Incorporation of the Corporation and, if so, the terms of
such additional voting rights; and
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(d) The rights of holders of shares of such series (including any
classes thereof) upon the liquidation, dissolution, or winding up of the affairs
of, or upon distribution of the assets of, the Corporation.
(5) Shares of capital stock of the Corporation shall have the following
preferences, and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption.
(a) ASSETS BELONGING TO A SERIES. All consideration received by the
Corporation for the issue or sale of stock of any series of capital stock,
together with all assets in which such consideration is invested and reinvested,
income, earnings, profits and proceeds thereof, including any proceeds derived
from the sale, exchange, or liquidation thereof, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to the series of shares of capital stock with respect
to which assets, payments, or funds were received by the Corporation for all
purposes, subject only to the rights of creditors, and shall be handled upon the
books of account of the Corporation. Such consideration, assets, income,
earnings, profits, and proceeds thereof, and any assets derived from the sale,
exchange, or liquidation thereof, and any assets derived from any reinvestment
of such proceeds in whatever form, are herein referred to as "assets belonging
to" such series. Any assets, income, earnings, profits, and proceeds thereof,
and any funds or payments which are not readily attributable to any particular
series shall be allocable among any one or more of the series in such a manner
and on such a basis as the Board of Directors, in its sole discretion, shall
deem fair and equitable.
(b) LIABILITIES BELONGING TO A SERIES. The assets belonging to any
series of capital stock shall be charged with the liabilities in respect of such
series and shall also be charged with such series' share of the general
liabilities of the Corporation determined as hereinafter provided. The
determination of the Board of Directors shall be conclusive as to the amount of
such liabilities, including the amount of accrued expenses and reserves; as to
any allocation of the same to a given series; and as to whether the same are
allocable to one or more series. The liabilities so allocated to a series are
herein referred to as "liabilities belonging to" such series. Any liabilities
which are not readily attributable to any particular series shall be allocable
among any one or more of the series in such manner and on such basis as the
Board of Directors, in its sole discretion, shall deem fair and equitable.
(c) DIVIDENDS AND DISTRIBUTIONS. Shares of each series of capital stock
shall be entitled to such dividends and distributions, in stock or in cash or
both, as may be declared from time-to-time by the Board of Directors, acting in
its sole discretion, with respect to such series, provided, however, that
dividends and distributions on shares of a series of capital stock shall be paid
only out of the lawfully available "assets belonging to" such series as such
phrase is defined in ARTICLE IV (5).
(d) LIQUIDATING DIVIDENDS AND DISTRIBUTIONS. In the event of the
liquidation or dissolution of the Corporation, stockholders of each series of
capital stock shall be entitled to receive, as a series, out of the assets of
the Corporation available for distribution to stockholders, but other than
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general assets not belonging to any particular series of capital stock, the
assets belonging to such series; and the assets so distributable to the
stockholders of any series of capital stock shall be distributed among such
stockholders in proportion to the number of shares of such series held by them
and recorded on the books of the Corporation. In the event that there are any
general assets not belonging to any particular series of capital stock and
available for distribution, such distribution shall be made to the holders of
stock of all series of capital stock in proportion to the asset value of the
respective series of capital stock determined as hereinafter provided.
(e) CLASSES OF SHARES. There shall initially be two classes of the
"Dresdner RCM Europe Fund" series, Class N and Class I. Of the 200,000,00 shares
designated as "Dresdner RCM Europe Fund" shares, 100,000,000 shall be designated
Class N shares thereof and 100,000,000 shall be designated Class I shares
thereof. All shares of the Corporation that are outstanding when the Corporation
converts from a closed-end to an open-end investment company will be
automatically designated Class N shares of "Dresdner RCM Europe Fund."
A class of shares may be invested with one or more other classes in a
common investment portfolio comprising a series. Notwithstanding the other
provisions of ARTICLE IV (5), if two or more classes are invested in a common
investment portfolio as a series, the shares of each such class of capital stock
of the Corporation shall be subject to the following preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption, and if there are other
classes of capital stock invested together in a different series, shall also be
subject to the provisions of this ARTICLE IV (5) at the series level as if the
classes comprising the series were one class.
(i) The income and expenses of the series shall be allocated
among the classes comprising the series in accordance with the relative net
asset value of each such class or as otherwise determined by the Board of
Directors in accordance with the law and the Corporation's current registration
statement as filed with the Securities and Exchange Commission (the
"Registration Statement"). The allocation of investment income, capital gains,
expenses, and liabilities of the Corporation or any series, among the series and
any classes thereof shall be determined by the Board of Directors in a manner
that is consistent with applicable law and the Registration Statement.
(ii) As more fully set forth in this ARTICLE IV (5), the
liabilities and expenses of the classes comprising the series shall be
determined separately from those of each other and, accordingly, the net asset
value, the dividends and distributions payable to holders, and the amounts
distributable in the event of the liquidation of the Corporation or a series to
holders of shares of the Corporation's capital stock may vary from class to
class within a series. Except for these differences and certain other
differences set forth in this ARTICLE IV (5) or elsewhere in the Amended and
Restated Articles of Incorporation, the classes comprising a series shall have
the same preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption.
(iii) The dividends and distributions of investment income and
capital gains with respect to the classes comprising a series shall be in such
amounts as may be declared from time-to-time by the Board of Directors, and such
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dividends and distributions may vary among the classes comprising the series to
reflect differing allocations of the expenses of the Corporation among the
classes and any resultant differences among the net asset values per share of
the classes, to such extent and for such purposes as the Board of Directors may
deem appropriate.
(iv) At such times (which may vary within a class) as may be
determined by the Board of Directors (or with the authorization of the Board of
Directors, by the officers of the Corporation) in accordance with the 1940 Act
and applicable rules and regulations of the National Association of Securities
Dealers, Inc. ("NASD") and the Registration Statement, shares of a particular
class of capital stock of the Corporation may be automatically converted into
shares of another class of capital stock of the Corporation based on the
relative net asset values of such classes at the time of conversion, subject,
however, to any conditions of conversion that may be imposed by the Board of
Directors (or with the authorization of the Board of Directors, by the officers
of the Corporation) and the Registration Statement.
(f) VOTING. Each stockholder of each series of capital stock then
standing in his or her name on the books of the Corporation, and on any matter
submitted to a vote of stockholders, all shares of capital stock then issued and
outstanding and entitled to vote shall be voted in the aggregate and not by
series except that: (i) when expressly required by law, shares of capital stock
shall be voted by individual series and (ii) only shares of capital stock of the
respective series affected by a matter shall be entitled to vote on such matter.
At all meetings of stockholders, the holders of one-third of the shares of
capital stock of the Corporation entitled to vote at the meeting, present in
person or by proxy, shall constitute a quorum for the transaction of any
business, except as otherwise provided by statute or by these Amended and
Restated Articles of Incorporation. In the absence of a quorum no business may
be transacted, except that the holders of a majority of the shares of capital
stock present in person or by proxy and entitled to vote may adjourn the meeting
from time-to-time, without notice other than announcement at the meeting except
as otherwise required by these Amended and Restated Articles of Incorporation or
the By-Laws, until the holders of the requisite amount of shares of capital
stock shall be present. At any such adjourned meeting at which a quorum may be
present any business may be transacted which might have been transacted at the
meeting originally called. The absence from any meeting, in person or by proxy,
of holders of the quorum which may be required by the laws of the State of
Maryland, the 1940 Act, or other applicable statute, these Amended and Restated
Articles of Incorporation, or the By-Laws, for action upon any given matter
shall not prevent action at such meeting upon any other matter or matters which
may properly come before the meeting, if there shall be present at the meeting,
in person or by proxy, holders of the number of shares of capital stock of the
Corporation required for action in respect of such other matter or matters.
(g) REDEMPTION. To the extent the Corporation has funds or other
property legally available therefor, each holder of shares of capital stock of
the Corporation shall be entitled to require the Corporation to redeem all or
any part of the shares standing in the name of such holder on the books of the
Corporation, at the redemption price of such shares as in effect from
time-to-time as may be determined by the Board of Directors of the Corporation
in accordance with the provisions hereof, subject to the right of the Board of
Directors of the Corporation to suspend the right of redemption of shares of
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capital stock or postpone the date of payment of such redemption price in
accordance with provisions of applicable law. The Corporation may at any time
purchase or redeem shares of capital stock of the Corporation in the open market
or at private sale, or otherwise, out of funds legally available therefor, at a
price not exceeding the net asset value thereof determined in accordance with
the 1940 Act and the Corporation's current Registration Statement. Without
limiting the generality of the foregoing, the Corporation shall, to the extent
permitted by applicable law, have the right at any time to redeem the shares
owned by any holder of capital stock of the Corporation if the value of such
shares in the account of such holder is less than the minimum initial investment
amount applicable to that account as set forth in the Corporation's current
Registration Statement, and subject to such further terms and conditions as the
Board of Directors of the Corporation may from time-to-time adopt. The price of
any shares of capital stock redeemed by the Corporation shall, except as
otherwise provided in ARTICLE IV (5)(e), be the net asset value thereof as
determined by, or pursuant to methods approved by, the Board of Directors of the
Corporation from time-to-time in accordance with the provisions of applicable
law, less such redemption fee or other charge, if any, as may be specified in
the Corporation's current Registration Statement for that series. Payment of the
redemption price shall be made in cash by the Corporation unless, in the opinion
of the Board of Directors, which shall be conclusive, conditions exist which
make payment wholly in cash unwise or undesirable; in such event the Corporation
may make payment wholly or partly by securities or other property included in
the assets belonging or allocable to the series of the shares redemption of
which is being sought, the value of which shall be determined as provided
herein.
(h) OTHER SALES CHARGES. The proceeds of the redemption of the shares
of any class of capital stock of the Corporation may be reduced by the amount of
any contingent deferred sales charge or other charge (which charges may vary
within and among the classes) payable on such redemption pursuant to the terms
of issuance of such shares, all in accordance with the 1940 Act, and applicable
rules and regulations of the NASD.
ARTICLE V
BOARD OF DIRECTORS
The number of Directors of the Corporation shall be fixed from
time-to-time by the By-Laws of the Corporation, but shall not be less than three
(3). The Board of Directors can vote to increase or decrease the number of
Directors within the limit set by the By-Laws. The number constituting the Board
of Directors is eight (8), and the names of the persons who are to serve as
Directors are:
Robert J. Birnbaum
Carroll Brown
Theodore J. Coburn
James E. Dowd
Alfred W. Fiore
Siegfried A. Kessler
Gottfried W. Perbix
Jacob Saliba
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ARTICLE VI
MANAGEMENT OF THE AFFAIRS OF THE CORPORATION
(1) POWERS OF THE CORPORATION. All corporate powers and authority of
the Corporation (except as at the time otherwise provided by statute or
applicable rules and regulations of any governmental or quasi-governmental
agency or instrumentality, by these Amended and Restated Articles of
Incorporation or by the By-Laws) shall be vested in and exercised by the Board
of Directors.
(2) ISSUANCE OF STOCK. The Board of Directors may from time-to-time
authorize the issuance of and may issue and sell or cause to be issued and sold
shares of the Corporation's capital stock of any series or class, whether now or
hereafter authorized, including any shares redeemed or repurchased by the
Corporation, and securities convertible into shares of the Corporation's capital
stock, whether now or hereafter authorized, for such consideration as may be
deemed advisable by the Board of Directors and without any action by the
stockholders.
(3) COMPENSATION OF DIRECTORS. The Board of Directors shall have power
from time-to-time to authorize payment of compensation to the Directors for
services to the Corporation, including fees for attendance at meetings of the
Board of Directors and of committees.
(4) INSPECTION OF CORPORATION'S BOOKS. The Board of Directors shall
have power from time-to-time to determine whether and to what extent, and at
what times and places and under what conditions and regulations, the accounts
and books of the Corporation (other than the stock ledger) or any of them shall
be open to the inspection of stockholders; and no stockholder shall have the
right of inspecting any account, book, or document of the Corporation except as
at the time conferred by statute, unless authorized by a resolution of the
stockholders or the Board of Directors.
(5) CONTRACTS OF THE CORPORATION AFFECTING THE FINANCIAL INTEREST OF
DIRECTOR(S). A contract or other transaction between the Corporation and any of
its Directors or between the Corporation and any other corporation, firm, or
other entity in which any of its Directors is a Director or has a material
financial interest is not void or voidable solely because of any one or more of
the following: the common Directorship or interest; the presence of the Director
at the meeting of the Board of Directors which authorizes, approves, or ratifies
the contract or transaction; or the counting of the vote of a Director for the
authorization or ratification of the contract or transaction. This ARTICLE VI
(5) applies if:
(a) the fact of common Directorship of interest is disclosed
or known to: (i) the Board of Directors and the Board authorizes,
approves, or ratifies the contract or transaction by the affirmative
vote of a majority of disinterested directors, even if the
disinterested directors constitute less than a quorum; or (ii) the
stockholders entitled to vote, and the contract or transaction is
authorized, approved, or ratified by a majority of the votes cast by
the stockholders entitled to vote other than the votes of shares owned
of record or beneficially by the interested director or corporation,
firm, or other entity; or
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(b) the contract or transaction is fair and reasonable to the
Corporation.
Common or interested Directors or the stock owned by them or by an
interested corporation, firm, or other entity may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or at a meeting of
the stockholders, as the case may be, at which the contract or transaction is
authorized, approved, or ratified. If a contract or transaction is not
authorized, approved, or ratified in one of the ways provided for in clause (a)
of the second sentence of this ARTICLE VI (5), the person asserting the validity
of the contract or transaction shall bear the burden of proving that the
contract or transaction was fair and reasonable to the Corporation at the time
it was authorized, approved, or ratified. This ARTICLE VI (5) does not apply to
the fixing by the Board of Directors of reasonable compensation for a Director,
whether as a Director or in any other capacity.
(6) RATIFICATION BY STOCKHOLDERS. Except as provided in Article VI (5),
any contract, transaction, or act of the Corporation or of the Board of
Directors which shall be ratified by a majority of a quorum of the stockholders
having voting power at any annual meeting, or at any special meeting called for
such purpose, shall so far as permitted by law be as valid and as binding as
though ratified by every stockholder of the Corporation.
(7) REMOVAL OF OFFICERS. Unless the By-Laws of the Corporation
otherwise provide, any officer or employee of the Corporation (other than a
Director) may be removed at any time with or without cause by the Board of
Directors or by any committee or superior officer upon whom such power of
removal may be conferred by the By-Laws or by authority of the Board of
Directors.
(8) INDEMNIFICATION OF OFFICERS AND DIRECTORS. To the maximum extent
permitted by Maryland Law, as from time-to-time amended, the Corporation: (a)
shall indemnify and advance expenses to each of its currently acting and its
former Directors against any and all liabilities and expenses incurred in
connection with their services in such capacities; (b) shall indemnify and
advance expenses to its currently acting and its former officers to the full
extent that indemnification shall be provided to Directors; and (c) may
indemnify and advance expenses to its employees and agents, to the extent
determined by the Board of Directors; in each case, subject to any limitations
imposed by the 1940 Act. The foregoing rights of indemnification shall not be
exclusive of any other rights to indemnification to which those seeking
indemnification may be entitled. Subject to the same limitations imposed by the
1940 Act, the Corporation may, by By-Laws, resolution, or agreement, make
further provision for indemnification of Directors, officers, employees, and
agents. Furthermore, to the fullest extent permitted by Maryland law, as it may
be amended or interpreted from time-to-time, subject to any limitations imposed
by the 1940 Act, no Director or officer in the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages. No amendment
of these Restated and Amended Articles of Incorporation or repeal of its
provisions shall limit or eliminate any of the benefits provided to any person
who at any time is or was a Director or officer of the Corporation under this
Section in respect of any act or omission that occurred prior to such amendment
or repeal.
ARTICLE VII
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DURATION
The duration of the Corporation shall be perpetual.
ARTICLE VIII
MAJORITY VOTE
Notwithstanding any provision of the laws of the State of Maryland
requiring a greater proportion than a majority of the votes of all classes or of
any class of stock entitled to be cast, to take or authorize any action, the
Corporation may, subject to other applicable provisions of law, these Amended
and Restated Articles of Incorporation and the By-Laws, take or authorize such
action upon the concurrence of a majority of the aggregate number of the votes
entitled to be cast thereon; provided, that this provision shall not affect any
requirement of the 1940 Act or the Rules and Regulations of the Securities and
Exchange Commission thereunder, for any vote to be taken by the concurrence of a
greater proportion of the votes entitled to be cast or for any matter to be
authorized by the separate vote of a particular class or series of shares.
ARTICLE IX
PRE-EMPTIVE RIGHTS
No holder of the capital stock of the Corporation or of any other class
of stock or securities of the Corporation, whether now or hereafter authorized,
shall be entitled as such, as a matter of pre-emptive right, to subscribe for or
purchase any part of any new or additional issue of stock of any class, or of
rights or options to purchase any stock, or of securities convertible into, or
carrying rights or options to purchase, stock of any class, whether now of
hereafter authorized or whether issued for money, for a consideration other than
money, or by way of a dividend or otherwise, and all such rights are hereby
waived by each holder of capital stock and of any other class of stock or
securities of the Corporation, whether now or hereafter authorized.
ARTICLE X
RESERVATION OF RIGHT TO AMEND
The Corporation reserves the right from time-to-time to make any
amendment of its charter, now or hereafter authorized by law, including any
amendment which alters the terms or contract rights, as expressly set forth in
its charter, of any outstanding stock by classification, reclassification, or
otherwise, and all rights herein conferred upon stockholders are granted subject
to such reservation.
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EXHIBIT B
INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY
AND SERVICE AGREEMENT
THIS AGREEMENT is entered into this ____ day of _______, 1999 by and
between Dresdner RCM Investment Funds Inc. (the "Company"), on behalf of
Dresdner RCM Europe Fund (the "Fund"), a series of the Company, and Dresdner RCM
Global Investors LLC, (the "Investment Manager").
1. APPOINTMENT AND ACCEPTANCE OF APPOINTMENT OF THE INVESTMENT
MANAGER
(a) Subject to express provisions and limitations set forth in
the Company's Amended and Restated Articles of Incorporation, By-Laws, Form N-1A
Registration Statement under the Investment Company Act of 1940, as amended (the
"1940 Act"), and under the Securities Act of 1933, as amended (the "1933 Act"),
and the Fund's prospectus as in use from time-to-time, as well as to the factors
affecting the Company's status as a regulated investment company under the
Internal Revenue Code of 1986, as amended, the Company hereby grants to the
Investment Manager and the Investment Manager hereby accepts full discretionary
authority to manage the investment and reinvestment of the cash, securities, and
other assets of the Fund (the "Portfolio"), any proceeds thereof, and any
additions thereto, in the Investment Manager's discretion. In the performance of
its duties hereunder, the Investment Manager shall further be bound by any and
all determinations by the Board of Directors of the Company relating to the
investment objectives, policies, or restrictions of the Fund, which
determinations shall be communicated in writing to the Investment Manager. For
all purposes herein, the Investment Manager shall be deemed an independent
contractor of the Company.
2. POWERS OF THE INVESTMENT MANAGER
(a) Subject to the limitations provided in Section 1 hereof,
the Investment Manager is empowered hereby, through any of its partners,
principals, or appropriate employees, for the benefit of the Fund:
(i) to invest and reinvest in shares, stocks, bonds,
notes, and other obligations of every description issued or incurred by
governmental bodies, corporations, mutual funds, trusts, associations, or firms,
in trade acceptances and other commercial paper, and in loans and deposits at
interest on call or on time, whether or not secured by collateral;
(ii) to purchase and sell commodities or commodities
contracts and investments in put, call, straddle, or spread options;
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(iii) to enter into forward, future, or swap contracts
with respect to the purchase and sale of securities, currencies, commodities,
and commodities contracts;
(iv) to lend its portfolio securities to brokers, dealers,
and other financial institutions;
(v) to buy, sell, or exercise options, rights, and
warrants to subscribe for stock or securities;
(vi) to engage in any other types of investment
transactions described in the Fund's Prospectus and Statement of Additional
Information; and
(vii) to take such other action, or to direct the Fund's
custodian to take such other action, as may be necessary or desirable to carry
out the purpose and intent of the foregoing.
(b) The Investment Manager may enter into one or more
contracts (each a "Sub-Advisory Contract" or "Sub-Administration Contract") with
a sub-adviser or sub-administrator in which the Investment Manager delegates to
such sub-adviser or sub-administrator any or all duties specified in this
Agreement, provided that each Sub-Advisory Contract or Sub-Administration
Contract imposes on the sub-adviser or sub-administrator bound thereby all
applicable duties and conditions to which the Investment Manager is subject
under this Agreement, and further provided that each Sub-Advisory Contract or
Sub-Administration Contract meets all requirements of the 1940 Act and any
rules, regulations, or orders of the Securities and Exchange Commission
thereunder.
3. EXECUTION OF PORTFOLIO TRANSACTIONS
(a) The Investment Manager shall provide adequate facilities
and qualified personnel for the placement of, and shall place, orders for the
purchase, or other acquisition, and sale, or other disposition, of portfolio
securities or other portfolio assets for the Fund.
(b) Unless otherwise specified in writing to the Investment
Manager by the Fund, all orders for the purchase and sale of securities for the
Portfolio shall be placed in such markets and through such brokers as in the
Investment Manager's best judgment shall offer the most favorable price and
market for the execution of each transaction; provided, however, that, subject
to the above, the Investment Manager may place orders with brokerage firms that
have sold shares of the Fund or that furnish statistical and other information
to the Investment Manager, taking into account the value and quality of the
brokerage services of such firms, including the availability and quality of such
statistical and other information. Receipt by the Investment Manager of any such
statistical and other information and services shall not be deemed to give rise
to any requirement for abatement of the advisory fee payable to the Investment
Manager pursuant to Section 5 hereof and Appendix A hereto.
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(c) The Fund understands and agrees that the Investment
Manager may effect securities transactions which cause the Fund to pay an amount
of commission in excess of the amount of commission another broker would have
charged, provided, however, that the Investment Manager determines in good faith
that such amount of commission is reasonable in relation to the value of Fund
share sales, statistical, brokerage, and other services provided by such broker,
viewed in terms of either the specific transaction or the Investment Manager's
overall responsibilities to the Fund and other clients for which the Investment
Manager exercises investment discretion. The Fund also understands that the
receipt and use of such services will not reduce the Investment Manager's
customary and normal research activities.
(d) The Fund understands and agrees that:
(i) the Investment Manager performs investment management
services for various clients and that the Investment Manager may take action
with respect to any of its other clients which may differ from action taken or
from the timing or nature of action taken with respect to the Portfolio, so long
as it is the Investment Manager's policy, to the extent practical, to allocate
investment opportunities to the Portfolio over a period of time on a fair and
equitable basis relative to other clients;
(ii) the Investment Manager shall have no obligation to
purchase or sell for the Portfolio any security which the Investment Manager, or
its principals or employees, may purchase or sell for its or their own accounts
or the account of any other client, if in the opinion of the Investment Manager
such transaction or investment appears unsuitable, impractical, or undesirable
for the Portfolio;
(iii) on occasions when the Investment Manager deems the
purchase or sale of a security to be in the best interests of the Fund as well
as other clients of the Investment Manager, the Investment Manager, to the
extent permitted by applicable laws and regulations, may aggregate the
securities to be so sold or purchased when the Investment Manager believes that
to do so will be in the best interests of the Fund. In such event, allocation of
the securities so purchased or sold, as well as the expenses incurred in the
transaction, shall be made by the Investment Manager in the manner the
Investment Manager considers to be the most equitable and consistent with its
fiduciary obligations to the Fund and to such other clients; and
(iv) the Investment Manager does not prohibit any of its
principals or employees from purchasing or selling for their own accounts
securities that may be recommended to or held by the Investment Manager's
clients, subject to the provisions of the Investment Manager's Code of Ethics
and that of the Company.
4. ALLOCATION OF EXPENSES OF THE FUND
(a) The Investment Manager will bear all expenses related to
salaries of its employees and to the Investment Manager's overhead in connection
with its duties under this Agreement. The Investment Manager also will pay all
fees and salaries of the Company's directors and officers who are affiliated
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persons (as such term is defined in the 1940 Act) of the Investment Manager.
(b) Except for the expenses specifically assumed by the
Investment Manager, the Fund will pay all of its expenses, including, without
limitation, fees and expenses of the directors not affiliated with the
Investment Manager attributable to the Fund; fees of the Investment Manager;
fees of the Fund's administrator, custodian, and sub-custodians for all services
to the Fund (including safekeeping of funds and securities and maintaining
required books and accounts); transfer agent, registrar, and dividend
reinvestment and disbursing agent fees; interest charges; taxes; charges and
expenses of the Fund's legal counsel and independent accountants; charges and
expenses of legal counsel provided to the non-interested directors of the
Company; expenses of repurchasing shares of the Fund; expenses of printing and
mailing share certificates, stockholder reports, notices, proxy statements, and
reports to governmental agencies; brokerage and other expenses connected with
the execution recording and settlement of portfolio security transactions;
expenses connected with negotiating, or effecting purchases or sales of
portfolio securities or registering privately issued portfolio securities;
expenses of calculating and publishing the net asset value of the Fund's shares;
expenses of membership in investment company associations; premiums and other
costs associated with the acquisition of a mutual fund directors and officers
errors and omissions liability insurance policy; expenses of fidelity bonding
and other insurance premiums; expenses of stockholders' meetings; SEC, state
blue sky, and foreign registration fees; portfolio pricing services expenses;
litigation expenses; and Rule 12b-1 fees.
(c) The expenses borne by the Fund pursuant to Section 4(b)
shall include the Fund's proportionate share of any such expenses of the
Company, which shall be allocated among the Fund and the other series of the
Company, if any, on such basis as the Company shall deem appropriate.
5. COMPENSATION OF THE INVESTMENT MANAGER
(a) In consideration of the services performed by the
Investment Manager hereunder, the Fund will pay or cause to be paid to the
Investment Manager, as they become due and payable, management fees determined
in accordance with the attached Schedule of Fees (Appendix A). In the event of
termination, any management fees paid in advance pursuant to such fee schedule
will be prorated as of the date of termination and the unearned portion thereof
will be returned to the Fund.
(b) The net asset value of the Fund's portfolio used in fee
calculations shall be determined in the manner set forth in the Amended and
Restated Articles of Incorporation and By-Laws of the Company and the Fund's
Prospectus as of the close of regular trading on the New York Stock Exchange on
each business day the New York Stock Exchange is open.
(c) The Fund hereby authorizes the Investment Manager to
charge the Portfolio, subject to the provisions in Section 6 hereof, for the
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full amount of fees as they become due and payable pursuant to the attached
Schedule of Fees; provided, however, that a copy of a fee statement covering
said payment shall be sent to the Fund's custodian and to the Company.
(d) The Investment Manager may from time-to-time voluntarily
agree to limit the aggregate operating expenses of the fund for one or more
fiscal years of the Company, as set forth in Appendix A hereto or in any other
written agreement with the Company. If in any such fiscal year the aggregate
operating expenses of the Fund (as defined in Appendix A or such other written
agreement) exceed the applicable percentage of the average daily net assets of
the Fund for such fiscal year, the Investment Manager shall reimburse the Fund
for such excess operating expenses. Such operating expense reimbursement, if
any, shall be estimated, reconciled, and paid on a quarterly basis, or such more
frequent basis as the Investment Manager may agree in writing. Any such
reimbursement of the Fund shall be repaid to the Investment Manager by the Fund,
without interest, at such later time or times as it may be repaid without
causing the aggregating operating expenses of the Fund to exceed the applicable
percentage of the average daily net assets of the Fund for the period in which
it is repaid; provided, however, that upon termination of this Agreement, the
Fund shall have no further obligation to repay any such reimbursements.
6. SERVICE TO OTHER CLIENTS
Nothing contained in this Agreement shall be construed to
prohibit the Investment Manager from performing investment advisory, management,
distribution, or other services for other investment companies and other
persons, trusts, or companies, or to prohibit affiliates of the Investment
Manager from engaging in such business or in other related or unrelated
businesses.
7. STANDARD OF CARE
The Investment Manager shall have no liability to the Fund, or
its stockholders, for any error of judgment, mistake of law, loss arising out of
any investment, or other act or omission on the performance of its obligations
to the Fund not involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties hereunder. The federal
securities laws impose liabilities under certain circumstances on persons who
act in good faith, and therefore nothing herein shall in any way constitute a
waiver or limitation of any rights which the undersigned may have under any
federal securities laws.
8. DURATION OF AGREEMENT
This Agreement shall continue in effect until the close of
business on _________, 2001. This Agreement may thereafter be renewed from year
to year by mutual consent, provided that such renewal shall be specifically
approved at least annually by (i) the Board of Directors of the Company, or by
the vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the Fund, and (ii) a majority of those directors who are not
parties to this Agreement or interested persons (as defined in the 1940 Act) of
any such party cast in person at a meeting called for the purpose of voting on
such approval.
9. TERMINATION
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This Agreement may be terminated at any time, without payment
of any penalty, by the Board of Directors of the Company or by the vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities of
the Company on sixty (60) days' written notice to the Investment Manager, or by
the Investment Manager on like notice to the Company. This Agreement shall
automatically terminate in the event of its assignment (as defined in the 1940
Act).
10. CORPORATE NAME
In the event this Agreement is terminated by either party or
upon written notice from the Investment Manager at any time, the Company hereby
agrees that it will eliminate from its corporate name any reference to the name
of "Dresdner RCM." The Company shall have the non-exclusive use of the name
"Dresdner RCM" in whole or in part so long as this Agreement is effective or
until such notice is given.
11. REPORTS, BOOKS, AND RECORDS
The Investment Manager shall render to the Board of Directors
of the Company such periodic and other reports as the Board may from time to
time reasonably request. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Investment Manager hereby agrees that all records which it
maintains for the Company are property of the Company. The Investment Manager
shall surrender promptly to the Company any of such records upon the Company's
request, and shall preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act.
12. REPRESENTATIONS AND WARRANTIES
The Investment Manager represents and warrants to the Company
that the Investment Manager is registered as an investment adviser under the
Investment Advisers Act of 1940. During the term of this Agreement, the
Investment Manager shall notify the Company of any change in the ownership of
the Investment Manager within a reasonable time after such change. The Company
represents and warrants to the Investment Manager that the company is registered
as an open-end management investment company under the 1940 Act. Each party
further represents and warrants to the other that this Agreement has been duly
authorized by such party and constitutes the legal, valid, and binding
obligation of such party in accordance with its terms.
13. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be change, waived,
discharged, or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge, or
termination is sought.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their officers thereunto duly authorized as
of the date first above written.
DRESDNER RCM GLOBAL INVESTORS LLC DRESDNER RCM INVESTMENT
FUNDS INC. ON BEHALF
OF DRESDNER RCM EUROPE FUND
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By: By:
--------------------------- -----------------------------
ATTEST: ATTEST:
By: By:
--------------------------- -----------------------------
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APPENDIX A
INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY,
AND SERVICE AGREEMENT
BETWEEN DRESDNER RCM GLOBAL INVESTORS LLC AND DRESDNER RCM INVESTMENT FUNDS INC.
SCHEDULE OF FEES
FOR DRESDNER RCM EUROPE FUND
Effective Date: __________, 1999
The Fund will pay a monthly fee to the Investment Manager based on the average
daily net assets of the Fund, at the annualized rate of 1.00% of the value of
the Fund's average daily net assets up to and including $100 million and 0.80%
of the Fund's average daily net assets in excess of $100 million.
Value of Securities and Cash of Fund Fee
- ------------------------------------ ----
Up to and including $100 million 1.00% annually
In excess of $100 million 0.80% annually
For three years beginning from the date that the Fund converts to an open-end
investment company, the Investment Manager shall reimburse the Fund to the
extent that the operating expenses of the Fund (as hereinafter defined) exceed
1.60% of the average daily net assets of the Fund. For this purpose, the
"operating expenses" of the Fund shall be deemed to include all ordinary
operating expenses other than interest, taxes and extraordinary expenses.
Dated: , 1999
--------------------
DRESDNER RCM GLOBAL INVESTORS LLC DRESDNER RCM INVESTMENT
FUNDS INC. ON BEHALF OF
DRESDNER RCM EUROPE FUND
By: By:
ATTEST: ATTEST:
--------------------- ---------------------
By: By:
------------------------- -------------------------
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EXHIBIT C
DRESDNER RCM INVESTMENT FUNDS INC.
FORM OF DISTRIBUTION PLAN
INTRODUCTION
The Board of Directors (the "Board") of Dresdner RCM Investment Funds
Inc., a Maryland Corporation (the "Company"), has approved the adoption of the
Distribution Plan (the "Plan") set forth below with respect to the distribution
of Class N shares of capital stock (the "Shares") of its Dresdner RCM Europe
Fund (the "Fund"). This Plan is designed to conform to the requirements of Rule
12b-1 promulgated under the Investment Company Act of 1940, as amended (the
"1940 Act").
The Company on behalf of the Fund has entered into a distribution
agreement pursuant to which the Company will employ Funds Distributor Inc. (the
"Distributor") to distribute Shares of the Fund. Under this Plan, the Company,
on behalf of the Fund, intends to compensate the Distributor for expenses
incurred, and services and facilities provided, by the Distributor in
distributing Shares of the Fund.
THE PLAN
The material aspects of the Plan are as follows:
SECTION 1. The Fund will pay the Distributor for: (a) expenses incurred
in connection with advertising and marketing Shares of the Fund including, but
not limited to, any advertising or marketing via radio, television, newspapers,
magazines, telemarketing, or direct dial mail solicitations; (b) periodic
payments of fees for distribution assistance made to one or more securities
dealers, or other industry professionals, such as investment advisers,
accountants, estate planning firms, and the Distributor itself (collectively the
"Service Organizations") in respect of the average daily value of the Fund's
Shares beneficially owned by persons ("Clients") for whom the Service
Organization is the dealer of record or holder of record or with whom the
Service Organization has a servicing relationship; and (c) expenses incurred in
preparing, printing, and distributing the Fund's prospectus and statement of
additional information (except those used for regulatory purposes or for
distribution to existing stockholders of the Fund).
SECTION 2. While this Plan is in effect the Distributor will be
compensated by the Fund for such distribution expenses that are incurred, and
services and facilities that are provided, in connection with Shares of the Fund
on a monthly basis, at the following annual rate of up to 0.25% of the Fund's
average daily net assets during such month. These monthly payments to the
Distributor will be made in accordance with and subject to the conditions set
forth below. For the purposes of determining the amounts payable under the Plan,
the value of the Fund's net assets shall be computed in the manner specified in
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the Fund's prospectus and statement of additional information as then in effect
for the computation of the value of the Fund's net assets.
The distribution fees payable to the Distributor are designed to
reimburse the Distributor for the expenses it incurs and services it renders in
distributing the Shares of the Fund. If in any year the Distributor's expenses
incurred in connection with the distribution of Shares of the Fund exceed the
distribution fees paid by the Fund, the Distributor will recover such excess
only if this Plan continues to be in effect with respect to the Fund in some
later year when the distribution fees exceed the Distributor's expenses. There
is no limit on the periods during which unreimbursed expenses may be carried
forward, although the Company is not obligated to repay any unreimbursed
expenses for the Fund that may exist at such time, if any, as this Plan
terminates or is not continued with respect to the Fund. No interest, carrying,
or finance charge will be imposed on any amounts carried forward.
Payment made out of or charged against the assets of the Fund must be
in payment for distribution expenses incurred on behalf of the Fund and which
are described herein.
SECTION 3. Payments by the Distributor to a Service Organization
described in this Plan shall be subject to compliance by the Service
Organization with the terms of a written agreement between the Service
Organization and the Distributor. If an investor in a Fund ceases to be a Client
of a Service Organization that has entered into a selling group agreement with
the Distributor, but continues to hold Shares of the Fund, the Distributor will
be entitled to receive similar payments in respect of the distribution
assistance provided with respect to such investor.
SECTION 4. The Distributor shall provide the Board, at least quarterly,
with a written report of all amounts expended pursuant to this Plan. The report
shall state the purposes for which the amounts were expended.
SECTION 5. This Plan shall become effective with respect to the Fund
upon its adoption by the Board and, unless earlier terminated with respect to
the Fund in accordance with its terms, the Plan shall continue automatically
with respect to the Fund for successive annual periods provided such continuance
is approved by a majority of the Board, including a majority of the Directors
who are not "interested" persons (as defined in the 1940 Act) of the Company and
who have no direct or indirect financial interest in the operation of this Plan
or in any agreements entered into in connection with this Plan (the "Independent
Directors"), pursuant to a vote cast in person at a meeting called for the
purpose of voting on the continuance of the Plan.
SECTION 6. This Plan may be amended at any time by the Board provided
that (i) any amendment to increase materially the costs which the Fund may bear
for distribution pursuant to this Plan shall be effective only upon approval by
a vote of a majority of the outstanding voting securities of the Fund, and (ii)
any material amendments of the terms of this Plan shall become effective only
upon approval by a majority of the Board and a majority of the Independent
Directors pursuant to a vote cast in person at a meeting called for the purpose
of voting on the Plan.
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SECTION 7. This Plan is terminable without penalty at any time by (i)
the vote of a majority of the Independent Directors, or (ii) the vote of a
majority of the outstanding voting securities of the Fund.
SECTION 8. The Board has adopted this Plan as of [_________], 1999.
SCHEDULE A DATED [___________], 1999 TO
DRESDNER RCM INVESTMENT FUNDS INC. DISTRIBUTION PLAN
FUND (CLASS) SALES CHARGE
Dresdner RCM Europe Fund (Class N) 0.25%
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