DRESDNER RCM INVESTMENT FUNDS INC, 485BPOS, 2000-05-01

DRESDNER RCM INVESTMENT FUNDS INC
485BPOS, 2000-05-01

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 1 [x]

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]

Amendment No. 3 [x]

(Check appropriate box or boxes.)

DRESDNER RCM INVESTMENT FUNDS INC.
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(Exact Name of Registrant as Specified in Charter)

Four Embarcadero Center San Francisco, California 94111
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(Address of Principal Executive Offices) (Zip Code)

(415) 954-5400
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(Registrant's Telephone Number, including Area Code)
Robert J. Goldstein
DRESDNER RCM INVESTMENT FUNDS INC.
Four Embarcadero Center
San Francisco, California 94111
(800) 726-7240

(Name and Address of Agent for Service)

Copies to:

Robert J. Goldstein Cecelia Calaby
Associate General Counsel Shaw Pittman
Dresdner RCM Global Investors LLC 2300 N Street, NW
Four Embarcadero Center Washington, DC 20037-1128
San Francisco, California 94111

It is proposed that this filing will become effective:

[ x ] Immediately upon filing pursuant to paragraph (b)
[ ] On _________________ pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On _________________ pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On _________________ pursuant to paragraph (a)(2) of rule 485

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DRESDNER RCM INVESTMENT FUNDS INC.
DRESDNER RCM EUROPE FUND
CROSS REFERENCE SHEET
BETWEEN ITEMS OF PART A AND B OF FORM N-1A AND THE
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION

ITEM NUMBER OF PART A OF FORM N-1A INFORMATION REQUIRED IN A PROSPECTUS

<S> <C>
1. Front and Back Cover Pages Front and Back Cover Pages

2. Risk/Return Summary: Investments, Risks, and Risk/Return Summary
Performance

3. Risk/Return Summary: Fee Table Fees and Expenses

4. Investment Objectives, Principal Investment Investment Strategies and Policies; Other
Strategies, and Related Risks Investment Practices; Investment Risks

5. Management's Discussion of Fund *
Performance

6. Management, Organization, and Capital Structure Organization and Management

7. Shareholder Information Buying Shares; Selling Shares; Other Stockholders
Services and Account Policies; Dividends,
Distributions and Taxes

8. Distribution Arrangements Organization and Management; The Distributor

9. Financial Highlights Information Financial Highlights
</TABLE>

*NOT APPLICABLE.

C-1

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DRESDNER RCM INVESTMENT FUNDS INC.
DRESDNER RCM EUROPE FUND
CROSS REFERENCE SHEET
BETWEEN ITEMS OF PART A AND B OF FORM N-1A AND THE
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
(CONTINUED)
<TABLE>
<CAPTION>

ITEM NUMBER OF PART B OF FORM N-1A INFORMATION REQUIRED IN A STATEMENT
OF ADDITIONAL INFORMATION
<S> <C>
10. Cover Page and Table of Contents Cover Page and Table of Contents

11. Fund History General Information

12. Description of the Fund and Its Investments Investment Strategies and Policies; Investment and
and Risks Risk Considerations; Investment Restrictions

13. Management of the Fund The Investment Manager

14. Control Persons and Principal Holders of Directors and Officers; Description of Capital
Securities Shares

15. Investment Advisory and Other Services The Investment Manager; The Distributor; Additional
Information

16. Brokerage Allocation and Other Practices Execution of Portfolio Transactions

17. Capital Stock and Other Securities Description of Capital Shares

18. Purchase, Redemption and Pricing of Purchase and Redemption of Shares
Shares

19. Taxation of the Fund Dividends, Distributions and Tax Status

20. Underwriters The Distributor

21. Calculation of Performance Data Investment Results

22. Financial Statements Financial Statements
</TABLE>

C-2

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DRESDNER RCM INVESTMENT FUNDS INC.

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Dresdner RCM Europe Fund

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May 1, 2000

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

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

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DRESDNER RCM INVESTMENT FUNDS INC.

TABLE OF CONTENTS

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RISK/RETURN SUMMARY AND FUND EXPENSES
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This section summarizes the fund's investments, 3 Risk/Return Summary
risks, past performance, and fees. 5 Fees and Expenses

INVESTMENT STRATEGIES, POLICIES AND RISKS
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This section provides details about the fund's 7 Investment Strategies and Policies
investment strategies, policies and risks. 9 Other Investment Practices
10 Changing the Investment Objectives and Policies
Investment Risks

ORGANIZATION AND MANAGEMENT
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This section provides details about the people 14 The Fund and the Investment Manager
and organizations who oversee the fund. 14 The Portfolio Managers
14 Management Fees and Other Expenses
15 The Distributor

STOCKHOLDER INFORMATION
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This section tells you how to buy, sell and 16 Buying Shares
exchange shares, how we value shares, and how we 19 Selling Shares
pay dividends and distributions. 19 Other Stockholder Services
22 Dividends, Distributions and Taxes

OTHER INFORMATION ABOUT THE FUND
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This section provides details on selected 24 Financial Highlights
financial highlights of the fund
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RISK RETURN SUMMARY AND FUND EXPENSES

RISK/RETURN SUMMARY

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

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

The Investment Manager evaluates the
fundamental value and prospects for
growth of individual companies and
focuses on companies that it expects
will have higher than average rates of
growth and strong potential for capital
appreciation. In addition, the
Investment Manager develops forecasts of
economic growth, inflation, and interest
rates that it uses to help identify
those regions and individual countries
that are likely to offer the best
investment opportunities. The Morgan
Stanley Capital International (MSCI)
Europe Index is the Fund's performance
benchmark. The Fund bases its security
selection on the relative investment
merits of different industries and
companies throughout Europe and will not
seek to duplicate the country and sector
allocations of the benchmark.

Principal Investment Risks: Because the value of the Fund's
investments will fluctuate with market
conditions, so will the value of your
investment in the Fund. You could lose
money on your investment in the Fund, or
the Fund could underperform other
investments.

The values of the Fund's investments
fluctuate in response to the activities
of individual companies and general
stock market and economic conditions.
The performance of foreign securities
depends in part on the political and
economic environments and other overall
economic conditions in the countries
where the Fund invests. Because the Fund
focuses on certain developed European
countries, it will be more susceptible
than other funds to market and other
conditions affecting those countries.
The Fund's value will also be exposed to
currency risk. The stock prices of
smaller and newer companies in which the
Fund may invest fluctuate more than
those of larger, more established
companies.

An investment in the Fund is not a bank
deposit and is not insured or guaranteed
by the Federal Deposit Insurance
Corporation or any other government
agency.

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

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

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

Year-by-Year Total Returns for Class N Shares*

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

Average Annual Total Returns*
(through December 31, 1999)

Performance One Five Since
Inception Year Years Inception

<S> <C> <C> <C> <C>
Class N (DRENX)** 4/5/90 43.59% 23.50% 9.42%
Class I*** 4/5/90 43.59% 23.50% 9.42%
DAX100 Index**** ----- 16.77% 19.00% 10.93%

MSCI Europe Index ----- 16.21% 22.53% 15.03%
</TABLE>

*For the periods through February 2, 1999, the bar chart and table reflect the
performance of the Fund under its objective of investing primarily in equity
securities of German companies. For periods through May 3, 1999 the bar chart
and table reflect the

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performance of the Fund as a closed-end investment company. Beginning on
February 9, 1999, the Fund's objective was expanded to permit investment in
European companies. On May 3, 1999, the Fund converted from a closed-end to an
open-end investment company. The expenses of the Fund as an open-end investment
company may be higher than as a closed-end investment company due to additional
fees, such as Rule 12b-1 fees.

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

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

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

FEES AND EXPENSES

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

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

ANNUAL FUND OPERATING EXPENSES
(FEES PAID FROM FUND ASSETS)
<S> <C> <C>
Management fees 1.00% 1.00%
Rule 12b-1 fee None 0.25%
Other expenses(1) 0.44% 0.44%
Total annual Fund operating expenses(2) 1.44% 1.69%
Less: Fees waived and reimbursed(3) -0.09% -0.09%
Net expenses(3) 1.35% 1.60%
</TABLE>

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

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

(3) Dresdner RCM Global Investors LLC (the "Investment Manager") has
contractually agreed until at least December 31, 2002, to pay each quarter
the amount, if any, by which the ordinary operating expenses for the
quarter (except interest, taxes and extraordinary expenses) exceed the
annualized rate of 1.35% for Class I and 1.60% for Class N. The Fund may
reimburse the Investment Manager in the future.

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EXAMPLE

Use this table to compare fees and expenses of the Fund with those of
other funds. It illustrates the amount of fees and expenses you would pay
assuming:

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

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

One Three Five Ten
Year Years Years Years
<S> <C> <C> <C> <C>
Class N* $163 $505 $891 $1,974
Class I* $137 $428 $760 $1,700
</TABLE>

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

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INVESTMENT STRATEGIES, POLICIES AND RISKS

INVESTMENT STRATEGIES AND POLICIES

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

HOW DOES THE FUND SELECT EQUITY INVESTMENTS?

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

When the Investment Manager analyzes a specific company, it evaluates the
fundamental value of each enterprise as well as its prospects for growth. In
most cases, these companies have one or more of the following characteristics:

- - Superior management
- - Strong balance sheets
- - Differentiated or superior products or services
- - Substantial capacity for growth in revenue through either an expanding
market or expanding market share
- - Strong commitment to research and development
- - Steady stream of new products or services

The Fund does not seek current income, and does not restrict its
investments to companies with a record of dividend payments.

When evaluating foreign companies, the Investment Manager may also consider
the anticipated economic growth rate, political outlook, inflation rate,
currency outlook, and interest rate environment for the country and the region
in which the company is located, as well as other factors it deems relevant.

In addition to traditional research activities, the Investment Manager uses
research produced by its Grassroots Research operating group. Grassroots
Research prepares research reports based on field interviews with customers,
distributors, and competitors of the companies that the Investment Manager
follows. The Investment Manager believes that Grassroots Research can be a
valuable adjunct to its traditional research efforts by providing a "second
look" at companies in which the Fund might invest and by checking marketplace
assumptions concerning market demand for particular products and services.

WHAT KINDS OF EQUITY SECURITIES DOES THE FUND INVEST IN?

The Fund invests primarily in common stocks and depositary receipts,
including American Depositary Receipts, European Depositary Receipts, Global
Depositary Receipts, or other similar depositary instruments representing
securities of foreign companies. Common stocks represent the basic equity
ownership interests in a company. Depositary receipts are issued by banks or
other financial institutions and represent, or may be converted into, underlying
ordinary shares of a foreign company. They may be sponsored by the foreign
company or organized independently.

The Fund may also invest in other equity and equity related securities.
These include preferred stock, convertible preferred stock, convertible debt
obligations, warrants or other rights to acquire stock, and options on stock and
stock indices.

The Fund expects that its foreign investments will primarily be traded on
recognized foreign securities exchanges. However, the Fund also may invest in
securities that are traded only over-the-counter, either in the United States or
in foreign markets, when the Investment Manager believes that such securities
meet the Fund's investment criteria. The Fund also may invest in securities that
are not publicly traded in the United States or in foreign markets.

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WHEN IS A COMPANY CONSIDERED TO BE LOCATED IN A PARTICULAR COUNTRY?

A company will be considered to be located in a particular country if the
company is organized or headquartered, or derives at least 50% of its total
revenue from operations, in such country.

OTHER INVESTMENT PRACTICES

The Fund may also employ the following investment techniques in pursuit of
its investment objective, long-term growth of capital.

DOES THE FUND BUY AND SELL FOREIGN CURRENCIES?

The Investment Manager expects to purchase and sell foreign currencies
primarily to settle foreign securities transactions. However, the Fund may also
engage in currency management transactions (other than currency futures
contracts) to hedge currency exposure related to securities it owns or
securities it expects to purchase. The Fund may also hold foreign currency
received in connection with investments in foreign securities when the
Investment Manager believes the relevant exchange rates will change favorably
and it would be better to convert the currency into U.S. dollars later.

DOES THE FUND HEDGE ITS INVESTMENTS?

For hedging purposes, the Fund may purchase options on stock indices and on
securities it is authorized to purchase. If the Fund purchases a "put" option on
a security, the Fund acquires the right to sell the security at a specified
price at any time during the term of the option (for "American-style" options)
or on the option expiration date (for "European-style" options). If the Fund
purchases a "call" option on a security, it acquires the right to purchase the
security at a specified price at any time during the term of the option (or on
the option expiration date). An option on a stock index gives the Fund the right
to receive a cash payment equal to the difference between the closing price of
the index and the exercise price of the option. The Fund may "close out" an
option before it is exercised or expires by selling an option of the same series
as the option previously purchased.

The Fund may employ certain techniques to hedge against currency exchange
rate fluctuations, changes in interest rates or general fluctuations in the
value of its portfolio securities. The Fund may hedge up to 100% of its total
assets. These techniques include forward currency exchange contracts, currency
options, index futures contracts and currency swaps. A forward currency exchange
contract is an obligation to purchase or sell a specific currency at a future
date at a price set at the time of the contract. Currency options are rights to
purchase or sell a specific currency at a future date at a specified price.
Index futures contracts are agreements to take or make delivery of an amount of
cash equal to the difference between the value of the index at the close of the
last trading day of the contract and the price at which the index contract was
originally written. Currency swaps involve the exchange of rights to make or
receive payments in specified currencies.

The Fund may also cross-hedge currencies, which involves writing or
purchasing options or entering into foreign exchange contracts on one currency
to hedge against changes in exchange rates for a different currency, if the
Investment Manager believes changes in the two currencies are correlated.

DOES THE FUND INVEST IN EMERGING MARKETS?

The Fund may invest up to 25% of its total assets in equity securities of
companies located in emerging market countries, including Eastern European
countries (but no more than 10% in any one emerging market country). Such
investments are not currently a principal investment technique of the Fund.
However, if emerging markets present attractive investment opportunities, the
Fund may increase the percentage of its total assets invested in emerging
markets, subject to the limits described above.

DOES THE FUND INVEST IN OTHER INVESTMENT COMPANIES?

The laws of some foreign countries may make it difficult or impossible for
the Fund to invest directly in companies organized or headquartered in those
countries, or may limit such investments. The only practical means of investing
in such companies may be through other investment companies that in turn are
authorized to invest in the securities of such issuers. In these cases and in
other appropriate circumstances, the Fund may invest up to 10% of

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the value of its total assets in other investment companies. Such investment is
subject to the restrictions referred to above regarding investments in companies
located in foreign countries. The Fund may not acquire more than 3% of the
voting securities of any other investment company.

If the Fund invests in other investment companies, it will bear its
proportionate share of the other investment companies' management or
administration fees and other expenses in addition to the Fund's own expenses.
At the same time, the Fund would continue to pay its own management fees and
other expenses.

WHAT ARE THE FUND'S INVESTMENT POLICIES IN UNCERTAIN MARKETS?

When the Investment Manager believes the Fund should adopt a temporary
defensive posture, including periods of international, political or economic
uncertainty, the Fund may hold all or a substantial portion of its assets in
investment grade debt securities. These securities may be debt obligations
issued or guaranteed by the U.S. Government or foreign governments (including
their agencies, instrumentalities, authorities and political subdivisions), debt
obligations issued or guaranteed by international or supranational government
entities, or debt obligations of corporate issuers. During these periods, the
Fund may not be achieving its investment objective.

WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT INVESTMENT PRACTICES?

The Statement of Additional Information (the SAI) has more detailed
information about the investment practices described in this Prospectus as well
as information about other investment practices used by the Investment Manager.

CHANGING THE INVESTMENT OBJECTIVES AND POLICIES

The Fund's investment objective is a fundamental policy that may not be
changed without stockholder approval. However, except as otherwise indicated in
this Prospectus or the SAI, the Fund's other investment policies and
restrictions are not fundamental and may be changed without stockholder
approval.

The various percentage limitations referred to in this Prospectus and the
SAI apply immediately after a purchase or initial investment. Unless indicated
to the contrary, the Fund is not required to sell any security in its portfolio
as a result of a change in any applicable percentage resulting from market
fluctuations.

INVESTMENT RISKS

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

EQUITY INVESTMENTS

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

SMALL COMPANIES

Investments in small companies may involve greater risks than larger
companies, and may be speculative. The securities of small companies, as a
class, have had periods of more favorable results, and periods of less favorable
results, than securities of larger companies as a class. In addition, small
companies may have limited or unprofitable operating histories, limited
financial resources and inexperienced management. They often face competition
from larger and more established firms that have greater resources. Small
companies may have less ability to raise additional capital, and may have a less
diversified product line (making them susceptible to market pressure), than
larger companies. Securities of small and unseasoned companies are often less
liquid than securities of larger companies and are frequently traded in the
over-the-counter market or on regional exchanges where low trading volumes may
result in erratic or abrupt price movements. Selling these securities may take
an extended period of time. As a result, to the extent the Fund invests in small
companies, its net asset value may be more volatile than would otherwise be the
case.

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FOREIGN SECURITIES

Investing in foreign securities involves significant risks, some of which
are not typically associated with investing in securities of U.S. issuers. For
example, the value of investments in such securities may fluctuate based on
changes in the value of one or more foreign currencies relative to the U.S.
dollar. In addition, information about foreign issuers may be less readily
available than information about domestic issuers. Foreign issuers generally are
not subject to accounting, auditing and financial reporting standards, or to
other regulatory practices and requirements, comparable to U.S. issuers.
Furthermore, certain foreign countries may be politically unstable, expropriate
or nationalize assets, revalue currencies, impose confiscatory taxes, and limit
foreign investment and use or removal of funds or other assets of the Fund
(including the withholding of dividends and limitations on the repatriation of
currencies). The Fund may also face difficulties or delays in obtaining or
enforcing judgments.

Most foreign securities markets have substantially less volume than U.S.
markets, and the securities of many foreign issuers may be less liquid and more
volatile than securities of comparable U.S. issuers. There is generally less
government regulation of securities markets, securities exchanges, securities
dealers, and listed and unlisted companies in foreign countries than in the
United States. Foreign markets also have different clearance and settlement
procedures, and at times in certain markets settlements have not been able to
keep pace with the volume of securities transactions, making it difficult to
conduct and complete transactions. In addition, the costs associated with
transactions in securities of foreign companies and securities traded on foreign
markets, and the expense of maintaining custody of these securities with foreign
custodians, generally are higher than in the U.S.

EMERGING MARKETS

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

Economies in emerging market countries generally depend heavily on
international trade. They may be affected adversely by the economic conditions
of the countries with which they trade, as well as by trade barriers, exchange
controls, managed adjustments in relative currency values, and other
protectionist measures imposed or negotiated by these countries. In many cases,
governments of emerging market countries continue to exercise significant
control over the economies of these countries. In addition, some of these
countries have in the past failed to recognize private property rights and have
at times nationalized or expropriated the assets of private companies. There is
a greater possibility of confiscatory taxation, imposition of withholding taxes
on interest payments, or other similar developments that could affect
investments in those countries. Unanticipated political or social developments
may also affect the value of the Fund's investments in those countries.

OPTIONS, CURRENCY HEDGING AND CURRENCY MANAGEMENT

Stock options involve a number of risks. They may be more volatile than the
underlying stock. Options and securities markets may not be precisely
correlated, so that a given transaction may not achieve its objective. In
addition, the secondary market for particular options may not be liquid for a
variety of reasons. When trading options on foreign exchanges, many of the
protections afforded to participants in the United States will not be available.
The Fund could lose the amount of the option premium plus transaction costs.

The Fund's use of hedging and currency management techniques involve risks
different from investments in U.S. dollar-denominated securities. If the Fund
invests in foreign securities and also maintains currency positions, it may be
exposed to greater combined risk than would otherwise be the case. Transactions
in index futures contracts involve risks similar to those of options on
securities; in addition, the potential loss incurred by the Fund in such
transactions is unlimited.

The use of hedging and currency management techniques is a highly
specialized activity, and the success of any such operations by the Fund is not
assured. Gains and losses in such transactions depend upon the Investment
Manager's ability to predict correctly the direction of stock prices, currency
exchange rates, and other factors. Although hedging operations could reduce the
risk of loss due to a decline in the value of the hedged security or currency,
they could also limit the potential gain from an increase in the value of the
security or currency.

<PAGE>

NON-DIVERSIFICATION

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

GEOGRAPHIC CONCENTRATION

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

<PAGE>

ORGANIZATION AND MANAGEMENT

THE FUND AND THE INVESTMENT MANAGER

The Fund is a series of Dresdner RCM Investment Funds Inc. (the "Company").

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

The Investment Manager provides investment supervisory services to
institutional and individual clients. It was established in December of 1998 and
is the successor to the business of its holding company, Dresdner RCM Global
Investors US Holdings LLC. The Investment Manager was originally formed as
Rosenberg Capital Management in 1970, and it and its successors have been
consistently in business since then. The Investment Manager is an indirect
wholly owned subsidiary of Dresdner Bank AG ("Dresdner"), an international
banking organization with principal executive offices in Frankfurt, Germany.

THE PORTFOLIO MANAGERS

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

MANAGEMENT FEES AND OTHER EXPENSES

The Fund pays the Investment Manager a monthly fee pursuant to an
investment management agreement at the annual rate of 1.00% of its average daily
net assets up to and including $100 million and 0.80% of its average daily net
assets in excess of $100 million.

The Fund pays for its own expenses. These include brokerage and commission
expenses, taxes, interest charges on any borrowings, custodial charges and
expenses, investment management fees, and other operating expenses (e.g., legal
and audit fees, securities registration expenses, and compensation of directors
who are not affiliated with the Investment Manager). These expenses are
allocated to each class of shares based on the assets of each class. Each class
also bears certain class-specific expenses, such as Rule 12b-1 expenses payable
by the Fund's Class N shares.

<PAGE>

The Investment Manager has agreed to limit the Fund's expenses through
December 31, 2002. During this period, the Investment Manager will pay the Fund
on a quarterly basis the amount, if any, by which the Fund's ordinary operating
expenses for the quarter (except interest, taxes and extraordinary expenses)
exceed the following expense ratios on an annual basis:

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

The Fund will reimburse the Investment Manager for such payments for a
period of up to five years after they are made, to the extent that the Fund's
ordinary operating expenses are less than the expense limit.

THE DISTRIBUTOR

Funds Distributor, Inc. (the "Distributor"), with principal offices at 60
State Street, Suite 1300, Boston, Massachusetts 02109, acts as distributor of
each class of shares of the Fund. The Distributor provides mutual fund
distribution services to registered investment companies, and is an indirect
wholly owned subsidiary of Boston Institutional Group, Inc., which is not
affiliated with the Investment Manager or Dresdner.

The Company has adopted a distribution plan (the "Plan") for its Class N
shares pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund pays
the Distributor an annual fee of up to 0.25% of the average daily net assets of
its Class N shares as reimbursement for certain expenses incurred by the
Distributor in providing distribution and shareholder support services to such
shares. These expenses include advertising and marketing expenses, payments to
broker-dealers and others who have entered into agreements with the Distributor,
the expenses of preparing, printing and distributing the Prospectus to persons
who are not already stockholders, and indirect and overhead costs associated
with the sale of Class N shares. If in any month the Distributor is due more for
such services than is immediately payable because of the Plan's expense
limitation, the unpaid amount is carried forward from month to month while the
Plan is in effect until it can be paid. Because these fees are paid out of the
Fund's assets on an ongoing basis, over time these fees will increase the cost
of your investment and may cost you more than paying other types of sales
charges.

STOCKHOLDER INFORMATION

BUYING SHARES

For your convenience, we offer several ways to start and add to Fund
investments.

OPENING YOUR ACCOUNT BY INVESTING THROUGH A FINANCIAL PROFESSIONAL

If you work with a financial professional, he or she is prepared to handle
your planning and transaction needs. Your financial professional will be able to
assist you in establishing your fund account, executing transactions, and
monitoring your investment. If you do not hold your Fund investment in the name
of your financial professional and you prefer to place a transaction order
yourself, please use the instructions below for investing directly.

You may also purchase shares through certain brokers which have entered
into selling group agreements with the Distributor. Brokers may charge a fee for
their services at the time of purchase or redemption. Subscription forms can be
obtained from the Fund.

OPENING YOUR ACCOUNT DIRECTLY

You may establish accounts without the help of an intermediary as follows:

<PAGE>

- - Determine the amount you are investing. The minimum initial and subsequent
investment requirements for each class of the Fund are as follows:

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

*Rollover only

- - The Fund reserves the right at any time to waive, increase or decrease the
minimum requirements applicable to initial or subsequent investments.
Minimum subsequent investment requirements do not apply to investors
purchasing shares through the Fund's automatic dividend reinvestment plan.
In addition, minimum initial investments may vary for investors purchasing
shares through a broker-dealer or other intermediary having a service
agreement with the Investment Manager and maintaining an omnibus account
with the Fund.

- - Complete the account application accompanying this Prospectus. Please apply
at this time for any account privileges you may want to use in the future
to avoid the delays associated with adding them later on. To add or change
account privileges or to re-register an existing account, please speak with
a Fund representative at 1-800-726-7240 to determine the additional
documentation that will be required.

- -

- - Mail your completed application to the Fund at:

Dresdner RCM Global Funds
P.O. Box 8500
Boston, MA 02266-8500

For overnight delivery, mail your completed application to:

Dresdner RCM Global Funds
66 Brooks Drive
Braintree, MA 02184

For answers to any questions, please speak with a Fund Representative at
1-800-726-7240. The Fund reserves the right to reject any purchase of shares
at its sole discretion. The Fund also reserves the right to cancel any purchase
order for which payment has not been received by the third business day
following the order.

Confirmation statements showing transactions in your account and a summary
of the status of the account serve as evidence of ownership of shares of the
Fund. We will forward a confirmation statement to you on receipt of a proper
order.

INVESTING IN YOUR ACCOUNT

BY WIRE

- - Make sure you have established an account by mailing an application as
explained above.

- - Call 1-800-726-7240 to obtain your account number and to place a purchase
order. Money that is wired without a purchase order will be returned
uninvested.

- - After placing your purchase order, instruct your bank to wire the amount of
your investment to:

<PAGE>

State Street Bank and Trust Company
Routing number: 011000028
Account number: 9905-268-0
FCC: your account number, name of registered owner(s) and Fund name

BY CHECK

- - Make out a check (bank or certified) or money order for the investment
amount payable to Dresdner RCM Europe Fund. Please note: No third party
checks will be accepted.

- - Mail the check with your completed application to the Fund at:

Dresdner RCM Global Funds
P.O. Box 8500
Boston, MA 02266-8500

For overnight delivery, mail your completed application to:

Dresdner RCM Global Funds
66 Brooks Drive
Braintree, MA 02184

ADDING TO YOUR ACCOUNT

BY WIRE

- - Call the Fund at 1-800-726-7240 to place a purchase order. Money that is
are wired without a purchase order will be returned uninvested.

- - Once you have placed your purchase order, instruct your bank to wire the
amount of your investment as described above.

BY CHECK

- - Make out a check for the investment amount payable to Dresdner RCM Europe
Fund. Please note: No third party checks will be accepted.

- - Mail the check with a completed investment slip to the Fund at:

Dresdner RCM Global Funds
P.O. Box 8500
Boston, MA 02266-8500

For overnight delivery, mail your completed investment slip to:

Dresdner RCM Global Funds
66 Brooks Drive
Braintree, MA 02184

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

WITH SECURITIES

At its discretion, the Fund may accept securities of equal value instead of
cash in payment of all or part of the subscription price for Fund shares.
Contact the Fund in advance to discuss the securities in question and the
documentation necessary to complete the transaction. Any such securities:

<PAGE>

- - Will be valued at the close of regular trading on the New York Stock
Exchange on the day of acceptance of the subscription in accordance with
the Fund's method of valuing its securities;

- - Will have a tax basis to the Fund equal to such value;

- - Must not be restricted securities; and

- - Must be permitted to be purchased in accordance with the Fund's investment
objective and policies and must be securities that the Fund would be
willing to purchase at that time.

AUTOMATICALLY

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

<PAGE>

SELLING SHARES

BY PHONE - WIRE PAYMENT

- - Call the Fund to verify that the wire redemption privilege via telephone is
in place on your account. If it is not, a representative can help you add
it. You will be required to provide a signature guaranteed letter of
instruction signed by all registered owners, accompanied by a voided check.

- - Place your wire request.

BY PHONE - CHECK PAYMENT

- - Call the Fund at 1-800-726-7240 to verify that you have telephone
redemption privileges and place your request. Once your request has been
verified, a check for the net cash amount (net of any redemption fee),
payable to the registered owner(s), will be mailed to the address of
record. For checks payable to any other party or mailed to any other
address, please make your request in writing (see below) and include a
signature guarantee.

IN WRITING

- - Write a letter of instruction, signed by each registered owner or their
duly authorized agent, that includes the following information:

- The name of the registered owner(s) of the account
- The account number
- The number of shares or the dollar amount you want to sell
- The recipient's name and address or wire information, if different
from those of the account registration
- A signature guarantee

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

- - Make sure the letter is signed by all registered owners or their authorized
parties.

- - Mail the letter to the Fund.

BY ELECTRONIC TRANSFER

- - Fill out the appropriate areas of the account application for this feature.
To request an electronic transfer (not less than $50; nor more than
$100,000), call 1-800-726-7240. Transfers of $50,000 or more will require a
signature guarantee. The Fund will transfer your sales proceeds
electronically to your bank account. The bank must be a member of the
Automated Clearing House.

SIGNATURE GUARANTEES

Certain requests must include a signature guarantee, which is designed to
protect you and the Fund from fraudulent activities. Your request must be made
in writing and include a signature guarantee if any of the following situations
applies:

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

- - The check is being mailed to an address different from the one on your
account (address of record).

- - The check is being made payable to someone other than the account owner.

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

- - You wish to add or change your account privileges.

<PAGE>

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

OTHER STOCKHOLDER SERVICES AND ACCOUNT POLICIES

TELEPHONE ORDERS

We may accept telephone orders to buy or sell shares of the Fund. To
order call 1-800-726-7240. To guard against fraud, we may record telephone
orders or take other reasonable precautions. However, if we do not take such
steps to ensure the authenticity of an order, we may bear any loss if the
order later proves fraudulent.

At times of peak activity, such as during periods of volatile economic or
market conditions, it may be difficult to place buy and sell orders by phone.
During these times, consider sending your request in writing.

BUSINESS HOURS AND NAV CALCULATIONS

The Fund's regular business days and hours are the same as those of the New
York Stock Exchange (NYSE). The Fund calculates its net asset value per share
(NAV) every business day as of the close of trading on the NYSE (normally 4:00
p.m. eastern time). Shares of the Fund will not be priced on days on which the
NYSE is closed for trading. The NYSE is closed for trading on national holidays
and weekends. The Fund's securities are typically priced using market quotes or
pricing services. When these methods are not available or do not represent a
security's value at the time of pricing, the security is valued in accordance
with the Fund's fair valuation procedures.

TIMING OF ORDERS

The Fund accepts orders until the close of trading on the NYSE every
business day. Orders received before the close of trading on the NYSE (4:00
eastern time) are executed the same day at that day's NAV. Orders received after
4:00 eastern time are executed the following day at that day's NAV. The Fund has
the right to suspend redemption of shares and to postpone payment of proceeds
for up to seven days or as permitted by law.

The Fund may suspend the right of redemption or postpone the date of
payment for more than seven days after shares are tendered for redemption for
any period during which

- - The New York Stock Exchange is closed (other than a customary weekend or
holiday closing) or the SEC determines that trading thereon is restricted;

- - An emergency (as determined by the SEC) exists as a result of which
disposal by the Fund of securities it owns is not reasonably practicable,
or as a result of which it is not reasonably practical for the Fund fairly
to determine the value of its net assets; or

- - The SEC by order permits such suspension for the protection of stockholders.

TIMING OF SETTLEMENTS

When you buy shares, you will become the owner of record when the Fund
receives your payment, generally the day following execution. When you sell
shares, cash proceeds are generally available the day following execution and
will be forwarded according to your instructions.

When you sell shares that you recently purchased by check, your order will
be executed at the next NAV but the proceeds will not be available until your
check clears. This may take up to 15 days from the purchase date. Upon execution
of the redemption order, a confirmation statement will be forwarded to you
indicating the number of shares sold and the proceeds thereof.

ACCOUNTS WITH BELOW-MINIMUM BALANCES

If your account balance falls below the minimum ($5,000 for Class N shares
and $250,000 for Class I shares) as a result of selling shares (and not because
of Fund performance), the Fund reserves the right to request

<PAGE>

that you buy more shares or close your account. If your account balance is still
below the minimum 90 days after notification, the Fund reserves the right to
close out your account and send the proceeds to the address of record.

AUTOMATIC REINVESTMENT

We will reinvest each income dividend and capital gain distribution
declared by the Fund in full and fractional shares of the same class, unless you
or your duly authorized agent elect to receive all such payments, or only the
dividend or distribution portions in cash. We will base such reinvestment on the
Fund's NAV as determined on the ex-dividend date. You or your authorized agent
may request changes in the manner in which dividend and distribution payments
are made through written notice to the Fund. This request will be effective as
to any payment if it is received prior to the record date used for determining
your payment. Any dividend and distribution election will remain in effect until
you notify the Fund in writing to the contrary.

EXCHANGE PRIVILEGE

You may exchange shares of either class of the Fund into shares of the same
class of any other Fund offered by Dresdner RCM, without a sales charge or other
fee (except redemption fees, if any), by contacting the Fund. You may also
exchange Class N shares of the Fund into Class I shares of the Fund or any other
Fund offered by Dresdner RCM. Exchange purchases are subject to the minimum
investment requirements of the class purchased. In order to keep Fund expenses
low for all shareholders, the Fund will not allow frequent exchanges, purchases
or sales of Fund shares. If a shareholder exhibits a pattern of frequent
trading, the Fund reserves the right to refuse to accept further purchase or
exchange orders from that shareholder. An exchange will be treated as a
redemption and purchase for tax purposes.

Shares will be exchanged at net asset value per share next determined after
receipt by BFDS of:

- - A written request for exchange, signed by each registered owner or his or
her duly authorized agency exactly as the shares are registered, which
clearly identifies the exact names in which the account is registered, the
account number and the number of shares or the dollar amount to be
exchanged

Exchanges will not become effective until all documents in the form
required have been received by BFDS. If you have any questions, please contact
BFDS.

Please be sure to obtain and read carefully the prospectus of any other
Fund into which you wish to exchange shares.

ACCOUNT STATEMENTS

Stockholder accounts are opened in accordance with your registration
instructions. Transactions in the account, such as additional investments and
dividend reinvestments, will be reflected on regular confirmation statements.

REPORTS TO STOCKHOLDERS

The Fund's fiscal year ends on December 31. The Fund will issue to its
stockholders semi-annual and annual reports. In addition, stockholders will
receive quarterly statements of the status of their accounts reflecting all
transactions having taken place within that quarter. In order to reduce
duplicate mailings and printing costs, the Fund will provide one annual and
semi-annual report and annual prospectus per household. Information regarding
the tax status of income dividends and capital gains distributions will be
mailed to stockholders on or before January 31st of each year. Account tax
information will also be sent to the IRS.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The Fund's dividends and distributions consist of most or all of its net
investment income and net realized capital gains. They are typically paid once a
year in December. The amount depends on the Fund's investment

<PAGE>

results and its tax compliance situation.

Dividends and distributions normally are reinvested in additional Fund
shares. You may instruct your financial professional or the Fund to have them
sent to you by check or credited to a separate account.

If you are an individual (or certain other non-corporate stockholders), we
have to withhold 31% of all dividends, capital gains distributions and
redemption proceeds we pay to you if: (a) you have not given us a certified
correct taxpayer identification number and (b) except with respect to redemption
proceeds, have not certified that backup withholding does not apply. Amounts we
withhold are applied to your federal tax liability, and a refund may be obtained
from the Internal Revenue Service if withholding results in an overpayment of
taxes. Distributions of our taxable income and net capital gain to non-resident
alien individuals, non-resident alien fiduciaries of trusts or estate, foreign
corporations, or foreign partnerships may also be subject to U.S. withholding
tax, although distributions of net capital gain to such stockholders generally
will not be subject to withholding.

We may be required to pay income, withholding and other taxes imposed by
foreign countries, generally at rates from 10% to 40%, which would reduce our
investment income. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes. We may "pass through" to you the amount of
foreign income taxes we pay, if it is in the best interests of stockholders. If
we do so, you will be required to include in your gross income your pro-rata
share of foreign taxes we paid, and you will be able to treat such taxes as
either an itemized deduction or a foreign credit against U.S. income taxes on
your tax returns. If we do not do so, you will not be able to deduct your share
of such taxes in computing your taxable income and will not be able to take your
share of such taxes as a credit against your U.S. income taxes.

In general, selling shares for cash, exchanging shares, and receiving
distributions (whether reinvested or taken in cash) are all taxable events.
These transactions typically create the following tax liabilities for taxable
accounts:
<TABLE>
<CAPTION>

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

Dividends and other distributions generally are taxable to you at the time
they are received. However, dividends declared in October, November and December
by the Fund and made payable to you in such months are treated as paid and are
thereby taxable as of December 31, provided that the Fund pays the dividend no
later than January 31 of the following year.

If you purchase the Fund's shares shortly before the record date for a
dividend or other distribution thereon, you will pay full price for the shares.
This is known as "buying a distribution" because you will receive some portion
of your purchase price back as a taxable distribution even though, because the
amount of the dividend or other distribution reduces the shares' net asset
value, it actually represents a return of invested capital. Depending on your
taxpayer status, that distribution may be taxable.

You will receive, after the end of each year, full information on
dividends, capital gains distributions and other reportable amounts with respect
to shares of the Fund for tax purposes. This includes information such as the
portion taxable as capital gains and the amount of dividends, if any, eligible
for the federal dividends-received deduction for corporate taxpayers.

Foreign stockholders may be subject to special withholding requirements. A
penalty is charged on certain

<PAGE>

pre-retirement distributions from retirement accounts. Consult your tax adviser
about the federal, state and local tax consequences in your particular
circumstances.

The tax considerations described in this section do not apply to
tax-deferred accounts or other non-taxable entities. Because each investor's tax
circumstances are unique, please consult your tax professional about your
investment in the Fund.

<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights table shows the Fund's financial
performance for the past 5 fiscal years. This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Fund's financial
statements, are included in the Fund's Annual Report, which is available upon
request and incorporated by reference into the SAI.

<PAGE>

EUROPE FUND
---------------------------------------------------------------
CLASS N
---------------------------------------------------------------
DECEMBER 31,
---------------------------------------------------------------
1999(1) 1998(1) 1997(1) 1996(1) 1995
-------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 13.66 $ 12.59 $ 10.66 $9.20 $ 9.20
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.01) (0.05) 0.01 0.03 0.07
Net realized and unrealized gain (loss) on
investments 5.66 4.60 2.70 1.45 (0.07)
-------- -------- -------- -------- --------
Total from investment operations 5.65 4.55 2.71 1.48 0.00
Less distributions:
From net investment income -- (0.17) (0.06) (0.02) --
In excess of net investment income (0.02) -- -- -- --
From net realized gain on investments (3.17) (3.31) (0.72) -- --
-------- -------- -------- -------- --------
Total distributions (3.19) (3.48) (0.78) (0.02) --
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR $ 16.12 $ 13.66 $ 12.59 $10.66 $ 9.20
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
TOTAL RETURN (2) 43.59% 37.23% 25.70% 15.87% 1.33%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 67,910 $191,338 $176,414 $149,299 $128,932
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratio of expenses to average net assets: (3)
With waiver and reimbursement 1.03% -- -- -- --
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Without waiver and reimbursement 2.01% 1.97% 1.30% 1.42% 1.51%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratio of net investment income to average net assets:
With waiver and reimbursement (0.11)% -- -- -- --
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Without waiver and reimbursement (1.08)% (0.31)% 0.06% 0.33% 0.76%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Portfolio turnover 202.90% 114.00% 85.00% 51.00% 40.00%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

(1) Calculated using the average share method.

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

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

<PAGE>

[Back Page]

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

ANNUAL/SEMIANNUAL REPORTS:

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

STATEMENT OF ADDITIONAL INFORMATION (SAI):

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

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

Dresdner RCM Investment Funds Inc.
Four Embarcadero Center, Suite 2900
San Francisco, CA 94111
Telephone 1-800-726-7240

You can review the Fund's reports and SAI at the Public Reference Room of
the Securities and Exchange Commission in Washington, D.C. You can also get
copies:

- For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009 or calling 1-800-SEC-0330 or by email at
[email protected].

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

Investment Company Act file no. 811-06038.

<PAGE>

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

DRESDNER RCM EUROPE FUND

STATEMENT OF ADDITIONAL INFORMATION

May 1, 2000

Dresdner RCM Europe Fund (the "Europe Fund") is a non-diversified series of
Dresdner RCM Investment Funds Inc. (the "Company"), an open-end management
investment company. The Fund's investment manager is Dresdner RCM Global
Investors LLC (the "Investment Manager").

This Statement of Additional Information ("SAI") is not a prospectus, and should
be read in conjunction with the Prospectus of the Fund dated May 1, 2000. This
SAI relates to the Fund's Non-Institutional Class ("Class N") and Institutional
Class ("Class I") of shares. The Prospectus may be obtained without charge by
writing or calling the Company at the address and phone number above.

Incorporated herein by reference are the financial statements of the Fund
contained in the Fund's Annual Report to Shareholders for the year ended
December 31, 1999, including the Report of Independent Accountants dated
February 18, 2000, the Statement of Investments in Securities and Net Assets,
the Statement of Assets and Liabilities, the Statement of Operations, the
Statement of Changes in Net Assets, and the related Notes to Financial
Statements. Copies of the Fund's Annual and Semi-Annual Reports to Shareholders
will be available upon request, by calling (800) 726-7240, or by writing to Four
Embarcadero Center, San Francisco, CA 94111.

TABLE OF CONTENTS

Page
<S> <C>
Investment Objectives and Policies...................1
Risk Considerations.................................12
Investment Restrictions.............................18
Execution of Portfolio Transactions.................19
Directors and Officers..............................21
The Investment Manager..............................24
The Distributor.....................................27
The Administrator...................................27
Other Service Providers.............................28
Net Asset Value.....................................29
Purchase and Redemption of Shares...................30
Dividends, Distributions and Tax Status.............31
Investment Results..................................34
General Information.................................34
Description of Capital Shares.......................34
Additional Information..............................36
Financial Statements................................36
</TABLE>

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

In pursuit of its investment objective of long-term growth of capital, the
Fund will invest at least 75% of its total assets in companies located in
Europe, in both EMU and non-EMU countries. The Fund expects to invest the
majority of its total assets in equity securities of issuers located in Western
European countries. However, if emerging markets present attractive investment
opportunities, the Fund will invest in emerging market countries, including
Eastern European countries, subject to the percentage limitations described in
the prospectus.

INVESTMENT CRITERIA

In evaluating particular investment opportunities, the Investment Manager
may consider such other factors, in addition to those described in the
Prospectus, as the anticipated economic growth rate, the political outlook, the
anticipated inflation rate, the currency outlook, and the interest rate
environment for the country and the region in which a particular issuer is
located. When the Investment Manager believes it would be appropriate and
useful, the Investment Manager's personnel may visit the issuer's headquarters
and plant sites to assess an issuer's operations and to meet and evaluate its
key executives. The Investment Manager also will consider whether other risks
may be associated with particular securities.

INVESTMENT IN FOREIGN SECURITIES

The securities markets of many countries have at times in the past moved
relatively independently of one another due to different economic, financial,
political, and social factors. In seeking to achieve the investment objectives
of the Fund, the Investment Manager allocates the Fund's assets among securities
of countries and in currency denominations where it expects opportunities for
meeting the Fund's investment objectives to be the most attractive, subject to
the percentage limitations set forth in the Prospectus. In addition, from time
to time the Fund may strategically adjust its investments among issuers based in
various countries and among the various equity markets of the world in order to
take advantage of diverse global opportunities, based on the Investment
Manager's evaluation of prevailing trends and developments, as well as on the
Investment Manager's assessment of the potential for capital appreciation (as
compared to the risks) of particular companies, industries, countries, and
regions.

INVESTMENT IN DEVELOPED FOREIGN COUNTRIES. The Fund may invest in
securities of foreign governments and companies that are organized or
headquartered in developed foreign countries. The Fund may not be invested in
all developed foreign countries at one time, and may not invest in particular
developed foreign countries at any time, depending on the Investment Manager's
view of the investment opportunities available.

Although these countries have developed economies, even developed countries
may be subject to periods of economic or political instability. For example,
efforts by the member countries of the European Union to eliminate internal
barriers to the free movement of goods, persons, services and capital have
encountered opposition arising from the conflicting economic, political and
cultural interests and traditions of the member countries and their citizens.
Future political, economic and social developments can be expected to produce
continuing effects on securities and currency markets in these and other
developed foreign countries.

INVESTMENT IN EMERGING MARKETS. The Fund may invest in securities of
developing countries with emerging markets and companies organized or
headquartered in such countries. As a general matter, countries that are not
considered to be developed foreign countries by the Investment Manager will be
deemed to be emerging market countries. Emerging market countries include any
country generally considered to be an emerging market or developing country by
the World Bank, the International Finance Corporation, the United Nations or its
authorities, or other recognized financial institutions. As of the date of this
SAI, emerging market countries are deemed to include for purposes of this SAI,
all foreign countries other than Australia, Austria, Belgium, Canada, Denmark,
Finland, France,

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Germany, Ireland, Italy, Japan, Luxembourg, The Netherlands, New Zealand,
Norway, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. (See
INVESTMENT IN DEVELOPED FOREIGN COUNTRIES.) As their economies grow and their
markets grow and mature, some countries that currently may be characterized by
the Investment Manager as emerging market countries may be deemed by the
Investment Manager to be developed foreign countries. In the event that the
Investment Manager deems a particular country to be a developed foreign country,
any investment in securities issued by that country's government or by an issuer
located in that country would not be subject to the Fund's overall limitations
on investments in emerging market countries.

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

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

CURRENCY MANAGEMENT

Securities purchased by the Fund may be denominated in U.S. dollars,
foreign currencies, or multinational currencies such as the Euro, and the Fund
will incur costs in connection with conversions between various currencies.
Movements in the various securities markets may be offset by changes in foreign
currency exchange rates. Exchange rates frequently move independently of
securities markets in a particular country. As a result, gains in a particular
securities market may be affected, either positively or negatively, by changes
in exchange rates, and the Fund's net currency positions may expose it to risks
independent of its securities positions.

From time to time, the Fund may employ currency management techniques
(other than currency futures contracts) to enhance its total returns, although
there is no current intention to do so. The Fund may not employ more than 30% of
the value of its total assets in currency management techniques for the purpose
of enhancing returns. To the extent that such techniques are used to enhance
return, they are considered speculative.

The Fund's ability and decision to purchase or sell portfolio securities
may be affected by the laws or regulations in particular countries relating to
convertibility and repatriation of assets. Because the shares of the Fund are
redeemable in U.S. dollars each day the Fund determines its net asset value, the
Fund must have the ability at all times to obtain U.S. dollars to the extent
necessary to meet redemptions. Under present conditions, the Investment Manager
does not believe that these considerations will have any significant adverse
effect on its portfolio strategies, although there can be no assurances in this
regard.

GENERAL CURRENCY CONSIDERATIONS. Currency exchange rates may fluctuate
significantly over short periods of time causing, along with other factors, the
Fund's net asset value to fluctuate as well. Currency exchange rates generally
are determined by the forces of supply and demand in the foreign exchange
markets and the relative merits of investments in different countries, actual or
anticipated changes in interest rates and other complex factors, as seen from an
international perspective. Currency exchange rates also can be affected
unpredictably by intervention, or failure to do so, by U.S. or foreign
governments or central banks or by currency controls or political developments
in the

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United States or abroad. The markets in forward foreign currency exchange
contracts, currency swaps and other privately negotiated currency instruments
offer less protection against defaults by the other party to such instruments
than is available for currency instruments traded on an exchange. To the extent
that a substantial portion of the Fund's total assets, adjusted to reflect the
Fund's net position after giving effect to currency transactions, is denominated
or quoted in the currencies of foreign countries, the Fund will be more
susceptible to the risk of adverse economic and political developments within
those countries.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may purchase or sell
forward foreign currency exchange contracts ("forward contracts") for hedging
purposes or to seek to increase total return when the Investment Manager
anticipates that a foreign currency will appreciate or depreciate in value, but
securities denominated or quoted in that currency do not present attractive
investment opportunities and are not held in the Fund's portfolio. When
purchased or sold to increase total return, forward contracts are considered
speculative. In addition, the Fund may enter into forward contracts in order to
protect against anticipated changes in future foreign currency exchange rates.

The Fund may engage in cross-hedging by using forward contracts in a
currency different from that in which the hedged security is denominated or
quoted if the Investment Manager determines that there is a pattern of
correlation between the two currencies. The Fund may also engage in proxy
hedging, by using forward contracts in a series of foreign currencies for
similar purposes.

The Fund may enter into forward contracts to purchase foreign currencies to
protect against an anticipated rise in the U.S. dollar price of securities it
intends to purchase. The Fund may enter into forward contracts to sell foreign
currencies to protect against the decline in value of its foreign currency
denominated or quoted portfolio securities, or a decline in the value of
anticipated income or dividends from such securities, due to a decline in the
value of foreign currencies against the U.S. dollar. Forward contracts to sell
foreign currency could limit any potential gain which might be realized by the
Fund if the value of the hedged currency increased.

If the Fund enters into a forward contract to sell foreign currency to
increase total return or to buy foreign currency for any purpose, the Fund will
segregate cash, U.S. Government securities, or other liquid debt or equity
securities with the Fund's custodian in an amount equal to the value of the
Fund's total assets committed to the consummation of the forward contract. If
the value of the segregated securities declines, additional assets will be
segregated so that the value of the segregated assets will equal the amount of
the Fund's commitment with respect to the contract.

A forward contract is subject to the risk that the counterparty to such
contract will default on its obligations. Since a forward contract is not
guaranteed by an exchange or clearinghouse, a default on the contract would
deprive the Fund of unrealized profits, transaction costs or the benefits of a
currency hedge or force the Fund to cover its purchase or sale commitments, if
any, at the current market price.

OPTIONS ON FOREIGN CURRENCIES. The Fund may purchase and sell (write) put
and call options on foreign currencies for the purpose of protecting against
declines in the U.S. dollar value of foreign portfolio securities and
anticipated income or dividends on such securities and against increases in the
U.S. dollar cost of foreign securities to be acquired. The Fund may also use
options on currency to cross-hedge, which involves writing or purchasing options
on one currency to hedge against changes in exchange rates for a different
currency, if the Investment Manager believes there is a pattern of correlation
between the two currencies. Options on foreign currencies to be written or
purchased by the Fund will be traded on U.S. and foreign exchanges.

The writer of a put or call option receives a premium and gives the
purchaser the right to sell (or buy) the currency underlying the option at the
exercise price. The writer has the obligation upon exercise of the option to
purchase (or deliver) the currency during the option period. A writer of an
option who wishes to terminate the obligation may effect a "closing transaction"
by buying an option of the same series as the option previously written. A
writer may not effect a closing purchase transaction after being notified of the
exercise of an option. The writing of an option on foreign currency will
constitute only a partial hedge, up to the amount of the premium received; the
Fund could be required to purchase or sell additional foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may constitute an effective hedge against exchange
rate fluctuations;

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however, in the event of exchange rate movements adverse to the Fund's position,
the Fund may forfeit the entire amount of the premium plus related transaction
costs.

The Fund may purchase call or put options on a currency to seek to increase
total return when the Investment Manager anticipates that the currency will
appreciate or depreciate in value, but the securities quoted or denominated in
that currency do not present attractive investment opportunities and are not
held in the Fund's portfolio.

When the Fund writes a put or call option on a foreign currency, an amount
of cash, U.S. Government securities, or other liquid debt or equity securities
equal to the market value of its obligations under the option will be segregated
by the Fund's custodian to collateralize the position.

CURRENCY SWAPS. The Fund may enter into currency swaps for both hedging and
to seek to increase total return. Currency swaps involve the exchange of rights
to make or receive payments in specified currencies. Since currency swaps are
individually negotiated, the Fund expects to achieve an acceptable degree of
correlation between its portfolio investments and its currency swap positions
entered into for hedging purposes. Currency swaps may involve the delivery of
the entire principal value of one designated currency in exchange for the other
designated currency, or the delivery of the net amount of a party's obligations
over its entitlements. Therefore, the entire principal value of a currency swap
may be subject to the risk that the other party to the swap will default on its
contractual delivery obligations. The Fund will maintain in a segregated account
with the Fund's custodian cash, U.S. Government securities, or other liquid debt
or equity securities equal to the amount of the Fund's obligations, or the net
amount (if any) of the excess of the Fund's obligations over its entitlements,
with respect to swap transactions. To the extent that such amount of a swap is
segregated, the Company and the Investment Manager believe that swaps do not
constitute senior securities under the Investment Company Act of 1940 (the "1940
Act") and, accordingly, will not treat them as being subject to the Fund's
borrowing restriction.

The use of currency swaps is a highly specialized activity which involves
investment techniques and risks different from those associated with ordinary
portfolio securities transactions. If the Investment Manager is incorrect in its
forecasts of market values and currency exchange rates, the investment
performance of the Fund entering into a currency swap would be less favorable
than it would have been if this investment technique were not used.

OPTIONS TRANSACTIONS

The Fund may purchase listed put and call options on any securities which
it is eligible to purchase as a hedge against changes in market conditions that
may result in changes in the value of the Fund's portfolio securities. The
aggregate premiums on put options and call options purchased by the Fund may not
in each case exceed 5% of the value of the net assets of the Fund as of the date
of purchase. In addition, the Fund will not purchase options if more than 25% of
the value of its net assets would be hedged.

A put gives the holder the right, in return for the premium paid, to
require the writer of the put to purchase from the holder a security at a
specified price. A call gives the holder the right, in return for the premium
paid, to require the writer of the call to sell a security to the holder at a
specified price. Put and call options on various stocks and financial indices
are traded on U.S. and foreign exchanges. A put option is covered if the writer
segregates cash, U.S. Government securities or other liquid debt or equity
securities equal to the exercise price. A call option is covered if the writer
owns the security underlying the call or has an absolute and immediate right to
acquire the security without additional cash consideration upon conversion or
exchange of other securities held by it.

The Fund may effectively terminate its right or obligation under an option
by entering into a closing transaction. For example, the Fund may terminate its
obligation under a put or call option that it had written by purchasing an
identical put or call option; this is known as a closing purchase transaction.
Conversely, the Fund may terminate a position in a put or call option that it
had purchased by writing an identical put or call option; this is known as a
closing sale transaction. The Fund realizes a gain from a closing transaction if
the cost of the closing transaction is less than the premium received from
writing the option or if the proceeds from the closing transaction are more than
the premium paid to purchase the option.

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PUT OPTIONS. If the Fund purchases a put option, the Fund acquires the
right to sell the underlying security at a specified price at any time during
the term of the option (for "American-style" options) or on the option
expiration date (for "European-style" options). Purchasing put options may be
used as a portfolio investment strategy when the Investment Manager perceives
significant short-term risk but substantial long-term appreciation for the
underlying security. The put option acts as an "insurance policy", as it
protects against significant downward price movement while it allows full
participation in any upward movement. If the Fund is holding a security which
the Investment Manager feels has strong fundamentals, but for some reason may be
weak in the near term, the Fund may purchase a put option on such security,
thereby giving itself the right to sell such security at a certain strike price
throughout the term of the option. Consequently, the Fund will exercise the put
only if the price of such security falls below the strike price of the put. The
difference between the strike price of the put and the market price of the
underlying security on the date the Fund exercises the put, less transaction
costs, will be the amount by which the Fund will be able to hedge against a
decline in the underlying security. If during the period of the option the
market price for the underlying security remains at or above the put's strike
price, the put will expire worthless, representing a loss of the price the Fund
paid for the put, plus transaction costs. If the price of the underlying
security increases, the profit the Fund realizes on the sale of the security
will be reduced by the premium paid for the put option less any amount for which
the put may be sold.

CALL OPTIONS. If the Fund purchases a call option, it acquires the right to
purchase the underlying security at a specified price at any time during the
term of the option. The purchase of a call option is a type of "insurance
policy" to hedge against losses that could incur if the Fund intends to purchase
the underlying security and the security thereafter increases in price. The Fund
will exercise a call option only if the price of the underlying security is
above the strike price at the time of exercise. If during the option period the
market price for the underlying security remains at or below the strike price of
the call option, the option will expire worthless, representing a loss of the
price paid for the option, plus transaction costs. If the price of the
underlying security increases, the price the Fund pays for the security will in
effect be increased by the premium paid for the call.

WRITING PUT AND CALL OPTIONS. Writing covered put or call options can
enable the Fund to enhance income by reason of the premiums paid by the
purchasers of such options. When the Fund writes a put option, the purchaser
acquire the right to sell to the Fund the underlying security at a specified
price at any time during the term of the option or on the option expiration
date. When the Fund writes a call option, the purchaser acquires the right to
purchase from the Fund the underlying security at a specified price at any time
during the term of the option. In return for the premium received for a call
option, the Fund foregoes the opportunity for profit from a price increase in
the underlying security above the exercise price so long as the option remains
open, but retains the risk of loss should the price of the security decline. In
return for the premium received for a put option, the Fund assumes the risk that
the price of the underlying security will decline below the exercise price, in
which case the put would be exercised and the Fund would suffer a loss.

STOCK INDEX OPTIONS. The Fund may purchase put and call options with
respect to stock indices such as Standard & Poor's 500 Index and other stock
indices. Such options may be purchased as a hedge against changes resulting from
market conditions in the values of securities which are held in the Fund's
portfolio or which it intends to purchase or sell, or when they are economically
appropriate for the reduction of risks inherent in the ongoing management of the
Fund.

The distinctive characteristics of options on stock indices create certain
risks that are not present with stock options generally. Because the value of an
index option depends upon movements in the level of the index rather than the
price of a particular stock, whether the Fund will realize a gain or loss on the
purchase or sale of an index option depends upon movements in the level of stock
prices in the stock market generally rather than movements in the price of a
particular stock. Accordingly, successful use by the Fund of options on a stock
index will be subject to the Investment Manager's ability to predict correctly
movements in the direction of the stock market generally. This requires
different skills and techniques than predicting changes in the prices of
individual stocks.

Index prices may be distorted if trading of certain stocks included in an
index is interrupted. Trading of index options also may be interrupted in
certain circumstances, such as if trading were halted in a substantial number of
stocks included in the index. If this were to occur, the Fund would not be able
to close out options which it had purchased, and if restrictions on exercise
were imposed, the Fund might be unable to exercise an option it holds, which

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could result in substantial losses to the Fund. It is the policy of the Fund to
purchase put or call options only with respect to an index which the Investment
Manager believes includes a sufficient number of stocks to minimize the
likelihood of a trading halt in the index.

DEALER OPTIONS. The Fund may engage in transactions involving dealer
options as well as exchange-traded options. Options not traded on an exchange
generally lack the liquidity of an exchange-traded option, and may be subject to
the Fund's restriction on investment in illiquid securities. In addition, dealer
options may involve the risk that the securities dealers participating in such
transactions will fail to meet their obligations under the terms of the options.

SHORT SALES

The Fund may engage in short sales transactions. A short sale that is not
made "against the box" is a transaction in which the Fund sells a security it
does not own in anticipation of a decline in market price. When the Fund makes a
short sale, the proceeds it receives are retained by the broker until the Fund
replaces the borrowed security. In order to deliver the security to the buyer,
the Fund must arrange through a broker to borrow the security and, in so doing,
the Fund becomes obligated to replace the security borrowed at its market price
at the time of replacement, whatever that price may be.

The value of securities of any issuer in which the Fund maintains a short
position that is not "against the box" may not exceed the lesser of 5% of the
value of the Fund's net assets or 5% of the securities of such class of the
issuer. The Fund's ability to enter into short sales transactions is limited by
the requirements of the 1940 Act.

Short sales by the Fund that are not made "against the box" create
opportunities to increase the Fund's return but, at the same time, involve
special risk considerations and may be considered a speculative technique. Since
the Fund in effect profits from a decline in the price of the securities sold
short without the need to invest the full purchase price of the securities on
the date of the short sale, the Fund's net asset value per share will tend to
increase more when the securities it has sold short decrease in value, and to
decrease more when the securities it has sold short increase in value, than
would otherwise be the case if it had not engaged in such short sales. Short
sales theoretically involve unlimited loss potential, as the market price of
securities sold short may continuously increase, although the Fund may mitigate
such losses by replacing the securities sold short before the market price has
increased significantly. Under adverse market conditions, the Fund might have
difficulty purchasing securities to meet its short sale delivery obligations,
and might have to sell portfolio securities to raise the capital necessary to
meet its short sale obligations at a time when fundamental investment
considerations would not favor such sales.

If the Fund makes a short sale "against the box," the Fund would not
immediately deliver the securities sold and would not receive the proceeds from
the sale. The seller is said to have a short position in the securities sold
until it delivers the securities sold, at which time it receives the proceeds of
the sale. The Fund's decision to make a short sale "against the box" may be a
technique to hedge against market risks when the Investment Manager believes
that the price of a security may decline, causing a decline in the value of a
security owned by the Fund or a security convertible into or exchangeable for
such security. In such case, any future losses in the Fund's long position would
be reduced by a gain in the short position.

In the view of the Securities and Exchange Commission ("SEC"), a short sale
involves the creation of a "senior security" as such term is defined in the 1940
Act, unless the sale is "against the box" and the securities sold are placed in
a segregated account (not with the broker), or unless the Fund's obligation to
deliver the securities sold short is "covered" by segregating (not with the
broker) cash, U.S. Government securities or other liquid debt or equity
securities in an amount equal to the difference between the market value of the
securities sold short at the time of the short sale and any cash or securities
required to be deposited as collateral with a broker in connection with the sale
(not including the proceeds from the short sale), which difference is adjusted
daily for changes in the value of the securities sold short. The total value of
the cash and securities deposited with the broker and otherwise segregated may
not at any time be less than the market value of the securities sold short at
the time of the short sale.

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To avoid limitations under the 1940 Act on borrowing by investment
companies, short sales by the Fund will be "against the box", or the Fund's
obligation to deliver the securities sold short will be "covered" by segregating
cash, U.S. Government securities or other liquid debt or equity securities in an
amount equal to the market value of its delivery obligation. The Fund will not
make short sales of securities or maintain a short position if doing so could
create liabilities or require collateral deposits and segregation of assets
aggregating more than 25% of the value of the Fund's total assets.

FUTURES TRANSACTIONS

The Fund may enter into contracts for the purchase or sale for future
delivery ("futures contracts") of foreign stock or bond indices or other
financial indices that the Investment Manager determines are appropriate to
hedge the risks associated with changes in interest rates or general
fluctuations in the value of its portfolio securities. Pursuant to the
regulations of the Commodity Futures Trading Commission ("CFTC"), and subject to
certain restrictions, the Fund may purchase or sell futures contracts that are
traded on U.S. exchanges that have been designated as contract markets by the
CFTC. The Fund may also generally purchase or sell futures contracts that are
subject to the rules of any foreign board of trade ("foreign futures
contracts"). The Fund may not, however, trade a foreign futures contract based
on a foreign stock index unless the contract has been approved by the CFTC for
trading by U.S. persons. The Investment Manager may comply with such different
standards as may be established by the CFTC with respect to the purchase or sale
of futures contracts and foreign futures contracts.

FUTURES CHARACTERISTICS. A futures contract on an index is an agreement
between two parties (buyer and seller) to take or make delivery of an amount of
cash equal to the difference between the value of the index at the close of the
last trading day of the contract and the price at which the index contract was
originally written. In the case of futures contracts traded on U.S. exchanges,
the exchange itself or an affiliated clearing corporation assumes the opposite
side of each transaction (i.e., as buyer or seller). A futures contract may be
satisfied or closed out by payment of the change in the cash value of the index.
No physical delivery of the instruments underlying the index is made.

Unlike when the Fund purchases or sells a security, no price is paid or
received by the Fund upon the purchase or sale of a futures contract. Initially,
the Fund will be required to deposit with the Fund's custodian or such other
parties as may be authorized by the SEC (in the name of the futures commission
merchant (the "FCM")) an amount of cash or U.S. Treasury bills which is referred
to as an "initial margin" payment. The nature of initial margin in futures
transactions is different from that of margin in security transactions in that a
futures contract margin does not involve the borrowing of funds by the Fund to
finance the transactions. Rather, the initial margin is in the nature of a
performance bond or good faith deposit on the contract which is returned to the
Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Futures contracts customarily are purchased and
sold with initial margins that may range upwards from less than 5% of the value
of the futures contract being traded. Subsequent payments, called "variation
margin", to and from the FCM, will be made on a daily basis as the value of the
underlying index varies, making the long and short positions in the futures
contract more or less valuable. This process is known as "marking to the
market." For example, when the Fund has purchased a stock index futures contract
and the value of the underlying index has risen, the Fund's position will have
increased in value and the Fund will receive from the FCM a variation margin
payment equal to that increased value. Conversely, when the Fund has purchased
stock index futures contract and the value of the underlying index has declined,
the position would be less valuable and the Fund would be required to make a
variation margin payment to the FCM. At any time prior to expiration of a
futures contract, the Fund may elect to close the position by taking an
identical opposite position which will operate to terminate the Fund's position
in the futures contract. A final determination of variation margin is then made,
additional cash is required to be paid by or released to the Fund, and the Fund
realizes a loss or a gain.

PURCHASE AND SALE OF FUTURES. If the Investment Manager anticipates a
significant stock market or stock market sector advance, the Fund may purchase a
stock index futures contract which affords a hedge against not participating in
such advance at a time when the Fund is not fully invested in equity securities.
Such purchase of a futures contract would serve as a temporary substitute for
the purchase of individual stocks which may later be purchased (with attendant
costs) in an orderly fashion. As such purchase of individual stocks are made, an
approximately equivalent amount of stock index futures would be terminated by
offsetting sales. The Fund may sell

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stock index futures contracts in anticipation of or during a general stock
market or market sector decline that may adversely affect the market values of
the Fund's portfolio of equity securities. To the extent that the Fund's
portfolio of equity securities changes in value in correlation with a given
stock index, the sale of futures contracts on that index would reduce the risk
to the portfolio of a market decline and, by doing so, would provide an
alternative to the liquidation of securities positions in the portfolio with
resultant transaction costs.

LIMITATIONS ON PURCHASE AND SALE OF FUTURES. The Fund may not purchase or
sell futures contracts if, immediately thereafter, more than 30% of the value of
its net assets would be hedged. In addition, the Fund may not purchase or sell
futures if, immediately thereafter, the sum of the amount of margin deposits on
the Fund's existing futures positions would exceed 5% of the market value of the
Fund's total assets. In Fund transactions involving futures contracts, to the
extent required by applicable SEC guidelines, an amount of cash, U.S. Government
securities, or other liquid debt or equity securities equal to the market value
of the futures contracts will be segregated with the Fund's Custodian, or in
other segregated accounts as regulations may allow, to collateralize the
position and thereby to insure that the use of such futures is unleveraged.

REGULATORY MATTERS. The Company has filed a claim of exemption from
registration of the Fund as a commodity pool with the CFTC. The Fund intends to
conduct its futures trading activity in a manner consistent with that exemption.
The Investment Manager is registered with the CFTC as both a commodity pool
operator and as a commodity trading advisor.

SWAPS

The Fund may engage in securities index total return swaps with approved
counterparties. Securities index total return swaps involve an agreement between
two parties to exchange payments that are based on a specified securities index
and that are calculated on the basis of a set amount (the "notional amount") for
a specified period of time. The Fund may enter into securities index total
return swaps only to the extent that the notional amount of all current swaps
does not exceed 30% of the Fund's net assets. Generally, the Fund will base its
securities index total return swaps on its benchmark index, MSCI Europe, or a
separate market index such as the DAX100 or CAC100. The Fund may, among other
purposes, use securities index total return swaps to provide the Fund with
sufficient liquidity to meet cash redemptions of shares while maintaining its
investments in securities and foreign currencies or to provide the Fund with
sufficient exposure to the equity markets when it is holding cash that is being
held to meet redemptions or when incoming cash is not yet invested. Swaps are
subject to risks comparable to the risks involved with respect to hedging
transactions.

The Fund may enter into securities index total return swaps and will
usually enter into securities index total return swaps on a net basis, I.E., the
two payment streams are netted out, with the Fund receiving or paying, as the
case may be, only the net amount of the two payments. Inasmuch as segregated
accounts will be established with respect to such transactions, the Investment
Manager believes such obligations do not constitute senior securities and,
accordingly, will not treat them as being subject to the Fund's borrowing
restrictions. The net amount of the excess, if any, of the Fund's obligations
over its entitlements with respect to each securities index total return swap
will be accrued on a daily basis, and appropriate Fund assets having an
aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account. The Fund also will establish and maintain
such segregated accounts with respect to its total obligations under any swaps
that are not entered into on a net basis.

The Fund will enter into swaps only with banks and recognized securities
dealers believed by the Investment Manager to present minimal credit risk in
accordance with guidelines established by the Board of Directors of the Company
(the "Board of Directors"). If there is a default by the approved counterparty
to such a transaction, the Fund will have to rely on its contractual remedies
(which may be limited by bankruptcy, insolvency or similar laws) pursuant to the
agreements related to the swap.

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DEBT SECURITIES

Under normal market conditions, the Fund may invest up to 10% of its total
assets in short-term debt obligations (with maturities of one year or less)
issued or guaranteed by the U.S. government or foreign governments (including
their respective agencies, instrumentalities, authorities and political
subdivisions), debt obligations issued or guaranteed by international or
supranational government entities, and debt obligations of corporate issuers.
The timing of purchase and sale transactions in debt obligations may result in
capital appreciation or depreciation because the value of debt obligations
varies inversely with prevailing interest rates. The debt obligations in which
the Fund may invest will be rated, at the time of purchase, BBB or higher by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("Standard &
Poor's"), or Baa or higher by Moody's Investors Service, Inc. ("Moody's") or
equivalent ratings by other rating organizations, or, if unrated, will be
determined by the Investment Manager to be of comparable investment quality. If
the rating of an investment grade security held by the Fund is downgraded, the
Investment Manager will determine whether it is in the best interests of the
Fund to continue to hold the security in its investment portfolio. Investment
grade means the issuer of the security is believed to have adequate capacity to
pay interest and repay principal, although certain of such securities in the
lower grades have speculative characteristics, and changes in economic
conditions or other circumstances may be more likely to lead to a weakened
capacity to pay interest and principal than would be the case with higher-rated
securities.

RATINGS. Credit ratings evaluate the safety of principal and interest
payments of securities, not their market value. The rating of an issuer is also
heavily weighted by past developments and does not necessarily reflect probable
future conditions. There is frequently a lag between the time a rating is
assigned and the time it is updated. As credit rating agencies may fail to
timely change credit ratings of securities to reflect subsequent events, the
Investment Manager will also monitor issuers of such securities to determine if
such issuers will have sufficient cash flow and profits to meet required
principal and interest payments and to assure their liquidity. In general, debt
securities held by the Fund will be treated as investment grade if they are
rated by at least one major rating agency in one of its top four rating
categories at the time of purchase or, if unrated, are determined by the
Investment Manager to be of comparable quality. Investment grade means the
issuer of the security is believed to have adequate capacity to pay interest and
repay principal, although certain of such securities in the lower grades have
speculative characteristics, and changes in economic conditions or other
circumstances may be more likely to lead to a weakened capacity to pay interest
and principal than would be the case with higher rated securities.

GOVERNMENT OBLIGATIONS. U.S. Government obligations include obligations
issued or guaranteed as to principal and interest by the U.S. Government and its
agencies and instrumentalities, by the right of the issuer to borrow from the
U.S. Treasury, by the discretionary authority of the U.S. Government to purchase
certain obligations of the agency or instrumentality, or only by the credit of
the agency or instrumentality. No assurance can be given that the U.S.
Government will provide financial support to U.S. Government-sponsored
instrumentalities if it is not obligated to do so by law.

The Fund may invest in sovereign debt obligations of foreign countries. A
number of factors affect a sovereign debtor's willingness or ability to repay
principal and interest in a timely manner, including its cash flow situation,
the extent of its foreign reserves, the availability of sufficient foreign
exchange on the date a payment is due, the relative size of the debt service
burden to the economy as a whole, the sovereign debtor's policy toward principal
international lenders and the political constraints to which it may be subject.
Emerging market governments could default on their sovereign debt. Such
sovereign debtors also may be dependent on expected disbursements from foreign
governments, multilateral agencies and other entities abroad to reduce principal
and interest arrearages on their debt. The commitments on the part of these
governments, agencies and others to make such disbursements may be conditioned
on a sovereign debtor's implementation of economic reforms and/or economic
performance and the

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timely service of such debtor's obligations. Failure to meet such conditions
could result in the cancellation of such third parties' commitments to lend
funds to the sovereign debtor, which may further impair such debtor's ability or
willingness to service its debt in a timely manner.

CONVERTIBLE SECURITIES AND WARRANTS

The Fund may invest in convertible securities and warrants. The value of a
convertible security is a function of its "investment value" (determined by its
yield in comparison with the yields of other securities of comparable maturity
and quality that do not have conversion privilege) and its "conversion value"
(the security's worth, at market value, if converted into the underlying common
stock). The credit standing of the issuer and other factors may also affect the
investment value of a convertible security. The conversion value of a
convertible security is determined by the market price of the underlying common
stock. If the conversion value is low relative to the investment value, the
price of the convertible security is governed principally by its investment
value. To the extent the market price of the underlying common stock approaches
or exceeds the conversion price, the price of the convertible security will be
increasingly influenced by its conversion value.

As a matter of operating policy, the Fund will not invest more than 5% of
its net assets in warrants. A warrant gives the holder a right to purchase at
any time during a specified period a predetermined number of shares of common
stock at a fixed price. Unlike convertible debt, securities or preferred stock,
warrants do not pay a fixed dividend. Investments in warrants involve certain
risks, including the possible lack of a liquid market for resale of the
warrants, potential price fluctuations as a result of speculation or other
factors, and failure of the price of the underlying security to reach or have
reasonable prospects of reaching a level at which the warrant can be prudently
exercised (in which event the warrant may expire without being exercised)
resulting in a loss of the Fund's entire investment.

SYNTHETIC CONVERTIBLE SECURITIES

The Fund may invest in "synthetic" convertible securities, which are
derivative positions composed of two or more different securities whose
investment characteristics, taken together, resemble those of convertible
securities. For example, the Fund may purchase a non-convertible debt security
and a warrant or option, which enables the Fund to have a convertible-like
position with respect to a company, group of companies or stock index. Synthetic
convertible securities are typically offered by financial institutions and
investment banks in private placement transactions. Upon conversion, the Fund
generally receives an amount in cash equal to the difference between the
conversion price and the then current value of the underlying security. Unlike a
true convertible security, a synthetic convertible comprises two or more
separate securities, each with its own market value. Therefore, the market value
of a synthetic convertible is the sum of the values of its fixed-income
component and its convertible component. For this reason, the values of a
synthetic convertible and a true convertible security may respond differently to
market fluctuations. The Fund only invests in synthetic convertibles with
respect to companies whose corporate debt securities are rated "A" or higher by
Moody's or Standard & Poor's and will not invest more than 15% of its net assets
in such synthetic securities and other illiquid securities.

PREFERRED STOCK

The Fund may purchase preferred stock. Preferred stock, unlike common
stock, offers a stated dividend rate payable from a corporation's earnings. Such
preferred stock dividends may be cumulative or non-cumulative, participating, or
auction rate. If interest rates rise, the fixed dividend on preferred stocks may
be less attractive, causing the price of preferred stocks to decline. Preferred
stock may have mandatory sinking fund provisions, as well as call/redemption
provisions prior to maturity, a negative feature when interest rates decline.
Dividends on some preferred stock may be "cumulative," requiring all or a
portion of prior unpaid dividends to be paid prior to payment of dividends on
the issuer's common stock. Preferred stock also generally has a preference over
common stock on the distribution of a corporation's assets in the event of
liquidation of the corporation, and may be "participating," which means that it
may be entitled to a dividend exceeding the stated dividend in certain cases.
The rights of the holders of

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preferred stock on the distribution of a corporation's assets in the event of a
liquidation are generally subordinate to the rights associated with a
corporation's debt securities.

BORROWING MONEY

From time to time, it may be advantageous for the Fund to borrow money
rather than sell portfolio securities to raise the cash to meet redemption
requests. In order to meet such redemption requests, the Fund may borrow from
banks or enter into reverse repurchase agreements. The Fund may also borrow up
to 5% of the value of its total assets for temporary or emergency purposes other
than to meet redemptions. However, the Fund will not borrow money for leveraging
purposes. The Fund may continue to purchase securities while borrowings are
outstanding. The 1940 Act permits the Fund to borrow only from banks and only to
the extent that the value of its total assets, less its liabilities other than
borrowings, is equal to at least 300% of all borrowings (including the proposed
borrowing), and requires the Fund to take prompt action to reduce its borrowings
if this limit is exceeded. For the purpose of the 300% borrowing limitation,
reverse repurchase agreements and other borrowing transactions covered by
segregated assets are not considered borrowings.

A reverse repurchase agreement involves a transaction by which a borrower
(such as the Fund) sells a security to a purchaser (a member bank of the Federal
Reserve System or a broker-dealer deemed creditworthy pursuant to standards
adopted by the Board of Directors, and simultaneously agrees to repurchase the
security at an agreed-upon price on an agreed-upon date within a number of days
(usually not more than seven) from the date of purchase.

LENDING PORTFOLIO SECURITIES

The Fund is authorized to make loans of portfolio securities, for the
purpose of realizing additional income, to broker-dealers or other institutional
investors deemed creditworthy pursuant to standards adopted by the Board of
Directors. The borrower must maintain with the Fund's custodian collateral
consisting of cash, U.S. Government securities or other liquid debt or equity
securities equal to at least 100% of the value of the borrowed securities, plus
any accrued interest. The Fund will receive any interest paid on the loaned
securities, and a fee and/or a portion of the interest earned on the collateral,
less any fees and administrative expenses associated with the loan.

INVESTMENT IN ILLIQUID SECURITIES

The Fund may invest up to 15% of the value of its net assets in illiquid
securities. Securities may be considered illiquid if the Fund cannot reasonably
expect to receive approximately the amount at which the Fund values such
securities within seven days. The Investment Manager has the authority to
determine whether certain securities held by the Fund are liquid or illiquid
pursuant to standards adopted by the Boards of Directors.

The Investment Manager takes into account a number of factors in reaching
liquidity decisions, including, but not limited to: the listing of the security
on an exchange or national market system; the frequency of trading in the
security; the number of dealers who publish quotes for the security; the number
of dealers who serve as market makers for the security; the apparent number of
other potential purchasers; and the nature of the security and how trading is
effected (e.g., the time needed to sell the security, how offers are solicited,
and the mechanics of transfer).

The Fund's investments in illiquid securities may include securities that
are not registered for resale under the Securities Act of 1933 (the "Securities
Act"), and therefore are subject to restrictions on resale. When the Fund
purchases unregistered securities, it may, in appropriate circumstances, obtain
the right to register such securities at the expense of the issuer. In such
cases there may be a lapse of time between the Fund's decision to sell any such
security and the registration of the security permitting sale. During any such
period, the price of the security will be subject to market fluctuations.

The fact that there are contractual or legal restrictions on resale of
certain securities to the general public or to certain institutions may not be
indicative of the liquidity of such investments. If such securities are subject
to purchase

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by institutional buyers in accordance with Rule 144A under the Securities Act,
the Investment Manager may determine in particular cases, pursuant to standards
adopted by the Board of Directors, that such securities are not illiquid
securities notwithstanding the legal or contractual restrictions on their
resale. Investing in Rule 144A securities could have the effect of increasing
the Fund's illiquidity to the extent that qualified institutional buyers become,
for a time, uninterested in purchasing such securities.

CASH-EQUIVALENT INSTRUMENTS

Other than as described under INVESTMENT RESTRICTIONS below, the Fund is
not restricted with regard to the types of cash-equivalent investments it may
make. When the Investment Manager believes that such investments are an
appropriate part of the Fund's overall investment strategy, the Fund may hold or
invest, for investment purposes, a portion of its assets in any of the
following, denominated in U.S. dollars, foreign currencies, or multinational
currencies: cash; short-term U.S. or foreign government securities; commercial
paper rated at least A-2 by Standard & Poor's or P-2 by Moody's; certificates of
deposit or other deposits of banks deemed creditworthy by the Investment Manager
pursuant to standards adopted by the Board of Directors; time deposits; bankers'
acceptances; and repurchase agreements related to any of the foregoing. In
addition, for temporary defensive purposes under abnormal market or economic
conditions, the Fund may invest up to 100% of its assets in such cash-equivalent
investments.

A certificate of deposit is a short-term obligation of a commercial bank. A
bankers' acceptance is a time draft drawn on a commercial bank by a borrower,
usually in connection with international commercial transactions. A repurchase
agreement involves a transaction by which an investor (such as the Fund)
purchases a security and simultaneously obtains the commitment of the seller (a
member bank of the Federal Reserve System or a securities dealer deemed
creditworthy by the Investment Manager pursuant to standards adopted by the
Board of Directors) to repurchase the security at an agreed-upon price on an
agreed-upon date within a number of days (usually not more than seven) from the
date of purchase.

PORTFOLIO TURNOVER

Securities in the Fund's portfolio will be sold whenever the Investment
Manager believes it is appropriate to do so, regardless of the length of time
that securities have been held, and securities may be purchased or sold for
short-term profits whenever the Investment Manager believes it is appropriate or
desirable to do so. Turnover will be influenced by sound investment practices, a
Fund's investment objective, and the need for funds for the redemption of the
Fund's shares.

For example, a 150% portfolio turnover rate would occur if the value of
purchases or sales of portfolio securities (whichever is less) by the Fund for a
year (excluding purchases of U.S. Treasury issues and securities with a maturity
of one year or less) were equal to 150% of the average monthly value of the
securities held by the Fund during such year. As a result of the manner in which
turnover is measured, a high turnover rate could also occur during periods when
the Fund's assets are growing or shrinking. A high portfolio turnover rate would
increase a Fund's brokerage commission expenses and other transaction costs, and
may increase its taxable capital gains.

RISK CONSIDERATIONS

INVESTMENTS IN FOREIGN SECURITIES GENERALLY

Investments in foreign securities may offer investment opportunities and
potential benefits not available from investments solely in securities of U.S.
issuers. Such benefits may include higher rates of interest on debt securities

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than are available from domestic issuers, the opportunity to invest in foreign
issuers that appear, in the opinion of the Investment Manager, to offer better
opportunity for long-term capital appreciation than investments in securities of
U.S. issuers, the opportunity to invest in foreign countries with economic
policies or business cycles different from those of the United States and the
opportunity to reduce fluctuations in portfolio value by taking advantage of
foreign markets that do not necessarily move in a manner parallel to U.S. stock
markets.

At the same time, however, investing in foreign securities involves
significant risks, some of which are not typically associated with investing in
securities of U.S. issuers. For example, the value of investments in such
securities may fluctuate based on changes in the value of one or more foreign
currencies relative to the U.S. dollar, and a change in the exchange rate of one
or more foreign currencies could reduce the value of certain portfolio
securities. Currency exchange rates may fluctuate significantly over short
periods of time, and are generally determined by the forces of supply and demand
and other factors beyond the Fund's control. Changes in currency exchange rates
may, in some circumstances, have a greater effect on the market value of a
security than changes in the market price of the security. To the extent that a
substantial portion of the Fund's total assets is denominated or quoted in the
currency of a foreign country, the Fund will be more susceptible to the risk of
adverse economic and political developments within that country. As discussed
above, the Fund may employ certain investment techniques to hedge its foreign
currency exposure; however, such techniques also entail certain risks.

In addition, information about foreign issuers may be less readily
available than information about domestic issuers. Foreign issuers generally are
not subject to accounting, auditing, and financial reporting standards or to
other regulatory practices and requirements comparable to those applicable to
U.S. issuers. Furthermore, with respect to certain foreign countries, the
possibility exists of expropriation, nationalization, revaluation of currencies,
confiscatory taxation, and limitations on foreign investment and the use or
removal of funds or other assets of the Fund, including the withholding of tax
on interest, dividends and other distributions and limitations on the
repatriation of currencies. In addition, the Fund may experience difficulties or
delays in obtaining or enforcing judgments. Foreign securities may be subject to
foreign government taxes that could reduce the yield and total return on such
securities.

Foreign equity securities may be traded on an exchange in the issuer's
country, an exchange in another country, or over-the-counter in one or more
countries. Most foreign securities markets, including over-the-counter markets,
have substantially less volume than U.S. securities markets, and the securities
of many foreign issuers may be less liquid and more volatile than securities of
comparable U.S. issuers. In addition, there is generally less government
regulation of securities markets, securities exchanges, securities dealers, and
listed and unlisted companies in foreign countries than in the United States.

Foreign markets also have different clearance and settlement procedures,
and in certain markets there have been times when settlements have been unable
to keep pace with the volume of securities transactions, making it difficult to
conduct and complete such transactions. Inability to dispose of a portfolio
security caused by settlement problems could result either in losses to the Fund
due to subsequent declines in the value of the portfolio security or, if the
Fund has entered into a contract to sell that security, could result in possible
liability of the Fund to the purchaser. Delays in settlement could adversely
affect the Fund's ability to implement its investment strategies and to achieve
its investment objectives.

In addition, the costs associated with transactions in securities traded on
foreign markets or of foreign issuers, and the expense of maintaining custody of
such securities with foreign custodians, generally are higher than the costs
associated with transactions in U.S. securities on U.S. markets. Investments in
foreign securities may result in higher expenses due to the cost of converting
foreign currency to U.S. dollars, the payment of fixed brokerage commissions on
foreign exchanges, the expense of maintaining securities with foreign custodians
and the imposition of transfer taxes or transaction charges associated with
foreign exchanges.

Investment in debt securities of supranational organizations involves
additional risks. Such organizations' debt securities generally are not
guaranteed by their member governments, and payment depends on their financial
solvency and/or the willingness and ability of their member governments to
support their obligations. Continued support of a supranational organization by
its government members is subject to a variety of political, economic and other
factors, as well as the financial performance of the organization.

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DEPOSITARY RECEIPTS

In many respects, the risks associated with investing in depositary
receipts are similar to the risks associated with investing in foreign equity
securities directly. In addition, to the extent that the Fund acquires
depositary receipts through banks that do not have a contractual relationship
with the foreign issuer of the security underlying the depositary receipts to
issue and service depositary receipts, there may be an increased possibility
that the Fund would not become aware of and be able to respond to corporate
actions, such as stock splits or rights offerings, involving the foreign issuer
in a timely manner.

The information available for American Depositary Receipts ("ADRs")
sponsored by the issuers of the underlying securities is subject to the
accounting, auditing, and financial reporting standards of the domestic market
or exchange on which they are traded, which standards generally are more uniform
and more exacting than those to which many non-domestic issuers may be subject.
However, some ADRs are sponsored by persons other than the issuers of the
underlying securities. Issuers of the stock on which such ADRs are based are not
obligated to disclose material information in the United States. The information
that is available concerning the issuers of the securities underlying European
Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs") may be less
than the information that is available about domestic issuers, and EDRs and GDRs
may be traded in markets or on exchanges that have lesser standards than those
applicable to the markets for ADRs.

A depositary receipt will be treated as an illiquid security for purposes
of the Fund's restriction on the purchases of such securities unless the
depositary receipt is convertible into cash by the Fund within seven days.

EMERGING MARKET SECURITIES

There are special risks associated with investments in securities of
companies organized or headquartered in developing countries with emerging
markets that are in addition to the usual risks of investing in securities of
issuers located in developed foreign markets around the world, and investors in
the Fund are strongly advised to consider those risks carefully. The securities
markets of emerging market countries are substantially smaller, less developed,
less liquid, and more volatile than the securities markets of the United States
and developed foreign markets. As a result, the prices of emerging market
securities may increase or decrease much more rapidly and much more dramatically
than the prices of securities of issuers located in developed foreign markets.
Disclosure and regulatory standards in many respects are less stringent than in
the United States and developed foreign markets. There also may be a lower level
of monitoring and regulation of securities markets in emerging market countries
and the activities of investors in such markets, and enforcement of existing
regulations has been extremely limited.

Many emerging market countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have very negative
effects on the economies and securities markets of certain emerging market
countries. Economies in emerging markets generally are heavily dependent upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values, and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been and may continue
to be adversely affected by economic conditions in the countries with which they
trade. In addition, custodial services and other costs related to investment in
foreign markets may be more expensive in emerging markets than in many developed
foreign markets, which could reduce the Fund's investment returns from such
securities.

In many cases, governments of emerging market countries continue to
exercise a significant degree of control over the economies of such countries,
and government actions relative to the economy, as well as economic developments
generally, also may have a major effect on an issuer's prospects. In addition,
certain of such governments have in the past failed to recognize private
property rights and have at times naturalized or expropriated the assets of
private companies. There is also a heightened possibility of confiscatory
taxation, imposition of withholding taxes on dividend and interest payments, or
other similar developments that could affect investments in those countries. As
a result, there can be no assurance that adverse political changes will not
cause the Fund to suffer

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a loss with respect to any of its holdings. In addition, political and economic
structures in many of such countries may be undergoing significant evolution and
rapid development, and such countries may lack the social, political and
economic stability characteristics of more developed countries. Unanticipated
political or social developments may affect the values of the Fund's investments
in those countries and the availability of additional investments in those
countries.

INVESTMENTS IN SMALLER COMPANIES

Investment in the securities of companies with smaller market
capitalizations involves greater risk and the possibility of greater portfolio
price volatility than investing in larger capitalization companies. The
securities of small-sized concerns, as a class, have shown market behavior which
has had periods of more favorable results, and periods of less favorable
results, relative to securities of larger companies as a class. For example,
smaller capitalization companies may have less certain growth prospects, and may
be more sensitive to changing economic conditions, than large, more established
companies. Moreover, smaller capitalization companies often face competition
from larger or more established companies that have greater resources. In
addition, the smaller capitalization companies in which the Fund may invest may
have limited or unprofitable operating histories, limited financial resources,
and inexperienced management. Furthermore, securities of such companies are
often less liquid than securities of larger companies, and may be subject to
erratic or abrupt price movements. To dispose of these securities, the Fund may
have to sell them over an extended period of time below the original purchase
price. Investments in smaller capitalization companies may be regarded as
speculative.

Securities issued by companies (including predecessors) that have operated
for less than three years may have limited liquidity, which can result in their
prices being lower than might otherwise be the case. In addition, investments in
such companies are more speculative and entail greater risk than do investments
in companies with established operating records.

CONVERTIBLE SECURITIES

Investment in convertible securities involves certain risks. If the
conversion value is low relative to the investment value, the price of the
convertible security will be governed principally by its yield, and thus may not
decline in price to the same extent as the underlying stock; to the extent the
market price of the underlying common stock approaches or exceeds the conversion
price, the price of the convertible security will be influenced increasingly by
its conversion value. A convertible security held by the Fund may be subject to
redemption at the option of the issuer at a price established in the instrument
governing the convertible security, in which event the Fund will be required to
permit the issuer to redeem the security, convert it into the underlying common
stock, or sell it to a third party.

OTHER DEBT OBLIGATIONS

Although securities rated BBB by Standard & Poor's or Baa by Moody's are
considered to be of "investment grade," and are considered to have adequate
capacity to pay interest and repay principal, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and principal than higher-rated securities. Credit ratings evaluate the
safety of principal and interest payments of securities, not their market value.
The rating of an issuer is also heavily weighted by past developments and does
not necessarily reflect probable future conditions. There is frequently a lag
between the time a rating is assigned and the time it is updated.

OPTIONS

There are several risks associated with transactions in options on
securities, currencies and financial indices. Options may be more volatile than
the underlying instruments, and therefore, on a percentage basis, an investment
in options may be subject to greater fluctuation than an investment in the
underlying instruments themselves. There are also significant differences
between the securities and options markets that could result in an imperfect
correlation

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between these markets, causing a given transaction not to achieve its objective.
In addition, a liquid secondary market for particular options may be absent for
reasons which include the following: there may be insufficient trading interest
in certain options; restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; trading halts, suspensions or
other restrictions may be imposed with respect to particular classes or series
of options or underlying instruments; unusual or unforeseen circumstances may
interrupt normal operations on an exchange; the facilities of an exchange or
clearing corporation may not at all times be adequate to handle current trading
volume; or one or more exchanges could, for economic or other reasons, decide,
or be compelled at some future date, to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market on
that exchange (or in that class or series of options) would cease to exist,
although outstanding options that had been issued by a clearing corporation as a
result of trades on that exchange would continue to be exercisable in accordance
with their terms.

A decision as to whether, when and how to use options involves the exercise
of skill and judgment, and even a well-conceived transaction may be unsuccessful
to some degree because of market behavior or unexpected events.

In addition, when trading options on foreign exchanges, many of the
protections afforded to participants in U.S. option exchanges will not be
available. For example, there may be no daily price fluctuation limits in such
exchanges or markets, and adverse market movements could therefore continue to
an unlimited extent over a period of time. Although the purchaser of an option
cannot lose more than the amount of the premium plus related transaction costs,
this entire amount could be lost.

Potential losses to the writer of an option are not limited to the loss of
the option premium received by the writer, and thus may be greater than the
losses incurred in connection with the purchasing of an option.

FUTURES TRANSACTIONS

There are several risks in connection with the use of futures contracts in
the Fund. One risk arises because the correlation between movements in the price
of an index futures contract and movements in the value of the portfolio of
securities which is the subject of the hedge is not always perfect. The price of
the futures contract acquired by the Fund may move more than, or less than, the
price of the security or currency being hedged. If the price of the future moves
less than the value of the portfolio of securities which is the subject of the
hedge, the hedge will not be fully effective but, if the value of the portfolio
of securities being hedged has moved in an unfavorable direction, the Fund would
be in a better position than if it had not hedged at all. If the value of the
portfolio of securities being hedged has moved in a favorable direction, this
advantage will be partially offset by movement in the value of the future. If
the price of the futures contract moves more than the value of the portfolio of
securities, the Fund will experience either a loss or a gain on the futures
contract which will not be completely offset by movements in the value of the
portfolio of securities which is the subject of the hedge.

To compensate for the imperfect correlation of movements in the value of
the portfolio of securities being hedged and movements in the price of the
futures, the Fund may buy or sell futures contracts in a greater dollar amount
than the value of the portfolio of securities being hedged, if the historical
volatility of the value of the portfolio of securities has been greater than the
historical volatility of the futures contract being used. Conversely, the Fund
may buy or sell fewer futures contracts if the historical volatility of the
price of the security or currency being hedged is less than the historical
volatility of the security or currency.

Because of the low margins required, futures trading involves a high degree
of leverage. As a result, a relatively small investment in a futures contract by
the Fund may result in immediate and substantial loss, or gain, to the Fund. A
purchase or sale of a futures contract may result in losses in excess of the
initial margin for the futures contract. However, the Fund would have sustained
comparable losses if, instead of the futures contract, it had invested in the
underlying financial instrument and sold the instrument after the decline.

When futures are purchased by the Fund to hedge against a possible
unfavorable movement in a currency exchange rate before the Fund is able to
invest its cash (or cash equivalents) in stock or debt instruments in an orderly

Page 16

<PAGE>

fashion, it is possible that the currency exchange rate may move in a favorable
manner instead. If the Fund then decides not to invest in stock or debt
instruments at that time because of concern as to possible further market
decline or for other reasons, the Fund will realize a loss on the futures
contract that is not offset by a reduction in the price of securities purchased.

In addition, the price of futures contracts may not correlate perfectly
with movements in the index due to certain market distortions. First, all
participants in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting transactions. This
practice could distort the normal relationship between the index and futures
markets. Second, from the point of view of speculators, the deposit requirements
in the futures market may be less onerous than margin requirements in the
securities market. Therefore, increased participation by speculators in the
futures market also may cause temporary price distortions. Due to the
possibility of price distortion in the futures market and because of the
imperfect correlation between movements in the index and movements in the price
of index futures, a correct forecast of general market trends by the Investment
Manager still may not result in a successful hedging transaction over a short
time frame.

Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. Once the daily limit has
been reached, no more trades may be made on that day at a price beyond the
limit. The daily limit governs only price movements during a particular trading
day and therefore does not limit potential losses, because the limit may prevent
the liquidation of unfavorable positions.

The Fund will only enter into futures contracts that are standardized and
traded on a U.S. or foreign exchange or board of trade, or similar entity, or
quoted on an automated quotation system. However, there is no assurance that a
liquid secondary market on an exchange or board of trade will exist for any
particular futures contract or at any particular time. In such event, it may not
be possible to close a futures position, and, in the event of adverse price
movements, the Fund would continue to be required to make daily cash payments of
variation margin. In the event futures contracts have been used to hedge a
portfolio security, an increase in the price of the security, if any, may
partially or completely offset losses on the futures contract. However, as
described above, there is no guarantee that the price of the security will, in
fact, correlate with the movements in the futures contract and thus provide an
offset to losses on a futures contract.

Successful use of futures by the Fund is subject to the Investment
Manager's ability to predict correctly movements in the direction of the
securities and interest rate markets. For example, if the Fund hedged against
the possibility of a decline in the market adversely affecting the value of its
portfolio and its value increased instead, the Fund would lose part or all of
the benefit of the increased value of its portfolio because it would have
offsetting losses in its futures positions. In addition, in such situations, if
the Fund had insufficient cash, it might have to sell securities to meet daily
variation margin requirements. Such sales of securities might, but would not
necessarily be at increased prices which would reflect the rising market. The
Investment Manager and its predecessor have been actively engaged in the
provision of investment supervisory services for institutional and individual
accounts since 1970, but the skills required for the successful use of futures
are different from those needed to select portfolio securities, and the
Investment Manager has limited prior experience in the use of futures techniques
in the management of assets under its supervision.

OTHER RISK CONSIDERATIONS

Investment in illiquid securities involves potential delays on resale as
well as uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of portfolio securities, and the Fund might not be
able to dispose of such securities promptly or at reasonable prices.

A number of transactions in which the Fund may engage are subject to the
risks of default by the other party to the transaction. If the seller of
securities pursuant to a repurchase agreement entered into by the Fund defaults
and the value of the collateral securing the repurchase agreement declines, the
Fund may incur a loss. If bankruptcy proceedings are commenced with respect to
the seller, realization of the collateral by the Fund may be delayed or

Page 17

<PAGE>

limited. Similarly, when the Fund engages in when-issued, reverse repurchase,
forward commitment and related settlement transactions, it relies on the other
party to consummate the trade; failure of the other party to do so may result in
the Fund incurring a loss or missing an opportunity to obtain a price the
Investment Manager believed to be advantageous. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of a possible
delay in receiving additional collateral or in recovery of the securities or
possible loss of rights in the collateral should the borrower fail financially.

Borrowing also involves special risk considerations. Interest costs of
borrowings may fluctuate with changing market rates of interest and may
partially offset or exceed the return earned on the borrowed funds (or on the
assets that were retained rather than sold to meet the needs for which funds
were borrowed). Under adverse market conditions, the Fund might have to sell
portfolio securities to meet interest or principal payments at a time when
fundamental investment considerations would not favor such sales. To the extent
the Fund enters into reverse repurchase agreements, the Fund is subject to risks
that are similar to those of borrowing.

INVESTMENT RESTRICTIONS

FUNDAMENTAL POLICIES

The Fund has adopted certain investment restrictions that are fundamental
policies and that may not be changed without approval by the vote of a majority
of the Fund's outstanding voting securities, as defined in the 1940 Act. The
"vote of a majority of the outstanding voting securities" of the Fund, as
defined in Section 2(a)(42) of the 1940 Act, means the vote of (i) 67% or more
of the voting securities of the Fund present at any meeting, if the holders of
more than 50% of the outstanding voting securities of the Fund are present or
represented by proxy, or (ii) more than 50% of the outstanding voting securities
of the Fund, whichever is less. These restrictions provide that the Fund may
not:

1. Purchase any security (other than obligations of the Federal Republic of
Germany, the German Federal Railways and the German Federal Post Office,
which in the aggregate shall not represent more than 25% or more of the
Fund's total assets, or obligations of the U.S. government, its agencies or
instrumentalities) if as a result more than 10% of the Fund's total assets
would then be invested in securities of any single issuer.

2. Invest 25% or more of the value of its total assets in a particular
industry. This restriction does not apply to securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities, but
will apply to foreign government obligations until such time as the
Securities and Exchange Commission permits their exclusion.

3. Purchase more than 10% of the outstanding voting securities of any issuer.

4. Borrow money, except from banks to meet redemption requests or for
temporary or emergency purposes; provided that borrowings for temporary or
emergency purposes other than to meet redemption requests shall not exceed
5% of the value of its total assets; and provided further that total
borrowings shall be made only to the extent that the value of the Fund's
total assets, less its liabilities other than borrowings, is equal to at
least 300% of all borrowings (including the proposed borrowing). For
purposes of the foregoing limitations, reverse repurchase agreements and
other borrowing transactions covered by segregated assets are not
considered to be borrowings. The Fund will not mortgage, pledge,
hypothecate, or in any other manner transfer as security for an
indebtedness any of its assets. This investment restriction shall not
prohibit the Fund from engaging in futures contracts, options on futures
contracts, forward foreign currency exchange transactions, and currency
options.

5. Purchase or sell real estate or real estate mortgage loans, except that the
Fund may purchase and sell securities of companies that deal in real estate
or interests therein.

Page 18

<PAGE>

6. Purchase securities on margin, except short-term credits as may be
necessary or routine for the clearance or settlement of transactions, and
except for margin posted in connection with hedging transactions consistent
with its investment policies.

7. Underwrite securities of other issuers, except insofar as the Fund may be
deemed an underwriter under the U.S. Securities Act of 1933 in selling
portfolio securities.

8. Buy or sell commodities, commodity contracts or futures contracts (other
than futures contracts with respect to foreign stock or bond indices or
other financial indices that the Investment Manager determines are
appropriate to hedge the risks associated with interest rates or general
fluctuations in the value of its portfolio securities).

OPERATING POLICIES

The Fund has adopted certain investment restrictions that are not
fundamental policies and may be changed by the Board of Directors without
approval of the Fund's outstanding voting securities. These restrictions provide
that the Fund may not:

1. Invest in interests in oil, gas, or other mineral exploration or
development programs;

2. Participate on a joint or a joint-and-several basis in any trading account
in securities (the aggregation of orders for the sale or purchase of
marketable portfolio securities with other accounts under the management of
the Investment Manager to save brokerage costs, or to average prices among
them, is not deemed to result in a securities trading account).

3. Purchase or sell futures if, immediately thereafter, the sum of the amount
of "margin" deposits on the Fund's existing futures positions would exceed
5% of the value of the Fund's total assets.

4. Invest more than 15% of the value of its net assets in securities that are
illiquid.

The Fund is also subject to other restrictions under the 1940 Act; however,
the registration of the Company under the 1940 Act does not involve any
supervision by any federal or other agency of the Company's management or
investment practices or policies, other than incident to occasional or periodic
compliance examinations conducted by the SEC staff.

EXECUTION OF PORTFOLIO TRANSACTIONS

The Investment Manager, subject to the overall supervision of the Board of
Directors, makes the Fund's investment decisions and selects the broker or
dealer to be used in each specific transaction using its best judgment to choose
the broker or dealer most capable of providing the services necessary to obtain
the best execution of that transaction. In seeking the best execution of a
transaction, the Investment Manager evaluates a wide range of criteria,
including any or all of the following: the broker's commission rate, promptness,
reliability and quality of executions, trading expertise, positioning and
distribution capabilities, back-office efficiency, ability to handle difficult
trades, knowledge of other buyers and sellers, confidentiality, capital strength
and financial stability, prior performance in serving the Investment Manager and
its clients, and other factors affecting the overall benefit to be received in
the transaction. When circumstances relating to a proposed transaction indicate
to the Investment Manager that a particular broker is in a position to obtain
the best execution, the order is placed with that broker. This may or may not be
a broker that has provided investment information and research services to the
Investment Manager.

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<PAGE>

Such investment information may include, among other things: a wide variety
of written reports or other data on individual companies and industries; data
and reports on general market or economic conditions; information concerning
pertinent federal and state legislative and regulatory developments and other
developments that could affect the value of actual or potential investments;
information about companies in which the Investment Manager has invested or may
consider investing; attendance at meetings with corporate management personnel,
industry experts, economists, government personnel, and other financial
analysts; comparative issuer performance and evaluation and technical
measurement services; subscription to publications that provide
investment-related information; accounting and tax law interpretations;
availability of economic advice; quotation equipment and services; execution
measurement services; market-related and survey data concerning the products and
services of an issuer and its competitors or concerning a particular industry
that are used in reports prepared by the Investment Manager to enhance its
ability to analyze an issuer's financial condition and prospects; and other
services provided by recognized experts on investment matters of particular
interest to the Investment Manager. In addition, the foregoing services may
include the use of, or be delivered by, computer systems whose hardware and/or
software components may be provided to the Investment Manager as part of the
services. In any case in which information and other services can be used for
both research and non-research purposes, the Investment Manager makes an
appropriate allocation of those uses and pays directly for that portion of the
services to be used for non-research purposes.

Subject to the requirement of seeking the best execution, the
Investment Manager may, in circumstances in which two or more brokers are in a
position to offer comparable execution, give preference to a broker or dealer
that has provided investment information to the Investment Manager. In so doing,
the Investment Manager may effect securities transactions which cause the Fund
to pay an amount of commission in excess of the amount of commission another
broker would have charged. In electing such broker or dealer, the Investment
Manager will make a good faith determination that the amount of commission is
reasonable in relation to the value of the brokerage services and research and
investment information received, viewed in terms of either the specific
transaction or the Investment Manager's overall responsibility to the accounts
for which the Investment Manager exercises investment discretion. The Investment
Manager evaluates all commissions paid in order to ensure that the commissions
represent reasonable compensation for the brokerage and research services
provided by such brokers. Such investment information as is received from
brokers or dealers may be used by the Investment Manager in servicing all of its
clients (including the Fund), and the Fund's commissions may be paid to a broker
or dealer who supplied research services not used by the Fund. However, the
Investment Manager expects that the Fund will benefit overall by such practice
because it is receiving the benefit of research services and the execution of
such transactions not otherwise available to it without the allocation of
transactions based on the recognition of such research services.

Subject to the requirement of seeking the best execution, the Investment
Manager may also place orders with brokerage firms that have sold shares of the
Fund. The Investment Manager has made and will make no commitments to place
orders with any particular broker or group of brokers. The Company anticipates
that a substantial portion of all brokerage commissions will be paid to brokers
who supply investment information to the Investment Manager.

The Investment Manager has no obligation to purchase or sell for the Fund
any security that it, or its officers of employees, may purchase or sell for the
Investment Manager's or their own accounts or the account of any other client,
if in the opinion of the Investment Manager such transaction appears unsuitable,
impractical or undesirable for the Fund. Additionally, the Investment Manager
does not prohibit any of its officers or employees from purchasing or selling
for their own accounts securities that may be recommended to or held by the
Investment Manager's client's, subject to the Investment Manager's and the
Fund's Code of Ethics.

The Fund also invests frequently in foreign and/or U.S. securities that are
not listed on a national securities exchange but are traded in the
over-the-counter market. The Fund may also purchase listed securities through
the third market or fourth market. When transactions are executed in the
over-the-counter market or the third or fourth market, the Investment Manager
will seek to deal with the counterparty that the Investment Manager believes can
provide the best execution, whether or not that counterparty is the primary
market maker for that security.

During the Fiscal Year ended December 31, 1999, the Fund acquired the
securities of more than one of its regular broker-dealers (as defined in Rule
10b-1 under the 1940 Act). At December 31, 1999, the Fund's holdings in

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<PAGE>

Julius Baer Holdings Ltd., Banque Nationale de Paris, State Street Bank and
Trust Company, and Deutsche Bank were valued at $453, 000, $554,000, $412, 000
and $1,098,000, respectively.

For the Fiscal Years ended December 31, 1997, 1998 and 1999, the Fund paid
total brokerage commissions of $761,708, $1,282,143, and $1,203,995
respectively. Of the total commissions paid during the fiscal year ended
December 31, 1999, (100%) were paid to firms which provided research,
statistical or other services to the Investment Manager. The Investment Manager
has not separately identified a portion of such commissions as applicable to the
provision of such research, statistical or otherwise. During fiscal 1999, the
Fund paid its affiliated broker, Dresdner RCM Kleinwort Benson North America
LLC, total brokerage commissions of $386,779, which represents 32.12% of the
Fund's aggregate brokerage commissions paid and 0.06% of the Fund's aggregate
dollar amount of transactions effected during its most recent fiscal year.

As noted below, the Investment Manager is an indirect wholly owned
subsidiary of Dresdner Bank AG ("Dresdner"). Dresdner Kleinwort Benson North
America LLC ("Dresdner Kleinwort Benson") and other Dresdner subsidiaries may be
broker-dealers (collectively, the "Dresdner Affiliates"). The Investment Manager
believes that it is in the best interests of the Fund to have the ability to
execute brokerage transactions, when appropriate, through the Dresdner
Affiliates. Accordingly, the Investment Manager intends to execute brokerage
transactions on behalf of the Fund through the Dresdner Affiliates, when
appropriate and to the extent consistent with applicable laws and regulations,
including federal banking laws.

In all such cases, the Dresdner Affiliates will act as agent for the Fund,
and the Investment Manager will not enter into any transaction on behalf of the
Fund in which a Dresdner Affiliate is acting as principal for its own account.
In connection with such agency transactions, the Dresdner Affiliates will
receive compensation in the form of brokerage commissions separate from the
Investment Manager's management fee. The Investment Manager's policy is that
such commissions must be reasonable and fair when compared to the commissions
received by other brokers in connection with comparable transactions involving
similar securities and that the commissions paid to a Dresdner Affiliate must be
no higher than the commissions paid to that broker by any other similar customer
of that broker who receives brokerage and research services that are similar in
scope and quality to those received by the Fund.

The Investment Manager performs investment management and advisory services
for various clients, including other registered investment companies, and
pension, profit-sharing and other employee benefit plans, as well as
individuals. In many cases, portfolio transactions for the Fund may be executed
in an aggregated transaction as part of concurrent authorizations to purchase or
sell the same security for numerous accounts served by the Investment Manager,
some of which accounts may have investment objectives similar to those of the
Fund. The objective of aggregated transactions is to obtain favorable execution
and/or lower brokerage commissions, although there is no certainty that such
objective will be achieved. Although executing portfolio transactions in an
aggregated transaction potentially could be either advantageous or
disadvantageous to any one or more particular accounts, aggregated transactions
in which the Fund participates will be effected only when the Investment Manager
believes that to do so will be in the best interest of the Fund, and the
Investment Manager is not obligated to aggregate orders into larger
transactions. These orders generally will be averaged as to price. When such
aggregated transactions occur, the objective will be to allocate the executions
in a manner which is deemed fair and equitable to each of the accounts involved
over time. In making such allocation decisions, the Investment Manager will use
its business judgment and will consider, among other things, any or all of the
following: each client's investment objectives, guidelines, and restrictions,
the size of each client's order, the amount of investment funds available in
each client's account, the amount already committed by each client to that or
similar investments, and the structure of each client's portfolio.

DIRECTORS AND OFFICERS

The names and addresses of the Directors and officers of the Companies and
their principal occupations and certain other affiliations during the past five
years are given below. Unless otherwise specified, the address of each of the
following persons is Four Embarcadero Center, San Francisco, California 94111.

page 21
<PAGE>

ROBERT J. BIRNBAUM (72), Director. Director, Chicago Board Options Exchange
(since 1998); Director, Chicago Mercantile Exchange (1990 to 1998); Trustee,
Liberty All-Star Growth Fund, Inc. (since 1995); Trustee, Colonial Funds (since
1995); Trustee, Liberty All-Star Equity Fund, Inc. (since 1994); Special
Counsel, Dechert Price & Rhoads (law firm) (1988 to 1993); President and Chief
Operating Officer, New York Stock Exchange, Inc. (1985 to 1988); President and
Chief Operating Officer, American Stock Exchange, Inc. (1977 to 1985).

CARROLL BROWN (71), Director. President, The American Council on Germany
(since 1988); Executive Director, John J. McCloy Fund (since 1988); Foreign
Service Officer, United States Department of State with service in Yugoslavia,
Poland, Austria, and Germany (1957 to 1988); U.S. Consul General, Dusseldorf and
Munich; Deputy Assistant Secretary of State, U.S. State Department (1986 and
1987).

THEODORE J. COBURN (45), Director. Partner, Brown, Coburn & Co., a
consulting firm (since 1991); education associate at Harvard University Graduate
School of Education (since 1996); Director, Nicholas-Applegate Fund, Inc. (since
1987); Trustee, Nicholas-Applegate Mutual Funds (since 1992); Director,
Measurement Specialties, Inc. (since 1995); Director, Moovies, Inc. (since
1995); Senior Vice President, Prudential Securities Inc. (1986 to 1991);
Managing Director of the Global Equity Transactions Group and a member of the
Board of Directors, Prudential Securities (1986 to 1991); Managing Director,
Merrill Lynch Capital Markets (1983 to 1986).

SIEGFRIED A. KESSLER (81), Director. Retired; Chairman. Carl Zeiss Inc.
(New York) (1981 to 1982) and President (1965 to 1981) (sale, distribution and
service of scientific instruments and optical products) (1965 to 1985).

ALFRED FIORE (62), Director. General Manager, Hirschfeld, Stern, Moyer &
Ross, Inc. (employee benefit consulting firm) (since 1988); Consultant,
Lois/U.S.A. (creative advertising agency) (1987 to 1988); Executive Vice
President and Chief Financial Officer, Parlux Fragrances, Inc. (1987); Executive
Vice President and Chief Financial Officer, Concord Assets Group, Inc. (real
estate manager) (1986); President and Chief Operating Officer, Amerigroup
Financial Services, Inc. (financial services) (1984 to 1986); Partner, KPMG Peat
Marwick, LLP (1973 to 1984).

GOTTFRIED W. PERBIX (69), Director. President, Perbix International, Inc.
(management consulting) (1980 to 1994); Director, American Profol Inc. (plastic
film manufacturers) (since 1993); Sole Proprietor, Perbix Associates (executive
search) (since 1978)

JACOB SALIBA (85), Director. Director, Chairman (1988 to 1994) and Chief
Executive Officer (1988 to 1993), Katy Industries, Inc. (diversified
manufacturing and oil and related services); President and Chief Operating
Officer, Katy Industries, Inc. (1968 to 1987); Director, CEGF Compagnie des
Entrepots et Gares Frigorifques (cold storage warehouses) (since 1989);
Director, Schon & Cie AG (manufacturer of machinery) (since 1990); Director,
Sahlman Seafoods (shrimp fishing and shrimp aquaculture) (since 1998); Director,
Syratech Corp. (manufacturer of household furnishings) (1992 to 1998).

ANTHONY AIN, (40), President. Mr. Ain is a Managing Director and General
Counsel of Dresdner RCM, with which he has been associated since 1992. From 1988
to 1992, he worked for the United States Securities and Exchange Commission,
first as Counsel to Commissioner Joseph A. Grundfest, then as a Senior Special
Counsel in the SEC's Division of Market Regulation. From 1984 to 1988, he was an
associate in the Washington, D.C. office of Fried, Frank, Harris, Shriver &
Jacobson, where he practiced securities and banking law.

ROBERT J. GOLDSTEIN, (37), Vice President and Secretary. Mr. Goldstein is a
Director and Associate General Counsel of Dresdner RCM, with which he has been
associated since 1997. From 1990 to 1996, Mr. Goldstein was an associate in the
New York, London and Prague offices of Weil, Gotshal & Manges where his practice
primarily focused on private investment and hedge funds, and international
transactional and general corporate matters.

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<PAGE>

KARIN L. BROTMAN, (33), Assistant Secretary. Ms. Brotman is Assistant Fund
Counsel of Dresdner RCM, with which she has been associated since 1997. From
1995 to 1997, Ms. Brotman was a Product Manager at Fidelity Investments in their
Legal Department, where she was involved in providing legal and compliance for
1940 Act registered management investment companies. From 1993 to 1995, she was
employed as an Account Officer with Fleet Financial Group where she was
responsible for negotiating the legal recovery of a distressed asset portfolio.

JENNIE W. KLEIN, (35), Vice President and Treasurer. Ms. Klein is Director
of Commingled Fund Services and an Assistant Director of Dresdner RCM, with
which she has been associated since 1994. She is responsible for fund
administration and shareholder record keeping for the Dresdner RCM products.
From 1991 to 1994, Ms. Klein was employed at G.T. Capital Management as the
Manager of Financial Reporting and Compliance for their mutual funds. From 1988
to 1991, she was an auditor at KPMG Peat Marwick.

STEVEN L. WONG, (33), Assistant Treasurer. Mr. Wong is a Manager in
Commingled Fund Services and has been associated with Dresdner RCM since 1994.
He is responsible for overseeing Dresdner RCM's mutual fund administration which
includes financial reporting, compliance, tax reporting, fund accounting,
budgeting and shareholder servicing. From 1992 to 1994, Mr. Wong was a senior
auditor at KPMG Peat Marwick specializing in the audit of investment companies.
From 1991 to 1992, he was a fund accountant with Franklin Funds.

Commencing January 1, 1999, the Fund pays each of its Directors who is not
an interested person of the Fund, as defined in the 1940 Act, an annual fee of
$9,000, plus $1,500 for each Board of Directors meeting attended. Commencing
November 4, 1999 the Fund pays each of the members of the Audit Committee of the
Board of Directors who is not an interested person of the Fund, as defined in
the 1940 Act $500 for each Audit Committee meeting attended. During the fiscal
year ended December 31, 1999, all such Directors as a group earned from the Fund
aggregate fees amounting to $175,250. In addition, the Fund reimburses Directors
not affiliated with Dresdner RCM for travel and out-of-pocket expenses incurred
in connection with meetings of the Board.

The following table sets forth for each Director receiving compensation
from the Fund the amount of such compensation paid by the Fund during the fiscal
year ended December 31, 1999.

NAME OF PERSON, AGGREGATE PENSION OR ESTIMATED TOTAL
POSITION COMPENSATION RETIREMENT ANNUAL BENEFITS COMPENSATION
FROM FUND BENEFITS ACCRUED UPON FROM FUND AND
AS PART OF FUND RETIREMENT FUND COMPLEX
EXPENSES PAID TO
DIRECTORS

<S> <C> <C> <C> <C>
Robert J. Birnbaum $30,500 N/A __ $30,500

Carroll Brown 18,000 N/A __ 18,000

Theodore J. Coburn 30,000 N/A __ 30,000

James E. Dowd (1) 11,250 N/A __ 11,250

Alfred W. Fiore 30,500 N/A __ 30,500

Siegfried A. Kessler 18,500 N/A __ 18,500

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<PAGE>

Gottfried W. Perbix 18,500 N/A __ 18,500

Jacob Saliba 18,500 N/A __ 18,500

TOTAL $175,750 $175,250
-------- --------
</TABLE>

(1) Mr. Dowd served as Director of the Company from 1990 through May 1999

During the fiscal year ended December 31, 1998, the Board of Directors met five
times and during the fiscal year ending December 31, 1999, the Board of
Directors met six times. Each Director, except Mr. Dowd, attended at least 75%
of the total number of meetings of the Board and each Committee of the Board of
which he was a member held during the period in which he served. Mr. Dowd passed
away in May 1999. The Board wishes to express its appreciation for his long and
valuable service to the Fund.

The Board of Directors has an Audit Committee presently composed of Messrs.
Perbix, Fiore, Birnbaum and Kessler, none of whom is an interested person of the
Fund (as defined in the 1940 Act). The Audit Committee makes recommendations to
the full Board with respect to the engagement of independent accountants and
reviews with the independent accountants the plan and results of the audit
engagement and matters having a material effect upon the Fund's financial
operations. The Audit Committee held two meetings during the fiscal year ended
December 31, 1998 and two meetings during the fiscal year ending December 31,
1999.

In 1999, 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 1999. There were 8 such meetings in 1999.

The Board of Directors has no compensation committee, or other committee
performing similar a function. Upon conversion of the Fund to an open-end
structure, a Nominating Committee was established, which consists of the
Directors who are not interested persons of the Fund (as defined in the 1940
Act).

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of March 31, 2000, the Directors and Officers of the Company, as a
group, owned beneficially and of record less than 1% of the outstanding shares
of the Fund.

As of March 31, 2000, there were 4,872,928 shares of the Fund outstanding.
On that date the following were known to the Company to own of record more than
5% of the Fund's capital stock:

Name and Address of % of Shares
Beneficial Owner Shares Held Outstanding

<S> <C> <C>
Charles Schwab & Co., Inc. 987,589 20.27%
FBO Customers
101 Montgomery Street
San Francisco, California 94104
344,467 7.07%
National Financial Services Corp.
FBO Customers
200 Liberty Street
One World Financial Center
New York, New York 10281-1003

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<PAGE>

Smith Barney Inc. 300,863 6.17%
388 Greenwich Street
New York, New York 10013-2339
290,930 5.97%
Marshcove & Co.
P.O. Box 5756
Boston, Massachusetts 02206-0001
</TABLE>

THE INVESTMENT MANAGER

The Board of Directors the Company has overall responsibility for the
operation of the Fund. Pursuant to such responsibility, the Board of Directors
has approved various contracts for designated financial organizations to
provide, among other things, day to day management services required by the
Fund. The Company has retained as the Fund's Investment Manager, Dresdner RCM
Global Investors LLC, a Delaware limited liability company with principal
offices at Four Embarcadero Center, San Francisco, California 94111. The
Investment Manager is actively engaged in providing investment supervisory
services to institutional and individual clients. The Investment Manager was
established in December of 1998 and is the successor to the business of its
holding company, Dresdner RCM Global Investors US Holdings LLC. The Investment
Manager was originally formed as Rosenberg Capital Management in 1970, and it
and its successors have been consistently in business since then.

The Investment Manager is an indirect wholly owned subsidiary of Dresdner
Bank, an international banking organization with principal executive offices
located at Gallunsanlage 7, 60041 Frankfurt, Germany. With total consolidated
assets as of December 31, 1998, of EUR 397 billion (USD 427 billion), and
approximately 1,500 offices and 51,000 employees in over 60 countries around the
world, Dresdner is one of Germany's largest banks. Dresdner provides a full
range of banking services including, traditional lending activities, mortgages,
securities, project finance and leasing, to private customers and financial and
institutional clients. In the United States, Dresdner maintains branches in New
York and Chicago and an agency in Los Angeles. As of the date of this SAI, the
nine members of the Board of Managers of the Investment Manager are William L.
Price (Chairman), Gerhard Eberstadt, George N. Fugelsang, Joachim Madler,
Leonhard Fischer, Susan C. Gause, Luke D. Knecht, , William S. Stack, and
Kenneth B. Weeman, Jr.

Dresdner and the Investment Manager, by virtue of Dresdner's banking
operations in the United States, are subject to U.S. banking laws and
regulations. U.S. banking organizations generally may act as advisers to
investment companies and may buy and sell investment company shares for their
customers. The Investment Manager believes that it may perform the services
contemplated by its investment management agreements with the Company without
violating these banking laws or regulations. In addition, effective March 11,
2000, banking organizations that qualify as and elect to become financial
holding companies are permitted to sponsor and distribute the shares of
investment companies. Thus, the extent to which Dresdner qualifies and elects to
engage in these activities, as well as future changes in legal requirements or
regulatory interpretations relating to permissible activities of banking
organizations and their affiliates, could affect the nature and scope of
services provided to the Company by the Investment Manager or its affiliates.

The Investment Manager is also the investment manager for Dresdner RCM
International Growth Equity Fund, Dresdner RCM MidCap Fund and Dresdner RCM
Small Cap Fund, each a series of Dresdner RCM Capital Funds, Inc.; Dresdner RCM
Large Cap Growth Fund, Dresdner RCM Global Small Cap Fund, Dresdner RCM Global
Technology Fund, Dresdner RCM Global Health Care Fund, Dresdner RCM
Biotechnology Fund, Dresdner RCM Balanced Fund, Dresdner RCM Emerging Markets
Fund, Dresdner RCM Tax Managed Growth Fund; Dresdner RCM Global Equity Fund and
Dresdner RCM Strategic Income Fund, each a series of Dresdner RCM Global Funds,
Inc.; RCM Strategic Global Government Fund, Inc., Dresdner RCM Global Strategic
Income Fund, Inc. and Bergstrom Capital Corporation, each a closed-end
management investment company. The Fund's Management Agreement may be renewed
from year-to-

Page 25
<PAGE>

year after its initial term, provided that any such renewals have been
specifically approved at least annually by (i) the vote of a majority of the
Company's Board of Directors, including a majority of the Directors who are
not parties to the Management Agreement or interested persons (as defined in
the 1940 Act) of any such person, cast in person at a meeting called for the
purpose of voting on such approval, or (ii) the vote of a majority (as defined
in the 1940 Act) of the outstanding voting securities of the Fund and the vote
of a majority of the Directors who are not parties to the contract or interested
persons of any such party.

The Fund has, under its Management Agreement, assumed the obligation for
payment of all of its ordinary operating expenses, including: (a) brokerage and
commission expenses, (b) federal, state, or local taxes incurred by, or levied
on, the Fund, (c) interest charges on borrowings, (d) charges and expenses of
the Fund's custodian, (e) investment advisory fees (including fees payable to
the Investment Manager under the Management Agreement), (f) fees pursuant to the
Fund's Rule 12b-1 plan, (g) legal and audit fees, (h) SEC and "Blue Sky"
registration expenses, and (i) compensation, if any, paid to officers and
employees of the Company who are not employees of the Investment Manager (see
DIRECTORS AND OFFICERS). The Investment Manager is responsible for all of its
own expenses in providing services to the Fund. Expenses attributable to the
Fund are charged against the assets of the Fund.

For the services rendered by the Investment Manager under the Management
Agreement, the Fund pays management fees at an annualized rate of its average
daily net assets. These fees are computed daily and paid monthly. The Fund pays
investment management fees monthly at an annualized rate of 1.00% of its average
daily net assets up to and including $100 million and 0.80% of its average daily
net assets in excess of $100 million. For the years ended December 31, 1999,
1998, and 1997, the Fund incurred investment management fees aggregating
$927,995, $1,915,266, and $1,555,539, respectively.

To limit the total expenses of the Fund, the Investment Manager 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 taxes, interest, and extraordinary expenses) exceed an
expense ratio of 1.60% for Class N and 1.35% for Class I 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 the Investment Manager for deferred
fees or other expenses paid by the Investment Manager 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 the Investment Manager. In addition, the fund will not be
required to repay any unreimbursed amounts to the Investment Manager upon
termination of the Management Agreement.

The Fund's Management Agreement provides that the Investment Manager will
not be liable for any error of judgment or for any loss suffered by the Fund in
connection with the matters to which the Management Agreement relates, except
for liability resulting from willful misfeasance, bad faith or gross negligence
in the performance of its duties or by reason of the Investment Manager's
reckless disregard of its duties and obligations under the Management Agreement.
The Company has agreed to indemnify the Investment Manager out of the assets of
the Fund, against liabilities, costs and expenses that the Investment Manager
may incur in connection with any action, suit, investigation or other proceeding
arising out of or otherwise based on any action actually or allegedly taken or
omitted to be taken by the Investment Manager in connection with the performance
of its duties or obligations under the Management Agreement with respect to the
Fund or otherwise as investment manager of the Fund. The Investment Manager is
not entitled to indemnification with respect to any liability to the Fund or its
stockholders by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties, or of its reckless disregard of its duties and
obligations under the Management Agreement.

The Management Agreement is terminable without penalty on 60 days' written
notice by a vote of the majority of the outstanding voting securities of the
Fund by a vote of the majority of the Company's Board of Directors, or by the
Investment Manager on 60 days' written notice and will automatically terminate
in the event of its assignment (as defined in the 1940 Act).

Page 26

<PAGE>

THE DISTRIBUTOR

Funds Distributor, Inc., 60 State Street, Suite 1300, Boston, Massachusetts
02109 (the "Distributor") serves as Distributor to the Fund. The Distributor has
provided mutual fund distribution services since 1976, and is a subsidiary of
Boston Institutional Group, Inc., which provides distribution and other related
services with respect to investment products.

DISTRIBUTION AGREEMENT

Pursuant to a Distribution Agreement with the Company, the Distributor has
agreed to use its best efforts to effect sales of shares of the Fund, but is not
obligated to sell any specified number of shares. The Distribution Agreement
contains provisions with respect to renewal and termination similar to those in
the Fund's Management Agreement discussed above. Pursuant to the Distribution
Agreement, the Company has agreed to indemnify the Distributor out of the assets
of the Fund to the extent permitted by applicable law against certain
liabilities under the Securities Act of 1933 arising in connection with the
Distributor's activities on behalf of the Company.

The Company also has an agreement with the Investment Manager and the
Distributor pursuant to which the Distributor has agreed to provide: regulatory,
compliance and related technical services to the Company; services with regard
to advertising, marketing and promotional activities; and officers to the
Company. The Investment Manager is required to reimburse the Company for any
fees and expenses of the Distributor pursuant to the Agreement.

DISTRIBUTION PLAN

The Company, on behalf of the Fund's Class N shares, has adopted a
distribution plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. Under
the Plan, the Fund pays the Distributor an annual fee of up to 0.25% of the
average daily net assets of its Class N shares as reimbursement for certain
expenses actually incurred by the Distributor in connection with providing
distribution and shareholder support services to such shares. Class I shares are
not subject to 12b-1 fees. The Distributor is reimbursed for: (a) expenses
incurred in connection with advertising and marketing the Class N shares of the
Fund, including but not limited to any advertising by radio, television,
newspapers, magazines, brochures, sales literature, telemarketing or direct mail
solicitations; (b) periodic payments of fees or commissions for distribution
assistance made to one or more securities brokers, dealers or other industry
professionals such as investment advisers, accountants, estate planning firms
and the Distributor itself in respect of the average daily value of 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 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.

During fiscal 1999, the Fund reimbursed the Distributor $91,278 for certain
expenses actually incurred by the Distributor. These fees reimbursed the
Distributor for expenses incurred in connection with various marketing and
communications efforts undertaken on behalf of the Fund.

The Plan continues in effect from year to year with respect to the Fund,
provided that each such continuance is approved at least annually by a vote of
the Board of Directors of the Company, including a majority vote of the
Directors who are not "interested persons" of the Company within the meaning of
the 1940 Act and have no direct or indirect

Page 27

<PAGE>

financial interest in the Plan or in any agreement related to the Plan, cast in
person at a meeting called for the purpose of voting on such continuance. The
Plan may be terminated with respect to the Fund at any time, without penalty, by
the vote of a majority of the outstanding Class N shares of the Fund or of the
Board of Directors in the manner described above. The Plan may not be amended to
increase materially the amounts to be paid by the Fund for the services
described therein without approval by the shareholders of the Fund, and all
material amendments are required to be approved by the Board of Directors of the
respective Company in the manner described above. The Plan will automatically
terminate in the event of its assignment.

The Distributor may pay broker-dealers and others, out of the fees it
receives under the Plan, quarterly trail commissions of up to 0.25%, on an
annual basis, of the average daily net assets attributable to the N class of
shares of the Fund held in the accounts of their customers.

Pursuant to the Plan, the Board of Directors of each Company will review at
least quarterly a written report of the distribution expenses incurred on behalf
of shares of the Class N shares of the Fund by the Distributor. The report will
include an itemization of the distribution expenses and the purposes of such
expenditures. In addition, as long as the Plan remains in effect, the selection
and nomination of Directors of the Company who are not "interested persons" of
the Company within the meaning of the 1940 Act will be committed to Directors
who are not interested persons of the Company.

THE ADMINISTRATOR

The administrator of the Company is State Street Bank and Trust Company
("State Street"), 1776 Heritage Drive, North Quincy, Massachusetts 02109.

Pursuant to an Administration Agreement with the Company, State Street is
responsible for performing various administrative services required for the
daily operation of the Company, subject to the control, supervision and
direction of the Company and the review and comment by the Company's auditors
and legal counsel. State Street has no supervisory responsibility over the
investment operations of the Fund. Administrative services performed by State
Street include, but are not limited to, the following: overseeing the
determination and publication of the Company's net asset value; overseeing the
maintenance by the Company's custodian of certain book and records of the
Company; preparing the Company's federal, state and local income tax returns;
arrange for payment of the Company's expenses; and preparing the financial
information for the Company's semi-annual and annual reports, proxy statements
and other communications.

For its services, State Street receives annual fees pursuant to the
following schedule:

ANNUAL FEE
Average Assets Expressed in Basis Points: 1/100 of 1%

<S> <C>
First $250 Million/Fund 2.50
Next $250 Million/Fund 1.75
Thereafter 1.00
Minimum/Fund $57,500
</TABLE>

Fees are calculated by multiplying each Average Asset Break Point in the
above schedule by the number of Funds in the Dresdner RCM complex to determine
the breakpoints used in the schedule. Total net assets of all the Funds will be
used to calculate the fee by multiplying the net assets of the Funds by the
basis point fees in the above schedule. The minimum fee will be calculated by
multiplying the minimum fee by the number of Funds in the complex

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<PAGE>

to arrive at the total minimum fee. The greater of the basis point fee or the
minimum fee will be allocated equally to each Fund in the complex.

OTHER SERVICE PROVIDERS

State Street acts as the transfer agent, redemption agent and dividend
paying agent for the Fund. State Street also acts as custodian for the Fund. The
custodian is responsible for the safekeeping of a fund's assets and the
appointment of any subcustodian banks and clearing agencies. State Street's
principal business address is 1776 Heritage Drive, North Quincy, Massachusetts
02171.

PricewaterhouseCoopers LLP ("PWC") acts as the independent public
accountants for the Fund. The accountant examines financial statements for the
Fund and provides other audit, tax, and related services. PWC's principal
business address is 160 Federal Street, Boston, Massachusetts 02110.

NET ASSET VALUE

For purposes of the computation of the net asset value of each share of the
Fund, equity securities traded on stock exchanges are valued at the last sale
price on the exchange or in the principal over-the-counter market in which such
securities are traded as of the close of regular trading on the day the
securities are being valued, unless the Board of Directors or a duly constituted
committee of the Board determines that such price does not reflect the fair
value of the security. In cases where securities are traded on more than one
exchange, the securities are valued on the exchange determined by the Investment
Manager to be the primary market for the securities. If there has been no sale
on such day, the security will be valued at the closing bid price on such day.
If no bid price is quoted on such day, then the security will be valued by such
method as a duly constituted committee of the Board of Directors determines in
good faith to reflect its fair value. Readily marketable securities traded only
in the over-the-counter market that are not listed on the NASDAQ Stock Market or
a similar foreign reporting service will be valued at the mean bid price, or
such other comparable sources as the Board of Directors deems appropriate to
reflect their fair value. Other portfolio securities held by the Fund will be
valued at current market value, if current market quotations are readily
available for such securities. To the extent that market quotations are not
readily available such securities will be valued by whatever means a duly
constituted committee of the Board of Directors deems appropriate to reflect
their fair value.

Futures contracts and related options are valued at their last sale or
settlement price as of the close of the exchange on which they are traded or, if
no sales are reported, at the mean between the last reported bid and asked
prices. All other assets of the Fund will be valued in such manner as a duly
constituted committee of the Board of Directors in good faith deems appropriate
to reflect their fair value.

Trading in securities on foreign exchanges and over-the-counter markets is
normally completed at times other than the close of regular trading on the New
York Stock Exchange. In addition, foreign securities and commodities trading may
not take place on all business days in New York, and may occur in various
foreign markets on days which are not business days in New York and on which net
asset value is not calculated. The calculation of net asset value may not take
place contemporaneously with the determination of the prices of portfolio
securities used in such calculation. Events affecting the values of portfolio
securities that occur between the time their prices are determined and the close
of the New York Stock Exchange will not be reflected in the calculation of net
asset value unless the Board of Directors determines that a particular event
would materially affect net asset value, in which case an adjustment will be
made.

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<PAGE>

Assets or liabilities initially expressed in terms of foreign currencies
are translated prior to the next determination of net asset value into U.S.
dollars at the spot exchange rates at 12:00 p.m. Eastern time or at such other
rates as the Investment Manager may determine to be appropriate in computing net
asset value.

Debt obligations with maturities of 60 days or less are valued at amortized
cost. The Company may use a pricing service approved by the Board of Directors
to value other debt obligations. Prices provided by such a service represent
evaluations of the mean between current bid and asked market prices, may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, individual
rating characteristics, indications of value from dealers, and other market
data. Such services may use electronic data processing techniques and/or a
matrix system to determine valuations. The procedures of such services are
reviewed periodically by the officers of the Investment Manager under the
general supervision of the Board of Directors. Short-term investments are
amortized to maturity based on their cost, adjusted for foreign exchange
translation, provided such valuations equal fair market value.

PURCHASE AND REDEMPTION OF SHARES

The price paid for purchase and redemption of shares of the Fund is based
on the net asset value per share, which is normally calculated once daily at the
close of regular trading (normally 4:00 P.M. Eastern time) on the New York Stock
Exchange on each day that the New York Stock Exchange is open. The New York
Stock Exchange is currently closed on weekends and on the following holidays:
New Year's Day, President's Day, Martin Luther King Jr. Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas Day. The
offering price is effective for orders received by Boston Financial Data
Services ("BFDS") prior to the time of determination of net asset value. Dealers
are responsible for promptly transmitting purchase orders to BFDS. The Company
reserves the right in its sole discretion to suspend the continued offering of
its Fund's shares and to reject purchase orders in whole or in part when such
rejection is in the best interests of the Fund and its respective stockholders.

REDEMPTION OF SHARES

Payments will be made wholly in cash unless the Board of Directors believes
that economic conditions exist which would make such a practice detrimental to
the best interests of the Fund. Under such circumstances, payment of the
redemption price could be made either in cash or in portfolio securities taken
at their value used in determining the redemption price (and, to the extent
practicable, representing a pro rata portion of each of the portfolio securities
held by the Fund), or partly in cash and partly in portfolio securities. Payment
for shares redeemed also may be made wholly or partly in the form of a pro rata
portion of each of the portfolio securities held by the Fund at the request of
the redeeming stockholder, if the Company believes that honoring such request is
in the best interests of such series. If payment for shares redeemed were to be
made wholly or partly in portfolio securities, brokerage costs would be incurred
by the stockholder in converting the securities to cash.

The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Fund's Net Asset Value next
computed after they are accepted by an authorized broker or the broker's
authorized designee provided they are transmitted to the Fund's transfer agent
on the same day.

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<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAX STATUS

Each income dividend and capital gain distribution, if any, declared by the
Fund will be paid in full and fractional shares based on the net asset value as
determined on the ex-dividend date for such distribution, unless the stockholder
or his or her duly authorized agent has elected to receive all such payments or
the dividend or other distribution portion thereof in cash. Changes in the
manner in which dividend and other distribution payments are paid may be
requested by the stockholder or his or her duly authorized agent at any time
through written notice to the Company and will be effective as to any subsequent
payment if such notice is received by the Company prior to the record date used
for determining the stockholders entitled to such payment. Any distribution
election will remain in effect until the Company is notified by the stockholder
in writing to the contrary.

REGULATED INVESTMENT COMPANY

The Fund has qualified and intends to continue to qualify for treatment as
a "regulated investment company" under Subchapter M of the Code. The Fund is
treated as a separate corporation for tax purposes and thus the provisions of
the Code generally applicable to regulated investment companies are applied
separately to the Fund. In addition, net capital gains (the excess of net
long-term capital gain over net short-term capital loss), net investment income,
and operating expenses are determined separately for the Fund. By complying with
the applicable provisions of the Code, the Fund will not be subject to federal
income tax with respect to net investment income and net realized capital gains
distributed to its stockholders.

To qualify as a regulated investment company under Subchapter M, generally
the Fund must: (i) derive at least 90% of its gross income each taxable year
from dividends, interest, payments with respect to securities loans, and gains
from the sale or other disposition of stock, securities or foreign currencies
and certain other income (including gains from certain options, futures and
forward contracts), ("Income Requirement"); and (ii) diversify its holdings so
that, at the end of each fiscal quarter, (a) at least 50% of the value of the
Fund's total assets is represented by cash, cash items, U.S. Government
securities, securities of other regulated investment companies and other
securities, limited, in respect of any one issuer, to an amount not greater than
5% of the Fund's total assets and 10% of the outstanding voting securities of
such issuer, and (b) not more than 25% of the value of its total assets is
invested in the securities of any one issuer (other than U.S. Government
securities or the securities of other regulated investment companies), or in two
or more issuers which the Fund controls and which are engaged in the same or
similar trades or businesses.

In any taxable year in which the Fund so qualifies and distributes at least
90% of the sum of its investment company taxable income (consisting of net
investment income, the excess of net short-term capital gains over net long-term
capital losses and net gains from certain foreign currency transactions) and its
net tax-exempt interest income (if any) ("Distribution Requirement"), it will be
taxed only on that portion, if any, of such investment company taxable income
and any net capital gain that it retains. The Fund expects to so distribute all
of such income and gains on an annual basis and thus will generally avoid any
such taxation.

Even if the Fund qualifies as a "regulated investment company," it may be
subject to a federal excise tax unless it meets certain additional distribution
requirements. Under the Code, a nondeductible excise tax of 4% ("Excise Tax") is
imposed on the excess of a regulated investment company's "required
distribution" for a calendar year ending within the regulated investment
company's taxable year over the "distributed amount" for that calendar year. The
term "required distribution" means the sum of (i) 98% of ordinary income
(generally net investment income and net gains from certain foreign currency
transactions) for the calendar year, (ii) 98% of capital gain net income
(generally both long-term and short-term capital gain) for the one-year period
ending on October 31 (as though that period were the regulated investment
company's taxable year), and (iii) the sum of any untaxed, undistributed net
investment income and net capital gains of the regulated investment company for
prior periods. The term "distributed amount" generally means the sum of (i)
amounts actually distributed by the Fund from its current year's ordinary income
and capital gain

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<PAGE>

net income and (ii) any amount on which the Fund pays income tax for the year.
The Fund intends to meet these distribution requirements to avoid Excise Tax
liability.

Stockholders who are subject to federal or state income or franchise taxes
will be required to pay taxes on dividend and capital gain distributions they
receive from the Fund whether paid in additional shares of the Fund or in cash.
To the extent that dividends received by the Fund would qualify for the 70%
dividends-received deduction available to corporations, the Fund must designate
in a written notice to stockholders, within 60 days after the close of the
Fund's taxable year, the amount of the Fund's dividends that would be eligible
for this treatment. In order to qualify for the dividends-received deduction
with respect to a dividend paid on Fund shares, a corporate stockholder must
hold the Fund shares for at least 45 days during the 90 day period that begins
45 days before the shares become ex-dividend with respect to the dividend.
Stockholders, such as qualified employee benefit plans, which are exempt from
federal and state taxation generally would not have to pay income tax on
dividend or capital gain distributions. Prospective tax-exempt investors should
consult their own tax advisers with respect to the tax consequences of an
investment in the Fund under federal, state, and local tax laws.

WITHHOLDING

Dividends paid by the Fund to a stockholder who, as to the U.S., is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation, or foreign partnership (a "foreign stockholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or a lower treaty
rate, if applicable). Withholding will not apply, however, if a dividend paid by
the Fund to a foreign stockholder is "effectively connected" with the conduct of
a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens or domestic corporations will apply.
Distributions of net capital gain to foreign stockholders who are neither U.S.
resident aliens nor engaged in a U.S. trade or business generally are not
subject to withholding or U.S. federal income tax.

FOREIGN CURRENCY, OPTIONS, FUTURES AND FORWARD CONTRACTS

Gains from the sale or other disposition of foreign currencies (except
certain gains therefrom that may be excluded by future regulations), and gains
from options, futures, and forward contracts derived by the Fund with respect to
its business of investing in securities of foreign currencies, will qualify as
permissible income under the Income Requirement.

SECTION 1256 CONTRACTS

Many of the options, futures contracts and forward contracts entered into
by the Fund are "Section 1256 contracts." Any gains or losses realized on
Section 1256 contracts are generally considered 60% long-term and 40% short-term
capital gains or losses, although certain foreign currency gains and losses from
such contracts may be treated as ordinary income in character. Section 1256
contracts held by the Fund at the end of each taxable year (and, for purposes of
the Excise Tax, on October 31 or such other dates as prescribed under the Code),
other than Section 1256 contracts that are part of a "mixed straddle" with
respect to which the Fund has made an election not to have the following rules
apply, must be "marked-to-market" (that is, treated as sold for their fair
market value) for federal income tax purposes, with the result that unrealized
gains or losses are treated as though they were realized. The 60% portion of
gains on Section 1256 contracts that is treated as long-term capital gain will
qualify for the reduced maximum tax rates on net capital gain -- 20% (10% for
taxpayers in the 15% marginal tax bracket) for gain recognized on capital assets
held for more than 12 months.

STRADDLE RULES

Generally, the hedging transactions and other transactions in options,
futures and forward contracts undertaken by the Fund may result in "straddles"
for U.S. federal income tax purposes. The straddle rules may affect the amount,
character and timing of recognition of gains or losses realized by the Fund. In
addition, losses realized by

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<PAGE>

the Fund on positions that are part of a straddle position may be deferred under
the straddle rules, rather than being taken into account for the taxable year in
which these losses are realized. Because limited regulations implementing the
straddle rules have been promulgated, the tax consequences of hedging
transactions and options, futures and forward contracts to the Fund are not
entirely clear.

Hedging transactions may increase the amount of short-term capital gain
realized by the Fund, which is taxed as ordinary income when distributed to
stockholders. The Fund may make one or more elections available under the Code
which are applicable to straddle positions. If the Fund makes any of the
elections, the amount, character and timing of the recognition of gains or
losses from the affected straddle positions will be determined under rules that
vary according to elections made. The rules applicable under certain elections
operate to accelerate the recognition of gains or losses from the affected
straddle positions. Because the application of the straddle rules may affect the
character of gains or losses, defer losses and/or accelerate the recognition of
gains or losses from the affected straddle positions, the amount which must be
distributed to stockholders, and which will be taxed to stockholders as ordinary
income or long-term capital gain, may be increased or decreased substantially as
compared to the Fund that did not engage in such hedging transactions.

SECTION 988 GAINS AND LOSSES

Under the Code, gains or losses attributable to fluctuations in exchange
rates which occur between the time the Fund accrues interest or other
receivables, or accrues expenses or other liabilities, denominated in a foreign
currency and the time the Fund actually collects such receivables or pays such
liabilities, generally are treated as ordinary income or loss. Similarly, on the
disposition of debt securities denominated in foreign currency and on the
disposition of certain futures contracts, forward contracts and options, gains
or losses attributable to fluctuation in the value of foreign currency between
the date of acquisition of the debt security, contract or option and the date of
disposition thereof are also treated as ordinary gain or loss. These gains or
losses, referred to under the Code as "Section 988" gains or losses, may
increase or decrease the amount of the Fund's investment company taxable income
to be distributed to stockholders as ordinary income.

FOREIGN TAXES

The Fund may be required to pay withholding and other taxes imposed by
foreign countries which would reduce the Fund's investment income, generally at
rates from 10% to 40%. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes. If more than 50% of the value of the
Fund's total assets at the close of its taxable year consists of securities of
foreign corporations, the Fund will be eligible to elect to "pass-through" to
the Fund's stockholders the amount of foreign income and similar taxes paid by
the Fund. If this election is made, stockholders generally subject to tax will
be required to include in gross income (in addition to taxable dividends
actually received) their pro rata shares of the foreign income taxes paid by the
Fund, and may be entitled either to deduct (as an itemized deduction) their pro
rata shares of foreign taxes in computing their taxable income or to use such
amount (subject to limitations) as a foreign tax credit against their U.S.
federal income tax liability. No deduction for foreign taxes may be claimed by a
stockholder who does not itemize deductions. Each stockholder will be notified
within 60 days after the close of the Fund's taxable year whether the foreign
taxes paid by the Fund will be "passed-through" for that year.

The foregoing is a general abbreviated summary of present U.S. federal
income tax laws applicable to the Fund, their stockholders and dividend and
capital gain distributions by the Fund. Stockholders are urged to consult their
own tax advisers for more detailed information and for information regarding any
foreign, state, and local tax laws and regulations applicable to dividends and
other distributions received from the Fund.

Page 33

<PAGE>

INVESTMENT RESULTS

Average annual total return ("T") of the Fund is calculated as follows: an
initial hypothetical investment of $1,000 ("P") is divided by the net asset
value of shares of the Fund as of the first day of the period in order to
determine the initial number of shares purchased. Subsequent dividend and
capital gain distributions by the Fund are paid at net asset value on the
payment date determined by the Board of Directors. The sum of the initial shares
purchased and shares acquired through distributions is multiplied by the net
asset value per share of the Fund as of the end of the period ("n") to determine
ending redeemable value ("ERV"). The ending value divided by the initial
investment converted to a percentage equals total return. The formula thus used,
as required by the SEC, is:
n
P(1+T) = ERV

The resulting percentage indicates the positive or negative investment
results that an investor would have experienced from reinvested dividend and
capital gain distributions and changes in share price during the period.

This formula reflects the following assumptions: (i) all share sales at net
asset value, without a sales load reduction from the $1,000 initial investment;
(ii) reinvestment of dividends and distributions at net asset value on the
reinvestment date determined by the Board of Directors; and (iii) complete
redemption at the end of any period illustrated. Total return may be calculated
for one year, five years, ten years, and for other periods, and will typically
be updated on a quarterly basis. The average annual compound rate of return over
various periods may also be computed by using ending values as determined above.

In addition, in order to more completely represent the Fund's performance
or more accurately compare such performance to other measures of investment
return, the Fund also may include in advertisements and stockholder reports
other total return performance data based on time-weighted, monthly-linked total
returns computed on the percentage change of the month end net asset value of
the Fund after allowing for the effect of any cash additions and withdrawals
recorded during the month. Returns may be quoted for the same or different
periods as those for which average total return is quoted. The Fund's investment
results will vary from time to time depending upon market conditions, the
composition of the Fund's portfolio, and operating expenses, so that any
investment results reported should not be considered representative of what an
investment in the Fund may earn in any future period. These factors and possible
differences in calculation methods should be considered when comparing the
Fund's investment results with those published for other investment companies,
other investment vehicles and unmanaged indices. Results also should be
considered relative to the risks associated with the Fund's investment objective
and policies.

The Fund may from time to time compare its investment results with the
following:

1. The DAX 100 Index, an unmanaged index which is commonly used as a
performance comparison for funds that invest primarily in Germany and which
measures the total rate of return of the 100 most highly capitalized stocks
traded on the Frankfurt Stock Exchange.

2. The MDAX Index, a total rate of return index of 70 medium sized German
companies.

3. The Morgan Stanley Capital International Europe Index which measures the
total rate of return of nearly 600 stocks from 15 developed European
countries.

4. Data and mutual fund rankings published or prepared by Lipper Inc. and
Morningstar, which rank mutual funds by overall performance, investment
objectives, and assets.

Page 34

<PAGE>

GENERAL INFORMATION

The Company was organized as a closed-end management investment company
incorporated under the laws of the State of Maryland on February 2, 1990. On
December 4, 1998, the Board of Directors, including the Directors who are not
interested persons of the Fund (as defined in the 1940 Act), approved the final
plan for the conversion of the Fund to an open-end investment company. At the
Company's Annual Meeting on January 26, 1999, the Company's stockholders
approved, among other things, (a) changing the Fund's investment strategy from a
predominately German investment portfolio to a broader European investment
portfolio, (b) changing the Fund's name to Dresdner RCM Europe Fund, (c)
changing the Fund from a closed-end investment company to an open-end investment
company, (d) modifying and eliminating certain fundamental investment
restrictions of the Fund, (e) the Investment Management Agreement between the
Fund and the Investment Manager, and (f) the Rule 12b-1 Distribution Plan of the
Fund. The Fund converted to an open-end investment company on May 3, 1999.

The Board of Directors has authority to issue an unlimited number of shares
of separate series and classes. The Fund is currently the only series of the
Company. Upon conversion to an open-end fund, the Fund commenced offering two
classes of stock: Class N and Class I, as described in the Prospectus.
Outstanding shares of the Fund on the date of conversion were automatically
redesignated Class N shares.

DESCRIPTION OF CAPITAL SHARES

All shares of the Company have equal voting rights and will be voted in the
aggregate, and not by series, except where voting by series is required by law
or where the matter involved affects only one series. Currently the Company
offers only one series. There are no conversion or preemptive rights in
connection with any shares. All shares of the Fund when duly issued will be
fully paid and non-assessable. The rights of the holders of shares of the Fund
may not be modified except by vote of the majority of the outstanding shares of
the Fund. Certificates are not issued unless requested and are never issued for
fractional shares. Fractional shares are liquidated when an account is closed.

Shares of the Company have non-cumulative voting rights, which means that
the holders of more than 50% of all series of the Company's shares voting for
the election of the directors can elect 100% of the directors of the Company if
they wish to do so. In such event, the holders of the remaining less than 50% of
the shares of the Company voting for the election of directors will not be able
to elect any person to the Board of Directors of the Company.

The Company is not required to hold a meeting of stockholders in any year
in which the 1940 Act does not require a stockholder vote on a particular
matter, such as election of directors. The Company will hold a meeting of its
stockholders for the purpose of voting on the question of removal of one or more
directors if requested in writing by the holders of at least 10% of the
Company's outstanding voting securities, and will assist in communicating with
its stockholders as required by Section 16(c) of the 1940 Act.

Stockholders are entitled to one vote for each full share held and
fractional votes for fractional shares held. Unless otherwise provided by law or
its Articles of Incorporation or Bylaws, each Company generally may take or
authorize any extraordinary action upon the favorable vote of the holders of
more than 50% of the outstanding shares of the Company or may take or authorize
any routine action upon approval of a majority of the votes cast.

Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Company shall not be deemed to have been effectively acted
upon unless approved by a majority of the outstanding voting securities, as
defined in the 1940 Act, of the series or class of the Company affected by the
matter. Under Rule 18f-2, a series or class is presumed to be affected by a
matter, unless the interests of each series or class in the matter are identical
or the matter does not affect any interest of such series or class. Under Rule
18f-2 the approval of an investment advisory agreement or any change in a
fundamental investment policy would be effectively acted upon with respect to
the Fund only if approved by a majority of its outstanding voting securities, as
defined in the 1940 Act. However, the rule also provides that the

Page 35
<PAGE>

ratification of independent public accountants, the approval of principal
underwriting contracts and the election of directors may be effectively acted
upon by the stockholders of the Company voting without regard to Fund.

Each share of each Class of the Fund (Class N - Retail and Class I -
Institutional) represents an equal proportional interest in the Fund with each
other share of the same Class and is entitled to such dividends and
distributions out of the income earned on the assets allocable to the Class as
are declared in the discretion of the Board of Directors. In the event of the
liquidation or dissolution of either Company, stockholders of the Fund are
entitled to receive the assets attributable to the Fund that are available for
distribution, and a distribution of any general assets not attributable to a
particular Fund that are available for distribution, in such manner and on such
general basis as the Board of Directors may determine.

Stockholders are not entitled to any preemptive rights. All shares, when issued,
will be fully paid and nonassessable by the Company.

ADDITIONAL INFORMATION

COUNSEL

Certain legal matters in connection with the capital shares offered by the
Prospectus have been passed upon for the Fund by Shaw Pittman, 2300 N Street
N.W., Washington, DC 20037. The validity of the capital stock offered by the
Fund has been passed upon by Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, DC 20036.

FINANCIAL STATEMENTS

Incorporated by reference herein are the financial statements of the Fund
contained in the Fund's Annual Reports to Shareholders for the year ended
December 31, 1999, including the Report of Independent Accountants, dated
February 18, 2000, Statement of Assets and Liabilities, including the Portfolio
of Investments and the related Statement of Operations and Changes in Net Assets
and the Financial Highlights. Copies of the Fund's Annual and Semi-Annual
Reports to Shareholders will be available, upon request, by calling (800)
726-7240, or by writing to Four Embarcadero Center, San Francisco, California
94111.

REGISTRATION STATEMENT

The Fund's Prospectus and this SAI do not contain all of the information
set forth in the Company's registration statement and related forms as filed
with the SEC, certain portions of which are omitted in accordance with rules and
regulations of the SEC. The registration statement and related forms may be
inspected at the Public Reference Room of the SEC at Room 1024, 450 5th Street,
N.W., Judiciary Plaza, Washington, D.C. 20549, and copies thereof may be
obtained from the SEC at prescribed rates. It is also available on the SEC's
Internet Web site at http://www.sec.gov/ Statements contained in the Prospectus
or this SAI as to the contents of any contract or other document referred to
herein or in the Prospectus are not necessarily complete, and, in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to each Company's registration statement, each such statement being
qualified in all respects by such reference.

Page 36

<PAGE>

PART C

OTHER INFORMATION

ITEM 23. EXHIBITS.

(a) Amended and Restated Articles of Incorporation of Registrant are
incorporated herein by reference to Exhibit 23(a) of Pre-Effective
Amendment No. 2.

(b) Amended and Restated By-laws of Registrant are incorporated herein by
reference to Exhibit 23(b) of Pre-Effective Amendment No. 2.

(c) (1) Form of certificate for Class N shares of capital stock ($0.001
par value) of Registrant is incorporated herein by reference to
Exhibit 23(c)(1) of the Registration Statement previously filed on
February 19, 1999.

(2) Form of certificate for Class I shares of capital stock ($0.001
par value) of Registrant is incorporated herein by reference to
Exhibit 23(c)(2) of the Registration Statement previously filed on
February 19, 1999.

(d) Form of Investment Management Agreement between Dresdner RCM Global
Investors LLC and Registrant on behalf of the Dresdner RCM Europe Fund
is incorporated herein by reference to Exhibit 23(d) of the
Registration Statement previously filed on February 19, 1999.

(e) Form of Distribution Agreement between Registrant and Funds
Distributor Inc. is incorporated herein by reference to Exhibit 23(e)
of the Registration Statement previously filed on February 19, 1999.

(f) None

(g) (1) Custodian Contract between Registrant and State Street Bank and
Trust Company is incorporated herein by reference to Exhibit 23(g)(1)
of Pre-Effective Amendment No. 2.

(2) Amendment dated January 13, 1994 to the Custodian Contract
between Registrant and State Street Bank and Trust Company is
incorporated herein by reference to Exhibit 23(g)(2) of
Pre-Effective Amendment No. 2.

(3) Amendment dated April 15, 1996 to the Custodian Contract between
Registrant and State Street Bank and Trust Company is
incorporated herein by reference to Exhibit 23(g)(3) of
Pre-Effective Amendment No. 2.

(4) Amendment dated July 14, 1996 to the Custodian Contract between
Registrant and State Street Bank and Trust Company is
incorporated herein by reference to Exhibit 23(g)(4) of
Pre-Effective Amendment No. 2.

C-3

<PAGE>

(5) Amendment dated May 3, 1999 to the Custodian Contract between
Registrant and State Street Bank and Trust Company is
incorporated herein by reference to Exhibit 23(g)(5) of
Pre-Effective Amendment No. 2.

(h) (1) Form of Service Agreement among Dresdner RCM Global Investors LLC,
Registrant, and Funds Distributor, Inc. is incorporated herein by
reference to Exhibit 23(h)(1) of the Registration Statement previously
filed on February 19, 1999.

(2) Form of Transfer Agency Agreement between Registrant and State
Street Bank and Trust Company is incorporated herein by reference
to Exhibit 23(h)(2) of the Registration Statement previously
filed on February 19, 1999.

(3) Form of Administration Agreement between Registrant and State
Street Bank and Trust Company is incorporated herein by reference
to Exhibit 23(h)(3) of Pre-Effective Amendment No. 2.

(i) Opinion and Consent of Kirkpatrick & Lockhart LLP as to the legality
of securities being registered in incorporated herein by reference to
Exhibit 23(i) of Pre-Effective Amendment No. 2.

(j) (1) Power of Attorney dated February 12, 1999 is incorporated herein
by reference to Exhibit 23(j) of the Registration Statement previously
filed on February 19, 1999.

(2) Consent of PricewaterhouseCoopers LLP is filed herein as Exhibit
23(j)(2).

(k) Not applicable.

(l) Not applicable.

(m) Form of Distribution Plan pursuant to Rule 12b-1 of Registrant on
behalf of the Class N shares of Dresdner RCM Europe Fund Inc. is
incorporated herein by reference to Exhibit 23(m) of Pre-Effective
Amendment No. 2.

(n) None.

(o) Form of Multiple Class of Shares Plan of Registrant pursuant to Rule
18f-3, on behalf of Dresdner RCM Europe Fund Inc. is incorporated
herein by reference to Exhibit 23(o) of Pre-Effective Amendment No. 1
previously filed on April 9, 1999.

(p) To be filed by subsequent amendment.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.

None

C-4

<PAGE>

ITEM 25. INDEMNIFICATION.

Section 2-418 of the General Corporation Law of Maryland empowers a
corporation to indemnify directors and officers of the corporation under various
circumstances as provided in such statute. A director or officer who has been
successful on the merits or otherwise, in the defense of any proceeding, must be
indemnified against reasonable expenses incurred by such person in connection
with the proceeding. Reasonable expenses may be paid or reimbursed by the
corporation in advance of the final disposition of the proceeding, after a
determination that the facts then known to those making the determination would
not preclude indemnification under the statute, and following receipt by the
corporation of a written affirmation by the person that his or her standard of
conduct necessary for indemnification has been met and upon delivery of a
written undertaking by or on behalf of the person to repay the amount advanced
if it is ultimately determined that the standard of conduct has not been met.

Article VI of the Bylaws of Registrant contains indemnification
provisions conforming to the above statute and to the provisions of Section 17
of the Investment Company Act of 1940, as amended.

The Registrant and the directors and officers of Registrant obtained
coverage under an Errors and Omissions insurance policy. The terms and
conditions of the policy coverage conforms generally to the standard coverage
available throughout the investment company industry. The coverage also applies
to Registrant's investment manager and its members and employees.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of Registrant pursuant to the provisions of Maryland law and
Registrant's Articles of Incorporation and Bylaws, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in said Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses incurred or
paid by a director, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER

Registrant's investment manager, Dresdner RCM Global Investors LLC, is
a Delaware limited liability company, whose two members are Dresdner Bank AG
("Dresdner") and Dresdner Kleinwort Benson North America, Inc. ("Dresdner
Kleinwort Benson"). Dresdner is an international banking organization whose
principal executive offices are located at Gallunsanlage 7, 60041 Frankfurt am
Main, Frankfurt, Germany. Dresdner Kleinwort Benson is an indirect wholly

C-5

<PAGE>

owned subsidiary of Dresdner whose principal executive offices are located at 75
Wall Street, New York, New York 10005.

The individuals who sit on the Board of Managers of Dresdner RCM have
held the following director or officer positions within the past two fiscal
years:

NAME OF THE OFFICER OR BUSINESS AFFILIATIONS ADDRESS
MEMBER OF THE BOARD OF
MANAGERS
<S> <C> <C>
Gerhard Eberstadt Dresdner Bank AG Jurgen-Ponto-Platz 1
(May 1998 - present) D-60301
Frankfurt am Main
Germany

Chairman, Dresdner Kleinwort Benson 75 Wall Street
North America, Inc. (September 1996 - New York, NY 10005
present)

Director, KBIMA (December 1997 - 75 Wall Street
present) New York, NY 10005

Leonard H. Fisher Dresdner Bank AG Jurgen-Ponto-Platz
Institutional Asset Management D-60301
(January 1198-present) Frankfurt am Main
Germany

George N. Fugelsang President, Chief Executive Officer, 75 Wall Street
Chairman, Dresdner Kleinwort Benson New York NY 10005
North America LLC (February 1994 -
present)

Director, Dresdner Kleinwort Benson 75 Wall Street
North America Services LLC (September New York, NY 10005
1996 - present); Director, KBIMA
(December 1997 - present)

Director, KBIMA (December 1997 - 75 Wall Street
present) New York, NY 10005
</TABLE>

C-6

<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
Susan C. Gause Dresdner RCM (July 1994 - present) Four Embarcadero Center
San Francisco, CA 94111
Chief Operating Officer, Senior Four Embarcadero Center
Managing Director, and Member of the San Francisco, CA 94111
Board of Managers (July 1998-present)

Luke D. Knecht Managing Director (July 1998-present), Four Embarcadero Center
Member of the Board of Managers, San Francisco, CA 94111
Dresdner RCM (November 1997 - present)

Joachim Madler Director, Dresdner Bank AG (September Mainzer Lanstra(Beta) 15-17
1997 - present) 60301 Frankfurt
Germany
Director, KBIMA (December 1997 - 75 Wall Street
present); New York, NY 10005

Director, Dresdner (South East Asia) Singapore
(October 1997 - present)

Managing Director, Dresdner Bank Farberstra(Beta)e 6,
(Schweiz) AG (November 1997 - present) Zurich, Switzerland

Chairman, DFV Deutsche
Fonds und Vorsorgeberatungs Mainzer Lanstra(Beta)e 11-13
(July 1996 - June 60301 Frankfurt 1997)
Germany

Deutscher Investment-Trust (June 1996 Mainzer Lanstra(Beta)e 11-13
- June 1997) 60301 Frankfurt
Germany

Managing Director, GKS Gesellschaft Windmuhlweg 12
fur Kontenservice GmbH (June 1994 - 95030 Hof
June 1997) Germany
</TABLE>

C-7

<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
William L. Price Chief Executive Officer and Global Four Embarcadero Center
Chief Investment Officer, Dresdner RCM San Francisco, CA 94111
(July 1998 - present)

Chairman and Member of the Board of Four Embarcadero Center
Managers, Senior Managing Director, San Francisco, CA 94111
Dresdner RCM (December 1997 - present)

Director, KBIMA (December 1997- 75 Wall Street
present) New York, NY 10005

Director, Dresdner RCM (UK) (January 10 Fenchurch Street
1998 - present) London, UK EC3M3LB

William S. Stack Senior Managing Director, Global Four Embarcadero Center
Equity Chief Investment Officer (July San Francisco, CA 94111
1998 - present); Member of the Board
of Managers, Dresdner RCM (August 1994
- present)

Director, KBIMA (December 1997- 75 Wall Street
present) New York, NY 10005

Director, Dresdner RCM (UK) (January 10 Fenchurch Street
1998 - present) London, UK EC3M3LB

Kenneth B. Weeman, Jr. Dresdner RCM (October 1979 - present) Four Embarcadero Center
San Francisco, CA 94111
Vice Chairman, Senior Managing Four Embarcadero Center
Director (July 1998 - present) San Francisco, CA 94111

Director, KBIMA (December 1997- 75 Wall Street
present) New York, NY 10005

Director, Dresdner RCM (UK) (January 10 Fenchurch Street
1998 - present) London, UK EC3M3LB
</TABLE>

C-8

<PAGE>

ITEM 27. PRINCIPAL UNDERWRITERS.

(a) Funds Distributor, Inc. ("FDI"), whose principal
offices are located at 60 State Street, Suite 1300,
Boston Massachusetts 02109, is the principal
underwriter of Registrant. FDI is an indirect, wholly
owned subsidiary of Boston Institutional Group, Inc.,
a holding company, all of whose outstanding shares
are owned by key employees. FDI is registered with
the Securities and Exchange Commission as a
broker-dealer and is a member of the National
Association of Securities Dealers. FDI also serves as
principal underwriter of the following investment
companies:

American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
The Brinson Funds
CDC MPT+Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Global Funds, Inc.
J.P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
LaSalle Partners Funds, Inc.
Merrimac Series
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds I
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
National Investors Cash Management Fund, Inc.

C-9

<PAGE>

Nomura Pacific Basin Fund, Inc.
Orbitex Group of Funds
The Saratoga Advantage Trust
SG Cowen Funds, Inc.
SG Cowen Income + Growth Fund, Inc.
SG Cowen Standby Reserve Fund, Inc.
SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
SG Cowen Series Funds, Inc.
St. Clair Funds, Inc.
The Skyline Funds
TD Waterhouse Investors Family of Funds, Inc.
TD Waterhouse Trust

FDI does not act as a depositor or investment adviser of any
investment company.

C-10

<PAGE>

(b) The directors and executive officers of FDI are set forth below:

NAME AND PRINCIPAL POSITIONS AND OFFICES WITH FUNDS POSITIONS AND OFFICES WITH
BUSINESS ADDRESS DISTRIBUTOR, INC. REGISTRANT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Marie E. Connolly Director, President and Chief None
Executive Officer

George A. Rio Executive Vice President None

Donald R. Roberson Executive Vice President None

William S. Nichols Executive Vice President None

Margaret W. Chambers Senior Vice President, General None
Counsel, Chief Compliance Officer,
Secretary and Clerk

Joseph F. Tower III Director, Senior Vice President and None
Treasurer

Paula R. David Senior Vice President None

Gary S. MacDonald Senior Vice President None

Judith K. Benson Senior Vice President None

William J. Nutt Chairman and Director None

William J. Stetter Vice President and Chief Financial None
Officer
</TABLE>

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.

Accounts, books and other records required by Rules 31a-1 and 31a-2
under the Investment Company Act of 1940, as amended, are maintained and held in
the offices of Registrant's investment manager, Dresdner RCM Global Investors
LLC, Four Embarcadero Center, San Francisco, California 94111; and/or
Registrant's distributor, Funds Distributor, Inc., 60 State Street, Suite 1300,
Boston, Massachusetts 02109.

Records covering portfolio transactions are also maintained and kept
by Registrant's custodian and transfer agent, State Street Bank and Trust
Company, U.S. Mutual Funds Services Division, P.O. Box 1713, Boston,
Massachusetts 02105.

C-11

<PAGE>

ITEM 29. MANAGEMENT SERVICES.

None

ITEM 30. UNDERTAKINGS.

Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders, upon
request and without charge.

C-12

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in San Francisco,
California on May 1, 2000.

DRESDNER RCM INVESTMENT FUNDS INC.

By: /s/Barbel Lenz, President
---------------
By: /s/Jennie W. Klein, Treasurer
---------------
and Vice President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.

SIGNATURE TITLE DATE

(1) Principal Executive Officer President May 1, 2000

/s/Barbel Lenz
--------------
Barbel Lenz

(2) Chief Financial and Accounting Officer Treasurer May 1, 2000

/s/Jennie W. Klein
------------------
Jennie W. Klein

<PAGE>

SIGNATURE TITLE DATE

(3) Directors

/s/ Theodore J. Coburn* May 1, 2000
-----------------------------------
Theodore J. Coburn

/s/ Robert J. Birnbaum* May 1, 2000
-----------------------------------
Robert J. Birnbaum

/s/ Carroll Brown * May 1, 2000
-----------------------------------
Carroll Brown

/s/Siegfried Kessler* May 1, 2000
-----------------------------------
Siegfried Kessler

/s/Gottfried W. Perbix* May 1, 2000
-----------------------------------
Gottfried W. Perbix

/s/Jacob Saliba* May 1, 2000
-----------------------------------
Jacob Saliba

/s/Alfred W. Fiore* May 1, 2000
-----------------------------------
Alfred W. Fiore

By: /s/Robert J. Goldstein May 1, 2000
-----------------------------------
Robert J. Goldstein
as Attorney-in-Fact

* By Robert J. Goldstein, pursuant to a Power of Attorney dated February 12,
1999.

<PAGE>

EXHIBIT LIST

EXHIBIT DESCRIPTION

23(j)(2) Consent of PricewaterhouseCoopers LLP

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration
Statement on Form N-1A of our report dated February 18, 2000, relating to the
financial statements and financial highlights which appear in the December
31, 1999 Annual Report to Shareholders of the Dresdner RCM Investment Funds,
Inc. (consisting of the Dresdner RCM Europe Fund), which are also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the headings "Financial Highlights" and "Other
Service Providers" in such Registration Statement.

PricewaterhouseCoopers LLP

Boston, Massachusetts
April 28, 2000