<PAGE>
RCM
STRATEGIC
GLOBAL
GOVERNMENT
FUND
SEMI-ANNUAL
REPORT
JULY 31, 1996
<PAGE>
LETTER TO SHAREHOLDERS
- ----------------------
PHOTO
Dear Shareholders:
The last six months gave bond market participants ample
opportunity to wrangle over the direction of the U.S. economy,
inflation and interest rates. The underlying strength of the
economy was evident in employment and higher
U.S. wages. But this good news for the economy consequently rekindled concerns
over inflation, which is generally bad news for the bond market. Inflation has
been benign, but published inflation figures are lagging indicators. Worldwide
efforts at fiscal conservatism and expanded trade have created a more favorable
context for inflation. However, many of the factors contributing to past
improvements in inflation have run their course. Since the bond market is always
motivated to look ahead, wage inflation in this tight labor market will be
crucial to interest rate trends. Much of the discourse about inflation focuses
on an economy "overheating" but growth at 3% or above will warrant action by the
Federal Reserve Board to raise short-term interest rates.
As we go into this year's election, the bond market will focus on political
positions on entitlement programs, tax and spending policies. Shifts in the
makeup of Congress may add to bond market volatility if the market perceives
that fiscal prudence will be compromised. Regardless of politics, the Federal
Reserve Board appears to be dedicated to maintaining a 2.5% growth rate of the
U.S. economy. In the absence of any exceptional shocks to the economy, the
Federal Reserve Board should be reasonably successful in this goal.
The RCM Strategic Global Government Fund (NYSE symbol: RCS) weathered the
uncertainties of the last six months by taking advantage of cyclical economic
weakness in Europe and by improving investor interest in Latin America. In this
report to you, we address the outlook for the rest of 1996 and where RCS is
positioned. We thank you for your support and interest in RCS.
Respectfully,
Gary W. Schreyer
CHAIRMAN
AUGUST 15, 1996
<PAGE>
FUND HIGHLIGHTS
- ---------------
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
PERIOD ENDED* 7/31/96 4/30/96 1/31/96 10/31/95 7/31/95
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total investment income $ 8,584 $ 8,465 $ 8,314 $ 8,338 $ 8,221
Total investment income per share 0.28 0.28 0.27 0.27 0.27
Net investment income 7,503 7,437 7,250 7,286 7,139
Net investment income per share 0.25 0.24 0.24 0.24 0.23
Net realized and unrealized gain (loss) (3,998) (9,602) 9,079 1,909 4,830
Net realized and unrealized gain (loss) per share (0.13) (0.31) 0.30 0.06 0.16
Net asset value at end of period 11.24 11.35 11.64 11.33 11.25
Market price at end of period 9.75 9.63 10.25 10.13 10.13
Total return on market price 3.62% (3.99)% 3.45% 2.20% 6.10%
Total return on net asset value 1.30% (0.30)% 4.99% 2.93% 3.74%
Dividend from net investment income $ 0.22 $ 0.22 $ 0.23 $ 0.22 $ 0.22
Effective dividend yield** 9.11% 9.23% 8.66% 8.77% 8.77%
</TABLE>
<TABLE>
<CAPTION>
KEY CHARACTERISTICS 7/31/96
- -------------------------------------------------
<S> <C>
MONTHLY DIVIDEND PER SHARE $ 0.074
EFFECTIVE DIVIDEND YIELD** 9.11%
MARKET PRICE PER SHARE $ 9.75
NET ASSET VALUE PER SHARE $ 11.24
DURATION 4.1 YEARS
AVERAGE CREDIT QUALITY AA
</TABLE>
* IN THOUSANDS, EXCEPT PER SHARE DATA.
** LAST DIVIDEND DIVIDED BY MARKET PRICE AND ANNUALIZED.
1
<PAGE>
FUND MANAGERS' DISCUSSION AND ANALYSIS
- --------------------------------------
HOW DID BOND MARKETS PERFORM IN THE LAST SIX MONTHS?
The last six months were a turning point for the U.S. bond market. Early in
1996, the bond market expected the Federal Reserve Board to continue to lower
interest rates. Lower interest rates would serve to resolve most economists'
concerns over slow economic growth. However, the first and second quarter of
U.S. economic growth proved strong enough to warrant the opposite concerns, that
the Federal Reserve Board may raise, not lower, interest rates. The market's
shift from expecting lower rates to fretting over the potential for the Federal
Reserve Board to raise rates was significant. Intermediate-term interest rates
rose 1.3% in response. Interest rates in Europe moved in parallel, but rose only
approximately one-half of the U.S. changes. For example, the German government
5-year rate rose 0.6% compared to 1.3% for the 5-year U.S. Treasury rate. Europe
provided a more favorable bond environment, at least relative to the United
States, as economic conditions remained slow.
HOW DID RCS DO?
RCS had an excellent first half after considering the volatility of the bond
market. For the fiscal six months ended July 31, total return on net asset value
was 1%, and total return on stock market price was -0.5%. As is evident from the
quarterly information provided on page 1, the stock price of RCS overreacted to
the change in bond market sentiment in the first quarter and corrected for some
of the overreaction in the second quarter. Since RCS invests in three primary
sectors - U.S. mortgage-related securities, developed foreign and emerging
markets - benchmarking performance cannot be readily accomplished. For
reference, RCS provides returns for three indices as representative of its
primary market sectors. During the six months ended July 31, the Salomon
Brothers Mortgage Security Index, the Salomon Brothers World Government Bond
Index, and the J.P. Morgan Emerging Market Index had returns of -0.1%, 0.7% and
5%, respectively.
WHAT ARE THE MAJOR THEMES DRIVING BOND YIELDS INTO YEAR-END?
For U.S. rates, there are two competing themes in the market for year-end 1996:
(1) a second-half slowing of U.S. economic growth versus (2) a renewed
acceleration. Both themes center on how inflation will behave in the coming
months and the prospects for the Federal Reserve Board's actions towards stable
or higher interest rates. The slowdown scenario assumes recent higher interest
rates, a stronger U.S. dollar, and a weaker stock market will all act to slow
the economy to approximately 2% growth or less. Higher interest rates over the
last six months are expected to slow housing activity. A
2
<PAGE>
FUND MANAGERS' DISCUSSION AND ANALYSIS
- --------------------------------------
stronger U.S. dollar will adversely affect export activity, and a weaker stock
market will lead consumers to spend less as the "wealth effect" of higher stock
prices dissipates. Weaker growth will take the pressure off of early signs of
wage inflation, a concern that the Federal Reserve Board highlighted in recent
testimony. The acceleration scenario assumes that global economic activity will
increase uniformly in a "synchronous recovery." Under this scenario, U.S.
exports pick up and counter a slowdown in housing. Capital spending also
increases, setting the stage for another round of productivity improvements.
Labor conditions in the United States remain tight, leading to wage pressure.
Whereas a slowdown scenario would likely lead to stable short-term rates and
lower long-term rates, the acceleration scenario would likely result in higher
short-term and long-term rates.
WHAT IS YOUR OUTLOOK FOR RATES FOR YEAR-END 1996?
RCM Capital Management, L.L.C. ("RCM"), the fund's investment manager, believes
the U.S. economy will grow at and around its longer term average of 2.5%,
meaning the economy is not expected to experience recession or sustained
weakness. However, economic activity is likely to be strong enough for the
Federal Reserve Board to justify a 50-basis-point increase in short-term
interest rates by year-end. Long-term interest rates are likely to be similarly
affected. Given this outlook, the bond market is likely to continue to
experience fluctuations through year-end. These market conditions should favor
funds like RCS with intermediate-level, duration-risk positions and higher
effective yields.
HOW IS RCS POSITIONED?
The duration of RCS was 4.1 years at July 31, a decrease from 4.6 years at
fiscal year-end, January 31. Duration is a measure of a bond's sensitivity to
changes in interest rates. In describing duration, the term "years" signifies
the percentage change in net asset value expected to result from a 1% change in
interest rates. Thus, a duration of 4.1 years indicates an expected change in
net assets of the fund of approximately 4.1% for each 1% change in interest
rates. Contributions to the fund's duration on a regional basis are: 26.8%
United States, 56.1% Europe, and 17.1% Latin America.
Within the United States, holdings are predominantly liquid U.S. Government or
agency issues, including FNMA, GNMA and FHLMC. Other U.S. positions include FHA
project loans and collateralized mortgage obligations having stable cash flows
with limited risk of early prepayment of principal. The total duration of the
U.S. position is net of U.S. Treasuries sold on a forward commitment basis which
are used to lower overall fund duration risk.
3
<PAGE>
FUND MANAGERS' DISCUSSION AND ANALYSIS
- --------------------------------------
For Europe, individual country positions are listed in the following table.
European positions totaling $200 million are held in U.S. dollar-denominated
interest rate swaps. RCM believes that these swaps are a more efficient way to
participate in foreign markets without taking currency risk, and to help RCS
achieve its income and performance goals. A listing of these individual
transactions is on page 16. Their contribution to the fund's duration is
included in the fund's overall total duration.
The table below also provides the average duration within each country position
and each country's duration contribution to the fund.
<TABLE>
<CAPTION>
PORTFOLIO DURATION BY COUNTRY
JULY 31, 1996
PERCENTAGE OF
AVERAGE DURATION TOTAL
COUNTRY DURATION CONTRIBUTION DURATION
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States 3.1 1.1 26.8%
Germany 3.4 0.8 19.5%
The Netherlands 3.4 0.5 12.2%
Switzerland 5.1 0.4 9.8%
Belgium 4.8 0.3 7.3%
Argentina 5.9 0.3 7.3%
Finland 3.3 0.3 7.3%
Mexico 6.4 0.2 4.9%
Brazil 3.1 0.2 4.9%
---- ----
Total 4.1 100.0%
</TABLE>
HAVE THERE BEEN ANY FUNDAMENTAL CHANGES IN THE FUND'S INVESTMENT POSITIONS?
There were no significant changes in the fund from last quarter-end, April 30.
In comparison to the year-end holdings at January 31, there were a number of
changes primarily within market sectors. In mortgage pass-throughs, positions in
8.5% coupons were decreased in favor of 7.5% coupons, and mortgage dollar rolls
of $112.3 million par were decreased to $77 million par. Overall holdings of
collateralized mortgage obligations were decreased by $18.9 million par. The
fund decreased its Mexican holdings in order to increase holdings in Brazil,
which had cheapened significantly.
4
<PAGE>
FUND MANAGERS' DISCUSSION AND ANALYSIS
- --------------------------------------
RCS uses U.S. Treasuries sold on a forward commitment basis as a tool to manage
overall duration. The impact of higher interest rates and other portfolio
changes led RCM to decrease the fund's overall duration as noted above. As a
result, the total of these Treasury positions increased from $43 million par at
January 31 to $115.1 million par at July 31. Additionally, a new swap position
of $110 million also incrementally lowered fund duration.
<TABLE>
<CAPTION>
CREDIT QUALITY
JULY 31, 1996
PERCENTAGE OF
RATING TOTAL INVESTMENTS
- ------------------------------------------------------------------------------------------------
<S> <C>
AAA 83.6%
AA 0.2%
A 2.2%
BB 7.9%
B 6.1%
------
Total 100.0%
</TABLE>
HOW DOES THE FUND MAINTAIN ITS DIVIDEND?
RCS's primary investment objective is to generate a level of income that is
higher than that generated by high-quality, intermediate-term U.S. debt
securities. To meet this goal, RCS takes advantage of financial leverage.
Financial leverage is simply holding an investment position that has been
financed. The opportunity in these positions is to earn the yield difference
between the investment itself and the cost of financing. However, every new
position affects the fund's duration and managing the overall duration is very
important. This is why, as its secondary investment objective, RCS will seek to
maintain volatility in the net asset value of the shares of the fund comparable
to that of the high-quality, intermediate-term U.S. debt securities. Managing
for income and risk go hand-in-hand.
Mortgage dollar rolls and interest rate swaps are used to add income, increase
duration and provide diversification to the fund. At the same time, U.S.
Treasuries sold on a forward commitment basis
5
<PAGE>
FUND MANAGERS' DISCUSSION AND ANALYSIS
- --------------------------------------
are used to lower overall duration. As leverage, these transactions are limited
by regulation and, within those limits, the fund segregated $192.1 million in
high credit quality, liquid investments, an amount equivalent to these
obligations.
HOW HAVE INTEREST RATE SWAPS BENEFITED THE PORTFOLIO?
The primary benefit of RCS's use of interest rate swaps in 1996 has been to
participate in the markets of developed countries, such as Germany and The
Netherlands, without taking currency risk. These swaps have allowed RCS to
benefit from stable or declining foreign interest rates while producing income.
As importantly, they avoid foreign currency risk since all interest payments and
future gains or losses are in U.S. dollars. As shown in the following graph,
foreign interest rates swaps contributed 11.1% of the income year-to-date. Since
European interest rates have not increased as much as in the United States,
these swaps had a net unrealized gain of $79,700 at July 31.
MARKET SECTOR INCOME CONTRIBUTION
SIX MONTHS ENDED JULY 31, 1996
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Developed Foreign 11.1%
Emerging Markets 16.8%
U.S. Short-Term Investments 1.5%
U.S. Collateralized Mortgage Obligations 17.6%
U.S. Mortgage Pass-Throughs 53.0%
</TABLE>
6
<PAGE>
FUND MANAGERS' DISCUSSION AND ANALYSIS
- --------------------------------------
HOW DO I GET COPIES OF PRIOR EDUCATIONAL SUMMARIES?
As an added service, RCS offers a brief summary of key investment topics in the
April and October quarterly shareholder reports. Below is a listing of prior
topics. Copies are available by calling RCM at (415) 954-5400.
* Understanding Total Return
* Introduction to Mortgage Pass-Through Securities
* Introduction to Collateralized Mortgage Obligations
* A New Role For Interest Rate Swaps
* Duration: The Yardstick For Measuring Bond Fund Risk
WHY DO YOU THINK RCS OFFERS VALUE IN THE CLOSED-END FUND UNIVERSE?
During the recent period of uncertainty in the bond market, investors have been
looking for higher yield but with reasonably stable net asset value. RCS can fit
that investment goal. At July 31, 1996, based on the closing stock price of
$9.75 per share, RCS is earning and paying an annualized dividend of
approximately 9.1%. Many other bond fund alternatives have not offered as
attractive a risk-adjusted return. Municipal bond funds have been under the
uncertainty of future tax law changes. Investment-grade and high-yield corporate
bond funds had reasonable investor interest throughout the early part of the
year, but the market theme of economic slowdown and lower corporate earnings has
added to uncertainty in this sector. In other cases, bond funds have experienced
dividend cuts. Getting comfortable with a fund manager's philosophy and a fund's
risk profile requires a level of communication that is atypical in the
closed-end bond fund universe. RCS offers attractive yield and net asset value
performance while providing quarterly shareholder reports and monthly press
releases to keep investors informed.
7
<PAGE>
INVESTMENTS IN SECURITIES AND NET ASSETS
- ----------------------------------------
JULY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
COUNTRY/ PRINCIPAL VALUE
CURRENCY (000'S) DESCRIPTION (US$)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENTS IN DEBT SECURITIES - 118.9%*
ARGENTINA - 5.6%
USD Republic of Argentina
15,000 5.25%, 03/31/23 $ 7,950,000
4,000 8.38%, 12/20/03 3,378,000
4,000 9.25%, 02/23/01 3,754,000
4,000 10.95%, 11/01/99 4,124,000
-------------
Total Argentina 19,206,000
-------------
BRAZIL - 7.2%
USD 15,723 Federal Republic of Brazil C Bond, 4.50% with
3.50% Interest Capitalization, 04/15/14 9,689,115
15,000 Petrobras Euronote 8.75%, 12/09/96 15,030,000
-------------
Total Brazil 24,719,115
-------------
MEXICO - 3.8%
USD United Mexican States
5,000 6.25%, 12/31/19 3,200,000
6,000 9.75%, 02/06/01 5,946,000
4,326 11.50%, 05/15/26 3,936,660
-------------
Total Mexico 13,082,660
-------------
UNITED STATES - 102.3%
USD MORTGAGE-BACKED SECURITIES - 82.8%
8,668 FNMA 7.00%, 2025 8,319,499
33,452 FHLMC 7.50%, 2025 - 2026 32,955,391
12,672 FNMA 7.50%, 2026 12,471,909
9,961 GNMA 7.50%, 2006 - 2026 9,812,350
20,776 FHLMC 8.00%, 2023 - 2025 20,923,241
5,403 GNMA 8.00%, 2016 - 2022 5,498,284
98,998 FNMA 8.50%, 2017 - 2025 101,406,540
807 GNMA 8.50%, 2016 - 2024 829,696
66,000 FNMA 7.50%, 2026 TBA 64,957,860
11,000 GNMA 7.50%, 2026 TBA 10,816,080
10,476 FHA Project Pool 56, 7.43%, 11/01/22 10,397,359
6,017 FHA Project Pool 144 S, 7.43%, 06/01/24 5,792,635
-------------
Total Mortgage-Backed Securities 284,180,844
-------------
</TABLE>
* PERCENTAGE OF NET ASSETS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
8
<PAGE>
INVESTMENTS IN SECURITIES AND NET ASSETS
- ----------------------------------------
JULY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
COUNTRY/ PRINCIPAL VALUE
CURRENCY (000'S) DESCRIPTION (US$)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
USD COLLATERALIZED MORTGAGE OBLIGATIONS - 19.5%
DLJ Mortgage Acceptance Corp.
1,000 Series 1994-MF11, Class A2 8.10%, 06/18/04 $ 1,011,836
4,850 Series 1994-MF11, Class A3 8.10%, 06/18/04 4,852,652
Federal Home Loan Mortgage Corp.
17,932 Series 1667, Class PE 6.00%, 03/15/08 17,013,685
22,786 Series 1665, Class N 6.50%, 01/15/24 20,231,977
G E Capital Mortgage Services, Inc.
4,644 Series 1994-12, Class B1 6.00%, 04/25/09 4,138,620
22,000 Series 1994-10, Class A15 6.50%, 03/25/24 19,424,453
-------------
Total Collateralized Mortgage Obligations 66,673,223
-------------
TOTAL INVESTMENTS - (COST $406,760,741) 407,861,842
-------------
Payable for Investments Purchased -- (21.9%) (75,185,000)
Payable for Investments Sold on a Forward Commitment Basis -- (33.7%)+ (115,507,862)
Other Assets Less Liabilities -- 36.7% 125,908,271
-------------
NET ASSETS - 100.0% $ 343,077,251
-------------
-----------
</TABLE>
<TABLE>
<S> <C>
TERMS
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
GNMA -- Government National Mortgage Association
TBA -- To Be Announced
USD -- United States Dollar
</TABLE>
+ On a forward commitment basis, the fund has agreed to sell U.S. Treasury
securities:
<TABLE>
<CAPTION>
PRINCIPAL VALUE
CURRENCY (000'S) DESCRIPTION (US$)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
USD 29,000 U.S. Treasury Notes 6.50%, 05/15/05 $ 28,502,360
36,850 U.S. Treasury Notes 6.50%, 08/15/05 36,183,752
22,000 U.S. Treasury Bonds 7.13%, 02/15/23 22,116,600
27,250 U.S. Treasury Bonds 7.50%, 11/15/24 28,705,150
-------------
$ 115,507,862
-------------
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
9
<PAGE>
STATEMENT_OF_ASSETS_AND_LIABILITIES
JULY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value - (Note 1)
(cost $406,760,741) $ 407,861,842
Cash equivalents 5,969,420
Receivable for investments sold 113,259,451
Unrealized appreciation on interest rate swaps, net - (Note 1) 1,301,470
Interest receivable 5,649,486
Receivable for forward commitments closed, net - (Note 1) 371,399
-----------------
Total Assets 534,413,068
-----------------
LIABILITIES:
Payable for investments purchased 75,185,000
Investments sold on a forward commitment basis - (Note 1) 115,507,862
Deferred fee income 55,614
Payable for:
Investment management fees - (Note 2) 275,225
Professional fees 88,848
Printing and postage expenses 85,464
Administration fees - (Note 2) 81,441
Custodial fees 50,203
Other expenses 6,160
-----------------
Total Liabilities 191,335,817
-----------------
NET ASSETS $ 343,077,251
-----------------
----------
NET ASSETS CONSIST OF:
Paid in capital $ 380,687,827
Accumulated net investment loss (404,649)
Accumulated net realized loss on investments, foreign currency transactions, interest rate
swaps and forward commitments (37,307,386)
Net unrealized appreciation on investments, interest rate swaps and forward commitments 101,459
-----------------
NET ASSETS $ 343,077,251
-----------------
----------
NET ASSET VALUE PER SHARE
(30,515,800 shares outstanding) $ 11.24
-----------------
----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
10
<PAGE>
STATEMENT_OF_OPERATIONS
FOR THE SIX MONTHS ENDED JULY 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest $ 15,870,785
Fee income - (Note 1) 1,178,173
-----------------
Total investment income 17,048,958
-----------------
Expenses:
Investment management fees - (Note 2) 1,629,364
Administration fees - (Note 2) 149,209
Printing and postage expenses 102,517
Custodial fees 94,196
Professional fees 64,342
Insurance expense 20,679
Registration and filing fees 16,573
Directors' fees and expenses 14,927
Transfer agent fees 8,942
Other expenses 8,447
-----------------
Total expenses 2,109,196
-----------------
Net investment income 14,939,762
-----------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investments, interest rate swaps and forward commitments 5,620,668
Net unrealized depreciation on investments, interest rate swaps and forward commitments (19,220,850)
-----------------
Net realized and unrealized loss (13,600,182)
-----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,339,580
-----------------
----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
11
<PAGE>
STATEMENTS_ OF_ CHANGES_ IN_ NET_ ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JULY 31, 1996 YEAR ENDED JANUARY
(UNAUDITED) 31, 1996
------------------- -------------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 14,939,762 $ 29,170,844
Net realized gain (loss) on:
Investments, interest rate swaps and forward commitments 5,620,668 (16,950,280)
Foreign currency transactions -- 2,330,131
Net unrealized appreciation (depreciation) on investments, interest
rate swaps and forward commitments (19,220,850) 36,667,874
------------------- -------------------
Net increase in net assets resulting from operations 1,339,580 51,218,569
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income - (Note 1) (13,549,015) (27,098,030)
------------------- -------------------
Net increase (decrease) in net assets (12,209,435) 24,120,539
NET ASSETS:
Beginning of period 355,286,686 331,166,147
------------------- -------------------
End of period $ 343,077,251 $ 355,286,686
------------------- -------------------
---------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
12
<PAGE>
STATEMENT_ OF_ CASH_ FLOWS
FOR THE SIX MONTHS ENDED JULY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income received $ 12,697,215
Operating expenses paid (2,081,270)
Sale of short-term portfolio investments, net 96,417
Purchase of long-term portfolio investments (368,241,673)
Proceeds from disposition of long-term portfolio investments 373,376,745
-----------------
Net cash provided by operating activities 15,847,434
-----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payment for reverse repurchase agreement (24,627)
Net proceeds from dollar roll transactions 1,139,211
Dividends paid from net investment income (13,549,015)
-----------------
Net cash used in financing activities (12,434,431)
-----------------
Net increase in cash 3,413,003
Cash and equivalents at beginning of period 2,556,417
-----------------
Cash and equivalents at end of period $ 5,969,420
-----------------
-----------
RECONCILIATION OF RESULTS FROM OPERATIONS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $ 1,339,579
Decrease in investments 42,988,509
Net realized gain on investments and forward commitments (5,620,668)
Net unrealized depreciation on investments 18,135,575
Change in:
Receivable for investments sold (46,234,843)
Unrealized appreciation on interest rate swaps (325,565)
Receivable for forward commitments closed, net (371,398)
Interest receivable (2,153,272)
Payable for investments purchased (58,108,591)
Payable for investments sold on a forward commitment basis 66,175,494
Accrued expenses 22,614
-----------------
Net cash provided by operating activities $ 15,847,434
-----------------
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
13
<PAGE>
NOTES_ TO_ FINANCIAL_ STATEMENTS_ (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
RCM Strategic Global Government Fund, Inc. (the "Fund") commenced investment
operations on February 24, 1994, as a non-diversified, closed-end management
investment company and is registered under the Investment Company Act of 1940,
as amended. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
SECURITIES VALUATIONS: Investment securities are stated at market value or, in
the absence of market value, at fair value as determined by or under the
direction of the Fund's Board of Directors. Over-the-counter securities are
valued on the basis of the most recent bid price. Investments in U.S. government
securities (other than short-term securities) are valued at the average of the
most recent bid and ask prices in the over-the-counter market. Investments that
mature in sixty days or less are valued at amortized cost which approximates
market value.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME: Security transactions are
recorded as of the date of purchase, sale or maturity. Realized gains and losses
on security transactions are determined on an identified cost basis. Interest
income, foreign taxes and expenses are accrued daily. Fees from dollar roll
transactions are recognized daily on a straight-line basis over the term of the
contract. The Fund accretes discount and amortizes premium to par value on
securities.
FOREIGN CURRENCY TRANSLATIONS: The records of the Fund are maintained in U.S.
dollars. Foreign currencies, investments and other assets and liabilities, if
any, are translated into U.S. dollars at current exchange rates. Purchases and
sales of foreign securities and income and expenses are translated on the
respective dates of such transactions. Net realized currency gains and losses
arise from trade and settlement date gains and losses, sales of forward foreign
currency contracts, and foreign currency transactions. The Fund does not isolate
the portion of unrealized foreign currency exchange fluctuation on investments.
Such unrealized fluctuations are included in net unrealized appreciation or
depreciation on investments.
FORWARD FOREIGN CURRENCY CONTRACTS: A forward foreign currency contract
("Forward") is an agreement between two parties to buy or sell currency at a set
price on a future date. The Fund may enter into Forwards in order to hedge
foreign currency risk associated with its portfolio securities or for other risk
management or investment purposes. The net U.S. dollar value of foreign currency
underlying all contractual commitments held by the Fund on each day is
determined by using the appropriate current or forward exchange rate. Realized
gains or losses on Forwards include net gains or losses on contracts that have
matured or that the Fund has terminated by entering into an offsetting closing
transaction. Unrealized appreciation or depreciation of Forwards is included in
the
14
<PAGE>
NOTES_ TO_ FINANCIAL_ STATEMENTS_ (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Statement of Assets and Liabilities and is carried on a net basis. The portfolio
could be exposed to risk of loss if the counterparty is unable to meet the terms
of the contract or if the value of the currency changes unfavorably. As of July
31, 1996, there were no open Forwards.
FORWARD COMMITMENTS: The Fund may enter into forward sale commitments in which
the Fund agrees on trade date to make delivery against payment for securities on
a delayed delivery basis. The price and interest rate of such securities are
fixed at trade date. The Fund enters into forward sale commitments to manage its
portfolio duration. Realized gains and losses of forward sale commitments are
recognized at the time such transactions are closed by an offsetting purchase.
At July 31, 1996, there were $115,507,862 of forward sale commitments
outstanding and a receivable for forward sale commitments closed but unsettled
of $371,399.
The Fund enters into dollar rolls in which the Fund sells securities for
delivery in the current month and simultaneously contracts to repurchase
substantially similar (same type, same or similar interest rate and maturity)
securities on a specified future date. During the roll period, the Fund forgoes
principal and interest paid on the securities. The Fund accounts for dollar
rolls as financing transactions. Dollar rolls enhance the Fund's yield by
earning a spread between the yield on the underlying mortgage securities and
short-term interest rates. The fee income earned for the period on these
transactions was $1,178,173. At July 31, 1996, there were $75,185,000 in dollar
roll commitments on liquid mortgage pass-throughs outstanding.
INTEREST RATE SWAPS: The Fund enters into interest rate swaps for investment
management, rate and currency hedging, risk management and other purposes.
Interest rate swaps involve the exchange of commitments to pay or receive
interest - e.g., an exchange of floating rate payments for fixed rate payments.
If forecasts of interest rates and other market factors are incorrect,
investment performance will diminish compared to what performance would have
been if these investment techniques were not used. For hedging, there are risks
that the positions may correlate imperfectly with the asset or liability being
hedged. Even if the forecasts are correct, a liquid secondary market may not
always exist, or a counterparty to a transaction may not perform. The Fund
records, as an increase or decrease to interest income, the net amount due or
owed by the Fund on each periodic payment. The market valuations represent the
net present value of all future cash settlement amounts based on implied forward
interest rates.
15
<PAGE>
NOTES_ TO_ FINANCIAL_ STATEMENTS_ (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
As of July 31, 1996, the Fund had the following outstanding interest rate swaps:
<TABLE>
<CAPTION>
FIXED COUNTER-
NOTIONAL INTEREST PARTY SWAP UNREALIZED
AMOUNT RATE CREDIT TERMINATION MATURITY APPRECIATION/
(000S) RECEIVED COUNTRY RATING DATE DATE (DEPRECIATION)
- ---------- ---------- --------------- --------- ------------ ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
$ 75,000 5.84% Germany AAA 10/20/97 10/20/00 $ 1,016,325
25,000 5.84% Netherlands AAA 10/23/97 10/23/00 306,900
25,000 5.00% Netherlands A+ 01/25/98 01/25/01 (525,100)
25,000 5.85% Belgium A+ 01/25/98 01/25/03 (562,225)
25,000 3.99% Switzerland AAA 01/26/98 01/26/03 (306,200)
25,000 6.36% Finland AA+ 01/26/98 01/26/01 150,000
110,000 5.50%* United States AA+ 03/01/98 03/01/98 1,221,770
- ---------- --------------
$ 310,000 $ 1,301,470
- ---------- --------------
------- -------
</TABLE>
* FLOATING RATE BASED ON 1-MONTH LIBOR.
REVERSE REPURCHASE AGREEMENTS: The Fund enters into reverse repurchase
agreements with qualified counterparties as determined by or under the direction
of the Fund's Board of Directors. A reverse repurchase agreement involves a sale
by the Fund of securities that it holds with an agreement by the Fund to
repurchase the same securities at an agreed-upon price and date. Interest on the
value of reverse repurchase agreements issued and outstanding is based upon
competitive market rates at the time of issuance. At July 31, 1996, the Fund had
no open reverse repurchase agreements outstanding.
LEVERAGE: Forward sale commitments, dollar rolls, interest rate swaps, reverse
repurchase agreements and other transactions may involve leverage. In order to
limit leverage, the Fund segregated $192,086,387 in high credit quality, liquid
investments against outstanding obligations, resulting in no net leverage at
July 31, 1996.
FEDERAL INCOME TAXES: It is the policy of the Fund to comply with the
requirements for qualification as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended. It is also the intention of the Fund
to make distributions of substantially all of its taxable income and net
realized capital gains to its shareholders. Therefore, no federal income tax
provision is required. As of January 31, 1996, the Fund had a capital loss
carryover of $42,111,669, of which $23,482,011 expires in 2003 and $18,629,658
expires in 2004.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund distributes to its holders of common
stock monthly dividends of net investment income. Net realized capital gains, in
excess of capital loss carryovers, if any, will be distributed to the
stockholders at least annually. The Fund records all distributions to
stockholders on the ex-dividend date. Income and capital gain distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. Any differences are primarily due to
differing treatments for losses deferred, accounting for foreign currency,
original issue discount accretion and excise tax regulations.
16
<PAGE>
NOTES_ TO_ FINANCIAL_ STATEMENTS_ (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH EQUIVALENTS: The Fund considers investments in money market funds to be
cash equivalents.
2. TRANSACTIONS WITH AFFILIATES, ADMINISTRATOR AND RELATED PARTIES
On June 14, 1996, all of the outstanding general and limited partnership
interests in the Fund's investment manager, RCM Capital Management, a California
Limited Partnership ("Old RCM"), were acquired by RCM Capital Management,
L.L.C., ("RCM") a wholly owned subsidiary of Dresdner Bank AG, an international
banking organization headquartered in Frankfurt, Germany. Because the
transaction may have constituted an "assignment" of the Fund's management
agreement with Old RCM under the Investment Company Act of 1940, and thus a
termination of such management agreement, the Fund sought and obtained approval
of a new management agreement from the Fund's Board of Directors and
shareholders at a special meeting held on May 28, 1996. The terms of the new
management agreement are substantially the same as those of the previous
management agreement.
RCM furnishes investment advice to the Fund and receives a fee at the annualized
rate of 0.95% of the Fund's average daily net assets. State Street Bank and
Trust Company (the "Administrator") serves as the Fund's administrator and
receives a fee of 0.10% on the first $250 million of the Fund's average daily
net assets, 0.05% on the next $250 million and 0.02% on amounts thereafter. No
principal, officer or employee of the investment manager or any affiliate
thereof will receive any compensation from the Fund for serving as an officer or
director of the Fund. The Fund pays each of its directors who is not a
principal, officer or employee of the investment manager or any affiliate
thereof an annual fee of $6,000 plus $1,000 for each meeting attended.
3. CAPITAL SHARES
On April 15, 1994, the Fund completed the initial public offering of a total of
30,515,800 shares of its common stock. Offering costs of $736,300 were charged
to capital upon commencement of investment operations. All other initial costs
of distribution and all offering commissions were paid by the investment
manager. At July 31, 1996, 500,000,000 shares of common stock, $0.00001 par
value, were authorized.
4. PURCHASES AND SALES OF SECURITIES
Purchases and proceeds from sales of securities, other than obligations of the
U.S. government and its agencies, short-term securities, dollar rolls, and
forward commitments, for the period ended July 31, 1996, aggregated $17,607,202
and $31,793,471 respectively. Purchases and proceeds from sales of obligations
of the U.S. government and its agencies, other than short-term securities,
dollar rolls, and forward commitments, for the period ended July 31, 1996,
aggregated $34,977,473 and $27,980,284, respectively. At July 31, 1996, the
aggregate cost of investments for book and federal income tax purposes was
approximately the same. Gross unrealized appreciation and depreciation of
investments aggregated $4,863,477 and $3,762,376, respectively, resulting in net
unrealized appreciation of $1,101,101 at July 31, 1996.
17
<PAGE>
NOTES_ TO_ FINANCIAL_ STATEMENTS_ (UNAUDITED)
5. FINANCIAL HIGHLIGHTS
Supplementary data for a share outstanding are presented for the periods
indicated:
<TABLE>
<CAPTION>
SIX
MONTHS YEAR 2/24/94*
ENDED ENDED THROUGH
7/31/96 1/31/96 1/31/95
--------- --------- ---------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 11.64 $ 10.85 $ 12.50
--------- --------- ---------
Net investment income 0.49 0.96 0.83
Net realized and unrealized gain (loss) (0.45) 0.72 (1.71)
--------- --------- ---------
Net increase (decrease) in net assets resulting from operations 0.04 1.68 (0.88)
Distributions:
Net investment income (0.44) (0.89) (0.75)
Offering costs -- -- (0.02)
--------- --------- ---------
Net asset value, end of period $ 11.24 $ 11.64 $ 10.85
--------- --------- ---------
Market price, end of period $ 9.75 $ 10.25 $ 9.625
--------- --------- ---------
Total return based on market price (0.52)%(a) 16.21% (17.21)%(a)
Total return based on net asset value 1.00%(a) 17.07% (6.68)%(a)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000s) $ 343,077 $ 355,287 $ 331,166
Ratio of expenses to average net assets 1.23%(b) 1.20% 1.15%(b)(c)
Ratio of net investment income to average
net assets 8.71%(b) 8.50% 7.79%(b)(c)
Portfolio Turnover 12%(a) 96% 158%(a)
</TABLE>
* COMMENCEMENT OF INVESTMENT OPERATIONS.
(a) NOT ANNUALIZED.
(b) ANNUALIZED.
(c) TO THE EXTENT NECESSARY TO REDUCE THE FUND'S TOTAL ANNUAL EXPENSES FOR THE
FIRST YEAR OF OPERATIONS TO 1.15%, THE INVESTMENT MANAGER AGREED TO REDUCE
ITS FEE TO 0.90%, AND THE ADMINISTRATOR AGREED TO REDUCE ITS FEE TO 0.07%
ON THE FIRST $250 MILLION OF THE FUND'S AVERAGE DAILY NET ASSETS, 0.05% ON
THE NEXT $250 MILLION AND 0.02% ON AMOUNTS THEREAFTER. IN THE ABSENCE OF
FEE REDUCTIONS BY THE INVESTMENT MANAGER AND THE ADMINISTRATOR, THE FUND'S
RATIO OF EXPENSES AND NET INVESTMENT INCOME TO AVERAGE NET ASSETS IN THE
FIRST FISCAL YEAR WOULD HAVE BEEN 1.24% AND 7.71%, RESPECTIVELY.
18
<PAGE>
SELECTED_ QUARTERLY_ FINANCIAL_ DATA_ (UNAUDITED)
Selected quarterly financial data for the period ended:
<TABLE>
<CAPTION>
NET REALIZED
TOTAL NET AND NET ASSET VALUE MARKET PRICE
INVESTMENT INVESTMENT UNREALIZED -------------------- -------------------- VOLUME
INCOME INCOME GAIN (LOSS) HIGH LOW HIGH LOW (000'S)
------------ ------------ ------------ --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE
April 1994 $0.16 $0.13 $(0.74) $ 12.50 $ 11.87 $ 12.50 $ 10.75 1,084
July 1994 0.28 0.25 (0.31) 11.92 11.43 11.50 10.00 4,927
October 1994 0.25 0.22 (0.17) 11.54 11.30 10.69 9.69 6,122
January 1995 0.26 0.23 (0.49) 11.25 10.71 10.25 9.25 7,654
April 1995 0.28 0.25 0.20 11.08 10.79 9.94 9.50 5,583
July 1995 0.27 0.23 0.16 11.47 11.11 10.50 9.75 5,708
October 1995 0.27 0.24 0.06 11.39 11.12 10.25 9.88 5,261
January 1996 0.27 0.24 0.30 11.70 11.29 10.25 9.88 6,833
April 1996 0.28 0.24 (0.31) 11.64 11.15 10.25 9.50 5,379
July 1996 0.28 0.25 (0.13) 11.32 11.15 9.75 9.38 5,638
TOTALS (000'S)
April 1994 $ 4,775 $ 4,049 $(22,682)
July 1994 8,612 7,563 (9,306)
October 1994 7,779 6,756 (5,283)
January 1995 7,852 6,911 (14,788)
April 1995 8,427 7,496 6,230
July 1995 8,221 7,139 4,830
October 1995 8,338 7,286 1,909
January 1996 8,314 7,250 9,079
April 1996 8,465 7,437 (9,602)
July 1996 8,584 7,503 (3,998)
</TABLE>
19
<PAGE>
DIVIDEND REINVESTMENT PLAN
- --------------------------------
Under the Fund's Dividend Reinvestment Plan (the "Plan"), a stockholder whose
shares of common stock are registered in his or her own name will have all
distributions from the Fund reinvested automatically by State Street Bank and
Trust Company (the "Plan Agent") as agent under the Plan, unless the stockholder
elects to receive cash. Distributions with respect to shares registered in the
name of a broker-dealer or other nominee (that is, in "street name") will be
reinvested by the broker or nominee in additional shares under the Plan, unless
that service is not provided by the broker or nominee or the stockholder elects
to receive distributions in cash.
When the market price of the common stock is equal to or exceeds the net asset
value per share of the common stock on the dividend payment date, Plan
participants will be issued shares of common stock valued at the net asset value
most recently determined or, if net asset value is less than 95% of the then
current market price of the common stock, then at 95% of the market value.
If the market price of the common stock is less than the net asset value of the
common stock, or if the Fund declares a dividend or capital gains distribution
payable only in cash, a broker-dealer not affiliated with the Fund's principal
underwriter, as purchasing agent for Plan participants (the "Purchasing Agent"),
will buy common stock in the open market for the participants' accounts. If the
market price exceeds the net asset value of shares before the Purchasing Agent
has completed its purchases, the Purchasing Agent is permitted to cease
purchasing shares and the Fund may issue the remaining shares.
Plan participants are subject to no charge for reinvesting dividends and capital
gains distributions. The Plan Agent's fees for handling the reinvestment of
dividends and capital gains distributions will be paid by the Fund. No brokerage
charges apply with respect to shares of common stock issued directly by the
Fund. Each Plan participant will, however, bear a proportionate share of
brokerage commissions incurred with respect to open market purchases made in
connection with the reinvestment of dividends or capital gains distributions.
Plan participants may terminate their participation in the Plan by giving
written notice to the Plan Agent. The Fund reserves the right to amend or
terminate the Plan. To obtain a full description of the Plan or to obtain any
other information about the Plan, please contact State Street Bank and Trust
Company, P.O. Box 8209, Boston, Massachusetts 02266-8209 or call (800) 426-5523.
20
<PAGE>
CORPORATE INFORMATION
- -----------------------------
<TABLE>
<S> <C>
DIRECTORS INVESTMENT MANAGER
Gary W. Schreyer, CHAIRMAN RCM Capital Management, L.L.C.
William A. Hasler Four Embarcadero Center
Francis E. Lundy San Francisco, California 94111
James M. Whitaker
PORTFOLIO MANAGERS
AUDIT COMMITTEE Eamonn F. Dolan
William A. Hasler Stephen Kim
Francis E. Lundy Jack L. Bernard
James M. Whitaker Mark E. Raaberg
NOMINATING COMMITTEE ADMINISTRATOR, CUSTODIAN AND
Gary W. Schreyer TRANSFER AGENT
William A. Hasler State Street Bank and Trust Company
1776 Heritage Drive
OFFICERS North Quincy, Massachusetts 02171
Richard W. Ingram (800) 426-5523
PRESIDENT, CHIEF FINANCIAL OFFICER AND
ASSISTANT TREASURER
John E. Pelletier INDEPENDENT AUDITORS
VICE PRESIDENT AND ASSISTANT SECRETARY Coopers & Lybrand L.L.P.
Elizabeth A. Bachman One Post Office Square
VICE PRESIDENT AND ASSISTANT SECRETARY Boston, Massachusetts 02109
Caroline M. Hirst
SECRETARY AND TREASURER COUNSEL
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
</TABLE>
- --------------------------------------------------------------------------------
SHAREHOLDER_MEETING_RESULTS
The Annual Meeting of Shareholders of RCM Strategic Global Government Fund, Inc.
was held on Tuesday, May 28, 1996. The number of shares issued, outstanding and
eligible to vote as of record date (March 14, 1996) was 30,515,678. Present were
28,193,570 shares represented by 201 proxies or 92.39% of the eligible voting
shares tabulated. The matters voted upon by Shareholders and the resulting votes
for each matter are presented below:
1. A new investment management agreement between RCM Capital Management, L.L.C.
and the Fund, effective upon the closing date of the transaction involving
Dresdner Bank AG and RCM Capital Management, a California Limited
Partnership, was approved. The votes were cast: For (27,181,628), Against
(369,084), Abstain (638,768), Broker Non-Vote (4,089). A broker non-vote is
a proxy received by the Fund from a broker or nominee when the broker or
nominee neither has received instructions from the beneficial owner or other
persons entitled to vote, nor has the discretionary power to vote on a
particular matter.
2. Gary W. Schreyer and James M. Whitaker were reelected to the Board of
Directors for a term to expire in 1999 or until their successors shall be
duly elected and qualified. The votes for Gary W. Schreyer were cast: For
(27,707,443), Withheld (482,037), Broker Non-Vote (4,089). The votes for
James M. Whitaker were cast: For (27,705,932), Withheld (483,548), Broker
Non-Vote (4,089).
3. The selection by the Board of Directors of Coopers & Lybrand L.L.P. as
independent public accountants for the fiscal year ending January 31, 1997,
was approved. The votes were cast: For (27,689,789), Against (138,504),
Abstain (361,187), Broker Non-Vote (4,089).
<PAGE>
RCM STRATEGIC GLOBAL
GOVERNMENT FUND, INC.
MARKET PRICES FOR RCS SHARES ARE PUBLISHED DAILY IN THE WALL STREET JOURNAL AS
"RCM STRATG," AND THE NEW YORK TIMES AS "RCMSTGLFD," AND LOCAL NEWSPAPERS IN
THE NEW YORK STOCK EXCHANGE LISTINGS. NET ASSET VALUE IS PUBLISHED WEEKLY AND
APPEARS EACH MONDAY IN THE WALL STREET JOURNAL AND THE NEW YORK TIMES UNDER THE
CAPTION, CLOSED-END BOND FUNDS. THE WEEKLY NET ASSET VALUE IS ALSO AVAILABLE
EACH SATURDAY IN BARRON'S.
THIS REPORT IS SENT TO THE SHAREHOLDERS OF RCS FOR THEIR INFORMATION. THE
FINANCIAL INFORMATION INCLUDED HEREIN IS TAKEN FROM THE RECORDS OF THE FUND.
THIS IS NOT A PROSPECTUS, CIRCULAR OR REPRESENTATION INTENDED FOR USE IN THE
PURCHASE OR SALE OF SHARES OF THE FUND OR OF ANY SECURITIES MENTIONED IN THE
REPORT. IF YOU WOULD LIKE A COPY OF THE MOST RECENT ANNUAL REPORT (INCLUDING
AUDITED FINANCIAL STATEMENTS), PLEASE CONTACT YOUR BROKER OR CALL RCM DIRECTLY
AT (415) 954-5400.
INVESTMENT MANAGER:
RCM CAPITAL MANAGEMENT, L.L.C.
FOUR EMBARCADERO CENTER
SAN FRANCISCO, CALIFORNIA 94111
