(File Nos. 33-33320 and 811-06038)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
The Emerging Germany Fund Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
TO OUR FELLOW STOCKHOLDERS:
The annual meeting of the stockholders of The Emerging Germany Fund Inc.
(the "Fund") will be held on January 26, 1999. At the meeting, the following
non-routine matters have been recommended by the Board of Directors for your
approval:
- Broadening the investment objective of the Fund to permit investment on a
pan-European basis
- Converting the Fund from a closed-end structure to an open-end structure
The new year will bring a time of historic change in Europe, and these
changes will have a major impact on the Fund. On January 1, 1999, European
Economic and Monetary Union will take effect. With that change, European
markets, which historically have operated independently on a country basis, will
move towards unification. As a result, a single, unified market will be realized
through which people, goods, and money can move freely, creating, with the
likely future addition of the United Kingdom, the world's largest economy.
As European unification emerges, the fortunes of more and more German
companies will no longer be linked as closely to the fortunes of the German
economy. Instead, they will be evaluated against their competitors in other
European countries, and their fortunes will be linked to the strength or
weakness of the overall European economy. In this environment, an investment
company's success will depend on its adviser's knowledge of European companies
and industry conditions.
Viewed against this backdrop, the Board believes that single European
country funds will have a reduced purpose and will tie an investor's fortunes to
a limited and somewhat arbitrary group of issuers. In contrast, pan-European
funds will serve as a key investment option for investors, with investment
advisers seeking to identify the promising investment opportunities of the
future. Proposal No. 1 seeks to permit the Fund to take advantage of these
changes by expanding the Fund's investment objective to allow it to invest on a
broader, pan-European basis. Your Board recommends strongly that you vote "FOR"
Proposal No. 1.
In recent years, the Fund has had excellent investment performance. In fact,
the Fund was the top performing German fund (closed or open-end) in the U.S.
marketplace in 1997 and again through the first three quarters of 1998, measured
by its total return. Despite the excellent performance, however, the discount
between the market price of the Fund's shares and the net asset value of those
shares has not substantially narrowed. Converting from a closed-end structure to
an open-end structure would eliminate that discount.
As a single country fund, the Board believed strongly that open-ending could
be harmful to stockholders because of concerns in satisfying redemption requests
with a portfolio of securities trading in a less liquid and overall smaller
market. Indeed, as a historical matter, the vast majority of single country
funds have been structured as closed-end funds. If the stockholders approve the
Board's proposal to broaden the Fund's investment objective, however, the Fund
will be able to operate in an open-end structure without disadvantage.
The Board recommends strongly that the stockholders vote "FOR" Proposal No.
2, to convert to an open-end structure. You should know that every voting member
of the Board of Directors intends to vote "FOR" both Proposal No. 1 and Proposal
No. 2, for reasons articulated in the accompanying Proxy Statement.
In addition, the accompanying Proxy Statement contains proposals to elect
four Directors and to ratify the selection of the Fund's independent
accountants, as well as a shareholder proposal to terminate the Fund's current
investment advisory agreement. The Board recommends strongly that you vote "FOR"
Proposal Nos. 3 and 4, and "AGAINST" Proposal No. 5.
The full details of these proposals and a comprehensive explanation of the
Board's recommendations are contained in the accompanying Proxy Statement, which
we urge you to read carefully.
Your vote is very important to help decide these critical issues for the
future of the Fund. Since the meeting will be held soon, please take a moment
now to sign and promptly return your proxy card in the enclosed postage-paid
envelope.
Thank you.
Sincerely,
[LOGO]
Rolf Passow
Chairman of the Board of Directors
The Emerging Germany Fund
THE EMERGING GERMANY FUND INC.
FOUR EMBARCADERO CENTER
SAN FRANCISCO, CA 94111
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 26, 1999
------------------------
To Our Stockholders:
Notice is hereby given that an Annual Meeting of Stockholders (the
"Meeting") of The Emerging Germany Fund Inc. (the "Fund") will be held at 10:00
a.m. on January 26, 1999 at 75 Wall Street (Lower Level), New York, New York
10005, for the following purposes:
(1) To approve or disapprove a proposal to change the Fund's investment
strategy, which proposal includes the following:
a. Expanding the Fund's investment objective from a predominantly German
investment portfolio to a broader European investment portfolio; and
b. Amending the Fund's Articles of Incorporation to change the Fund's
name to Dresdner RCM Europe Fund Inc.
(2) To approve or disapprove a proposal to convert the Fund from a
closed-end investment company to an open-end investment company, which
proposal includes the following:
a. Changing the Fund's subclassification under the Investment Company
Act of 1940, as amended (the "1940 Act"), from a closed-end
investment company to an open-end investment company and amending and
restating the Fund's Articles of Incorporation to provide for such
conversion;
b. Modifying and eliminating certain fundamental investment restrictions
of the Fund in connection with such conversion;
c. Approving or disapproving the Investment Management Agreement between
the Fund and Dresdner RCM Global Investors LLC ("Dresdner RCM"); and
d. Approving or disapproving the Rule 12b-1 Distribution Plan (the
"Plan") of the Fund.
(3) To elect four Directors of the Fund, each to hold office for a term of
three years and until his successor is duly elected and qualified.
(4) To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the Fund for the fiscal year ending December 31, 1999.
(5) To approve or disapprove, if presented, a stockholder proposal.
(6) To consider and act upon any other business that may properly come
before the Meeting or any adjournment thereof.
Only holders of common stock of record at the close of business on December
4, 1998 are entitled to notice of, and to vote at, this Meeting or any
adjournment thereof.
By Order of the Board of Directors,
[LOGO]
Robert J. Goldstein
SECRETARY
December 30, 1998
San Francisco, California
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN THE ENCLOSED PROXY
AND RETURN IT TO THE FUND. TO SAVE THE FUND THE ADDITIONAL EXPENSE OF FURTHER
SOLICITATION, PLEASE MAIL IN YOUR PROXY PROMPTLY.
THE EMERGING GERMANY FUND INC.
FOUR EMBARCADERO CENTER
SAN FRANCISCO, CA 94111
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 26, 1999
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished by the Board of Directors of The Emerging
Germany Fund Inc. (the "Fund") in connection with the solicitation of proxies
for use at the Annual Meeting of Stockholders (the "Meeting") to be held at
10:00 a.m. on January 26, 1999 at 75 Wall Street (Lower Level), New York, New
York 10005. The purpose of the Meeting and the matters to be acted upon are set
forth in the accompanying Notice of Annual Meeting.
If the accompanying form of proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. However, if no instructions are specified, shares
will be voted "FOR" the expansion of the Fund's investment objective, "FOR" the
amendment of the Fund's Articles of Incorporation to change the Fund's name,
"FOR" the conversion of the Fund from a closed-end investment company to an
open-end investment company and the amendment and restatement of the Fund's
Articles of Incorporation, "FOR" the modification and elimination of certain of
the Fund's fundamental investment restrictions, "FOR" the approval of the
Investment Management Agreement, "FOR" the approval of the Rule 12b-1
Distribution Plan, "FOR" the election of the nominees for Director listed below,
"FOR" ratification of selection of the Fund's independent accountants, "AGAINST"
the stockholder proposal, and "FOR" authorizing the persons serving as proxies
to vote on any other business that may come before the Meeting based on their
discretion. A proxy may be revoked at any time prior to the time it is voted by
written notice to the Secretary of the Fund or by attendance at the Meeting.
The close of business on December 4, 1998 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Meeting. On that date, the Fund had 14,008,334 shares of Common Stock
outstanding and entitled to vote. Each share of Common Stock is entitled to one
vote at the Meeting, and fractional shares are entitled to proportionate shares
of one vote. It is expected that the Notice of Annual Meeting, Proxy Statement,
and form of proxy will first be mailed to stockholders on or about January 4,
1999.
The expansion of the Fund's fundamental investment objective from a
predominantly German focus to a broader European focus (Proposal No. 1(a))
requires approval by a vote of a majority of the outstanding voting securities
of the Fund as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"). Under the 1940 Act, a majority of the outstanding voting securities
of the Fund is defined as the lesser of (i) 67% of the Fund's outstanding shares
represented at a meeting at which more than 50% of the outstanding shares are
present in person or represented by proxy, or (ii) more than 50% of the Fund's
outstanding shares (hereinafter referred to as "1940 Act majority vote"). The
amendment of the Fund's Articles of Incorporation to change the Fund's name
(Proposal No. 1(b)) requires approval by the affirmative vote of two-thirds of
all the votes entitled to be cast on the matter. The change of the Fund's
subclassification under the 1940 Act (Proposal No. 2(a)) and the amendment and
restatement of the Fund's Articles of Incorporation (Proposal No. 2(b)) require
approval by the affirmative vote of the holders of a majority of the outstanding
shares of the Common Stock. The approval of the modification and elimination of
certain of the Fund's investment restrictions, the new Investment Management
Agreement, and the new Rule 12b-1 Distribution Plan (Proposal Nos. 2(b), 2(c),
and 2(d)) each require a
1
1940 Act majority vote. However, the Fund will not effect the open-ending
according to Proposal Nos. 2(a), 2(b), 2(c), and 2(d) unless Proposal No. 1(a)
is also approved. The election of Directors (Proposal No. 3) requires approval
by a plurality of the votes cast at the Meeting. The ratification of
PricewaterhouseCoopers LLP as independent accountants of the Fund (Proposal No.
4) requires the affirmative vote of a majority of the shares cast at the Meeting
on the matter. Approval of the stockholder proposal (Proposal No. 5), if
presented, requires a 1940 Act majority vote.
If a proxy is properly executed and returned accompanied by instructions to
abstain from voting or to withhold authority to vote (an abstention) or
represents a broker "non-vote" (that is, a proxy from a broker or nominee
indicating that such person has not received instructions from the beneficial
owner or other person entitled to vote shares on a particular matter with
respect to which the broker or nominee does not have discretionary power), the
Fund intends to treat such proxies as present at the Meeting for the purposes of
determining whether a quorum has been achieved at the Meeting. Under Maryland
law, abstentions do not constitute a vote "for" or "against" a matter and will
be disregarded in determining the "votes cast" on an issue. Broker "non-votes"
will be treated the same as abstentions. With respect to proposals to be
determined by an affirmative vote of a specified majority of the total shares
outstanding, such as Proposal Nos. 1(a), 1(b), 2(a), 2(b), 2(c), 2(d), and 5, an
abstention or broker "non-vote" will be considered present for purposes of
determining a quorum but will have the effect of a vote "against" such matters.
With respect to proposals to be determined by a specified majority or plurality
of the votes cast at the Meeting, such as Proposal Nos. 3 and 4, an abstention
or broker "non-vote" will be considered present for purposes of determining a
quorum but will have no effect on the outcome of such matters.
In the event that a quorum is present at the Meeting but sufficient votes to
approve one or more proposals are not cast, the persons named as proxies may
propose one or more adjournments of such Meeting to permit further solicitation
of proxies with respect to such proposal or proposals. Any such adjournment will
require the affirmative vote of a majority of the shares present at the Meeting
or represented by proxy. In such case, the persons named as proxies will vote
those proxies which they are entitled to vote "for" any such proposal in favor
of such an adjournment, and will vote those proxies required to be voted
"against" any such proposal against any such adjournment. A stockholder vote may
be taken on one of the proposals in this Proxy Statement prior to any such
adjournment if sufficient votes have been received and it is otherwise
appropriate.
If any proposal, other than Proposal Nos. 1, 2, 3, 4, or 5, properly comes
before the Meeting, including the possible stockholder proposals referred to
below in the discussion of "Other Matters," the shares represented by proxies
will be voted on all such proposals in the discretion of the person or persons
voting the proxies.
CHANGE IN INVESTMENT OBJECTIVE
(PROPOSAL NO. 1)
The Board of Directors of the Fund has concluded that the Fund should change
its investment strategy to take advantage of investment opportunities throughout
Europe. Accordingly, it proposes a change in the Fund's investment objective
from a predominantly German-focused strategy to a broader European-focused
strategy (Proposal No. 1(a)). In addition, to formalize this change, the Fund's
Articles of Incorporation must be amended to change the Fund's name to reflect
the broader objective (Proposal No. 1(b)). The Board has decided that this
change of investment objective is so integral to the Fund's future success that
if Proposal No. 1 is approved, the Fund will change its investment objective
irrespective of the approval of Proposal No. 2. The Fund will effect Proposal
Nos. 1(a) and 1(b) as soon as possible after stockholder approval. Below is a
more detailed description of the proposals and the Board's basis for its
determination that such proposals will benefit the Fund and its stockholders.
2
PROPOSAL NO. 1(A). EXPANDING THE FUND'S INVESTMENT OBJECTIVE FROM A
PREDOMINANTLY GERMAN INVESTMENT PORTFOLIO TO A BROADER EUROPEAN INVESTMENT
PORTFOLIO
The Board of Directors believes that the Fund's investment objective should
be expanded. Currently, the Fund's investment objective is to obtain long-term
capital appreciation by investing primarily in equity securities of German
companies. The Board recommends that the Fund maintain its investment objective
to obtain long-term appreciation but also broaden the investment focus, so that
the objective would be to obtain long-term capital appreciation by investing
primarily in equity securities of European companies. If approved, the Fund
would invest in common stocks of European companies, and not primarily in German
companies. The Board understands that a pan-European fund is more likely to
capture fully the investment opportunities expected as a result of a unified
European continent and that funds focusing on a single European country have a
reduced purpose in light of this new investment opportunity. The Board also
realizes that the change of the investment objective of the Fund, as described
herein, will permit the Fund to diversify its country and sector allocation and
provide it with a more liquid market in which to invest. Finally, the Board
believes that an expanded investment objective will assist the Fund in its
operations as an open-end investment company under Proposal No. 2.
The continent of Europe has both a larger economy and population than the
United States. Although the countries within Europe are relatively small,
together they offer many different types of investment opportunities for the
Fund and its stockholders--everything from agriculture to heavy industry within
both developed and developing markets. In addition, stockholders of the Fund may
be able to take advantage of the unprecedented merging of the economies of most
of the major developed European countries with the implementation of European
Economic and Monetary Union ("EMU"). Of course, there is no guarantee that
investment by the Fund in other European countries will result in similar or
higher rates of return than the Fund's prior investment in primarily German
securities.
The Board of Directors and Dresdner RCM Global Investors LLC ("Dresdner
RCM"), the Fund's investment adviser, believe that the EMU likely will have a
significant impact on the economies of both participating and non-participating
European countries. The EMU's objective is to create a single, unified market
through which people, goods, and money can move freely. Each country will act as
a "state" within the greater "Union." Europe already has a larger population
than the United States, and with the possible future addition of the United
Kingdom, the EMU will be the world's largest economy. Eleven countries will
participate initially: Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, the Netherlands, Portugal, and Spain. The Board and Dresdner
RCM expect that, over time, the EMU area will expand to include most of the
fifteen European Union members as well as some countries from the former Eastern
Bloc.
Participation in the EMU is predicated upon countries meeting certain
financial criteria outlined in the Maastricht treaty. Such criteria include: an
inflation rate below 3.3%, a public debt below 60% of GDP, and a deficit of 3%
or less of GDP. These criteria will also serve as an impetus for
non-participating European countries, especially Eastern European countries, to
adopt strict monetary and fiscal policies. The EMU will begin officially on
January 1, 1999 with, among other things, the adoption of a common currency, the
Euro. After a three-year transition period, the Euro will begin to circulate
among the general public on January 1, 2002. On July 1, 2002, each country's
individual currency will cease to exist. The EMU will also have one central bank
to guide monetary policy for all EMU members.
Dresdner RCM believes that the following changes may occur due to the EMU,
which could create positive economic opportunities for the Fund, although there
can be no guarantee that this will be the case. These changes and opportunities
may include:
- the disappearance of cross-border price discrepancies;
- stricter budgetary control;
- lower tax rates;
3
- deregulation and privatization of certain industries and markets;
- lower interest rates;
- corporate restructuring, especially mergers and acquisitions;
- the increased use of share buy backs;
- the increased use of management incentive and share option schemes to
focus company management on profitability;
- companies becoming more stockholder-friendly by focusing on investor
relations; and
- increased public equity issuances by private companies.
Besides the developed countries that are members of the EMU, the Fund may
also invest in other developed European countries such as, for example, Denmark,
Norway, Sweden, and the United Kingdom under the proposed expanded investment
objective. These countries have also taken steps to standardize their economies
via their membership in the European Union (except Norway) and may join the EMU
in the future. The United Kingdom is the world's sixth largest economy, has a
well-developed securities market, and has recently recovered from an economic
slowdown. The Scandinavian countries have strong export markets and are endowed
with abundant natural resources.
In addition, under the proposed investment objective, the Fund may invest in
the developing securities markets of Eastern European countries. Such countries
are continuing their transition from state-controlled economies to capitalism.
Some Eastern European countries have made greater strides in this process than
others, such as Croatia, the Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Poland, and Slovenia. Many of these countries have expressed the
desire to become EMU participants and are gradually bringing their economies
in-line with the Maastricht criteria.
The Fund is well positioned to take advantage of the changes expected to
occur throughout Europe as a result of the EMU. Dresdner RCM has many years of
experience in European investment research and portfolio management. This,
together with its affiliation with a major European bank, Dresdner Bank AG
("Dresdner Bank"), should facilitate the Fund's discovery of the European
investment opportunities of the future. The terms of the Fund's proposed
advisory arrangements are described at length in Proposal No. 2(c) below, and
the proposed contract is attached hereto as Exhibit B.
This change in investment objective will necessitate a restructuring of the
Fund's portfolio. Upon approval and implementation of an expanded objective, a
substantial portion of the Fund's German holdings will be sold. The Fund will
then purchase securities of issuers located in other European countries. The
Fund will use the MSCI Europe Index, an index measuring the total rate of return
of nearly 600 stocks from 15 developed European countries, as its benchmark.
However, the Fund will not duplicate MSCI Europe Index's country and sector
allocations. Dresdner RCM will invest the assets of the Fund, upon change of the
Fund's objective, based on its then-current judgment about the relative
investment merits of different industries and companies in Europe.
The substantial restructuring of the Fund's portfolio that is necessary to
implement the proposed European investment objective will generate expenses for
the Fund, including brokerage and other transactional expenses that are not
reflected in the Fund's expense ratio. Such sales of portfolio securities could
also result in capital gains (or losses). The gains would normally be
distributed to Fund stockholders, who would be subject to federal and state
income tax thereon, as applicable to the stockholder. As of November 30, 1998,
the Fund had approximately $42 million of net unrealized appreciation.
Investment in foreign markets involves certain risks that may affect the
Fund's overall performance. Not all European countries are as stable as Germany
and investments by the Fund in other European countries may potentially be
riskier and more volatile than German investments. Such risks may generally
include certain government actions like expropriation, nationalization,
confiscatory taxes, limits on the use
4
and removal of the Fund's assets, and restrictions on ownership of securities by
foreign entities. In addition, certain European markets may be relatively
illiquid and unforeseen changes in economic conditions may occur. Differences in
the regulation of financial markets such as less mandated disclosure, different
accounting and financial recordkeeping standards, less governmental supervision
of exchanges and broker/dealers, and higher regulatory fees may also hinder the
performance of the Fund. Fluctuations in the value of European currencies,
including the new Euro, relative to the U.S. dollar will also affect the value
of the Fund's holdings in European currencies.
There are certain specific risks that may be encountered when investing in
EMU countries. The transition to EMU may be troubled as eleven separate nations
adjust to the reduction in flexibility, independence, and sovereignty that the
EMU mandates. High unemployment and a sense of "deculturalization" within the
general public of the participating countries could lead to political unrest and
continuing labor disturbances.
While the Board and Dresdner RCM appreciate the risks detailed above, they
believe that the standardization of regulation and stabilization of the
financial, monetary, and economic sectors entailed by the EMU will likely reduce
such risks over the longer term throughout Europe. Investments in other European
markets could be even more profitable and stable than investments in Germany.
Dresdner RCM will use its experience in dealing with European securities markets
and its research expertise to attempt to mitigate such risks within EMU and
non-EMU European securities markets.
If this proposal is approved, the investment objective change will occur as
soon as possible. This will provide the Fund and its stockholders the potential
investment advantages of this change expeditiously. The change will also
position the Fund with a more attractive focus prior to open-ending, if approved
at the Meeting, that should increase the likely cash flows to the Fund.
VOTE REQUIRED
The proposed amendment of the Fund's investment objective requires approval
by a 1940 Act majority. IF YOU WANT TO CHANGE THE FUND'S INVESTMENT OBJECTIVE,
YOU SHOULD VOTE "FOR" EACH OF THE SUBPARTS OF PROPOSAL NO. 1, INCLUDING 1(A). IF
PROPOSAL NO. 1(A) IS NOT APPROVED BY THE STOCKHOLDERS, THE FUND WILL CONTINUE TO
OPERATE AS A CLOSED-END FUND, AND THE FUND'S GERMAN-FOCUSED INVESTMENT OBJECTIVE
AND ITS NAME WILL REMAIN IN EFFECT. IF PROPOSAL NO. 1(A) IS APPROVED BUT
PROPOSAL NO. 1(B) IS NOT APPROVED, THE FUND WILL SEEK TO CHANGE ITS OBJECTIVE
AND THE BOARD WILL MAKE EVERY EFFORT TO TAKE OTHER ACTIONS TO ADDRESS
SATISFACTORILY THE ISSUE OF STILL HAVING A CORPORATE NAME RELATED TO GERMAN
INVESTMENTS, INCLUDING THE POSSIBLE USE OF A TRADE NAME RELATING TO EUROPE.
Additionally, because the implementation of Proposal No. 2 is contingent on the
approval of Proposal No. 1(a), the disapproval of Proposal No. 1(a) by
stockholders will mean that the Fund will remain a closed-end investment
company. The implementation of the amended investment objective will likely
occur before the conversion to open-end status, assuming Proposal No. 2 is also
approved at the Meeting, because the Fund anticipates that the open-end
conversion will take effect approximately ninety days after stockholder
approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 1(A).
PROPOSAL NO. 1(B). AMENDING THE FUND'S ARTICLES OF INCORPORATION TO CHANGE THE
FUND'S NAME
The change in investment objective requires a change in the Fund's name from
"The Emerging Germany Fund Inc." to "Dresdner RCM Europe Fund Inc." The Board
has advised the amendment of the Fund's Articles of Incorporation to reflect
this name change. The name change would reflect accurately the new objective of
the Fund and its association with Dresdner RCM. If Proposal Nos. 1(a) and 1(b)
are approved by stockholders, the Fund's Articles of Incorporation will be
amended by striking ARTICLE SECOND and inserting the following:
"The name of the Corporation is Dresdner RCM Europe Fund Inc."
5
VOTE REQUIRED
The amendment of the Fund's Articles of Incorporation to change the Fund's
name to "Dresdner RCM Europe Fund Inc." requires the affirmative vote of
two-thirds of all the votes entitled to be cast on the matter. IF YOU WANT TO
CHANGE THE FUND'S INVESTMENT OBJECTIVE, YOU SHOULD VOTE "FOR" EACH OF THE
SUBPARTS OF PROPOSAL NO. 1, INCLUDING 1(B). AS NOTED ABOVE, IF PROPOSAL NO. 1(B)
IS NOT APPROVED BY THE STOCKHOLDERS, BUT PROPOSAL NO. 1(A) IS APPROVED, THE FUND
WILL SEEK TO CHANGE ITS OBJECTIVE AND THE BOARD WILL MAKE EVERY EFFORT TO TAKE
OTHER ACTIONS TO ADDRESS THE ISSUE OF STILL HAVING A CORPORATE NAME RELATED TO
GERMAN INVESTMENTS, INCLUDING THE POSSIBLE USE OF A TRADE NAME RELATING TO
EUROPE.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 1(B).
CONVERSION OF THE FUND FROM A CLOSED-END
INVESTMENT COMPANY TO AN OPEN-END INVESTMENT COMPANY
(PROPOSAL NO. 2)
The Board of Directors believes that if the Fund's investment objective is
expanded pursuant to Proposal No. 1(a), the Fund also should be converted from a
closed-end investment company to an open-end investment company. The Board of
Directors and Dresdner RCM believe that this conversion will allow the Fund to
take advantage of new opportunities likely to develop as a result of a unified
Europe, yet not hinder the Fund's ability to continue to provide the investment
vehicle and to seek the investment goals that stockholders sought when they
invested in the Fund.
Stockholders of the Fund are now being asked to consider the conversion of
the Fund from a closed-end to an open-end investment company and related matters
approved by the Board of Directors in connection with the conversion. In this
regard, the Board is concurrently seeking stockholder approval of: a change of
the Fund's 1940 Act subclassification to an open-end investment company and
corresponding amendment and restatement of the Fund's Articles of Incorporation
(Proposal 2(a)), the modification and elimination of certain of the Fund's
fundamental investment restrictions (Proposal No. 2(b)), a proposed Investment
Management Agreement (Proposal No. 2(c)), and a proposed Rule 12b-1 Distribution
Plan (Proposal No. 2(d)), each of which is considered a necessary element, in
the view of the Board and Dresdner RCM, of operating as an open-end investment
company. Furthermore, although the change in investment objective to a European
focus is a separate and independent proposal (Proposal No. 1(a)), that change
must be approved by stockholders before the Fund may open-end. It is anticipated
that if both Proposal Nos. 1(a) and 2 are approved, the Fund would implement the
open-ending approximately ninety days after stockholder approval, which is the
time frame during which the Fund expects the registration statement relating to
the offering of its shares of Common Stock to be declared effective by the
Securities and Exchange Commission ("SEC") and operational revisions to the
Fund's transfer agency and other arrangments to be implemented. IF ANY SUBPART
OF PROPOSAL NO. 2 IS NOT APPROVED BY STOCKHOLDERS, OR IF ALL OF THE SUBPARTS ARE
APPROVED BUT PROPOSAL NO. 1(A) IS NOT ALSO APPROVED, THE FUND WILL REMAIN A
CLOSED-END INVESTMENT COMPANY.
It is anticipated that approximately ninety days after stockholder approval
the Fund will convert to an open-end investment company. On the day that the
Fund converts to open-end status, every stockholder will hold Class N shares in
the same number as held immediately beforehand. Trading of the shares on the New
York Stock Exchange ("NYSE") will cease. The Fund anticipates that it will
commence a continuous offering of its shares to the public, including current
stockholders. The price of the shares will be based on their net asset value
computed daily on all business days. The shares of the Fund will be redeemable
at a price also based on their net asset value as computed after receipt of the
redemption order. During the first six months following the conversion, a
redemption fee, payable to the Fund, of 1% of the net asset value will be
assessed on all redemptions. It is also anticipated that the Fund's Class N
shares will be exchangeable for Class N shares being offered by other funds in
the Dresdner RCM family of funds. Upon
6
conversion, there will be no changes to the investment objective of the Fund,
the investment adviser for the Fund, or the principal investment strategies the
Fund will employ.
Below is (1) a further explanation of why the Board and Dresdner RCM are
recommending that the Fund convert to open-end status, (2) a description of the
steps the Fund must take to effect the conversion from a closed-end investment
company to an open-end investment company, and (3) a description of the
differences of operating as an open-end investment company.
BACKGROUND OF THE PROPOSAL
When the Fund was organized in 1990, a closed-end structure was chosen as
most appropriate to achieving the Fund's investment objective and intended
method of operation. The Board believed that such a structure, among other
things, would permit management of the Fund's portfolio consistent with its
investment objective to seek long-term capital appreciation by investing
primarily in equity and equity-linked securities of small to middle
capitalization German companies, without the pressures and constraints,
primarily as a result of cash inflows and outflows, to which open-end investment
companies are subject. Further, as a closed-end investment company, the Fund was
expected to have greater flexibility than an open-end investment company both to
invest in restricted, illiquid, or less liquid securities and to engage in
borrowing. The Board and the Fund's investment adviser at that time, Asset
Management Advisors of Dresdner Bank, recognized and disclosed to stockholders
that the shares of closed-end investment companies frequently trade at a
discount from net asset value.
The Fund has owned and managed a portfolio of German equities since its
inception; in April 1996, the Board and stockholders approved a change in focus
to larger capitalization German companies. Since that transition, its investment
results have been successful, especially in 1997 and 1998. The Fund achieved net
asset value returns of 29.28% in 1998 (through October 31, 1998), 26.27% in
1997, and 14.90% in 1996 (from April 26 to December 31, 1996). The DAX100, an
unmanaged index measuring the total rate of return of the 100 most highly
capitalized stocks traded on the Frankfurt Stock Exchange returned 18.44% in
1998 (through October 31, 1998), 22.40% in 1997 and 13.78% in 1996 (from April
26 to December 31, 1996). Measured by the market price changes, the Fund
returned 30.13% in 1998 (through October 31, 1998), 48.00% in 1997 and 8.59% in
1996 (from April 26 to December 31, 1996).
Throughout this period, as well as throughout much of the Fund's history,
however, its shares have traded at prices representing a discount to net asset
value. Through October 31, 1998, for example, its shares traded on the NYSE at
discounts ranging from approximately 8% to 23% below their net asset value.
Since the Fund's announcement that it would propose conversion to an open-end
structure, the discount has fallen to about 8%.
The Board of Directors has periodically evaluated various mechanisms that
closed-end investment companies have employed to attempt to reduce or eliminate
a market discount, including special dividend policies, dividend reinvestment
plans, use of leverage, tender offers, an enhanced public communications effort,
stock repurchase programs, rights offerings, and conversion to an open-end
investment company. On February 12, 1998, after considering these various
options, the Board of Directors adopted a 10% managed distribution plan as a
strategy to reduce the net asset value discount. Under that plan, the Fund
agreed to distribute to stockholders on a quarterly basis approximately 2.5% (at
least 10% annually) of the Fund's net assets. Through the short period during
which the plan operated until the open-end proposal was announced, the managed
distribution plan failed to reduce substantially the Fund's market discount.
Subsequently, the Board gave further consideration to the various alternatives
whereby the discount at which the Fund's shares trade might be reduced or
eliminated.
As described above, following a period of study by the Board and Dresdner
RCM, at a meeting on November 5, 1998, the Board of Directors of the Fund
determined to recommend a change in the objective of the Fund as soon as
practical. See Proposal No. 1 above. The Board also considered the ability of
the Fund, and its proposed distributor, Funds Distributor Inc., to distribute
shares of the Fund if it were to
7
engage in a public offering. Given the more attractive investment objective
proposed for the Fund and the initial marketing and distribution proposal for
the Fund presented by Funds Distributor Inc. at the same meeting, the Board
concluded that it would be in the best interest of the Fund and its stockholders
for the Fund to convert to an open-end investment company. This conversion would
eliminate the discount because stockholders would have the right to retain
ownership of the Fund and dispose of Fund shares at prices based on the
then-current net asset value of the shares.
The Board also considered costs to the Fund of operating as an open-end
investment company, including the potential adverse effects on the Fund's
expense ratio, which likely would increase as an open-end investment company and
would increase further if assets decreased in the period shortly following
conversion to open-end status, as is expected. The Board noted, in addition to
the adverse effects of the likely significant levels of redemptions on Fund
expense levels, the potential realization of capital gains from the sale of
portfolio securities, which taxable capital gains would be distributed to
stockholders of record later in the year. The Board also considered the expenses
of converting to open-end status, which were estimated at approximately
$600,000. The Board noted the commitment of Dresdner RCM to defer its fees from
the Fund and reimburse the Fund's expenses for at least the first three years
following open-ending to the extent needed to limit annual Fund operating
expenses to 1.60% of average net assets. Taxes, interest, and extraordinary
expenses would be excluded from Fund expenses for purposes of this limitation.
Additionally, the Board considered other benefits to the Fund that could
result from open-ending besides the elimination of the market discount. First,
Fund stockholders would benefit by owning shares of a fund that would be part of
a family of Dresdner RCM-advised funds. Such benefits include the ability to
exchange shares among the Dresdner RCM family of open-end funds, each of which
has a different investment objective and focus. Second, the Fund's liquidity
will increase due to the 1940 Act open-end investment company requirements and
the broader European investment objective, which would give the Fund more
flexibility in its portfolio management. Finally, an open-end structure will
help the Fund compete in the marketplace against the universe of pan-European
funds, thereby possibly increasing the Fund's net assets over time.
Accordingly, on November 5, 1998, the Board of Directors unanimously
approved Dresdner RCM's recommendation to convert the Fund to an open-end
investment company and to submit the proposal to stockholders. On December 4,
1998, the Board of Directors, including the Directors who are not interested
persons of the Fund as defined in the 1940 Act (the "Independent Directors"),
approved the final plan for conversion to an open-end investment company
including the proposed Amended and Restated Articles of Incorporation, the
modification and elimination of certain of the Fund's fundamental investment
restrictions, the proposed Investment Management Agreement, and the proposed
Rule 12b-1 Distribution Plan.
Below is a more detailed description of the differences between closed-end
and open-end investment companies. This description includes an explanation of
how the Fund intends to operate upon conversion to open-end status.
DIFFERENCES BETWEEN FUND OPERATIONS AS AN OPEN-END AND CLOSED-END INVESTMENT
COMPANY
The Fund is currently registered as a "closed-end" investment company under
the 1940 Act. Closed-end investment companies neither redeem their outstanding
stock nor engage in the continuous sale of new stock and thus operate with a
relatively fixed capitalization. The stock of a closed-end investment company is
normally bought and sold on a national securities exchange; the Fund's shares
are currently traded on the NYSE under the listing "FRG." Upon conversion, the
Fund's shares will be delisted from the NYSE and it is unlikely that any other
trading market in such shares will exist, although shares may be purchased and
sold (redeemed) as described below.
In contrast, open-end investment companies (commonly referred to as "mutual
funds") issue redeemable securities. The holders of redeemable securities have
the right to surrender those securities to the mutual fund and obtain in return
their proportionate share of the value of the fund's net assets (less any
8
redemption fee charged by the fund). Most mutual funds (including the Fund, if
the proposed conversion is effected) also continuously issue new shares of stock
to investors based on the fund's net asset value at the time of such issuance.
Some of the legal and practical differences between operations of the Fund
as a closed-end and open-end investment company are as follows:
a) ACQUISITION AND DISPOSITION OF SHARES; TEMPORARY REDEMPTION FEES; AND
REDEMPTIONS-IN-KIND. If the Fund were converted into a mutual fund,
stockholders and new investors wishing to acquire shares of the Fund would be
able to purchase them initially from the Fund's principal underwriter at their
public offering price. It is anticipated that the public offering price of the
shares of the Fund will be at its net asset value, with no front-end sales load.
Stockholders desiring to sell or redeem their shares would be able to do so by
exercising their right to have such shares redeemed by the Fund at a price based
on their current net asset value less any redemption fee as may be determined by
the Board of Directors. The Fund's net asset value per share would be calculated
daily by dividing (i) the value of its portfolio securities plus all cash and
other assets (including accrued interest and dividends received but not
collected) less all liabilities (including accrued expenses) by (ii) the number
of outstanding shares of the Fund.
THE FUND INTENDS TO IMPOSE A FEE PAYABLE TO THE FUND OF 1% OF NET ASSET
VALUE ON ALL REDEMPTIONS OF FUND SHARES DURING THE FIRST SIX MONTHS AFTER
COMMENCEMENT OF OPERATIONS AS AN OPEN-END INVESTMENT COMPANY, AND NO SUCH FEE
THEREAFTER. The temporary redemption fee would be retained by the Fund and would
be used to offset expenses incurred by the Fund arising out of the redemption,
including brokerage and transactional costs associated with selling portfolio
securities when cash is needed to satisfy the redemption request. The Board of
Directors believes that the redemption fee may also limit the level of
redemptions during the first six months of operations as an open-end company,
thereby limiting the potential disruption of the Fund's portfolio management and
its operations caused by significant reductions in Fund assets.
Payment for any redemption, minus the temporary 1% redemption fee, will be
made by the Fund within seven days after receipt of a proper request for
redemption (in accordance with redemption procedures specified in the
prospectus). Such payment may be postponed or the right of redemption suspended
at times (a) when the NYSE is closed for other than customary weekends and
holidays, (b) when trading on the NYSE is restricted (as determined by SEC rules
and regulations), (c) when an emergency exists as a result of which disposal by
the Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund to determine the value of its net assets, or
(d) during any other period when the SEC, by order, so permits.
Although the Fund does not initially intend to redeem any stockholders
in-kind, that is, giving redeeming stockholders a portion of the Fund's
portfolio securities equal to the net asset value of their shares instead of
cash, the Fund reserves the right in the future to redeem stockholders in-kind
in accordance with its Amended and Restated Articles of Incorporation.
b) DETERMINATION OF NET ASSET VALUE. The 1940 Act and its rules generally
require open-end investment companies to value their assets on each business day
in order to determine the current net asset value on the basis of which their
shares may be redeemed by stockholders or purchased by investors. Net asset
values of most mutual funds are published daily by the leading financial
publications. It is anticipated that the net asset value of the Fund would be
published daily following its conversion to an open-end investment company.
c) EXPENSES; AND POTENTIAL NET REDEMPTIONS. The Fund's expenses will
likely increase as a result of open-ending due to the cost of additional
services available to stockholders of a mutual fund. Open-ending also could
result in immediate, substantial redemptions and hence a marked reduction in the
size of the Fund, with a consequent increase in the Fund's expense ratio, i.e.,
the Fund's ratio of operating costs to average net assets. On the other hand,
this result could be offset by new sales of the Fund's shares and
9
reinvestment of dividends and capital gains distributions in shares of the Fund.
An asset base of decreased size, with an increased expense ratio, would produce
a lower total return than is currently being produced.
Importantly, Dresdner RCM, as noted above, has agreed to defer all or a
portion of its advisory fee if the Fund's operating expenses (excluding taxes,
interest, and extraordinary expenses) were to exceed 1.60% of the Fund's average
daily net assets in any fiscal year for at least three years after open-ending.
Dresdner RCM is not required otherwise to defer its fee or to reimburse the Fund
for any part of its respective fee. For a detailed description of the proposed
Investment Management Agreement and estimated Fund expenses, please refer to
Proposal No. 2(c) below.
In addition, the Fund might be required to sell portfolio securities in
order to meet redemptions, as a result of which it could incur brokerage and
other transactional expenses not reflected in its operating expense ratio. Such
sales of portfolio securities could also result in the realization of capital
gains (or losses). Such gains would normally be distributed to Fund
stockholders, who would be subject to federal and state income tax thereon, as
applicable to the stockholder.
For the six month period ended June 30, 1998, the Fund's annualized total
expenses aggregated about 1.38% of its average net assets. Assuming that the
Fund's assets remain at approximately $200 million, it is estimated that the
Fund's annual operating expenses as an open-end investment company would amount
to 1.62% of its average daily net assets. However, if assets decreased to $100
million, the gross annual operating expenses are estimated to be 2.06% of such
average net assets, and if assets decreased to $50 million, the gross annual
operating expenses are estimated to be 2.62% of such average net assets.
Significant net redemptions could ultimately render the Fund an uneconomical
venture by virtue of its diminished size. Dresdner RCM considers this
possibility unlikely. In the event, however, that the Fund were to become too
small to be considered economically viable, the Board of Directors would
consider alternatives to continuing the Fund's operations, ranging from merger
of the Fund with another investment company to liquidation of the Fund. The Fund
has no plans to pursue such alternatives at this time, and any such merger or
liquidation would require stockholder approval.
d) ELIMINATION OF DISCOUNT. Since stockholders who wish to realize the
value of their shares will be able to do so by redemption, any market discount
from net asset value (less the temporary redemption fee) will be eliminated.
Subject to the approval of this proposal, redemptions will also eliminate any
possibility that the Fund's shares will trade at a premium over net asset value.
Prior to the date of actual conversion to open-end status, the discount may be
reduced to the extent purchasers of shares in the open market are willing to pay
less of a discount in anticipation of a prospective open-ending.
e) DIVIDENDS; OTHER DISTRIBUTIONS; AND DIVIDEND REINVESTMENT. The Fund
expects to declare a dividend from undeclared net investment income and a
distribution of net capital gain to the Fund's stockholders prior to the
conversion to open-end status. The distributions will be in accordance with the
Fund's 10% managed distribution plan, and therefore will be at least equal to
2.5% of the Fund's net assets.
The Fund will continue to provide the opportunity for stockholders to
receive dividends and capital gain distributions in cash or, at no charge to
stockholders, in shares of the Fund. Currently, stockholders who hold of record
automatically receive dividends and other distributions in the form of
additional shares of the Fund unless they have opted out of the current
arrangement in order to receive cash. Effective upon conversion, the Fund will
continue to pay dividends and other distributions in additional shares
automatically unless stockholders elect to receive cash by written notice to the
Fund. Any "opt-out" elections made by stockholders under the current
arrangements will remain in effect following conversion. Additionally, upon
conversion to an open-end investment company, reinvestments in shares would
simply be made at net asset value (without any discount).
As an open-end investment company, the Fund will distribute substantially
all of its net investment income and net capital gain, if any, annually. The
Fund will terminate the 10% managed distribution plan, which has no purpose
after the Fund commences operation as an open-end investment company.
10
f) PORTFOLIO MANAGEMENT. Unlike mutual funds, closed-end investment
companies are not subject either to pressures to sell portfolio securities at
disadvantageous times or to hold cash or cash equivalents uninvested in
securities consistent with their primary investment objectives, in order to meet
net redemptions. Because closed-end investment companies do not have to meet
redemptions, their cash reserves can be substantial or minimal, depending
primarily on management's perception of market conditions and on decisions to
use fund assets to pay dividends or repurchase shares. The larger reserves of
cash or cash equivalents required to operate prudently as an open-end fund when
net redemptions are anticipated could reduce the Fund's investment flexibility
and the scope of its investment opportunities. Additionally, the Fund may have
to reduce the proportion of its portfolio held in securities in order to
accommodate the need for larger reserves of cash or cash equivalents. In
connection with this needed liquidity and changing cash flow, there may also be
an increase in transaction costs and portfolio turnover.
g) ILLIQUID SECURITIES. An open-end investment company registered under
the 1940 Act is required by the SEC to limit its holding of illiquid securities
to no more than 15% of its total assets. The Fund is currently subject to a 25%
limitation. If the Fund is converted to a mutual fund it will be required to
meet the 15% limitation, but Dresdner RCM anticipates no difficulties in
complying with this stricter limitation. Please refer to Proposal No. 2(b) below
for a more detailed discussion of this issue.
h) SENIOR SECURITIES AND BORROWINGS. The 1940 Act prohibits mutual funds
from issuing "senior securities" representing indebtedness (i.e., bonds,
debentures, notes, and other similar securities), other than indebtedness to
banks where there is an asset coverage of at least 300% for all borrowings.
Closed-end investment companies, on the other hand, are permitted to issue
senior securities representing indebtedness to any lender if the 300% asset
coverage is met. In addition, closed-end investment companies may issue
preferred stock (subject to various limitations), whereas open-end investment
companies generally may not issue preferred stock. This ability to issue senior
securities may give closed-end investment companies more flexibility than mutual
funds in the "leveraging" of their stockholders' investments. To date, although
it has the authority to do so, the Fund has neither engaged in borrowing nor
issued any senior securities. Dresdner RCM does not believe that the greater
limitations on mutual funds in this respect will have any significant effect
upon the Fund's operation.
The Board of Directors has approved an amendment to the Fund's investment
restrictions that would grant the Fund the maximum borrowing flexibility
permitted for an open-end investment company under the 1940 Act. See Proposal
No. 2(b) below for a more detailed discussion of the amendment. The Fund may
borrow from banks or enter into reverse repurchase agreements to meet redemption
requests.
i) STOCKHOLDER SERVICES. If Proposal No. 2 is approved and the Fund
becomes a mutual fund, the Board of Directors will permit the provision of
various services that are often available to stockholders in an open-end
investment company. These services will include participation in an exchange
privilege which would allow stockholders of the Fund to exchange their shares
for shares of the same class of shares of certain investment companies in the
Dresdner RCM group of open-end funds ("Dresdner RCM Mutual Funds").
j) DISTRIBUTION PLAN. An open-end investment company, unlike a closed-end
investment company, is permitted to finance the distribution of its shares by
adopting a plan of distribution pursuant to Rule 12b-1 under the 1940 Act. If
Proposal No. 2 is approved by stockholders, the Fund will adopt a Rule 12b-1
Distribution Plan in order to reimburse the Fund's distributor for costs
incurred by it in distributing the Class N shares of the Fund. See Proposal No.
2(d) below for a more detailed discussion of the Rule 12b-1 Distribution Plan.
k) SHARES OF CAPITAL STOCK; MINIMUM INVESTMENT; AND CLASS I SHARES. If the
Fund is converted to an open-end fund, it will adopt requirements that an
initial investment in the Fund's shares and any subsequent investment must be in
a specified minimum amount, in order to reduce the administrative costs and
burdens incurred in monitoring numerous small accounts. It is anticipated that
the minimum initial investment in Class N shares of the Fund will be $5,000, and
the minimum subsequent investment will be
11
$250 (other than investments through the Fund's dividend reinvestment plan). It
is anticipated that the minimum initial investment in Class I shares of the Fund
will be $1 million and the minimum subsequent investment will be $50,000 (other
than through the Fund's dividend reinvestment plan). However, the minimum
initial investment amount may differ for investors purchasing shares through a
broker-dealer or other intermediary having a service agreement with Dresdner RCM
and maintaining an omnibus account with any of the Dresdner RCM Mutual Funds.
All shares of the Fund that are outstanding on the date that the Fund
converts to an open-end investment company will be redesignated Class N shares.
The net asset value of these shares will not change as a result of the
redesignation. Holders of Class N shares who would meet the eligibility
requirements for purchasing Class I shares may convert Class N shares to Class I
shares upon submission of satisfactory proof to the Fund of their eligibility.
l) VOTING RIGHTS. The voting rights of holders of shares of the Fund will
not change if the Fund converts to open-end status, except for minor operational
matters. For example the Board of Directors will have the authority to amend the
Fund's Articles of Incorporation to authorize issuance of additional shares of
the Fund's Common Stock or to change the name of the Fund without submitting
such amendments to stockholder vote.
By virtue of the provisions of Maryland corporate law applicable to
investment companies, opportunities to vote will probably become less frequent
if the Fund converts to open-end status, since the Fund will not normally hold
annual stockholder meetings. Maryland corporate law provides that, if the
Articles of Incorporation or By-Laws of either an open-end or closed-end fund
registered under the 1940 Act so provide, the Fund is not required to hold an
annual stockholder meeting in any year in which the election of directors is not
required to be acted upon under the 1940 Act. Currently, the amended By-Laws of
the Fund provide that the annual meeting of stockholders shall be held at such
time and date as the Board designates. The Board of Directors will adopt Amended
and Restated By-Laws, that will become effective if the conversion is
implemented. These By-Laws provide that the Fund will not be required to hold an
annual meeting in any year in which it is not required to do so under the 1940
Act. Maryland law generally requires the Directors to call a special meeting of
stockholders when requested in writing to do so by stockholders entitled to cast
25% of all of the shares.
m) QUALIFICATION AS A REGULATED INVESTMENT COMPANY. The Fund intends to
continue to qualify for treatment as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), after
conversion to open-end status, so that it will continue to be relieved of
federal income tax on that part of its investment company taxable income and net
capital gain that it distributes to its stockholders.
PROPOSAL NO. 2(A). CHANGING THE FUND'S 1940 ACT SUBCLASSIFICATION AND AMENDING
AND RESTATING THE FUND'S ARTICLES OF INCORPORATION
If the proposed conversion to open-end status is approved, the Board will
take all actions necessary to effect the conversion. The conversion of the Fund
to an open-end investment company will be accomplished by (1) changing the
Fund's subclassification under the 1940 Act from a closed-end investment company
to an open-end investment company and (2) approving Amended and Restated
Articles of Incorporation for the Fund. The Amended and Restated Articles of
Incorporation will not be made effective until shortly before a registration
statement under the Securities Act of 1933, as amended ("1933 Act"), covering
the offering of the shares of the Fund and appropriate state securities law
qualifications and registrations are expected to become effective. It is
anticipated that the Fund's registration statement relating to these securities
will be filed shortly after stockholder approval of Proposal Nos. 1 and 2 is
obtained.
If Proposal No. 2(a) is approved, the conversion of the Fund to an open-end
investment company will be accomplished by amending and restating the Fund's
Articles of Incorporation to, among other matters, (1) authorize the issuance of
redeemable securities, (2) provide that all of the Fund's outstanding shares
12
will be redeemable at the option of the stockholders, (3) change the Fund's
name, and (4) change the Fund's subclassification under the 1940 Act from a
closed-end investment company to an open-end investment company. In connection
with the amendment and restatement of the Articles of Incorporation, the Board
of Directors will also make conforming changes to the Fund's By-Laws. The
proposed Amended and Restated Articles of Incorporation are set forth at Exhibit
A.
Certain related changes would also be made in the Amended and Restated
Articles of Incorporation. All of the existing assets will become assets of a
series of Dresdner RCM Investment Funds Inc. and all of the Fund's outstanding
shares at the time of the conversion to an open-end investment company will
become shares of a series of Dresdner RCM Investment Funds Inc. known as the
Dresdner RCM Europe Fund. The Board of Directors would have the right in the
future to create additional series of the Dresdner RCM Investment Funds Inc.
Such additional series would be separate from the Dresdner RCM Europe Fund
series, and would represent entirely different assets and liabilities and have
different investment features than the initial series, Dresdner RCM Europe Fund.
As an open-end investment company, the Fund will have the right under Maryland
law to change its corporate, series, or class names at any time without
stockholder approval. It is expected that the Fund would immediately change its
corporate and series names if Dresdner RCM ceased to provide the Fund with
investment management services.
Additionally, as noted above, the Board of Directors has decided that upon
conversion to an open-end fund, the Fund will offer two classes of shares: Class
N and Class I. The Fund's Amended and Restated Articles of Incorporation reflect
the creation of these two classes and outline the class rights and privileges of
Fund stockholders. All current shares of the Fund will automatically become
Class N shares upon conversion. Class N shares will be the Fund's
non-institutional class and will be offered to all investors. In most respects
Class N and Class I shares will be the same, however Class I will be the Fund's
institutional class and its shares will initially be available only to investors
who invest $1 million or more in the Fund. The Board has authorized Class I
shares because it anticipates that institutional investors, who would add assets
to the Fund, would require unique features. Class I's per-share expenses will be
lower than Class N's per-share expenses and its dividends will be higher than
those of Class N because only Class N shareholders will be subject to Rule 12b-1
fees for distribution services provided to the Fund. Class N shareholders will
be able to exchange their Class N shares for Class I shares of the Fund, if they
so choose, provided that they meet the minimum investment requirements for Class
I shares discussed in subheading (k) of "Differences Between Fund Operations as
an Open-End and Closed-End Investment Company," above. The Board of Directors
reserves the right in the future to create and offer for sale additional classes
of shares with separate features, such as sales loads and other distribution
fees.
The Amended and Restated Articles of Incorporation also reflect the changes
that will substantially conform the structure of the Fund's Articles of
Incorporation to the Articles of Incorporation of the Dresdner RCM Mutual Funds
that are incorporated in the State of Maryland. In many aspects of the
conversion, the Fund has decided to conform its arrangements to the arrangements
already in-place for the Dresdner RCM Mutual Funds. Such conformation will
facilitate Fund stockholders' exchange of shares with these funds and simplify
the administration of the Fund. To effect this conformity, the Amended and
Restated Articles of Incorporation no longer require an affirmative vote of 75%
of the outstanding shares of the Common Stock if less than two-thirds of the
Directors approve the merger, consolidation, dissolution, or liquidation of the
Fund; the sale, lease, exchange or other transfer of all or substantially all of
the assets of the Fund; or the amendment of the Articles of Incorporation to
convert the Fund to an open-end investment company under the 1940 Act. Under the
Fund's Amended and Restated Articles of Incorporation substantially all issues
that require stockholder approval will be decided by a majority vote.
13
Neither the current nor the proposed Articles of Incorporation contain
provisions concerning the removal of directors by the stockholders. The Fund's
By-Laws, however, do have such a provision that follows Maryland law. Other
proposed changes to the Articles of Incorporation include: (1) the deletion of
the provision providing for the Class-based structure of the Fund's
Directorships and the inclusion of a provision noting the initial composition of
the Board of Directors; (2) a provision allowing the Fund, at its option, to
redeem Fund shares, as determined by Board resolution; and (3) an increase in
the total number of shares authorized. Refer to Exhibit A for a complete list of
the terms of the proposed Articles.
If Proposal Nos. 1(a), 2(a), 2(b), 2(c), and 2(d) are all approved by
stockholders, the proposed Amended and Restated Articles of Incorporation, a
copy of which is attached to this proxy statement as Exhibit A, are expected to
be filed with the State of Maryland to become effective simultaneously with the
conversion. Such filing will not be made, however, until shortly before a
registration statement under the 1933 Act covering the offering of the shares of
the Fund is anticipated to become effective. The Fund expects to implement the
conversion to open-end status approximately ninety days after stockholder
approval of Proposal No. 1 and 2, but there is no guarantee that the open-ending
will follow this timeline.
EXPENSES OF THE FUND
The expenses of the Fund as an open-end investment company will be higher
than the expenses of the Fund as a closed-end investment company. Set forth
below is a summary of the Fund's estimated stockholder transaction expenses as
an open-end fund for Class N and Class I shares and a comparison of annual
operating expenses as of June 30, 1998 as a closed-end fund and those expenses
that would apply to current stockholders holding Class N and Class I shares of
the Fund after open-ending on a pro forma (estimated) basis.
OPEN-END STOCKHOLDER TRANSACTION EXPENSES
CLASS N CLASS I
---------- ---------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................. None None
Maximum Sales Load Imposed on Reinvested Dividends.................. None None
Redemption Fees..................................................... 1%(*) 1%(*)
Exchange Fee........................................................ None None
- ------------------------
* The redemption fee will be imposed for the six-month period immediately
following the conversion; redemptions will be free-of-charge thereafter.
14
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
OPEN-END(4)
-----------------
CLOSED-END CLASS N CLASS I
---------- ------- -------
Management Fees(1)(2)(3)............................. 0.90% 1.00% 1.00%
Rule 12b-1 Fees...................................... N/A 0.25% N/A
Other Expenses....................................... 0.48%(3) 1.48% 1.48%
---------- ------- -------
Total Fund Operating Expenses........................ 1.38%(3) 2.73% 2.48%
Fee Deferral and Expense Reimbursement............... N/A 1.13% 1.13%
---------- ------- -------
Net Fund Operating Expenses.......................... 1.38% 1.60% 1.35%
- ------------------------
(1) The Fund's fee structure for investment advisory and management services
provided by Dresdner RCM is as follows:
1.0% on the first $100 million
0.8% on amounts in excess of $100 million
(2) The Fund's investment advisory and management fees are calculated as a
percentage of the average WEEKLY net assets of the Fund. This fee is
computed weekly and paid monthly. In contrast, upon conversion, the
investment management fees will be calculated as a percentage of the average
DAILY net assets of the Fund. This fee will be computed daily and paid
monthly.
(3) These totals are based on financial data for the six-month period ended June
30, 1998.
(4) The open-end figures assume that average net assets will be $50 million in
the first year following the Fund's conversion to open-end status.
Set forth below are examples that show the estimated aggregate expenses that
an investor in the Fund would pay on a $1,000 investment if the Fund remained
closed-end compared to those expenses that an investor would incur if the Fund
were converted to an open-end format, based upon the expense ratios set forth
above but without regard to any brokerage and other transactional costs that
would be paid when purchasing or redeeming shares of the closed-end fund, or
redemption fees or other charges that would be paid when redeeming shares of the
open-end fund.
You would pay the following expenses on a $1,000 investment assuming 5%
annual return:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- ----------- -----------
Closed-End (based on a 1.38% expense level).................................. $ 14 $ 44 $ 76 $ 166
Open-End
Class N (based on a 1.60% expense level)..................................... $ 16 $ 50 $ 87 $ 190
Class I (based on a 1.35% expense level)..................................... $ 14 $ 43 $ 74 $ 162
The examples are not an illustration of past or future investment results
and should not be considered a representation of past or future expenses. Actual
expenses may be more or less than those shown.
Although Dresdner RCM will use all practicable measures to keep costs at a
minimum, certain non-recurring costs will be incurred in connection with the
conversion from a closed-end to an open-end investment company, including costs
associated with pursuing necessary government clearances, preparing a
registration statement and prospectuses as required by federal securities laws
(including printing and mailing costs), and complying with the securities laws
of various states. The Fund estimates that these additional costs, which will be
paid by the Fund, will be $600,000 or $0.0428 per share, based on the current
number of shares outstanding. The Board anticipates that substantially all of
these costs will be incurred by the Fund prior to the effective date of
conversion.
15
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Kirkpatrick & Lockhart LLP, special counsel to the Fund,
neither the Fund nor its stockholders will recognize any gain or loss for United
States federal income tax purposes as a result of the Fund's conversion to
open-end status. However, a stockholder will recognize gain or loss if he or she
later redeems his or her shares to the extent that the redemption proceeds are
more or less than the adjusted tax basis of the shares (similar to the tax
treatment of a stockholder that currently sells Fund shares).
Stockholders of the Fund residing outside of the United States should seek
additional tax advice concerning the taxable impact on their shares, if any, of
the Fund's open-end conversion in their respective foreign jurisdictions.
VOTE REQUIRED
The proposed conversion of the Fund from a closed-end investment company to
an open-end investment company and the Amended and Restated Articles of
Incorporation, have been approved and advised by more than two-thirds of the
members of the Board of Directors. Under the Fund's Articles of Incorporation,
the amendment and restatement of the Fund's Articles of Incorporation necessary
to implement the conversion as described in Proposal No. 2(a) must be approved
by the affirmative vote of the holders of a majority of the Fund's outstanding
shares of Common Stock.
IF YOU WANT THE OPEN-END CONVERSION TO BE EFFECTED, YOU MUST VOTE "FOR"
PROPOSAL NO. 1(a) AND EACH OF THE SUBPARTS OF PROPOSAL NO. 2, INCLUDING 2(a). IF
PROPOSAL NO. 2(a) IS NOT APPROVED BY THE STOCKHOLDERS, OR IF PROPOSAL NO. 2(a)IS
APPROVED BUT ANY OF PROPOSAL NOS. 1(a), 2(b), 2(c), AND 2(d) ARE NOT ALSO
APPROVED, THE FUND WILL CONTINUE TO OPERATE AS A CLOSED-END FUND, AND THE
CURRENT PROVISIONS OF THE FUND'S ARTICLES OF INCORPORATION AND CURRENT
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT WILL REMAIN IN EFFECT. In that
event, the Board will consider what further actions, if any, are desirable to
reduce the discount at which the Fund's shares have traded and to achieve other
benefits for the Fund and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2(a).
PROPOSAL NO. 2(b). MODIFICATION AND ELIMINATION OF CERTAIN OF THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTIONS
The proposed modification and elimination of certain of the Fund's
investment restrictions described below, if approved, will become effective upon
conversion of the Fund to an open-end investment company.
If the stockholders of the Fund vote to approve the conversion of the Fund
to an open-end investment company, it is anticipated that, as discussed above,
the Fund will require additional flexibility in order to meet stockholders'
demands for redemption and will be required to conform to certain investment
restrictions applicable to open-end investment companies under the 1940 Act.
Several investment restrictions of the Fund are no longer required by the 1940
Act. Moreover, state regulations governing investment restrictions were
eliminated in 1996 with the passage of the National Securities Markets
Improvement Act. Accordingly, the Board of Directors believes that authorizing
the Fund to modify and eliminate a few of its fundamental investment
restrictions will provide the Fund with additional flexibility in the management
of its portfolio as an open-end investment company. Because such restrictions
are considered "fundamental policies" under the 1940 Act, they may only be
changed by a 1940 Act majority vote. Furthermore, such additions and deletions
will substantially conform the Fund's fundamental investment restrictions to the
fundamental investment restrictions adopted by the funds comprising the Dresdner
RCM Mutual Funds.
The Fund currently has a fundamental investment restriction limiting the
Fund's ability to issue senior securities and borrow money. Because the 1940 Act
applies different borrowing restrictions to closed-end
16
investment companies and open-end investment companies, this investment
restriction must be modified to meet the latter restrictions upon the Fund's
conversion to an open-end investment company. If Proposal No. 2(b) is approved
by stockholders, the Fund's fundamental investment restriction concerning
borrowing will be modified so as to read:
The Fund may not borrow money, except from banks to meet redemption requests
or for temporary or emergency purposes; provided that borrowings for
temporary or emergency purposes other than to meet redemption requests shall
not exceed 5% of the value of its total assets; and provided further that
total borrowings shall be made only to the extent that the value of the
Fund's total assets, less its liabilities other than borrowings, is equal to
at least 300% of all borrowings (including the proposed borrowing). For
purposes of the foregoing limitations, reverse repurchase agreements and
other borrowing transactions covered by segregated assets are not considered
to be borrowings. This investment restriction shall not prohibit the Fund
from engaging in futures contracts, options on futures, forward foreign
currency exchange transactions, and currency options.
If Proposal No. 2(b) is approved by stockholders, the following current
fundamental investment restrictions will be eliminated from the Fund's
fundamental investment restrictions to conform them to the fundamental
investment restrictions of the Dresdner RCM Mutual Funds and to eliminate
restrictions that are not mandatory under current law.
The Fund may not:
(1) Make loans, except through the purchase of debt obligations consistent
with the Fund's investment policies, and except that the Fund may invest
in repurchase agreements consistent with its investment policies;
(2) Make short sales of securities or maintain a short position in any
security; and
(3) Buy, sell or write put or call options.
It is not anticipated that the investment strategies covered by these
restrictions, if they are eliminated as proposed, will become principal
investment strategies of the Fund. Their elimination will give the Fund more
flexibility if Dresdner RCM proposes to use such strategies in the future.
CERTAIN NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
As noted above, if the proposed conversion to open-end status takes place,
the Fund will adopt a non-fundamental investment restriction limiting its
purchases of illiquid securities to not more than 15% of its total assets. An
open-end investment company, under SEC interpretations, may not hold a
significant amount of illiquid securities because such securities may present
problems of accurate valuation and because it is possible that the investment
company would have difficulty satisfying redemptions within seven days.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the 1933 Act, securities that are otherwise not readily
marketable, and repurchase agreements having a maturity of longer than seven
days. Dresdner RCM has the authority to determine whether certain securities
held by the Fund are liquid or illiquid pursuant to standards adopted by the
Board of Directors.
VOTE REQUIRED
The modification and elimination of certain of the Fund's fundamental
investment restrictions, as described above, require approval by a 1940 Act
majority vote. IF YOU WANT THE OPEN-END CONVERSION TO BE EFFECTED, YOU MUST VOTE
"FOR" PROPOSAL NO. 1(a) AND EACH OF THE SUBPARTS OF PROPOSAL NO. 2, INCLUDING
2(b). IF PROPOSAL NO. 2(b) IS NOT APPROVED OR IF PROPOSAL NO. 2(b) IS APPROVED
BUT ANY OF PROPOSAL NOS. 1(a), 2(a), 2(c), AND 2(d) ARE NOT ALSO APPROVED, THE
FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS WILL NOT CHANGE AND THE FUND WILL
REMAIN A CLOSED-END INVESTMENT COMPANY.
17
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2(b).
PROPOSAL NO. 2(c). APPROVAL OR DISAPPROVAL OF THE PROPOSED INVESTMENT MANAGEMENT
AGREEMENT
On December 4, 1998, the Board of Directors, including a majority of the
Independent Directors, approved an investment management agreement between
Dresdner RCM Investment Funds Inc., on behalf of Dresdner RCM Europe Fund, and
Dresdner RCM (the "Investment Management Agreement"). Currently, the Fund
operates under an investment advisory and administration agreement between the
Fund and Dresdner RCM dated November 1, 1996 (the "Current Investment Advisory
and Administration Agreement"). If Proposal No. 2(c), along with Proposal Nos.
1(a), 2(a), 2(b), and 2(d), is approved by stockholders of the Fund, the Current
Investment Advisory and Administration Agreement will be terminated and the
Investment Management Agreement will become effective upon the conversion of the
Fund to an open-end investment company.
The Investment Management Agreement is modeled after the investment advisory
agreements between the Dresdner RCM open-end funds and Dresdner RCM. However,
the Investment Management Agreement is not substantially different from the
Fund's Current Investment Advisory and Administration Agreement. Besides the new
names and dates in the Investment Management Agreement, there are several
differences between the two Agreements. First, under the Current Investment
Advisory and Administration Agreement Dresdner RCM paid for expenses incurred in
calculating the net asset value of the Fund, whereas under the Investment
Management Agreement the Fund must pay such expenses. Second, the non-exclusive
list of expenses to be borne by the Fund has been amended to reflect the
addition of expenses typical of an open-end fund and to delete expenses typical
of a closed-end fund. Third, the Investment Management Agreement provides for a
deferral of fees to Dresdner RCM to the extent that the Fund's ordinary
operating expenses (not including taxes, interest or extraordinary expenses)
exceed 1.60% annually for at least three years after the Fund's open-ending; but
the Current Investment Advisory and Administration Agreement does not contain
such a deferral provision. The terms of both Agreements are described in more
detail below and a copy of the proposed Investment Management Agreement appears
as Exhibit B to this Proxy Statement.
TERMS OF THE INVESTMENT MANAGEMENT AGREEMENT
Pursuant to the Investment Management Agreement, subject to the supervision
of the Fund's Board of Directors, and in conformity with the stated policies of
the Fund, Dresdner RCM would be responsible for managing the investment
operations of the Fund and the composition of the Fund's portfolio, including
the purchase, retention, and disposition of portfolio securities. In this
regard, Dresdner RCM would be responsible for supervising the Fund's
investments, furnishing a continuous investment program for the Fund's
portfolio, and placing purchase and sale orders for portfolio securities of the
Fund and other investments. Under the Investment Management Agreement, Dresdner
RCM would also administer the Fund's corporate affairs, subject to the
supervision of the Fund's Board of Directors and, in connection therewith,
furnish the Fund with office facilities, together with those ordinary clerical
and bookkeeping services which are not being furnished by the Fund's
distribution, transfer and dividend disbursing agent, and custodian. Dresdner
RCM would keep certain books and records of the Fund required to be maintained
pursuant to the 1940 Act. The investment management services of Dresdner RCM to
the Fund will not be exclusive under the terms of the Investment Management
Agreement and Dresdner RCM is free to, and already does, render investment
management services to others. Dresdner RCM is permitted to delegate any or all
of its duties under the Investment Management Agreement to a sub-adviser or sub-
custodian according to a sub-advisory or sub-administration contract.
18
All services furnished by Dresdner RCM under the Investment Management
Agreement may be furnished by any directors, officers, or employees of Dresdner
RCM. In connection with the administration of the corporate affairs of the Fund,
Dresdner RCM would bear the following expenses:
(a) the salaries and expenses of all of Dresdner RCM's personnel and its
overhead;
(b) the fees and salaries of the Fund's Directors and officers, if any, who
are affiliated with Dresdner RCM (as defined in the 1940 Act); and
(c) all expenses incurred by Dresdner RCM in connection with managing the
ordinary course of the Fund's business, other than those assumed by the
Fund, as described below.
Except for the expenses specifically assumed by the Investment Manager, the
Fund will pay all of its expenses, including, without limitation, (a) fees and
expenses of the Directors not affiliated with the Investment Manager
attributable to the Fund; (b) fees of the Investment Manager; (c) fees of the
Fund's administrator, custodian, and sub-custodians for all services to the Fund
(including safekeeping of funds and securities and maintaining required books
and accounts); (d) transfer agent, registrar, and dividend reinvestment and
disbursing agent fees; (e) interest charges; (f) taxes; (g) charges and expenses
of the Fund's legal counsel and independent accountants; (h) charges and
expenses of legal counsel provided to the non-interested Directors of the
Company; (i) expenses of repurchasing shares of the Fund; (j) expenses of
printing and mailing share certificates, stockholder reports, notices, proxy
statements, and reports to governmental agencies; (k) brokerage and other
expenses connected with the execution recording and settlement of portfolio
security transactions; (l) expenses connected with negotiating, or effecting
purchases or sales of portfolio securities or registering privately issued
portfolio securities; (m) expenses of calculating and publishing the net asset
value of the Fund's shares; (n) expenses of membership in investment company
associations; (o) premiums and other costs associated with the acquisition of a
mutual fund directors and officers errors and omissions liability insurance
policy; (p) expenses of fidelity bonding and other insurance premiums; expenses
of stockholders' meetings; (q) SEC, state blue sky, and foreign registration
fees; (r) portfolio pricing services expenses; (s) litigation expenses; and (t)
Rule 12b-1 fees.
Under the Investment Management Agreement, the Fund will pay Dresdner RCM a
fee at the annual rate of 1.00% of the Fund's average daily net assets for the
portion of such assets up to and including $100 million and 0.80% of the Fund's
average daily net assets in excess of $100 million for the services and
facilities provided to the Fund. This fee will be computed daily and paid
monthly. Currently, the Fund's net assets are approximately $200 million.
To limit the total expenses of the Fund, Dresdner RCM has agreed to waive
its fees and to pay the Fund on a quarterly basis the amount, if any, by which
the ordinary operating expenses of the Fund attributable to the Fund for the
quarter (except taxes, interest, and extraordinary expenses) exceed an expense
ratio of 1.60% on an annual basis for at least the first three years of
operation following the conversion of the Fund to open-end status. The Fund will
reimburse Dresdner RCM for deferred fees or other expenses paid by Dresdner RCM
pursuant to the Investment Management Agreement in later years in which
operating expenses are otherwise, and as a result of such reimbursement would
be, less than such expense limitation. Accordingly, until all such amounts are
reimbursed, the Fund's expenses will be higher, and its total return will be
lower, than would otherwise have been the case. No interest, carrying, or
finance charge will be paid by the Fund with respect to any amounts representing
deferred fees or other expenses paid by Dresdner RCM. In addition, the Fund will
not be required to repay any unreimbursed amounts to Dresdner RCM upon
termination of the Investment Management Agreement.
The Investment Management Agreement provides that Dresdner RCM will not be
liable to the Fund or its stockholders for any error of judgment by Dresdner RCM
or for any loss suffered by the Fund in connection with the matters to which the
Investment Management Agreement relates, except for liability resulting from
willful misfeasance, bad faith, or gross negligence in the performance of its
duties or by
19
reason of Dresdner RCM's reckless disregard of its duties and obligations under
the Investment Management Agreement. Dresdner RCM is not entitled to any such
indemnification with respect to any liability to the Fund or its stockholders
resulting from willful misfeasance, bad faith, gross negligence in the
performance of its duties, or its reckless disregard of its duties and
obligations under the Investment Management Agreement.
If approved by stockholders, the Investment Management Agreement will
continue in effect for two years after the date of stockholder approval. The
Investment Management Agreement may be renewed from year-to-year after its
initial term, provided that any such renewals are specifically approved at least
annually by (i) the Board of Directors, or by a vote of the majority of the
outstanding voting securities of the Fund, and (ii)a majority of Independent
Directors cast in person at a meeting called for the purpose of voting on such
approval.
The Investment Management Agreement is terminable without penalty on 60
days' written notice by a vote of the majority of the outstanding voting
securities of the Fund, by a vote of the majority of the Board of Directors, or
by Dresdner RCM on 60 days' written notice, and will automatically terminate in
the event of its assignment (as defined in the 1940 Act).
The Investment Management Agreement also provides that the Fund must
eliminate any reference to "Dresdner RCM" from its corporate name if the
Investment Management Agreement is terminated or upon written notice to the Fund
from Dresdner RCM. Until such time, the Fund will have non-exclusive use of the
name "Dresdner RCM."
INFORMATION ABOUT DRESDNER RCM GLOBAL INVESTORS LLC
It is proposed that Dresdner RCM, a Delaware limited liability company, with
principal offices at Four Embarcadero Center, San Francisco, CA 94111, act as
the Investment Manager for the Fund. Dresdner RCM, currently the Fund's adviser
and administrator under the Current Investment Advisory Agreement, is a
wholly-owned subsidiary of Dresdner Bank AG ("Dresdner Bank"), an international
banking organization with principal executive offices in Frankfurt, Germany.
Dresdner RCM is actively engaged in providing investment supervisory services to
institutional and individual clients. Dresdner RCM was organized in 1996, as the
successor to the business and operations of RCM Capital Management, which, with
its successors, has been in operation since 1970.
Dresdner RCM is also the Investment Manager for the investment companies set
forth below:
APPROX.
NET ASSETS
AS OF
OPEN-END MANAGEMENT 10/31/98 ANNUAL MANAGEMENT FEE
INVESTMENT COMPANIES (IN 000'S) (AS A % OF NET ASSETS)
- -------------------------------------------------- ---------- ------------------------------------------------
Dresdner RCM Biotechnology Fund $ 3,193 1% on the first $500 million
0.95% on the next $500 million
0.90% on amounts in excess of $1 billion
With a 1.50% expense cap
Dresdner RCM Emerging Markets Fund $ 2,600 1%
With a 1.50% expense cap
Dresdner RCM Global Equity Fund $0(1) 0.75% on the first $500 million
0.70% on the next $500 million
0.65% on amounts in excess of $1 billion
With a 1.50% expense cap on Class N shares and a
1.25% expense cap on Class I shares
20
APPROX.
NET ASSETS
AS OF
OPEN-END MANAGEMENT 10/31/98 ANNUAL MANAGEMENT FEE
INVESTMENT COMPANIES (IN 000'S) (AS A % OF NET ASSETS)
- -------------------------------------------------- ---------- ------------------------------------------------
Dresdner RCM Global Health Care Fund $ 5,104 1% on the first $500 million
0.95% on the next $500 million
0.90% on amounts in excess of $1 billion
With a 1.50% expense cap
Dresdner RCM Global Small Cap Fund $ 4,967 1% on the first $500 million
0.95% on the next $500 million
0.90% on amounts in excess of $1 billion
With a 1.75% expense cap
Dresdner RCM Global Technology Fund $ 12,412 1%
With a 1.75% expense cap
Dresdner RCM Growth Equity Fund $ 811,107 0.75%
With a 1.00% expense cap
Dresdner RCM International Growth Equity Fund $ 109,533 0.75%
With a 1.00% expense cap
Dresdner RCM Large Cap Growth Fund $ 6,043 0.70% on the first $500 million
0.65% on the next $500 million
0.60% on amounts in excess of $1 billion
With a 0.95% expense cap
Dresdner RCM Small Cap Fund $ 451,182 1.00%
With a 1.25% expense cap
Dresdner RCM Strategic Income Fund $0(1) 0.75% on the first $500 million
0.65% on the next $500 million
0.60% on amounts in excess of $1 billion
With a 1.50% expense cap on Class N shares and a
1.25% expense cap on Class I shares
Dresdner RCM Tax Managed Growth Fund $0(1) 0.75% on the first $500 million
0.70% on the next $500 million
0.65% on amounts in excess of $1 billion
With a 1.50% expense cap on Class N shares and
1.25% expense cap on Class I shares
CLOSED-END MANAGEMENT
INVESTMENT COMPANIES
- --------------------------------------------------
Bergstrom Capital Corporation $ 171,002 0.70% on the first $10 million
0.60% on the next $10 million
0.50% on the next $20 million
0.35% on the next $20 million
0.30% on the next 40 million
0.25% on amounts in excess of $40 million
RCM Strategic Global Government Fund $ 349,903 0.95%
- ------------------------
(1) These funds currently have no net assets because they are involved in the
initial registration process.
21
Certain information regarding the directors and principal executive officers
of Dresdner RCM is set forth below:
POSITION WITH
NAME AND ADDRESS DRESDNER RCM PRINCIPAL OCCUPATION
- ---------------------------------- ------------------------ ---------------------------------------------------
Gerhard Eberstadt Member of Board of Member of Board of Managers of Dresdner Bank AG
Jurgen-Ponto-Platz 1 Managers
D-60301 Frankfurt-am-Main
Germany
George N. Fugelsang Member of Board of President/Chief Executive Officer/Chairman,
75 Wall Street Managers Dresdner Kleinwort Benson North America LLC
New York, NY 10005
Susan C. Gause(1) Member of Board of Same
Managers; Chief
Operating Officer; and
Senior Managing Director
Luke D. Knecht(1) Member of Board of Same
Managers; and Managing
Director
Joachim Madler Member of Board of Director, Dresdner Bank AG
Mainzer Lanstrass 15-17 Managers
D-60301 Frankfurt-am-Main
Germany
William L. Price(1) Member of Board of Same
Managers; Senior
Managing Director; Chief
Executive Officer; and
Global Chief Investment
Officer
Jeffrey S. Rudsten(1) Member of Board of Same
Managers; and Senior
Managing Director
William S. Stack(1) Member of Board of Same
Managers; Senior
Managing Director;
Global Equity Chief
Investment Officer
Kenneth B. Weeman, Jr(1) Member of Board of Same
Managers; Vice Chairman;
and Senior Managing
Director
- ------------------------
(1) The address for these directors and officers is Four Embarcadero Center, San
Francisco, CA 94111.
22
The following Directors and officers of the Fund are directors, officers,
employees, or stockholders of Dresdner RCM: Karin Brotman, Robert J. Goldstein,
Caroline M. Hirst, Jennie Klein, Barbel Lenz, Judith O'Connell, and William S.
Stack.
None of the Directors or officers of the Fund own securities of or have a
direct or indirect material interest in Dresdner RCM or Dresdner Bank (not
including directors of Dresdner RCM).
No Director of the Fund had a material interest in a material transaction
during the fiscal year ended December 31, 1997 or has such an interest in a
proposed material transaction to which Dresdner, Dresdner Bank, or any
subsidiaries thereof were or will be parties.
DIRECTORS' CONSIDERATIONS
In considering the proposed Investment Management Agreement, the Board of
Directors reviewed and analyzed the factors they deemed relevant, including: (1)
the services now being provided by Dresdner RCM; (2) the nature, quality, and
scope of such services as well as the Fund's investment performance; (3) the
nature and scope of the services to be provided to the Fund by Dresdner RCM
under the proposed Investment Management Agreement; (4) the ability of Dresdner
RCM to provide such services; and (5) the potential effect of the Investment
Management Agreement on stockholders. The Directors reviewed the proposed fees
payable to Dresdner RCM under the Investment Management Agreement. The Board of
Directors also reviewed the management and/or advisory fees paid by other
investment companies with similar objectives and characteristics.
After full consideration of the above listed and other factors, the Board of
Directors, including the Independent Directors, approved the proposed Investment
Management Agreement and authorized the submission of the Investment Management
Agreement to the Fund's stockholders for their approval at the Annual Meeting.
TERMS OF THE CURRENT INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
The Current Investment Advisory and Administration Agreement between the
Fund and Dresdner RCM, as the Fund's adviser and administrator, first took
effect on November 1, 1996. Unless earlier terminated, it will remain in effect
until October 5, 1999. The last time the Current Investment Advisory and
Administration Agreement was approved by an affirmative vote of stockholders was
October 4, 1996, when it was submitted to stockholders for their initial
approval as a new agreement.
As noted above, the Current Investment Advisory and Administration Agreement
is very similar to the proposed Investment Management Agreement. Under the
direction and control of the Fund's Board of Directors, Dresdner RCM makes
recommendations for purchases and sales of portfolio securities by the Fund
pursuant to the Fund's stated investment objective, policies, and restrictions
and reviews these purchase and sale recommendations for suitability in
accordance with such objectives, policies, and restrictions. Upon determining
such suitability, Dresdner RCM is authorized to transmit purchase and sale
orders and select brokers and dealers to execute portfolio transactions on
behalf of the Fund. Dresdner RCM determines the timing of portfolio transactions
and other matters related to execution. Additionally, pursuant to the Current
Investment Advisory and Administration Agreement, Dresdner RCM is the corporate
administrator of the Fund. Dresdner RCM renders to the Fund such administrative,
accounting, internal auditing, and clerical services as are necessary to provide
for effective operation of the Fund, but the Fund must bear all of its own
expenses. The Current Investment Advisory and Administration Agreement also
contains provisions concerning renewals, terminations, the non-exclusivity of
Dresdner RCM's services, and the power of Dresdner RCM to enter into
sub-advisory or sub-administration contracts that are substantially similar to
provisions in the proposed Investment Management Agreement.
The fee structure under the Current Investment Advisory and Administration
Agreement is very similar to the fee structure under the proposed Investment
Management Agreement except that the fee is
23
computed daily, not weekly, under the latter and that Dresdner RCM has promised
to defer its fee to the extent that the Fund's total annual ordinary operating
expenses applicable to Class N shares (not including taxes, interest, or
extraordinary expenses) exceed 1.60% of the Fund's net assets applicable to that
class for at least three years following the conversion.
The aggregate amount of fees received by Dresdner RCM from the Fund during
the fiscal year ended December 31, 1997 was $1,555,539 and for the six-month
period ended June 30, 1998 was $927,962. Dresdner RCM would have received
approximately the same amount from the Fund if the fees under the proposed
Investment Management Agreement had been charged during the same periods.
PORTFOLIO TRANSACTIONS
Subject to policies established by the Board of Directors of the Fund,
Dresdner RCM, pursuant to the Current Investment Advisory and Administration
Agreement, has arranged for the execution of the Fund's portfolio transactions
and the allocation of brokerage. These arrangements, detailed below, would be
substantially similar if Proposal No. 2(c) is approved and Dresdner RCM becomes
the Fund's investment manager pursuant to the Investment Management Agreement.
Dresdner RCM, subject to the overall supervision of the Board of Directors,
makes each Fund's investment decisions and selects the broker or dealer to be
used in each specific transaction using its best judgment to choose the broker
or dealer most capable of providing the services necessary to obtain the best
execution of that transaction. In seeking the best execution of a transaction,
Dresdner RCM evaluates a wide range of criteria, including any or all of the
following: the broker's commission rate, promptness, reliability and quality of
executions, trading expertise, positioning and distribution capabilities,
back-office efficiency, ability to handle difficult trades, knowledge of other
buyers and sellers, confidentiality, capital strength and financial stability,
prior performance in serving Dresdner RCM and its clients, and other factors
affecting the overall benefit to be received in the transaction. When
circumstances relating to a proposed transaction indicate to Dresdner RCM that a
particular broker is in a position to obtain the best execution, the order is
placed with that broker. This may or may not be a broker that has provided
investment information and research services to Dresdner RCM.
Subject to the requirement of seeking best execution, Dresdner RCM may, in
circumstances in which two or more brokers are in a position to offer comparable
execution, give preference to a broker or dealer that has provided investment
information to Dresdner RCM. In so doing, Dresdner RCM may effect securities
transactions that cause a Fund to pay an amount of commission in excess of the
amount of commission another broker would have charged. In electing such broker
or dealer, Dresdner RCM will make a good faith determination that the amount of
commission is reasonable in relation to the value of the brokerage services and
research and investment information received, viewed in terms of either the
specific transaction or Dresdner RCM's overall responsibility to the accounts
for which Dresdner RCM exercises investment discretion. Dresdner RCM continually
evaluates all commissions paid in order to ensure that the commissions represent
reasonable compensation for the brokerage and research services provided by such
brokers. Such investment information as is received from brokers and dealers may
be used by Dresdner RCM in servicing all of its clients (including the Fund),
and it is recognized that the Fund may be charged commissions paid to a broker
or dealer who supplied research services not utilized by the Fund. However,
Dresdner RCM expects that the Fund will benefit overall by such practice because
it is receiving the benefit of research services and the execution of such
transactions not otherwise available to it without the allocation of
transactions based on the recognition of such research services.
Subject to the requirement of seeking best execution, Dresdner RCM may also
place orders with brokerage firms that have sold shares of the Fund. Dresdner
RCM has made and will make no commitments to place orders with any particular
broker or group of brokers. It is anticipated that a substantial portion of all
brokerage commissions will be paid to brokers that supply investment information
to Dresdner RCM.
24
Dresdner RCM has no obligation to purchase or sell for the Fund any security
that it, or its officers or employees, may purchase or sell for Dresdner RCM's
or their own accounts or the account of any other client, if in the opinion of
Dresdner RCM such transaction appears unsuitable, impractical, or undesirable
for the Fund. Additionally, Dresdner RCM does not prohibit any of its officers
or employees from purchasing or selling for their own accounts securities that
may be recommended to or held by Dresdner RCM's clients, subject to Dresdner
RCM's and the Fund's Code of Ethics.
Because the Fund will frequently invest in foreign securities that are not
listed on a national securities exchange but are traded in the over-the-counter
market or the third or fourth market, Dresdner RCM will seek in such instances
to deal with the counterparty that Dresdner RCM believes can provide the best
execution, whether or not that counterparty is the primary market maker for that
security.
As noted above, Dresdner RCM is a wholly-owned subsidiary of Dresdner Bank.
Dresdner Kleinwort Benson North America LLC ("Dresdner Kleinwort Benson") and
other Dresdner Bank subsidiaries may be broker-dealers (collectively, the
"Dresdner Bank Affiliates"). Dresdner RCM believes that it is in the best
interest of the Fund to have the ability to execute brokerage transactions, when
appropriate, through the Dresdner Bank Affiliates. Accordingly, Dresdner RCM
intends, with the Board's approval, to execute brokerage transactions on behalf
of the Fund through the Dresdner Bank Affiliates, when appropriate and to the
extent consistent with applicable laws and regulations, including federal
banking laws.
In such cases, the Dresdner Bank Affiliates will act as agent for the Fund,
and Dresdner RCM will not enter into any transaction on behalf of the Fund in
which a Dresdner Bank Affiliate is acting as principal for its own account. In
connection with such agency transactions, the Dresdner Bank Affiliates will
receive compensation in the form of brokerage commissions separate from Dresdner
RCM's management fee. It is Dresdner RCM's policy that such commissions be
reasonable and fair when compared to the commissions received by other brokers
in connection with comparable transactions involving similar securities and that
the commissions paid to a Dresdner Bank Affiliate be no higher than the
commissions paid to that broker by any other similar customer of that broker who
receives brokerage and research services that are similar in scope and quality
to those received by the Fund.
For the six-month period ended June 30, 1998, the Fund paid total brokerage
commissions of $356,527, of which $162,076, or approximately 45.50%, were paid
to Dresdner Kleinwort Benson, the only affiliated broker the Fund used during
this time period.
Investment decisions for the Fund and for other investment accounts managed
by Dresdner RCM are made independently of each other in light of the differing
considerations for the various accounts. However, the same investment decisions
may occasionally be made for two or more such accounts. In such cases
simultaneous transactions are inevitable. Purchases or sales are then averaged
as to price and allocated to accounts according to a formula deemed equitable to
each account. While in some cases this practice could have a detrimental effect
upon the price or value of the security as far as the Fund is concerned, in
other cases it is believed to be beneficial to the Fund.
VOTE REQUIRED
The approval of the Investment Management Agreement requires approval by a
1940 Act majority vote. IF YOU WANT THE OPEN-END CONVERSION TO BE EFFECTED, YOU
MUST VOTE "FOR" PROPOSAL NO. 1(A) AND EACH OF THE SUBPARTS OF PROPOSAL NO. 2,
INCLUDING 2(C). IF PROPOSAL NO. 2(C) IS NOT APPROVED OR IF PROPOSAL NO. 2(C) IS
APPROVED BUT ANY OF PROPOSAL NOS. 1(A), 2(A), 2(B), AND 2(D) ARE NOT ALSO
APPROVED, THE FUND WILL CONTINUE TO FOLLOW THE TERMS OF THE CURRENT INVESTMENT
ADVISORY AND ADMINISTRATION AGREEMENT AND WILL REMAIN A CLOSED-END INVESTMENT
COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2(C).
25
PROPOSAL NO. 2(D). APPROVAL OR DISAPPROVAL OF A RULE 12B-1 DISTRIBUTION PLAN
Funds Distributor Inc. ("Funds Distributor"), 60 State Street, Suite 1300,
Boston Massachusetts 02109, is a corporation organized under the laws of the
State of Massachusetts and will serve as distributor of Class N and Class I
shares of the Dresdner RCM Europe Fund, a series of Dresdner RCM Investment
Funds Inc. upon the Fund's conversion to an open-end investment company. Funds
Distributor is an indirect wholly-owned subsidiary of Boston Institutional Group
Inc., which is not affiliated with Dresdner RCM.
Funds Distributor is the distributor for shares of the Dresdner RCM Mutual
Funds and has successfully provided distribution assistance to many open-end
investment companies. It would dedicate a strong, experienced professional team
to distributing shares of the Fund and it has sales contacts in all major
channels of distribution. The Fund, combined with the other Dresdner RCM Mutual
Funds, would be one of five full service clients of Funds Distributor.
The purpose of the Rule 12b-1 Distribution Plan applicable to Class N shares
(the "Plan") is to permit Funds Distributor to offer incentives to the financial
advisers and other qualified broker-dealers that provide distribution and
stockholder assistance to their customers who are investors in Class N shares of
the Fund and to defray the costs and expenses associated with distribution
activities. If Proposal No. 2(d) is approved by stockholders, the Plan will be
applicable to the Class N shares of the Fund (the existing shares of the Fund)
and will become effective upon conversion of the Fund to open-end status. A copy
of the proposed Plan is attached to this Proxy Statement as Exhibit C.
The Plan authorizes the Fund to pay Funds Distributor on a monthly basis for
all costs incurred by it in distributing the Class N shares of the Fund at an
annual rate not to exceed 0.25% of the Fund's average daily net assets. In
addition, the Plan specifies the services to be provided and the activities to
be undertaken to distribute shares and to provide stockholder services. Under
the Plan, the Fund must reimburse Funds Distributor for the following
expenditures, among others: (a) expenses incurred in connection with advertising
and marketing Class N shares of the Fund, including but not limited to any
advertising by radio, television, newspapers, magazines, telemarketing, or
direct mail solicitations; (b) periodic payments of fees for distribution
assistance made to one or more securities brokers, dealers, or other industry
professionals such as investment advisers, accountants, estate planning firms,
and Funds Distributor itself in respect of the average daily value of Class N
shares owned by clients of such service organizations; and (c) expenses incurred
in preparing, printing, and distributing the Fund's prospectus and statement of
additional information.
If in any year Funds Distributor is due more from the Fund for such services
than is immediately payable because of the expense limitation under the Plan,
the unpaid amount is carried forward from while the Plan is in effect until such
later year as it may be paid. There is no limit on the periods during which
unreimbursed expenses may be carried forward, although the Fund is not obligated
to repay any outstanding unreimbursed expenses that may exist if the Plan is
terminated or not continued. No interest, carrying, or finance charge will be
imposed on any amounts carried forward.
Pursuant to the Plan, the Board of Directors of the Fund will review at
least quarterly a written report prepared by Funds Distributor of all of the
distribution expenses incurred pursuant to the Plan. The report will include an
itemization of the distribution expenses and the purposes of such expenditures.
If approved by stockholders, the Plan will continue in effect for two years
after the date of stockholder approval. The Plan may be renewed from
year-to-year after its initial term, provided that any such renewals are
approved at least annually by the vote of a majority of the Board, including a
majority of the Independent Directors, pursuant to a vote cast in person at a
meeting called for the purpose of voting on the continuance of the Plan.
The Plan may be amended at any time by the Board provided that (i) any
amendment to increase materially the costs of the Fund under the Plan shall be
effective only upon approval by a vote of the
26
majority of the outstanding Class N shares of the Fund, and (ii) any other
material amendments of the terms of the Plan shall become effective only upon
approval by a majority of the Board and a majority of the Independent Directors
pursuant to a vote cast in person at a meeting called for the purpose of voting
on the Plan.
The Plan is terminable, without penalty, at any time by (i) the vote of a
majority of the Independent Directors, or (ii) the vote of a majority of the
outstanding Class N shares of the Fund.
DIRECTORS' CONSIDERATIONS
The Board of Directors of the Fund, including a majority of the Independent
Directors who have no direct or indirect interest in the proposed Plan or any
related agreement, by vote cast in person at a meeting held on December 4, 1998
approved a Rule 12b-1 Distribution Plan and a distribution agreement for the
Class N shares of the Fund (the "Distribution Agreement") between Funds
Distributor and Dresdner RCM Investment Funds Inc. on behalf of Dresdner RCM
Europe Fund, and recommended the Plan to the stockholders of the Fund for
approval at this Annual Meeting of Stockholders.
In considering whether or not to approve the Plan, the Board of Directors
reviewed, among other things, the nature, quality, and scope of the services to
be provided by Funds Distributor, the ability of Funds Distributor to provide
such services, and the fees payable to Funds Distributor if the Plan is adopted.
The Board also reviewed the Rule 12b-1 fees paid by other open-end investment
companies with similar objectives and characteristics and found Funds
Distributor's proposed fees to be competitive and reasonable. The Board
considered the potential benefits of the Plan to stockholders, investors, Funds
Distributor, and Dresdner RCM. The Board investigated, among other things, Funds
Distributor's distribution experience, the strength of its distribution base,
staff, and infrastructure, and its track record with the distribution of other
open-end funds. Based upon their review of the factors above, among others, the
Directors, including a majority of the Independent Directors, determined that
there is a reasonable likelihood that the Plan would benefit the Fund and its
stockholders and authorized the submission of the Plan to stockholders for their
approval at the Annual Meeting.
VOTE REQUIRED
The approval of the Rule 12b-1 Distribution Plan requires approval by a 1940
Act majority vote. IF YOU WANT THE OPEN-END CONVERSION TO BE EFFECTED, YOU MUST
VOTE "FOR" PROPOSAL NO. 1(A) AND EACH OF THE SUBPARTS OF PROPOSAL NO. 2,
INCLUDING 2(D). IF PROPOSAL NO. 2(D) IS NOT APPROVED OR IF PROPOSAL NO. 2(D) IS
APPROVED BUT PROPOSAL NOS. 1(A), 2(A), 2(B), AND 2(C) ARE NOT ALSO APPROVED, THE
FUND WILL NOT ADOPT THE PROPOSED RULE 12B-1 DISTRIBUTION PLAN AND WILL CONTINUE
TO OPERATE AS A CLOSED-END INVESTMENT COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2(D).
ELECTION OF DIRECTORS
(PROPOSAL NO. 3)
The Fund's Articles of Incorporation and By-Laws provide that the Board of
Directors is to be divided into three classes of Directors. The Directors in
each class serve three-year terms, with one class being elected each year. The
term of one class will expire each year. The term of office for Directors in
Class I expires at the Meeting, for Directors in Class II at the Annual Meeting
of Stockholders in 1999 and for Directors in Class III at the Annual Meeting of
Stockholders in 2000. However, if Proposal Nos. 1 and 2 are approved, the Fund's
Amended and Restated Articles of Incorporation will no longer provide for a
class-based structure of Directorships, and the existing Directors will remain
on the Board, except as noted below.
27
Four Class I nominees are named in this Proxy Statement. If elected, the
Class I Directors will serve a three-year term to expire at the Annual Meeting
of Stockholders in 2001 and until their successors are duly elected and
qualified. Each of the nominees was last elected to the Board of Directors at
the Annual Meeting of Stockholders in 1995.
Unless authority is withheld, it is the intention of the persons named in
the accompanying form of proxy to vote each proxy for the election of the
nominees listed below. Each nominee has indicated he will serve if elected, but
if any nominee should be unable to serve, proxies will be voted for any other
person determined by the persons named in the accompanying form of proxy in
accordance with their judgment.
If Proposal Nos. 1 and 2 are approved by stockholders and the Fund
open-ends, the initial Directors of "Dresdner RCM Investment Funds Inc." will be
the Fund's current Directors except that Mr. Fugelsang, a Class I Director, and
Mr. Passow, a Class II Director, will resign from the Board prior to the Fund's
commencement of operations as an open-end fund because of restrictions on the
ability of persons who serve as officers of banks regulated in the U.S. also
serving as directors of open-end investment companies. The Board has no current
plans to replace those Directors if and when they resign. Additionally, any
Class I Directors who are not elected by stockholders and who cease to be
Directors will be deleted as Directors from the Fund's Amended and Restated
Articles of Incorporation.
The following table provides information concerning the Class I nominees for
election as Directors.
CLASS I (TERM EXPIRES AT THE MEETING)
SHARES OF COMMON
STOCK BENEFICIALLY
OWNED DIRECTLY OR
PRINCIPAL OCCUPATION INDIRECTLY AT
POSITION WITH DURING PAST 5 YEARS SEPTEMBER 30,
NAME, ADDRESS AND AGE FUND AND OTHER AFFILIATIONS 1998(1)
- --------------------- -------------- ---------------------------------- -------------------
Robert J. Birnbaum Director since Director, Chicago Board Options 1,059
313 Bedford Road 1990 Exchange (since 1998); Director,
Ridgewood, N.J. 07450 Chicago Mercantile Exchange
Age: 71 (1990-1998); 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)
(1988-1993); President and Chief
Operating Officer, New York Stock
Exchange, Inc. (1985-1988);
President and Chief Operating
Officer, American Stock Exchange,
Inc. (1977-1985)
Carroll Brown Director since President, The American Council on 1,000
The American Council 1990 Germany (since 1988); Executive
on Germany Director, John J. McCloy Fund
14 East 60th Street (since 1988); Foreign Service
Suite 606 Officer, United States Department
New York, NY 10022 of State with service in
Age: 70 Yugoslavia, Poland, Austria, and
Germany (1957-1988); U.S. Consul
General, Dusseldorf and Munich;
Deputy Assistant Secretary of
State, U.S. State Department (1986
and 1987)
28
SHARES OF COMMON
STOCK BENEFICIALLY
OWNED DIRECTLY OR
PRINCIPAL OCCUPATION INDIRECTLY AT
POSITION WITH DURING PAST 5 YEARS SEPTEMBER 30,
NAME, ADDRESS AND AGE FUND AND OTHER AFFILIATIONS 1998(1)
- --------------------- -------------- ---------------------------------- -------------------
Theodore J. Coburn Director since Partner, Brown, Coburn & Co. , a --
17 Cotswold Road 1991 consulting firm (since 1991);
Brookline, MA 02146 education associate at Harvard
Age: 44 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. (1986-1991); Managing
Director of the Global Equity
Transactions Group and a member of
the Board of Directors, Prudential
Securities (1986-1991); Managing
Director, Merrill Lynch Capital
Markets (1983-1986)
George N. Director since Senior General Manager and Chief --
Fugelsang(*) 1994 Executive North America, Dresdner
Dresdner Bank AG Bank AG (since 1994); President,
75 Wall Street Director and Chief Executive
New York, NY 10005 Officer, Dresdner Kleinwort Benson
Age: 57 North America LLC (since 1994);
Director, Dresdner-NY Inc.
(1994-1997); Managing Director,
Morgan Stanley & Company, Inc.
(1986-1994)
29
CONTINUING DIRECTORS. The remaining Directors currently serving on the
Board of Directors consist of three Class II Directors and three Class III
Directors. None of such Directors is a nominee for election at the Meeting. All
such Directors will continue in office after the Meeting for the terms shown
below, except as noted above.
The following table provides information concerning the Class II Directors.
CLASS II (TERM EXPIRES 1999)
SHARES OF COMMON
STOCK BENEFICIALLY
OWNED DIRECTLY OR
PRINCIPAL OCCUPATION INDIRECTLY AT
POSITION WITH DURING PAST 5 YEARS SEPTEMBER 30,
NAME, ADDRESS AND AGE FUND AND OTHER AFFILIATIONS 1998(1)
- --------------------- -------------- ---------------------------------- -------------------
James E. Dowd Director since Attorney/Consultant (since 1982); 1,077
571 Hayward Mill Road 1990 Director, Trustee or Managing
Concord, MA 01742 General Partner of various
Age: 75 registered investment companies
managed by Federated Investors
(since 1982); President, Boston
Stock Exchange (1969-1982); Member
of Panel of Arbitrators, New York
Stock Exchange, Inc. (since 1986);
Member of Panel of Arbitrators,
National Association of Securities
Dealers, Inc. (since 1984)
Siegfried A. Kessler Director since Retired; Chairman, Carl Zeiss Inc. 1,000
52 Heritage Road 1990 (New York) (1981-1982) and
Hilton Head Island, President (1965-1981) (sale,
SC 29925 distribution and service of
Age: 80 scientific instruments);
President, Carl Zeiss Canada Ltd.
(sale, distribution and service of
scientific instruments and optical
products) (1965-1985)
Rolf Passow(*) Chairman and Chief Executive (since 1992) and --
Deutscher Investment- Director since Managing Director (1987-1992),
Trust Gesellschaft 1995 Deutscher Investment-Trust,
fur Wertpapieranlagen Gesellschaft fur Wertpapieranlagen
mbH mbH; Chief Executive, Dresdnerbank
Mainzer Landstrasse investment management
11-13 Kapitalanlagegesellschaft mbH
D-60329 (since 1992); Member, Board of
Frankfurt-am-Main Managing Directors, Frankfurter
Germany Wertpapierborse (Frankfurt Stock
Age: 58 Exchange) (1992-1993); Chairman,
Supervisory Board, Dresdner
Kleinwort Benson International
Management Services Ltd. (since
1995)
30
The following table provides information concerning the Class III Directors.
CLASS III (TERM EXPIRES 2000)
SHARES OF COMMON
STOCK BENEFICIALLY
OWNED DIRECTLY OR
PRINCIPAL OCCUPATION INDIRECTLY AT
POSITION WITH DURING PAST 5 YEARS SEPTEMBER 30,
NAME, ADDRESS AND AGE FUND AND OTHER AFFILIATIONS 1998(1)
- --------------------- -------------- ---------------------------------- -------------------
Alfred Fiore Director since General Manager, Hirschfeld, --
27 Copper Beech Road 1996 Stern, Moyer & Ross, Inc.
Greenwich, CT 06930 (employee benefit consulting firm)
Age: 60 (since 1988); Consultant,
Lois/U.S.A. (creative advertising
agency) (1987-1988); Executive
Vice President and Chief Financial
Officer, Parlux Fragrances, Inc.
(1987); Executive Vice President
and Chief Financial Officer,
Concord Assets Group, Inc. (real
estate manager) (1986); President
and Chief Operating Officer,
Amerigroup Financial Services,
Inc. (financial services)
(1984-1986); Partner, KPMG Peat
Marwick, LLP (1973-1984)
Gottfried W. Perbix Director since President, Perbix International, 1,000
293 Saugatuck Avenue 1990 Inc. (management consulting)
Westport, CT 06880 (1980-1994); Director, American
Age: 68 Profol Inc. (plastic film
manufacturers) (since 1993); Sole
Proprietor, Perbix Associates
(executive search) (since 1978)
Jacob Saliba Director since Director (since 1994), Chairman --
770 Boylston Street, 1990 (1988-1994) and Chief Executive
Apt. 11I Officer (1988-1993), Katy
Boston, MA 02199 Industries, Inc. (diversified
Age: 84 manufacturing and oil and related
services); President and Chief
Operating Officer, Katy
Industries, Inc. (1968-1987);
Director, CEGF Compagnie des
Entrepots et Gares Frigorifiques
(cold storage warehouses) (since
1989); Director, Schon & Cie AG
(manufacturer of machinery) (since
1990); Director, Sahlman Seafoods
(shrimp fishing and shrimp
aquaculture) (since 1998);
Director, Syratech Corp.
(manufacturer of household
furnishings) (1992-1998)
- ------------------------
(1) All Directors and officers as a group beneficially owned 5,136 shares of
Common Stock, which constituted less than 1% of the outstanding Common Stock
of the Fund as of September 30, 1998.
(*) Interested person of the Fund (as defined in the "1940 Act"). Mr. Fugelsang
is an interested person of the Fund because of his affiliation with Dresdner
Bank, the parent of Dresdner RCM; Mr. Passow is an interested person of the
Fund because of his affiliation with Deutscher Investment-Trust Gesellschaft
fur Wertpapieranlagen mbH and Dresdnerbank investment management
Kapitalanlagegesellschaft mbH, which are wholly-owned subsidiaries of
Dresdner Bank.
31
OTHER INFORMATION REGARDING DIRECTORS
The Fund pays each of its Directors who is not an interested person of the
Fund, as defined in the 1940 Act, an annual fee of $7,500, plus $750 for each
Board of Directors meeting attended. During the fiscal year ended December 31,
1997, all such Directors as a group received from the Fund aggregate fees
amounting to $88,500. In addition, the Fund reimburses Directors not affiliated
with Dresdner RCM for travel and out-of-pocket expenses incurred in connection
with meetings of the Board. The following table sets forth for each Director
receiving compensation from the Fund the amount of such compensation paid by the
Fund during the fiscal year ended December 31, 1997.
COMPENSATION TABLE
PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS FROM FUND AND
AGGREGATE ACCRUED ESTIMATED FUND COMPLEX
COMPENSATION AS PART OF ANNUAL BENEFITS PAID TO
NAME OF PERSON, POSITION FROM FUND FUND EXPENSES UPON RETIREMENT DIRECTORS
- ------------------------------------------------ ------------- -------------- --------------- ----------------
Directors:
Robert J. Birnbaum............................ $ 11,250 -- -- $ 11,250
Carroll Brown 11,250 -- -- 11,250
Theodore J. Coburn............................ 10,500 -- -- 10,500
James E. Dowd................................. 10,500 -- -- 10,500
Alfred W. Fiore............................... 11,250 -- -- 11,250
Siegfried A. Kessler.......................... 11,250 -- -- 11,250
Gottfried W. Perbix........................... 11,250 -- -- 11,250
Jacob Saliba.................................. 11,250 -- -- 11,250
------------- -------
TOTAL..................................... $ 88,500 $ 88,500
------------- -------
------------- -------
During the fiscal year ended December 31, 1997, the Board of Directors met
five times and during the fiscal year ending December 31, 1998, the Board of
Directors met eleven times. Each Director attended at least 75% of the total
number of meetings of the Board and each Committee of the Board of which he was
a member held during the period in which he served. The fees paid to the full
Board in 1998 were at the same rate as the fees paid in 1997.
The Board of Directors has an Audit Committee presently composed of Messrs.
Perbix, Dowd, and Kessler, none of whom is an interested person of the Fund (as
defined in the 1940 Act). The Audit Committee makes recommendations to the full
Board with respect to the engagement of independent accountants and reviews with
the independent accountants the plan and results of the audit engagement and
matters having a material effect upon the Fund's financial operations. The Audit
Committee held two meetings during the fiscal year ended December 31, 1997 and
two meetings during the fiscal year ending December 31, 1998. The fees paid to
Audit Committee members in 1998 were at the same rate as the fees paid in 1997.
In 1998, the Board of Directors established an ad hoc Strategic Planning and
Communications Committee, composed of Messrs. Birnbaum, Coburn, and Fiore, none
of whom is an interested person of the Fund (as defined in the 1940 Act), to
communicate with stockholders on behalf of the full Board of Directors and to
consider various strategic options for the future of the Fund, including,
whether the Fund should convert from a closed-end investment company to an
open-end investment company. Strategic Planning and Communications Committee
members received $1,500 per meeting in 1998, and there were 14 such meetings in
1998 to date.
The Board of Directors has no compensation or nominating committees, or
other committees performing similar functions. If the Fund converts to an
open-end structure, it would have a Nominating Committee, consisting of the
Directors who are not interested persons of the Fund (as defined in the 1940
Act).
32
EXECUTIVE OFFICERS OF THE FUND
The executive officers of the Fund are typically chosen each year at the
meeting of the Board of Directors held in connection with the Annual Meeting of
Stockholders, to hold office until the meeting of the Board of Directors held in
connection with the next Annual Meeting of Stockholders and until their
successors are chosen and qualified. The current executive officers of the Fund
were appointed by the Board of Directors in March 1997, except that Robert J.
Goldstein was appointed Secretary by the Board of Directors on February 12,
1998. No executive officers of the Fund receive any compensation from the Fund
for their services as executive officers. It is anticipated that the Fund's
current officers will resign upon conversion to open-end status due to
regulatory limitations on Dresdner RCM, which is wholly-owned by a foreign bank,
Dresdner Bank. In the event the Fund's current officers resign upon conversion
to open-end status, it is expected that the Fund's officers will be employees of
Funds Distributor.
The following table presents information about the executive officers of the
Fund, other than as shown above.
PRINCIPAL OCCUPATION
POSITION WITH DURING PAST 5 YEARS
NAME, ADDRESS AND AGE FUND AND OTHER AFFILIATIONS
- ------------------------------------ ----------------- --------------------------------------------------------
William S. Stack President since Senior Managing Director, Global Equity Chief Investment
The Emerging Germany Fund 1997 Officer, Member, Board of Managers, and Principal,
Four Embarcadero Center Dresdner RCM Global Investors LLC (since 1996); Senior
San Francisco, CA 94111 Vice President, RCM Capital Management, a California
Age: 51 Limited Partnership (1994-1996); Managing Director,
Lexington Management Corporation (1985-1994)
Barbel Lenz Vice President Director, Dresdner RCM Global Investors LLC (since
The Emerging Germany Fund since 1997 1997); Assistant Vice President, Dresdner Kleinwort
Four Embarcadero Center Benson North America LLC (1996-1997); Assistant Vice
San Francisco, CA 94111 President, Dresdner Securities (USA) Inc. (1995-1996);
Age: 34 Assistant Vice President, Deutscher Investment-Trust,
Gesellschaft fur Wertpapieranlagen mbH (1991-1995)
Caroline M. Hirst Treasurer since Managing Director, Director of Investment Operations and
The Emerging Germany Fund 1997 Information Technology and Risk Management, Dresdner RCM
Four Embarcadero Center Global Investors LLC; Director of Operations, RCM
San Francisco, CA 94111 Capital Management, a California Limited Partnership
Age: 37 (1994-1996); Head of International Administration,
Morgan Grenfell Asset Management, Ltd. (1991-1995)
Robert J. Goldstein Secretary since Director, Associate General Counsel, Dresdner RCM Global
The Emerging Germany Fund 1998 Investors LLC (since 1997); Associate, Weil, Gotshal &
Four Embarcadero Center Manges (1990-1996)
San Francisco, CA 94111
Age: 35
33
LEGAL PROCEEDINGS
On April 8, 1998, the Fund filed a lawsuit against Phillip Goldstein, Ronald
Olin, and three entities affiliated with them. The action is captioned THE
EMERGING GERMANY FUND INC. V. GOLDSTEIN, 98 Civ. 2508 (DC) and is filed in the
United States District Court for the Southern District of New York. In its
complaint, the Fund alleges violations by the defendants of the proxy
solicitation and beneficial ownership disclosure provisions of U.S. federal
securities laws when the defendants used an Internet "chat room" and other means
to conduct an unlawful proxy solicitation in opposition to the Fund's
solicitation for the annual meeting scheduled for April 27, 1998. The Fund seeks
equitable relief against the defendants. The Fund filed this lawsuit, canceled
the annual meeting, and amended its By-Laws in order to protect its stockholders
from the unlawful activities it asserts were undertaken by these defendants.
One of the defendants in the action filed by the Fund, Opportunity Partners
L.P., filed an action against the Fund and its directors on April 24, 1998 in
the United States District Court of the Southern District of New York. The
matter is styled OPPORTUNITY PARTNERS L.P. V. THE EMERGING GERMANY FUND INC., 98
Civ. 2904 (DC). In connection with the factual matters described above,
plaintiff claims that defendants violated the proxy antifraud rule of U.S.
federal securities laws and breached their fiduciary duties by canceling the
annual meeting and amending the Fund's By-Laws as previously described.
Plaintiff seeks equitable relief.
The Fund, as nominal defendant, and each member of the Fund's Board of
Directors, including the four Class I members who are standing for re-election
to the Board at the Meeting, have been named as defendants in a derivative and
purported class action suit filed in the United States District Court for the
Southern District of New York. The matter is captioned STEINER V. FUGELSANG, 98
Civ. 3809 (DC) (the "Steiner Litigation"), and was commenced on May 28, 1998.
The class action allegations in the Steiner Litigation assert that the
defendants violated the Investment Company Act of 1940 and Maryland Corporate
Law by interfering with the voting rights of Fund stockholders when they
canceled the annual meeting scheduled for April 27, 1998 and when they adopted
an amendment to the Fund's By-Laws which requires proposals intended to be made
at stockholders' meetings be provided to the Fund in advance of the meeting
together with materially relevant information. The derivative claims assert that
the defendants breached their fiduciary duties by amending the By-Laws as
described above, by causing the Fund to institute certain litigation described
above, and by failing to take all steps necessary to maximize stockholder value.
Plaintiff seeks equitable relief on the class claims and damages on the
derivative claims.
Discovery has been stayed in the first two actions pending decision on
defendants' motions to dismiss the Fund's action. Plaintiff has filed a motion
for injunction in the Steiner Litigation and the defendants have filed a motion
to dismiss the amended complaint in that action. No discovery has begun in the
Steiner Litigation.
The Fund's Directors believe that they acted appropriately in these matters
and that they have meritorious defenses, and they intend to defend the two
actions vigorously. Under the Fund's chartering documents and under a policy of
insurance, the directors are entitled to indemnification and to advancement of
the costs of defense in certain circumstances. Consistent with state and federal
law and the terms of the insurance policy, the Fund will indemnify the Directors
and advance the costs of their defense to these actions.
VOTE REQUIRED
The election of each Director requires approval by a plurality of the votes
cast at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 3.
34
RATIFICATION OF
SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 4)
At a meeting held on December 4, 1998, a majority of the Independent
Directors of the Fund approved the selection of PricewaterhouseCoopers LLP
("PWC") as independent accountants of the Fund for the fiscal year ending
December 31, 1999. Audit services performed for the Fund by Coopers & Lybrand
L.L.P. (PWC's predecessor) during the fiscal year ended December 31, 1997, and
being performed for the fiscal year ending December 31, 1998, include
examination of the Fund's financial statements. PWC has informed the Fund that
it has no material direct or indirect interest in the Fund.
A representative of PWC is expected to be present at the Meeting to answer
appropriate questions concerning the Fund's financial statements and will have
an opportunity to make a statement if such representative chooses to do so.
It is the intention of the persons named in the accompanying form of proxy
to vote each proxy for ratification of the selection of PWC.
VOTE REQUIRED
The ratification of PWC as the Fund's independent accountants for the fiscal
year ending December 31, 1999 requires the affirmative vote of a majority of the
shares cast at the Annual Meeting on the matter.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 4.
STOCKHOLDER PROPOSAL
(PROPOSAL NO. 5)
A beneficial owner of Common Stock of the Fund (the "proponent") has
informed the Fund that he intends to present a proposal for action at the
Meeting. The proponent's name and address will be furnished by the Secretary of
the Fund upon request. The proponent proposes that the following resolution be
presented to the stockholders of the Fund:
"RESOLVED: The investment advisory agreement between Dresdner RCM Global
Investors LLC (the "Advisor") and the Fund shall be terminated."
The proponent has requested that the following statement be included in the
proxy statement in support of the proposal:
"I believe that the Advisor is the main impediment to the ability of
Shareholders to realize net asset value for their shares, through open-ending,
liquidation, merger or self-tender.
Our directors may claim "independence," but they were chosen by the Advisor
or by each other, and I believe they have placed the Advisor's interest in its
fee stream above the interests of the Shareholders in getting the maximum return
on their investment. Consider:
They postponed the 1998 annual meeting indefinitely, "in order to protect
the rights of fund shareholders." Protecting democracy by canceling an election
is like burning a village in order to save it.
They pose as defenders of small, long term Shareholders, who in fact have
been bailing out at substantial discounts to net asset value, such that four
institutions now own almost half of the shares.
They point with pride to investment results of the last year or two, hoping
that Shareholders will forget the results of the prior FIVE years, which even
our Directors called "unacceptable performance."
They recently referred to the Advisor as a "new investment manager,"
although it's another Dresdner Bank affiliate, and when the contract came up for
approval in 1996 they called it just a "reorganization, identical in all
material respects," with the same personnel and policies.
They keep changing the fund's goals (they obtained shareholder approval for
the changes they proposed). First it was a German Smallcap fund, now the
portfolio is concentrated in large, liquid
35
companies. First it had to be 90% invested in Germany, now 65%, and in June,
1998, the portfolio manager told the New York Times that the fund would be
converted to a Pan-Europe fund. There are many successful open-ended Europe
funds.
While passage of this proposal would not directly result in open-ending the
Fund, it would cut the links between the Advisor and its cronies on the Board. I
believe this would send the Board the message that the Shareholders demand
action to eliminate the deadweight loss of value represented by the discount.
I submitted this resolution in July. The Board has since announced support
for open-ending, on several conditions. Shareholders should now consider the
overall performance of the Fund, and the conduct of the Board and Advisor
towards shareholders, in deciding whether to terminate the advisory contract."
OPPOSING STATEMENT OF YOUR BOARD OF DIRECTORS
FOR THE REASONS DISCUSSED BELOW, YOUR BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "AGAINST" THIS STOCKHOLDER PROPOSAL.
We believe that this proposal, which was submitted prior to the public
announcement of our plan to recommend conversion to a European, open-end fund,
no longer serves its original purpose and should not be approved. In fact, we
believe that the portfolio manager's investment team and its European investment
strategy are critical to maintaining the Fund's performance both during the
conversion period to an open-end fund with a broader investment objective, and
in the future.
1. THE BOARD AND DRESDNER RCM ARE SUPPORTING ACTIONS THAT WILL ENTIRELY
ELIMINATE THE DISCOUNT.
Given our current proposal in the Proxy Statement to convert the Fund to an
open-end investment company, the proposal does not make sense. The only
impediment to open-ending the Fund would be a decision by you, the stockholders,
against this proposal.
Dresdner RCM advocates and supports the changes we are proposing--however,
we wish to make it clear that it is not the manager who determines whether the
Fund open-ends. That decision is up to the stockholders, based on the
recommendation of the Board of Directors--eight of ten of whom are independent
of the investment adviser.
2. WE BELIEVE THAT DRESDNER RCM'S STRONG INVESTMENT TEAM, AND ITS EUROPEAN
INVESTMENT PROCESS ARE CRITICAL TO MAINTAINING THE FUND'S PERFORMANCE BOTH
DURING THE CONVERSION PERIOD AND FOR THE FUTURE.
The proposal, if approved, would pose substantial risk to investment
performance of the Fund both during the conversion period and in the future.
- Dresdner RCM's Performance Has Been Outstanding
Approval of this proposal would remove an investment adviser that has
delivered superior results to Stockholders. Based on total NAV* return, the Fund
was the top performing German fund (open or closed) in the U.S. marketplace for
1997 and the first three quarters of 1998. Comparative percentage performance
for these periods are shown below:
EMERGING GERMANY FUND DAX100 MSCI GERMANY INDEX
----------------------- --------- --------------------
1997.................................................... NAV*: 26.3% 22.4% 24.8%
YTD as of 9/30/98....................................... NAV*: 20.36% 12.60% 15.71%
- ------------------------
* All NAV returns include reinvestment of dividends and distributions.
The Board has a high degree of confidence in Dresdner RCM and believes that
replacing Dresdner RCM would adversely impact the Fund's performance. The
proponent's suggestion that the current investment adviser should be removed
because of the Fund's performance during its initial five years ignores the
Fund's superior performance over the more recent 2 1/2 years.
36
- Termination of Dresdner RCM is likely to significantly disrupt performance
during the critical conversion period as the Fund converts to open-end
status.
If you vote to terminate the investment advisory agreement with Dresdner
RCM, the Board will be required to select another investment adviser for the
Fund, negotiate a new investment advisory agreement, and submit that agreement
to you, the stockholders, for approval. During this process--which could take
several months--the Fund's portfolio management and procedures would be
significantly disrupted. As a result, termination of Dresdner RCM could
significantly harm the Fund's ability not only to manage the portfolio but also
to obtain maximum performance during a conversion period.
- Dresdner RCM's European investment capabilities are an essential component
of the Board's recommendation to expand the Fund's objective to Europe and
a significant factor in our decision to recommend converting the Fund to
an open-end investment management company.
In reaching the decision to recommend conversion to a European mandate, the
Board carefully reviewed Dresdner RCM's investment process and personnel. We
noted that Dresdner RCM has an established European investment process and
organization focused on a sector rather than a country basis, which we believe
enables it to take advantage of opportunities in a post-EMU Europe. We further
noted Dresdner RCM's strong global fundamental research base of research
analysts and independent Grassroots (SM) research. This type of investment
process and strong European company and industry research resources will be
necessary in order to anticipate investment opportunities across a rapidly
changing Europe. We therefore believe it would be difficult for the Board to
locate and retain an investment adviser with comparable experience, resources
and demonstrated success in the European market to manage the Fund.
YOUR BOARD STRONGLY URGES YOU TO VOTE AGAINST THIS PROPOSAL.
VOTE REQUIRED
The approval of the stockholder proposal requires a 1940 Act majority vote.
If the open-end conversion (Proposal No. 2) and the stockholder proposal
(Proposal No. 5) are both approved, Dresdner RCM will cease to be the Fund's
investment adviser 60 days after notice is given to it of the termination. Upon
conversion to open-end status, however, Dresdner RCM would be reinstated as the
Fund's investment manager in accordance with the terms of the proposed
Investment Management Agreement detailed in Proposal No. 2(c) above. If there is
a period between the termination and the conversion to open-end status, the
Board would take such action as it deemed appropriate to provide investment
advisory services for the Fund during the period. If Proposal No. 5 is approved
but Proposal No. 2 is not approved, the Current Investment Advisory and
Management Contract between the Fund and Dresdner RCM would be terminated by the
Fund upon 60 days' notice to Dresdner RCM and the Board would make every effort
to effect a new investment advisory agreement with a professional adviser. There
can be no assurance that such arrangement can be made by the end of that 60 day
period. Additionally, if Proposal Nos. 1 and 5 are approved, but Proposal No. 2
is not approved, there will be no amendment to the Fund's Articles of
Incorporation to change the Fund's name to Dresdner RCM Europe Fund Inc. in
accordance with Proposal No. 1(b). The Board will consider alternative changes
of names at that time.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" PROPOSAL NO. 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of the Fund's Common
Stock as of December 11, 1998 for each stockholder known to be the beneficial
owner of more than five percent of the
37
Common Stock on that date. The Fund does not know of any other stockholder with
more than 5% of its outstanding shares.
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF TOTAL
- ------------------------------------------------------------------------------- ----------------- -----------------
Bankgesellschaft Berlin AG..................................................... 2,932,600(1) 20.90%
Alexanderplatz 2
D-10178 Berlin
Germany
Deep Discount Advisors, Inc.................................................... 2,031,150 (2) 14.50%
One West Pack Square
Suite 777
Asheville, NC 28801
Lazard Freres & Co. LLC........................................................ 1,419,200 (3) 10.13%
30 Rockefeller Plaza
New York, NY 10020
FMR Corp....................................................................... 1,400,800 (4) 10.00%
82 Devonshire Street
Boston, MA 02109
- ------------------------
(1) As reported in the Schedule 13D/A dated December 4, 1998 filed by
Bankgesellschaft Berlin AG (the "Bank"), the Bank is the beneficial owner of
2,932,600 shares of Common Stock, over each of which it has sole power to
vote and dispose.
(2) As reported in the Schedule 13D/A dated November 6, 1998, filed by Deep
Discount Advisors, Inc. ("DDA") and Ron Olin Investment Management Company
("Olin"), DDA is the beneficial owner of 1,372,150 shares of Common Stock,
over each of which it has sole power to vote and dispose, and Olin is the
beneficial owner of 659,000 shares of Common Stock, over each of which it
has sole power to vote and dispose. As reported in the Schedule 13D dated
June 24, 1998, filed by DDA and Olin, Ronald G. Olin may be deemed to be a
control person of DDA and Olin.
(3) As reported in the Schedule 13G/A dated July 10, 1998, filed by Lazard
Freres & Co. LLC ("Lazard"), Lazard is the beneficial owner of 1,419,200
shares of Common Stock, over each of which it has sole power to vote and
dispose.
(4) As reported in the Schedule 13G/A dated February 10, 1998, filed by FMR
Corp., Fidelity Management & Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp., is the beneficial owner of 1,400,800 shares of
Common Stock, none of which it has the power to vote. Fidelity is the
beneficial owner as a result of its serving as investment adviser to various
registered investment funds (the "Funds"). Each of Edward C. Johnson III,
Chairman of FMR Corp., Abigail P. Johnson, a director of FMR Corp., FMR
Corp., through its control of Fidelity, and the Funds has sole power to
dispose of such Common Shares owned by the Funds. Neither FMR Corp., nor
Edward C. Johnson III, nor Abigail P. Johnson has the sole power to vote or
direct the voting of the shares owned directly by the Funds, which power
resides with the Funds' Board of Trustees.
As of October 31, 1998, Cede & Co., a nominee of Depository Trust Company
(DTC), held of record 13,772,863, or approximately 98%, of the Fund's
outstanding shares of Common Stock. DTC is a securities depository for brokers,
dealers and other institutional investors. Securities are so deposited for the
purpose of permitting book entry transfers of securities among such investors.
The Fund does not know the names of the beneficial owners of its shares that
have been deposited at DTC.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 30(h) of the 1940 Act requires the Fund's officers, Directors,
investment adviser, affiliated persons of its investment adviser, and the
beneficial owners of more than 10% of the Fund's capital stock to file initial
reports of ownership and reports of changes of ownership with the Securities and
Exchange Commission and the New York Stock Exchange, and to provide copies of
such reports to the Fund.
38
Based solely on a review of the copies of such reports received by the Fund
and written representations by reporting persons that no additional reports are
due, the Fund is of the opinion that all Section 30(h) requirements for 1997
were satisfied, except as follows:
Eamonn F. Dolan and Joachim Madler, as members of the Board of Managers of
Dresdner RCM, were required to file reports under Section 30(h), but did not
file on a timely basis an initial report of ownership on Form 3. This
information was subsequently reported on Form 5. Jacob Saliba, a member of the
Board of Directors of the Fund inadvertently failed to file on a timely basis a
change in ownership on Form 4. This information was subsequently reported on
Form 5. The Fund did not receive a Form 5 for 1997 from Bankgesellschaft Berlin
AG, an owner of more than 10% of the Fund's outstanding shares of capital stock,
and the Fund did not receive a written representation from such stockholder that
a Form 5 was not required.
OTHER MATTERS
The Fund understands that certain stockholders may submit proposals for
consideration at the Meeting. Such proposals may include a proposal for the
election of four individuals as Directors of the Fund in place of the nominees
whose election is recommended in Proposal No. 3, as well as separate proposals
(i) removing all Directors in Class II and Class III; (ii) recommending that the
Board of Directors seek reimbursement from Dresdner RCM or other parties for
legal and other expenses incurred by the Fund with respect to litigation that
delayed the Meeting; (iii) urging the Fund to commission an independent study to
determine if the Fund should seek reimbursement from any person(s) for legal and
other expenses incurred in the cancellation of the Meeting and related
litigation; (iv) urging that the Fund conduct a tender offer for all of the
Fund's outstanding shares at full net asset value; and (v) repealing Section 14
of the Fund's By-Laws. It is the intention of each person who will be authorized
to vote shares represented by proxies solicited by the Board of Directors to
vote such shares "AGAINST" each of the foregoing potential stockholder
proposals, if any, that is submitted at the Meeting.
Other than Proposal Nos. 1, 2, 3, 4, and 5 described in this Proxy Statement
and the foregoing potential stockholder proposals, the Fund does not know of any
other matters that may be presented at the Meeting. If any other matters
properly come before the Meeting, the shares represented by proxies will be
voted with respect thereto in accordance with the best judgment of the person or
persons voting the proxies.
THE FUND WILL FURNISH, WITHOUT CHARGE, TO ANY STOCKHOLDER UPON REQUEST A
COPY OF THE FUND'S SEMI-ANNUAL REPORT, DATED JUNE 30, 1998, AND ITS ANNUAL
REPORT CONTAINING AUDITED FINANCIAL STATEMENTS OF THE FUND FOR ITS FISCAL YEAR
ENDED DECEMBER 31, 1997. STOCKHOLDERS SHOULD DIRECT REQUESTS FOR THE ANNUAL AND
SEMI-ANNUAL REPORTS TO ROBERT J. GOLDSTEIN, SECRETARY OF THE FUND, BY WRITING TO
THE FUND IN CARE OF DRESDNER RCM GLOBAL INVESTORS LLC, FOUR EMBARCADERO CENTER,
SAN FRANCISCO, CALIFORNIA 94111, OR BY CALLING THE FUND'S TOLL-FREE TELEPHONE
NUMBER 1-800-356-6122.
ANNUAL MEETINGS AND STOCKHOLDER PROPOSALS
If the Fund becomes an open-end investment company in 1999 in accordance
with Proposal Nos. 1 and 2, it would not expect to hold a stockholder meeting
later in 1999. If stockholders do not approve Proposal Nos. 1 and 2, the Fund
will remain a closed-end investment company and will continue to have annual
stockholders meetings.
According to the Fund's amended By-Laws, stockholder proposals which will
not be included in the Fund's proxy statement can be brought before an Annual
Meeting only if notice of any such matter to be presented by a stockholder at
the stockholders' meeting is delivered to the Secretary of the Fund at the
principal executive offices of the Fund not less than 60 nor more than 90 days
prior to the date of the Annual Meeting for the preceding year; provided,
however, if the Annual Meeting is not scheduled to be held within 30 days from
the date of the previous year's meeting such notice shall be given by the close
of business on the later of (i) the date 60 days before this year's Annual
Meeting or (ii) the 10th day following the date this year's Annual Meeting date
is first publicly announced,
If the Fund remains closed-end it expects to hold its 1999 Annual Meeting of
stockholders on September 28, 1999. Consequently, the deadline for submission of
stockholder proposals meant to be
39
included in the proxy statement is May 14, 1999 and the deadline for submission
of stockholder proposals which will be presented at the Annual Meeting, but not
be included in the proxy statement is June 30, 1999. The submission by a
stockholder of a proposal for inclusion in the proxy statement does not
guarantee that it will be included.
PROXY SOLICITATION MATTERS
The Fund may solicit proxies delivered by beneficial and record owners of
the Fund's Common Stock in the form of a telephonic proxy or "proxygram." In
such event, beneficial and record stockholders will receive mailgrams from the
Fund requesting each stockholder who wishes to vote by proxygram call the
toll-free telephone number provided, furnish the operator with specified
information regarding the stockholder and the shares to be voted, and instruct
the operator how the stockholder wishes to vote on the proposals described in
this Proxy Statement. The operator will then electronically transmit the
stockholder's voting instructions to the designated broker, depository
institution, or other holder with actual voting authority, which then will vote
shares held of record by returning a signed proxy card. The operators who
receive the foregoing voting instructions will be independent of the Fund.
The Fund may also solicit proxies delivered by beneficial and record owners
of the Fund's Common Stock in the form of an Internet proxy. To vote via the
Internet, stockholders should access the website printed on the written proxy
accompanying this Proxy Statement, enter the code number found on the written
proxy, and then follow the instructions on-screen. The masters of this website
will be independent of the Fund.
The cost of preparing, assembling, and mailing materials in connection with
this solicitation will be borne by the Fund. In addition to the use of mails,
proxies may be solicited personally by regular employees of the Fund, Dresdner
RCM, or Dresdner Bank or by telephone or telegraph. Brokerage houses, banks, and
other fiduciaries may be requested to forward proxy solicitation material to
their principals to obtain authorization for the execution of proxies, and they
will be reimbursed by the Fund for out-of-pocket expenses incurred in this
connection. The Fund also has made arrangements with Georgeson & Company Inc.
and, in Canada, CIBC Mellon Trust to assist in the solicitation of proxies, if
called upon by the Fund, at an aggregate estimated fee of approximately $65,000
plus reimbursement of normal expenses.
By Order of the Board of Directors
[LOGO]
Robert J. Goldstein
SECRETARY
December 30, 1998
San Francisco, California
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO HAVE
THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT TO THE FUND.
40
TABLE OF EXHIBITS
EXHIBIT A.................... Amended and Restated Articles of Incorporation
EXHIBIT B.................... Investment Management Agreement
EXHIBIT C.................... Rule 12b-1 Distribution Plan
41
EXHIBIT A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
ARTICLE I
NAME
(1) The name of the Corporation is Dresdner RCM Investment Funds Inc.
(2) The Board of the Directors reserves the right to change the
Corporation's name and the name of any series or class thereunder by a majority
vote without action by stockholders in accordance with Section 2-605 of the
General Corporation Law of the State of Maryland.
ARTICLE II
PURPOSES AND POWERS
The purposes for which the Corporation is formed are to act as an open-end
investment company under the Investment Company Act of 1940, as amended, and the
rules and regulations promulgated thereunder (the "1940 Act"), and to exercise
and enjoy all of the general powers, rights, and privileges granted to, or
conferred upon, corporations by the Maryland Law (the "Maryland Law") now or
hereafter in force.
ARTICLE III
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office of the Corporation in the
State of Maryland is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The name and address of the resident agent of the
Corporation in the State of Maryland are The Corporation Trust Incorporated, 32
South Street, Baltimore, Maryland 21202. Such resident agent is a Maryland
corporation.
ARTICLE IV
CAPITAL STOCK
(1)(a) As increased from 100,000,000 with a par value of $.001 per share, the
total number of shares of all classes of capital stock that the Corporation
shall have the authority to issue is 1,000,000,000 shares of capital stock, of
the par value of $.001 per share. There shall initially be one series of shares,
designated as the "Dresdner RCM Europe Fund" consisting initially of 200,000,000
shares (such series and any further series of shares from time-to-time created
by the Board of Directors being referred to individually herein as a "series")
and 800,000,000 unclassified shares of capital stock. The Board of Directors of
the Corporation is hereby empowered to increase or decrease, from time to time,
the total number of shares of capital stock or the number of shares of capital
stock of any series that the Corporation shall have authority to issue without
any action by the stockholders but to not less than the number of shares of
capital stock or of such series, as the case may be, then outstanding.
(b) The aggregate par value of all shares having a par value is $100,000
before the increase and $1,000,000 as increased.
A-1
(2) The Corporation may issue fractional shares, which shall carry
proportionally all the rights of a whole share, excepting any right to receive a
certificate evidencing such fractional shares, but including the right to vote
and the right to receive dividends.
(3) All persons who shall acquire capital stock in the Corporation shall
acquire the same subject to the provisions of these Amended and Restated
Articles of Incorporation and the By-Laws of the Corporation (the "By-Laws").
(4) As used in these Amended and Restated Articles of Incorporation, a
"series" of shares represents interests in the same assets, liabilities, income,
earnings, and profits of the Corporation. The Board of Directors shall have
authority to classify and reclassify any authorized but unissued shares of
capital stock from time to time by setting or changing in any one or more
respects the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of the capital stock. Subject to the provisions of
ARTICLE IV and applicable law, the power of the Board of Directors to classify
or reclassify any of the shares of capital stock shall include, without
limitation, authority to classify or reclassify any such stock into one or more
series of capital stock, by determining, fixing, or altering one or more of the
following:
(a) The distinctive designation of such series and the number of shares
to constitute such series; provided that, unless otherwise prohibited by the
terms of such series, the number of shares of any series may be decreased by
the Board of Directors in connection with any classification or
reclassification of unissued shares and the number of shares of such series
may be increased by the Board of Directors in connection with any such
classification or reclassification, and any such shares of any series that
have been redeemed, purchased, or otherwise acquired by the Corporation
shall remain part of the authorized capital stock and be subject to
classification and reclassification as provided herein; and
(b) Whether or not dividends shall be payable on shares of such series
and, if so, the rates, amounts, and times at which, and the conditions under
which, such dividends shall be paid; and
(c) Whether or not shares of such series shall have voting rights in
addition to any general voting rights provided by law and these Amended and
Restated Articles of Incorporation of the Corporation and, if so, the terms
of such additional voting rights; and
(d) The rights of holders of shares of such series (including any
classes thereof) upon the liquidation, dissolution, or winding up of the
affairs of, or upon distribution of the assets of, the Corporation.
(5) Shares of capital stock of the Corporation shall have the following
preferences, and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption.
(a) ASSETS BELONGING TO A SERIES. All consideration received by the
Corporation for the issue or sale of stock of any series of capital stock,
together with all assets in which such consideration is invested and
reinvested, income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange, or liquidation thereof, and any
funds or payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably belong to the series of shares of
capital stock with respect to which assets, payments, or funds were received
by the Corporation for all purposes, subject only to the rights of
creditors, and shall be handled on the books of account of the Corporation.
Such consideration, assets, income, earnings, profits, and proceeds thereof,
and any assets derived from the sale, exchange, or liquidation thereof, and
any assets derived from any reinvestment of such proceeds in whatever form,
are herein referred to as "assets belonging to" such series. Any assets,
income, earnings, profits, and proceeds thereof, and any funds or payments
that are not readily attributable to any particular series shall be
allocable among any one or
A-2
more of the series in such a manner and on such a basis as the Board of
Directors, in its sole discretion, shall deem fair and equitable.
(b) LIABILITIES BELONGING TO A SERIES. The assets belonging to any
series of capital stock shall be charged with the liabilities in respect of
such series and shall also be charged with such series' share of the general
liabilities of the Corporation determined as hereinafter provided. The
determination of the Board of Directors shall be conclusive as to the amount
of such liabilities, including the amount of accrued expenses and reserves;
as to any allocation of the same to a given series; and as to whether the
same are allocable to one or more series. The liabilities so allocated to a
series are herein referred to as "liabilities belonging to" such series. Any
liabilities that are not readily attributable to any particular series shall
be allocable among any one or more of the series in such manner and on such
basis as the Board of Directors, in its sole discretion, shall deem fair and
equitable.
(c) DIVIDENDS AND DISTRIBUTIONS. Shares of each series of capital
stock shall be entitled to such dividends and distributions, in stock or in
cash or both, as may be declared from time to time by the Board of
Directors, acting in its sole discretion, with respect to such series,
provided, however, that dividends and distributions on shares of a series of
capital stock shall be paid only out of the lawfully available "assets
belonging to" such series as such phrase is defined in ARTICLE IV (5)(a).
(d) LIQUIDATING DIVIDENDS AND DISTRIBUTIONS. In the event of the
liquidation or dissolution of the Corporation, stockholders of each series
of capital stock shall be entitled to receive, as a series, out of the
assets of the Corporation available for distribution to stockholders, but
other than general assets not belonging to any particular series of capital
stock, the assets belonging to such series; and the assets so distributable
to the stockholders of any series of capital stock shall be distributed
among such stockholders in proportion to the number of shares of such series
held by them and recorded on the books of the Corporation. In the event that
there are any general assets not belonging to any particular series of
capital stock and available for distribution, such distribution shall be
made to the holders of stock of all series of capital stock in proportion to
the asset value of the respective series of capital stock determined as
hereinafter provided.
(e) CLASSES OF SHARES. There shall initially be two classes of the
"Dresdner RCM Europe Fund" series, Class N and Class I. Of the 200,000,00
shares designated as "Dresdner RCM Europe Fund" shares, 100,000,000 shall be
designated Class N shares thereof and 100,000,000 shall be designated Class
I shares thereof. All shares of the Corporation that are outstanding when
the Corporation converts from a closed-end to an open-end investment company
will be automatically designated Class N shares of "Dresdner RCM Europe
Fund."
A class of shares may be invested with one or more other classes in a
common investment portfolio comprising a series. Notwithstanding the other
provisions of ARTICLE IV (5), if two or more classes are invested in a
common investment portfolio as a series, the shares of each such class of
capital stock of the Corporation shall be subject to the following
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption, and if there are other classes of capital stock invested
together in a different series, shall also be subject to the provisions of
this ARTICLE IV (5) at the series level as if the classes comprising the
series were one class.
(i) The income and expenses of the series shall be allocated among
the classes comprising the series in accordance with the relative net
asset value of each such class or as otherwise determined by the Board of
Directors in accordance with the law and the Corporation's current
registration statement ("Registration Statement") as filed with the
Securities and Exchange Commission ("SEC"). The allocation of investment
income, capital gains, expenses, and liabilities of the Corporation or
any series, among the series and any classes thereof shall be determined
by the Board of Directors in a manner that is consistent with applicable
law and the Registration Statement.
A-3
(ii) As more fully set forth in ARTICLE IV (5), the liabilities and
expenses of the classes comprising the series shall be determined
separately from those of each other and, accordingly, the net asset
value, the dividends and distributions payable to holders, and the
amounts distributable in the event of the liquidation of the Corporation
or a series to holders of shares of the Corporation's capital stock may
vary from class to class within a series. Except for these differences
and certain other differences set forth in this ARTICLE IV (5) or
elsewhere in the Amended and Restated Articles of Incorporation, the
classes comprising a series shall have the same preferences, conversion
and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption.
(iii) The dividends and distributions of investment income and
capital gains with respect to the classes comprising a series shall be in
such amounts as may be declared from time to time by the Board of
Directors, and such dividends and distributions may vary among the
classes comprising the series to reflect differing allocations of the
expenses of the Corporation among the classes and any resultant
differences among the net asset values per share of the classes, to such
extent and for such purposes as the Board of Directors may deem
appropriate.
(iv) At such times (which may vary within a class) as may be
determined by the Board of Directors (or with the authorization of the
Board of Directors, by the officers of the Corporation) in accordance
with the 1940 Act and applicable rules and regulations of the National
Association of Securities Dealers, Inc. ("NASD") and the Registration
Statement, shares of a particular class of capital stock of the
Corporation may be automatically converted into shares of another class
of capital stock of the Corporation based on the relative net asset
values of such classes at the time of conversion, subject, however, to
any conditions of conversion that may be imposed by the Board of
Directors (or with the authorization of the Board of Directors, by the
officers of the Corporation) and the Registration Statement.
(f) VOTING. Each stockholder of each series of capital stock then
standing in his or her name on the books of the Corporation, and on any
matter submitted to a vote of stockholders, all shares of capital stock then
issued and outstanding and entitled to vote shall be voted in the aggregate
and not by series except that: (i) when expressly required by law, shares of
capital stock shall be voted by individual series and (ii) only shares of
capital stock of the respective series affected by a matter shall be
entitled to vote on such matter. At all meetings of stockholders, the
holders of one-third of the shares of capital stock of the Corporation
entitled to vote at the meeting, present in person or by proxy, shall
constitute a quorum for the transaction of any business, except as otherwise
provided by statute or by these Amended and Restated Articles of
Incorporation. In the absence of a quorum no business may be transacted,
except that the holders of a majority of the shares of capital stock present
in person or by proxy and entitled to vote may adjourn the meeting from time
to time, without notice other than announcement at the meeting except as
otherwise required by these Amended and Restated Articles of Incorporation
or the By-Laws, until the holders of the requisite amount of shares of
capital stock shall be present. At any such adjourned meeting at which a
quorum may be present any business may be transacted that might have been
transacted at the meeting originally called. The absence from any meeting,
in person or by proxy, of holders of the quorum that may be required by
Maryland Law, the 1940 Act, or other applicable statute, these Amended and
Restated Articles of Incorporation, or the By-Laws, for action upon any
given matter shall not prevent action at such meeting upon any other matter
or matters which may properly come before the meeting, if there shall be
present at the meeting, in person or by proxy, holders of the number of
shares of capital stock of the Corporation required for action in respect of
such other matter or matters.
(g) REDEMPTION. To the extent that the Corporation has funds or other
property legally available therefor, each holder of shares of capital stock
of the Corporation shall be entitled to require the Corporation to redeem
all or any part of the shares standing in the name of such holder on the
books of the Corporation, at the redemption price of such shares as in
effect from time to time and as
A-4
may be determined by the Board of Directors of the Corporation in accordance
with the provisions hereof, subject to the right of the Board of Directors
of the Corporation to suspend the right of redemption of shares of capital
stock or postpone the date of payment of such redemption price in accordance
with provisions of applicable law. The Corporation may at any time purchase
or redeem shares of capital stock of the Corporation in the open market or
at private sale, or otherwise, out of funds legally available therefor, at a
price not exceeding the net asset value thereof determined in accordance
with the 1940 Act and the Corporation's current Registration Statement.
Without limiting the generality of the foregoing, the Corporation shall, to
the extent permitted by applicable law, have the right at any time to redeem
the shares owned by any holder of capital stock of the Corporation if the
value of such shares in the account of such holder is less than the minimum
initial investment amount applicable to that account as set forth in the
Corporation's current Registration Statement, and subject to such further
terms and conditions as the Board of Directors of the Corporation may from
time to time adopt. The price of any shares of capital stock redeemed by the
Corporation shall, except as otherwise provided in ARTICLE IV (5)(e), be the
net asset value thereof as determined by, or pursuant to methods approved
by, the Board of Directors of the Corporation from time to time in
accordance with the provisions of applicable law, less such redemption fee
or other charge, if any, as may be specified in the Corporation's current
Registration Statement for that series. Payment of the redemption price
shall be made in cash by the Corporation unless, in the opinion of the Board
of Directors, which shall be conclusive, conditions exist that make payment
wholly in cash unwise or undesirable; in such event the Corporation may make
payment wholly or partly by securities or other property included in the
assets belonging or allocable to the series of the shares redemption of
which is being sought, the value of which shall be determined as provided
herein.
(h) OTHER SALES CHARGES. The proceeds of the redemption of the shares
of any class of capital stock of the Corporation may be reduced by the
amount of any contingent deferred sales charge or other charge (which
charges may vary within and among the classes) payable on such redemption
pursuant to the terms of issuance of such shares, all in accordance with the
1940 Act, and applicable rules and regulations of the NASD.
ARTICLE V
BOARD OF DIRECTORS
The number of Directors of the Corporation shall be fixed from time to time
by the By-Laws of the Corporation, but shall not be less than three (3). The
Board of Directors can vote to increase or decrease the number of Directors
within the limit set by the By-Laws. The number constituting the Board of
Directors is eight (8), and the names of the persons who are to serve as
Directors are:
Robert J. Birnbaum
Carroll Brown
Theodore J. Coburn
James E. Dowd
Alfred W. Fiore
Siegfried A. Kessler
Gottfried W. Perbix
Jacob Saliba
A-5
ARTICLE VI
MANAGEMENT OF THE AFFAIRS OF THE CORPORATION
(1) POWERS OF THE CORPORATION. All corporate powers and authority of the
Corporation (except as at the time otherwise provided by statute or applicable
rules and regulations of any governmental or quasi-governmental agency or
instrumentality, by these Amended and Restated Articles of Incorporation or by
the By-Laws) shall be vested in and exercised by the Board of Directors.
(2) ISSUANCE OF STOCK. The Board of Directors may from time to time
authorize the issuance of and may issue and sell or cause to be issued and sold
shares of the Corporation's capital stock of any series or class, whether now or
hereafter authorized, including any shares redeemed or repurchased by the
Corporation, and securities convertible into shares of the Corporation's capital
stock, whether now or hereafter authorized, for such consideration as may be
deemed advisable by the Board of Directors and without any action by the
stockholders.
(3) COMPENSATION OF DIRECTORS. The Board of Directors shall have power
from time to time to authorize payment of compensation to the Directors for
services to the Corporation, including fees for attendance at meetings of the
Board of Directors and of committees.
(4) INSPECTION OF CORPORATION'S BOOKS. The Board of Directors shall have
power from time to time to determine whether and to what extent, and at what
times and places and under what conditions and regulations, the accounts and
books of the Corporation (other than the stock ledger) or any of them shall be
open to the inspection of stockholders; and no stockholder shall have the right
of inspecting any account, book, or document of the Corporation except as at the
time conferred by statute, unless authorized by a resolution of the stockholders
or the Board of Directors.
(5) CONTRACTS OF THE CORPORATION AFFECTING THE FINANCIAL INTEREST OF
DIRECTOR(S). A contract or other transaction between the Corporation and any of
its Directors or between the Corporation and any other corporation, firm, or
other entity in which any of its Directors is a Director or has a material
financial interest is not void or voidable solely because of any one or more of
the following: the common Directorship or interest; the presence of the Director
at the meeting of the Board of Directors that authorizes, approves, or ratifies
the contract or transaction; or the counting of the vote of a Director for the
authorization or ratification of the contract or transaction. This ARTICLE VI
(5) applies if:
(a) the fact of common Directorship or interest is disclosed or known
to: (i) the Board of Directors and the Board authorizes, approves, or
ratifies the contract or transaction by the affirmative vote of a majority
of disinterested Directors, even if the disinterested Directors constitute
less than a quorum; or (ii) the stockholders entitled to vote, and the
contract or transaction is authorized, approved, or ratified by a majority
of the votes cast by the stockholders entitled to vote other than the votes
of shares owned of record or beneficially by the interested director or
corporation, firm, or other entity; or
(b) the contract or transaction is fair and reasonable to the
Corporation.
Common or interested Directors or the stock owned by them or by an
interested corporation, firm, or other entity may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or at a meeting of
the stockholders, as the case may be, at which the contract or transaction is
authorized, approved, or ratified. If a contract or transaction is not
authorized, approved, or ratified in one of the ways provided for in clause (a)
of the second sentence of this ARTICLE VI (5), the person asserting the validity
of the contract or transaction shall bear the burden of proving that the
contract or transaction was fair and reasonable to the Corporation at the time
it was authorized, approved, or ratified. This ARTICLE VI (5) does not apply to
the fixing by the Board of Directors of reasonable compensation for a Director,
whether as a Director or in any other capacity.
A-6
(6) RATIFICATION BY STOCKHOLDERS. Except as provided in Article VI (5),
any contract, transaction, or act of the Corporation or of the Board of
Directors which shall be ratified by a majority of a quorum of the stockholders
having voting power at any annual meeting, or at any special meeting called for
such purpose, shall so far as permitted by law be as valid and as binding as
though ratified by every stockholder of the Corporation.
(7) REMOVAL OF OFFICERS. Unless the By-Laws of the Corporation otherwise
provide, any officer or employee of the Corporation (other than a Director) may
be removed at any time with or without cause by the Board of Directors or by any
committee or superior officer upon whom such power of removal may be conferred
by the By-Laws or by authority of the Board of Directors.
(8) INDEMNIFICATION OF OFFICERS AND DIRECTORS. To the maximum extent
permitted by Maryland Law, as amended from time to time, the Corporation: (a)
shall indemnify and advance expenses to each of its currently acting and its
former Directors against any and all liabilities and expenses incurred in
connection with their services in such capacities; (b) shall indemnify and
advance expenses to its currently acting and its former officers to the full
extent that indemnification shall be provided to Directors; and (c) may
indemnify and advance expenses to its employees and agents, to the extent
determined by the Board of Directors; in each case, subject to any limitations
imposed by the 1940 Act. The foregoing rights of indemnification shall not be
exclusive of any other rights to indemnification to which those seeking
indemnification may be entitled. Subject to the same limitations imposed by the
1940 Act, the Corporation may, by By-Laws, resolution, or agreement, make
further provision for indemnification of Directors, officers, employees, and
agents. Furthermore, to the fullest extent permitted by Maryland Law, as it may
be amended or interpreted from time to time, subject to any limitations imposed
by the 1940 Act, no Director or officer in the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages. No amendment
of these Restated and Amended Articles of Incorporation or repeal of their
provisions shall limit or eliminate any of the benefits provided to any person
who at any time is or was a Director or officer of the Corporation under this
Section irrespective of any act or omission that occurred prior to such
amendment or repeal.
ARTICLE VII
DURATION
The duration of the Corporation shall be perpetual.
ARTICLE VIII
MAJORITY VOTE
Notwithstanding any provision of Maryland Law requiring a greater proportion
than a majority of the votes of all classes or of any class of stock entitled to
be cast, to take or authorize any action, the Corporation may, subject to other
applicable provisions of law, these Amended and Restated Articles of
Incorporation, and the By-Laws, take or authorize such action upon the
concurrence of a majority of the aggregate number of the votes entitled to be
cast thereon; provided, that this provision shall not affect any requirement of
the 1940 Act or the Rules and Regulations of the SEC thereunder, for any vote to
be taken by the concurrence of a greater proportion of the votes entitled to be
cast or for any matter to be authorized by the separate vote of a particular
class or series of shares.
ARTICLE IX
PRE-EMPTIVE RIGHTS
No holder of the capital stock of the Corporation or of any other class of
stock or securities of the Corporation, whether now or hereafter authorized,
shall be entitled as such, as a matter of pre-emptive right, to subscribe for or
purchase any part of any new or additional issue of stock of any class, or of
rights
A-7
or options to purchase any stock, or of securities convertible into, or carrying
rights or options to purchase, stock of any class, whether now of hereafter
authorized or whether issued for money, for a consideration other than money, or
by way of a dividend or otherwise, and all such rights are hereby waived by each
holder of capital stock and of any other class of stock or securities of the
Corporation, whether now or hereafter authorized.
ARTICLE X
RESERVATION OF RIGHT TO AMEND
The Corporation reserves the right from time to time to make any amendment
of its charter, now or hereafter authorized by law, including any amendment
which alters the terms or contract rights, as expressly set forth in its
charter, of any outstanding stock by classification, reclassification, or
otherwise, and all rights herein conferred upon stockholders are granted subject
to such reservation.
A-8
EXHIBIT B
INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY
AND SERVICE AGREEMENT
THIS AGREEMENT is entered into this day of , 1999 by and between
Dresdner RCM Investment Funds Inc. (the "Company"), on behalf of Dresdner RCM
Europe Fund (the "Fund"), a series of the Company, and Dresdner RCM Global
Investors LLC (the "Investment Manager").
1. APPOINTMENT AND ACCEPTANCE OF APPOINTMENT OF THE INVESTMENT MANAGER
(a) Subject to express provisions and limitations set forth in the
Company's Amended and Restated Articles of Incorporation, By-Laws, Form N-1A
Registration Statement under the Investment Company Act of 1940, as amended
(the "1940 Act"), and under the Securities Act of 1933, as amended (the
"1933 Act"), and the Fund's prospectus as in use from time to time, as well
as to the factors affecting the Company's status as a regulated investment
company under the Internal Revenue Code of 1986, as amended, the Company
hereby grants to the Investment Manager and the Investment Manager hereby
accepts full discretionary authority to manage the investment and
reinvestment of the cash, securities, and other assets of the Fund (the
"Portfolio"), any proceeds thereof, and any additions thereto, in the
Investment Manager's discretion. In the performance of its duties hereunder,
the Investment Manager shall further be bound by any and all determinations
by the Board of Directors of the Company relating to the investment
objectives, policies, or restrictions of the Fund, which determinations
shall be communicated in writing to the Investment Manager. For all purposes
herein, the Investment Manager shall be deemed an independent contractor of
the Company.
2. POWERS OF THE INVESTMENT MANAGER
(a) Subject to the limitations provided in Section 1 hereof, the
Investment Manager is empowered hereby, through any of its partners,
principals, or appropriate employees, for the benefit of the Fund:
(i) to invest and reinvest in shares, stocks, bonds, notes, and
other obligations of every description issued or incurred by governmental
bodies, corporations, mutual funds, trusts, associations, or firms, in
trade acceptances and other commercial paper, and in loans and deposits
at interest on call or on time, whether or not secured by collateral;
(ii) to purchase and sell commodities or commodities contracts and
investments in put, call, straddle, or spread options;
(iii) to enter into forward, future, or swap contracts with respect
to the purchase and sale of securities, currencies, commodities, and
commodities contracts;
(iv) to lend its portfolio securities to brokers, dealers, and other
financial institutions;
(v) to buy, sell, or exercise options, rights, and warrants to
subscribe for stock or securities;
(vi) to engage in any other types of investment transactions
described in the Fund's Prospectus and Statement of Additional
Information; and
(vii) to take such other action, or to direct the Fund's custodian to
take such other action, as may be necessary or desirable to carry out the
purpose and intent of the foregoing.
(b) The Investment Manager may enter into one or more contracts (each a
"Sub-Advisory Contract" or "Sub-Administration Contract") with a sub-adviser
or sub-administrator in which the Investment Manager delegates to such
sub-adviser or sub-administrator any or all duties specified in
B-1
this Agreement, provided that each Sub-Advisory Contract or
Sub-Administration Contract imposes on the sub-adviser or sub-administrator
bound thereby all applicable duties and conditions to which the Investment
Manager is subject under this Agreement, and further provided that each
Sub-Advisory Contract or Sub-Administration Contract meets all requirements
of the 1940 Act and any rules, regulations, or orders of the Securities and
Exchange Commission thereunder.
3. EXECUTION OF PORTFOLIO TRANSACTIONS
(a) The Investment Manager shall provide adequate facilities and
qualified personnel for the placement of, and shall place, orders for the
purchase, or other acquisition, and sale, or other disposition, of portfolio
securities or other portfolio assets for the Fund.
(b) Unless otherwise specified in writing to the Investment Manager by
the Fund, all orders for the purchase and sale of securities for the
Portfolio shall be placed in such markets and through such brokers as in the
Investment Manager's best judgment shall offer the most favorable price and
market for the execution of each transaction; provided, however, that,
subject to the above, the Investment Manager may place orders with brokerage
firms that have sold shares of the Fund or that furnish statistical and
other information to the Investment Manager, taking into account the value
and quality of the brokerage services of such firms, including the
availability and quality of such statistical and other information. Receipt
by the Investment Manager of any such statistical and other information and
services shall not be deemed to give rise to any requirement for abatement
of the advisory fee payable to the Investment Manager pursuant to Section 5
hereof and Appendix A hereto.
(c) The Fund understands and agrees that the Investment Manager may
effect securities transactions which cause the Fund to pay an amount of
commission in excess of the amount of commission another broker would have
charged, provided, however, that the Investment Manager determines in good
faith that such amount of commission is reasonable in relation to the value
of Fund share sales, statistical, brokerage, and other services provided by
such broker, viewed in terms of either the specific transaction or the
Investment Manager's overall responsibilities to the Fund and other clients
for which the Investment Manager exercises investment discretion. The Fund
also understands that the receipt and use of such services will not reduce
the Investment Manager's customary and normal research activities.
(d) The Fund understands and agrees that:
(i) the Investment Manager performs investment management services
for various clients and that the Investment Manager may take action with
respect to any of its other clients which may differ from action taken or
from the timing or nature of action taken with respect to the Portfolio,
so long as it is the Investment Manager's policy, to the extent
practical, to allocate investment opportunities to the Portfolio over a
period of time on a fair and equitable basis relative to other clients;
(ii) the Investment Manager shall have no obligation to purchase or
sell for the Portfolio any security which the Investment Manager, or its
principals or employees, may purchase or sell for its or their own
accounts or the account of any other client, if in the opinion of the
Investment Manager such transaction or investment appears unsuitable,
impractical, or undesirable for the Portfolio;
(iii) on occasions when the Investment Manager deems the purchase or
sale of a security to be in the best interests of the Fund as well as
other clients of the Investment Manager, the Investment Manager, to the
extent permitted by applicable laws and regulations, may aggregate the
securities to be so sold or purchased when the Investment Manager
believes that to do so will be in the best interests of the Fund. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, shall be made by the Investment
B-2
Manager in the manner the Investment Manager considers to be the most
equitable and consistent with its fiduciary obligations to the Fund and
to such other clients; and
(iv) the Investment Manager does not prohibit any of its principals
or employees from purchasing or selling for their own accounts securities
that may be recommended to or held by the Investment Manager's clients,
subject to the provisions of the Investment Manager's Code of Ethics and
that of the Company.
4. ALLOCATION OF EXPENSES OF THE FUND
(a) The Investment Manager will bear all expenses related to salaries of
its employees and to the Investment Manager's overhead in connection with
its duties under this Agreement. The Investment Manager also will pay all
fees and salaries of the Company's directors and officers who are affiliated
persons (as such term is defined in the 1940 Act) of the Investment Manager.
(b) Except for the expenses specifically assumed by the Investment
Manager, the Fund will pay all of its expenses, including, without
limitation, fees and expenses of the directors not affiliated with the
Investment Manager attributable to the Fund; fees of the Investment Manager;
fees of the Fund's administrator, custodian, and sub-custodians for all
services to the Fund (including safekeeping of funds and securities and
maintaining required books and accounts); transfer agent, registrar, and
dividend reinvestment and disbursing agent fees; interest charges; taxes;
charges and expenses of the Fund's legal counsel and independent
accountants; charges and expenses of legal counsel provided to the
non-interested directors of the Company; expenses of repurchasing shares of
the Fund; expenses of printing and mailing share certificates, stockholder
reports, notices, proxy statements, and reports to governmental agencies;
brokerage and other expenses connected with the execution recording and
settlement of portfolio security transactions; expenses connected with
negotiating, or effecting purchases or sales of portfolio securities or
registering privately issued portfolio securities; expenses of calculating
and publishing the net asset value of the Fund's shares; expenses of
membership in investment company associations; premiums and other costs
associated with the acquisition of a mutual fund directors and officers
errors and omissions liability insurance policy; expenses of fidelity
bonding and other insurance premiums; expenses of stockholders' meetings;
SEC, state blue sky, and foreign registration fees; portfolio pricing
services expenses; litigation expenses; and Rule 12b-1 fees.
(c) The expenses borne by the Fund pursuant to Section 4(b) shall
include the Fund's proportionate share of any such expenses of the Company,
which shall be allocated among the Fund and the other series of the Company,
if any, on such basis as the Company shall deem appropriate.
5. COMPENSATION OF THE INVESTMENT MANAGER
(a) In consideration of the services performed by the Investment Manager
hereunder, the Fund will pay or cause to be paid to the Investment Manager,
as they become due and payable, management fees determined in accordance
with the attached Schedule of Fees (Appendix A). In the event of
termination, any management fees paid in advance pursuant to such fee
schedule will be prorated as of the date of termination and the unearned
portion thereof will be returned to the Fund.
(b) The net asset value of the Fund's portfolio used in fee calculations
shall be determined in the manner set forth in the Amended and Restated
Articles of Incorporation and By-Laws of the Company and the Fund's
Prospectus as of the close of regular trading on the New York Stock Exchange
on each business day the New York Stock Exchange is open.
(c) The Fund hereby authorizes the Investment Manager to charge the
Portfolio, subject to the provisions in Section 5 hereof, for the full
amount of fees as they become due and payable pursuant to the attached
Schedule of Fees; provided, however, that a copy of a fee statement covering
said payment shall be sent to the Fund's custodian and to the Company.
B-3
(d) The Investment Manager may from time to time voluntarily agree to
limit the aggregate operating expenses of the fund for one or more fiscal
years of the Company, as set forth in Appendix A hereto or in any other
written agreement with the Company. If in any such fiscal year the aggregate
operating expenses of the Fund (as defined in Appendix A or such other
written agreement) exceed the applicable percentage of the average daily net
assets of the Fund for such fiscal year, the Investment Manager shall
reimburse the Fund for such excess operating expenses. Such operating
expense reimbursement, if any, shall be estimated, reconciled, and paid on a
quarterly basis, or such more frequent basis as the Investment Manager may
agree in writing. Any such reimbursement of the Fund shall be repaid to the
Investment Manager by the Fund, without interest, at such later time or
times as it may be repaid without causing the aggregating operating expenses
of the Fund to exceed the applicable percentage of the average daily net
assets of the Fund for the period in which it is repaid; provided, however,
that upon termination of this Agreement, the Fund shall have no further
obligation to repay any such reimbursements.
6. SERVICE TO OTHER CLIENTS
Nothing contained in this Agreement shall be construed to prohibit the
Investment Manager from performing investment advisory, management,
distribution, or other services for other investment companies and other
persons, trusts, or companies, or to prohibit affiliates of the Investment
Manager from engaging in such business or in other related or unrelated
businesses.
7. STANDARD OF CARE
The Investment Manager shall have no liability to the Fund, or its
stockholders, for any error of judgment, mistake of law, loss arising out of
any investment, or other act or omission on the performance of its
obligations to the Fund not involving willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations and duties hereunder.
The federal securities laws impose liabilities under certain circumstances
on persons who act in good faith, and therefore nothing herein shall in any
way constitute a waiver or limitation of any rights which the undersigned
may have under any federal securities laws.
8. DURATION OF AGREEMENT
This Agreement shall continue in effect until the close of business on
, 2001. This Agreement may thereafter be renewed from year to year
by mutual consent, provided that such renewal shall be specifically approved
at least annually by (i) the Board of Directors of the Company, or by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the Fund, and (ii) a majority of those directors who are not
parties to this Agreement or interested persons (as defined in the 1940 Act)
of any such party cast in person at a meeting called for the purpose of
voting on such approval.
9. TERMINATION
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Company or by the vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities
of the Company on sixty (60) days' written notice to the Investment Manager,
or by the Investment Manager on like notice to the Company. This Agreement
shall automatically terminate in the event of its assignment (as defined in
the 1940 Act).
10. CORPORATE NAME
In the event this Agreement is terminated by either party or upon
written notice from the Investment Manager at any time, the Company hereby
agrees that it will eliminate from its corporate name any reference to the
name "Dresdner RCM." The Company shall have the non-exclusive use of the
name "Dresdner RCM" in whole or in part so long as this Agreement is
effective or until such notice is given.
B-4
11. REPORTS, BOOKS, AND RECORDS
The Investment Manager shall render to the Board of Directors of the
Company such periodic and other reports as the Board may from time to time
reasonably request. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Investment Manager hereby agrees that all records which it
maintains for the Company are property of the Company. The Investment
Manager shall surrender promptly to the Company any of such records upon the
Company's request, and shall preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
12. REPRESENTATIONS AND WARRANTIES
The Investment Manager represents and warrants to the Company that the
Investment Manager is registered as an investment adviser under the
Investment Advisers Act of 1940. During the term of this Agreement, the
Investment Manager shall notify the Company of any change in the ownership
of the Investment Manager within a reasonable time after such change. The
Company represents and warrants to the Investment Manager that the company
is registered as an open-end management investment company under the 1940
Act. Each party further represents and warrants to the other that this
Agreement has been duly authorized by such party and constitutes the legal,
valid, and binding obligation of such party in accordance with its terms.
13. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be change, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination
is sought.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their officers thereunto duly authorized as
of the date first above written.
DRESDNER RCM GLOBAL INVESTORS LLC DRESDNER RCM INVESTMENT FUNDS INC. ON BEHALF
OF DRESDNER RCM EUROPE FUND
By: By:
ATTEST: ATTEST:
By: By:
B-5
APPENDIX A
INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY,
AND SERVICE AGREEMENT
BETWEEN DRESDNER RCM GLOBAL INVESTORS LLC AND DRESDNER RCM
INVESTMENT FUNDS INC.
SCHEDULE OF FEES
FOR DRESDNER RCM EUROPE FUND
Effective Date: , 1999
The Fund will pay a monthly fee to the Investment Manager based on the
average daily net assets of the Fund, at the annualized rate of 1.00% of the
value of the Fund's average daily net assets up to and including $100 million
and 0.80% of the Fund's average daily net assets in excess of $100 million.
VALUE OF SECURITIES AND CASH OF FUND FEE
- --------------------------------------------------------------------------- -----------------
Up to and including $100 million........................................... 1.00% annually
In excess of $100 million.................................................. 0.80% annually
For three years beginning from the date that the Fund converts to an
open-end investment company, the Investment Manager shall reimburse the Fund to
the extent that the operating expenses of the Fund (as hereinafter defined)
exceed 1.60% of the average daily net assets of the Fund. For this purpose, the
"operating expenses" of the Fund shall be deemed to include all ordinary
operating expenses other than interest, taxes and extraordinary expenses.
Dated: , 1999
DRESDNER RCM GLOBAL INVESTORS LLC DRESDNER RCM INVESTMENT FUNDS INC. ON BEHALF
OF DRESDNER RCM EUROPE FUND
By: By:
ATTEST: ATTEST:
By: By:
B-6
EXHIBIT C
DRESDNER RCM INVESTMENT FUNDS INC.
FORM OF DISTRIBUTION PLAN
INTRODUCTION
The Board of Directors (the "Board") of Dresdner RCM Investment Funds Inc.,
a Maryland Corporation (the "Company"), has approved the adoption of the
Distribution Plan (the "Plan") set forth below with respect to the distribution
of Class N shares of capital stock (the "Shares") of its Dresdner RCM Europe
Fund (the "Fund"). This Plan is designed to conform to the requirements of Rule
12b-1 promulgated under the Investment Company Act of 1940, as amended (the
"1940 Act").
The Company on behalf of the Fund has entered into a distribution agreement
pursuant to which the Company will employ Funds Distributor Inc. (the
"Distributor") to distribute Shares of the Fund. Under this Plan, the Company,
on behalf of the Fund, intends to compensate the Distributor for expenses
incurred, and services and facilities provided, by the Distributor in
distributing Shares of the Fund.
THE PLAN
The material aspects of the Plan are as follows:
SECTION 1. The Fund will pay the Distributor for: (a) expenses incurred in
connection with advertising and marketing Shares of the Fund including, but not
limited to, any advertising or marketing via radio, television, newspapers,
magazines, telemarketing, or direct dial mail solicitations; (b) periodic
payments of fees for distribution assistance made to one or more securities
dealers, or other industry professionals, such as investment advisers,
accountants, estate planning firms, and the Distributor itself (collectively the
"Service Organizations") in respect of the average daily value of the Fund's
Shares beneficially owned by persons ("Clients") for whom the Service
Organization is the dealer of record or holder of record or with whom the
Service Organization has a servicing relationship; and (c) expenses incurred in
preparing, printing, and distributing the Fund's prospectus and statement of
additional information (except those used for regulatory purposes or for
distribution to existing stockholders of the Fund).
SECTION 2. While this Plan is in effect the Distributor will be compensated
by the Fund for such distribution expenses that are incurred, and services and
facilities that are provided, in connection with Shares of the Fund on a monthly
basis, at the following annual rate of up to 0.25% of the Fund's average daily
net assets during such month. These monthly payments to the Distributor will be
made in accordance with and subject to the conditions set forth below. For the
purposes of determining the amounts payable under the Plan, the value of the
Fund's net assets shall be computed in the manner specified in the Fund's
prospectus and statement of additional information as then in effect for the
computation of the value of the Fund's net assets.
The distribution fees payable to the Distributor are designed to reimburse
the Distributor for the expenses it incurs and services it renders in
distributing the Shares of the Fund. If in any year the Distributor's expenses
incurred in connection with the distribution of Shares of the Fund exceed the
distribution fees paid by the Fund, the Distributor will recover such excess
only if this Plan continues to be in effect with respect to the Fund in some
later year when the distribution fees exceed the Distributor's expenses. There
is no limit on the periods during which unreimbursed expenses may be carried
forward, although the Company is not obligated to repay any unreimbursed
expenses for the Fund that may exist at such time, if any, as this Plan
terminates or is not continued with respect to the Fund. No interest, carrying,
or finance charge will be imposed on any amounts carried forward.
C-1
Payment made out of or charged against the assets of the Fund must be in
payment for distribution expenses incurred on behalf of the Fund and which are
described herein.
SECTION 3. Payments by the Distributor to a Service Organization described
in this Plan shall be subject to compliance by the Service Organization with the
terms of a written agreement between the Service Organization and the
Distributor. If an investor in a Fund ceases to be a Client of a Service
Organization that has entered into a selling group agreement with the
Distributor, but continues to hold Shares of the Fund, the Distributor will be
entitled to receive similar payments in respect of the distribution assistance
provided with respect to such investor.
SECTION 4. The Distributor shall provide the Board, at least quarterly,
with a written report of all amounts expended pursuant to this Plan. The report
shall state the purposes for which the amounts were expended.
SECTION 5. This Plan shall become effective with respect to the Fund upon
its adoption by the Board and, unless earlier terminated with respect to the
Fund in accordance with its terms, the Plan shall continue automatically with
respect to the Fund for successive annual periods provided such continuance is
approved by a majority of the Board, including a majority of the Directors who
are not "interested" persons (as defined in the 1940 Act) of the Company and who
have no direct or indirect financial interest in the operation of this Plan or
in any agreements entered into in connection with this Plan (the "Independent
Directors"), pursuant to a vote cast in person at a meeting called for the
purpose of voting on the continuance of the Plan.
SECTION 6. This Plan may be amended at any time by the Board provided that
(i) any amendment to increase materially the costs which the Fund may bear for
distribution pursuant to this Plan shall be effective only upon approval by a
vote of a majority of the outstanding voting securities of the Fund, and (ii)
any material amendments of the terms of this Plan shall become effective only
upon approval by a majority of the Board and a majority of the Independent
Directors pursuant to a vote cast in person at a meeting called for the purpose
of voting on the Plan.
SECTION 7. This Plan is terminable without penalty at any time by (i) the
vote of a majority of the Independent Directors, or (ii) the vote of a majority
of the outstanding voting securities of the Fund.
SECTION 8. The Board has adopted this Plan as of [ ], 1999.
SCHEDULE A DATED [ ], 1999 TO
DRESDNER RCM INVESTMENT FUNDS INC. DISTRIBUTION PLAN
FUND (CLASS) SALES CHARGE
- -------------------------------------------------------------------------------- ---------------
Dresdner RCM Europe Fund (Class N).............................................. 0.25%
C-2
THE EMERGING GERMANY FUND INC.
FOUR EMBARCADERO CENTER
SAN FRANCISCO, CA 94111
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD JANUARY 26, 1999.
The undersigned hereby appoints Robert J. Goldstein and Barbel Lenz as
proxies, each with full power of substitution, and hereby authorizes each of
them to represent and to vote, as designated below, all the shares of Common
Stock of The Emerging Germany Fund Inc. (the "Fund") held of record by the
undersigned on December 4, 1998 at an Annual Meeting of Stockholders to be
held on January 26, 1999 or any adjournment thereof. The undersigned hereby
further authorizes such proxies to vote in their discretion upon such other
business as may properly come before such Annual Meeting or any adjournment
thereof. Receipt of Notice of Annual Meeting and Proxy Statement is hereby
acknowledged.
EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED HEREON.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSAL NOS. 1(a),
1(b) 2(a), 2(b), 2(c), 2(d), 3, 4, AND 6 AND "AGAINST" PROPOSAL NO. 5.
PLEASE VOTE, DATE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE.
IMPORTANT: Joint owners EACH must sign. When signing as attorney,
trustee, executor, administrator, or guardian, please give your FULL title.
If a corporation, please provide the full name of the corporation and the
signature of the authorized officer signing on its behalf. If a partnership,
please sign in partnership name by an authorized person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_________________________ _________________________
_________________________ _________________________
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 1(a).
(1(a)) EXPANSION OF THE FUND'S INVESTMENT OBJECTIVE FROM A
PREDOMINANTLY GERMAN INVESTMENT PORTFOLIO TO A BROADER
EUROPEAN INVESTMENT PORTFOLIO
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 1(b).
(1(b)) AMENDMENT OF THE FUND'S ARTICLES OF INCORPORATION TO CHANGE
THE FUND'S NAME TO DRESDNER RCM EUROPE FUND INC.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2(a).
(2(a)) CONVERSION OF THE FUND FROM A CLOSED-END INVESTMENT COMPANY
TO AN OPEN-END INVESTMENT COMPANY UNDER THE 1940 ACT AND
THE AMENDMENT AND RESTATEMENT OF THE FUND'S ARTICLES
OF INCORPORATION
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2(b).
(2(b)) MODIFICATION AND ELIMINATION OF CERTAIN OF THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTIONS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2(c).
(2(c)) APPROVAL OR DISAPPROVAL OF THE INVESTMENT MANAGEMENT AGREEMENT
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2(d).
(2(d)) APPROVAL OR DISAPPROVAL OF THE RULE 12B-1 DISTRIBUTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 3.
(3) ELECTION OF DIRECTORS
[ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT
Robert J. Birnbaum Carroll Brown Theodore J. Coburn
George N. Fugelsang
If you do not wish your shares voted "FOR" a particular nominee,
mark the "FOR ALL EXCEPT" Box and strike a line through the nominee(s)
name. Your shares will be voted for the remaining nominee(s).
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 4.
(4) RATIFICATION OF THE SELECTION BY THE BOARD OF DIRECTORS OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS OF THE
FUND FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" PROPOSAL NO. 5.
(5) STOCKHOLDER PROPOSAL
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 6.
(6) IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
RECORD DATE SHARES:
(Signature) X:__________________________________ Date:__________________
(Signature) X:__________________________________ Date:__________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee, or
guardian, please give full title as such.