RCM EQUITY FUNDS INC
N-1A/A, 1995-12-26
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<PAGE>
   
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 26, 1995
    
                                                      1933 ACT FILE NO. 33-97572
                                                      1940 ACT FILE NO. 811-9100
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                      / /
                          POST-EFFECTIVE AMENDMENT NO.                       / /
   
                         PRE-EFFECTIVE AMENDMENT NO. 2                       /X/
    

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940              / /
                                AMENDMENT NO. 1                              /X/
                            ------------------------

                             RCM EQUITY FUNDS, INC.
                      Four Embarcadero Center, Suite 3000
                        San Francisco, California 94111
                                 (415) 954-5400
                            ------------------------

            Anthony Ain, Vice President, General Counsel & Secretary
                             RCM EQUITY FUNDS, INC.
                      Four Embarcadero Center, Suite 3000
                        San Francisco, California 94111
                                 (415) 954-5400

                    (Name and Address of Agent for Service)

                                    COPY TO:
                                 Michael Glazer
                       Paul, Hastings, Janofsky & Walker
                            555 South Flower Street
                         Los Angeles, California 90071
                            ------------------------

                     APPROXIMATE DATE OF PROPOSED OFFERING:
                AS SOON AS PRACTICABLE FOLLOWING EFFECTIVE DATE.
                            ------------------------

    The  Registrant hereby  amends this registration  statement on  such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a  further  amendment  which specifically  states  that  this  registration
statement  shall thereafter become effective in  accordance with Section 8(a) of
the Securities Act  of 1933  or until  the registration  statement shall  become
effective  on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
                            ------------------------

    Pursuant to Rule 24f-2 under the Investment Company Act of 1940,  Registrant
is  hereby registering under the Securities Act  of 1933 an indefinite number of
shares of beneficial interest.  Registrant's initial Rule  24f-2 Notice will  be
filed no later than April 26, 1996.

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<PAGE>
                             RCM EQUITY FUNDS, INC.
                           RCM GLOBAL TECHNOLOGY FUND
                             CROSS REFERENCE SHEET
               BETWEEN ITEMS OF PART A AND B OF FORM N-1A AND THE
               PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION

   
<TABLE>
<S>        <C>                                         <C>
ITEM NUMBER OF PART A OF FORM N-1A                               CAPTIONS IN PROSPECTUS
- -----------------------------------------------------  ------------------------------------------
1.         Cover Page................................  Cover Page
2.         Synopsis..................................  Prospectus Summary; Summary of Fees and
                                                        Expenses
3.         Condensed Financial Information...........                      *
4.         General Description of Registrant.........  General Information; Investment Objective
                                                        and Policies; Investment and Risk
                                                        Considerations
5.         Management of the Fund....................  Organization and Management
5A.        Management's Description of Fund..........                      *
6.         Capital Stock and Other Securities........  General Information; Dividends,
                                                       Distributions and Taxes
7.         Purchase of Securities Being Offered......  How to Purchase Shares; Organization and
                                                        Management
8.         Redemption or Repurchase..................  Redemption of Shares
9.         Pending Legal Proceedings.................                      *
ITEM NUMBER OF PART B OF FORM N-1A                        CAPTIONS IN STATEMENT OF ADDITIONAL
- -----------------------------------------------------                 INFORMATION
                                                       ------------------------------------------
10.        Cover Page................................  Cover Page
11.        Table Of Contents.........................  Table of Contents
12.        General Information and History...........                      *
13.        Investment Objectives and Policies........  Investment Objective and Policies;
                                                       Investment and Risk Considerations;
                                                        Investment Restrictions
14.        Management of the Fund....................  Directors and Officers
15.        Control Persons and Principal Holders of    Description of Capital Shares; Directors
            Securities...............................   and Officers
16.        Investment Advisory and Other Services....  The Investment Manager; Additional
                                                        Information
17.        Brokerage Allocation......................  Execution of Portfolio Transactions
18.        Capital Stock and Other Securities........  Description of Capital Shares
19.        Purchase, Redemption and Pricing of         How to Purchase Shares
            Securities Being Offered.................
20.        Tax Status................................  Dividends, Distributions and Tax Status
21.        Underwriters..............................  Distributor
22.        Calculation of Performance Data...........  Investment Results
23.        Financial Statements......................  Additional Information
</TABLE>
    

- ------------------------
*  Not applicable
<PAGE>
                        -------------------------------
                                   PROSPECTUS
                          ----------------------------

                           RCM GLOBAL TECHNOLOGY FUND

                                  OFFERED BY:

                             RCM EQUITY FUNDS, INC.

   
                      Four Embarcadero Center, Suite 3000
                        San Francisco, California 94111
                                 (800) 726-7240
    

             THIS PROSPECTUS RELATES TO RCM GLOBAL TECHNOLOGY FUND
           (A SERIES OF RCM EQUITY FUNDS, INC.), WHICH SPECIALIZES IN
                    EQUITY AND EQUITY-RELATED SECURITIES OF
                   DOMESTIC AND FOREIGN TECHNOLOGY COMPANIES

                        -------------------------------

RCM  GLOBAL TECHNOLOGY FUND (THE "FUND") is a non-diversified, no-load series of
RCM Equity  Funds,  Inc.  (the "Company"),  an  open-end  management  investment
company.  Shares of the Fund may be purchased at their net asset value without a
sales charge. (See HOW TO PURCHASE SHARES.)

The Fund's investment objective  is to seek  appreciation of capital,  primarily
through  investment  in equity  and  equity-related securities  of  domestic and
foreign technology companies.  Such investments  will be  chosen primarily  with
regard  to  their potential  for capital  appreciation.  Current income  will be
considered only as part of total  investment return and will not be  emphasized.
(See INVESTMENT OBJECTIVE AND POLICIES.)

Investments  in  equity and  equity-related securities  of domestic  and foreign
technology companies involve significant risks, some of which are not  typically
associated  with  investments  in  securities of  domestic  issuers  and issuers
engaged in other  types of business.  There can  be no assurance  the Fund  will
achieve its investment objective. (See INVESTMENT AND RISK CONSIDERATIONS.)

THESE  SECURITIES HAVE  NOT BEEN APPROVED  OR DISAPPROVED BY  THE SECURITIES AND
EXCHANGE COMMISSION OR ANY  STATE SECURITIES COMMISSION  NOR HAS THE  SECURITIES
AND  EXCHANGE  COMMISSION OR  ANY STATE  SECURITIES  COMMISSION PASSED  UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

   
This Prospectus  sets  forth  concisely  the information  about  the  Fund  that
prospective  investors should know before  investing. Investors should read this
document and retain it for future use. A Statement of Additional Information for
the Fund dated December   , 1995 has been filed with the Securities and Exchange
Commission and is incorporated by reference into this Prospectus. The  Statement
may  be  obtained, without  charge, by  writing  or calling  the Company  at the
address or telephone number set forth above.
    

                        -------------------------------

   
                The date of this Prospectus is December   , 1995
    
                        -------------------------------
<PAGE>
                        -------------------------------
                               TABLE OF CONTENTS
                          ----------------------------

   
<TABLE>
<CAPTION>
                                                                                          PAGE

<S>                                                                                    <C>
Prospectus Summary...................................................................           3
Summary of Fees and Expenses.........................................................           5
Investment Objective and Policies....................................................           6
Investment and Risk Considerations...................................................          11
Organization and Management..........................................................          13
How to Purchase Shares...............................................................          16
Stockholder Services.................................................................          17
Redemption of Shares.................................................................          18
Investment Results...................................................................          19
Dividends, Distributions and Taxes...................................................          19
General Information..................................................................          20
</TABLE>
    

NO  PERSON  HAS  BEEN  AUTHORIZED  TO  GIVE  ANY  INFORMATION  OR  TO  MAKE  ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFER CONTAINED IN THIS PROSPECTUS  AND, IF GIVEN OR MADE, SUCH  INFORMATION
OR  REPRESENTATIONS MUST  NOT BE  RELIED UPON AS  HAVING BEEN  AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS IS NOT AN OFFER  TO SELL OR A SOLICITATION OF AN  OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION OR TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
<PAGE>
                        -------------------------------
                               PROSPECTUS SUMMARY
                          ----------------------------

The  following summary is qualified in  its entirety by the detailed information
appearing elsewhere in this Prospectus:

WHAT IS THE FUND'S OBJECTIVE?

The Fund's investment objective  is to seek  appreciation of capital,  primarily
through  investment  in equity  and  equity-related securities  of  domestic and
foreign technology companies.  The Fund's investments  will be chosen  primarily
with  regard to their potential for capital appreciation; current income will be
considered only  as  part of  total  return and  will  not be  emphasized.  (See
INVESTMENT OBJECTIVE AND POLICIES.)

WHAT DOES THE FUND INVEST IN?

Under normal market conditions, at least 65% of the value of the total assets of
the  Fund will be invested in equity and equity-related securities of technology
companies.  Technology  companies  are  issuers  whose  revenues  are  primarily
generated  by technology products, including, but  not limited to, computers and
peripheral products, software, electronic components and systems, communications
equipment  and  services,  media  and  information  services,   pharmaceuticals,
hospital  supply  and  medical devices,  biotechnology,  environmental services,
chemicals and  synthetic  materials,  and defense  and  aerospace  products  and
services.  Investments  may  also include  companies  that  should significantly
benefit from the commercialization  of technological advances  even if they  are
not directly involved in research and development.

DOES THE FUND INVEST GLOBALLY?

The Fund may invest up to 50% of the value of its total assets in foreign equity
and equity-related securities. Under normal market conditions, the Fund's assets
will  be invested in equity and equity-related securities of companies organized
or headquartered in at least three different countries (one of which will be the
United States). A substantial portion of  the Fund's foreign investments may  be
securities  of companies organized or  headquartered in Japan, and  up to 20% of
the value of the Fund's total assets may be securities of companies organized or
headquartered in emerging market countries. Investment in foreign securities and
currencies involves special  risks, including fluctuations  in foreign  exchange
rates,  political  or economic  instability  in the  country  of issue,  and the
possible  imposition  of  exchange  controls  or  other  laws  or  restrictions.
Investment  in emerging  markets may involve  greater risks  than investments in
other foreign markets, as  a result of factors  such as less-developed  economic
and  legal structures, less stable political systems, and less liquid securities
markets.

SHOULD I INVEST IN THE FUND?

The Fund  believes that  there are  attractive investment  opportunities in  the
technology  sector. In the United States, as well as internationally, technology
companies have grown  faster than the  general economy for  decades. The  Fund's
investment  manager believes  that this trend  can continue. Yet,  the stocks of
individual technology companies can be  very volatile, and analyzing  individual
companies   can  be  very  time-intensive.   A  global  technology  fund  offers
experienced professional  management  to  investors  who wish  to  invest  in  a
diversified global portfolio of technology stocks.

The  Fund is  designed for  investors who recognize  and are  prepared to accept
these risks  in return  for the  possibility of  higher returns.  Consider  your
investment  goals, your time horizon for  achieving them, and your tolerance for
risk. If you seek an aggressive approach  to capital growth, and can accept  the
above-average level of price fluctuations that the Fund may experience, the Fund
may be an appropriate part of your overall investment strategy.

WHO OPERATES THE FUND?

   
The  Fund's investment manager  is RCM Capital  Management, a California Limited
Partnership (the  "Investment Manager"),  a registered  investment adviser  with
principal  offices in San Francisco, California.  RCM and its predecessor have a
25-year record  of  investments  in equity  securities.  It  currently  provides
investment  supervisory  services to  institutional  and individual  clients and
registered investment companies with aggregate assets in excess of $25  billion.
(See  ORGANIZATION AND MANAGEMENT.) The Custodian  of the Fund's assets is State
Street Bank and Trust Company.
    

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                                     Page 3
<PAGE>
WHAT ARE SOME OF THE POTENTIAL INVESTMENT RISKS?

Investment in the Fund  is subject to  a variety of risks  in addition to  those
normally  associated with investments in a  portfolio of equity securities. (See
INVESTMENT AND RISK CONSIDERATIONS.) They include the following:

Investment in  equity  and  equity-related securities  of  technology  companies
involves  significant risks,  some of  which are  not typically  associated with
investment in securities of other issuers. These include substantial competitive
and pricing  pressures,  rapid  product obsolescence,  dependence  on  extensive
research and development, and sensitivity to changes in governmental regulations
and policies.

   
The  Fund's investments will be focused in the technology sector of the U.S. and
foreign economies. As  a result  of the  Fund's focus  on a  single sector,  the
Fund's net asset value may be more volatile in price than the net asset value of
a company with a more broadly diversified portfolio.
    

Investment  in securities  of foreign companies  involves significant additional
risks, including fluctuations in foreign  exchange rates, political or  economic
instability  in the  country of issue,  and the possible  imposition of exchange
controls or  other  laws or  restrictions.  Foreign issuers  generally  are  not
subject  to accounting and financial reporting  standards or to other regulatory
practices and requirements comparable to those applicable to U.S. issuers. There
is generally less  government regulation  of securities  markets, exchanges  and
dealers than in the United States, and the costs associated with transactions in
and custody of securities traded on foreign markets are higher than in the U.S.

DOES THE FUND HEDGE ITS RISKS?

The Fund may use a variety of techniques to hedge its investments. These include
currency  management techniques; options on  securities, indices and currencies;
financial and foreign currency futures  contracts and options; and currency  and
interest  rate swaps.  Each of  these hedging  techniques also  involves certain
risks.  (See  INVESTMENT  OBJECTIVE  AND   POLICIES  AND  INVESTMENT  AND   RISK
CONSIDERATIONS.)

IS THERE A MINIMUM INVESTMENT?

   
There is no minimum initial investment for investors purchasing shares through a
broker-dealer or other financial institution having a service agreement with the
Investment  Manager and  maintaining an omnibus  account with the  Fund, such as
Charles Schwab & Co., Inc. For  other investors, the minimum initial  investment
is $25,000, and the minimum subsequent investment is $1,000. There is no initial
sales charge. (See HOW TO PURCHASE SHARES.)
    

CAN I REDEEM SHARES AT ANY TIME?

   
You  may redeem your  shares at any  time. If you  have held your  shares for at
least 12 months, you can redeem your shares at their net asset value, without  a
redemption  charge. However, to reduce costs to other stockholders of short-term
investments in the Fund ,  you will be charged a  redemption fee of 1.5% of  any
amounts  you redeem within 12 months of  your purchase. This redemption fee will
be payable to the Fund. (See REDEMPTION OF SHARES.)
    

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                                     Page 4
<PAGE>
                        -------------------------------
                          SUMMARY OF FEES AND EXPENSES
                          ----------------------------

WHAT EXPENSES WILL THE FUND INCUR?

The following information is designed to  help you understand various costs  and
expenses  of the  Fund that  an investor  may bear  directly or  indirectly. The
information is  based on  the Fund's  expected expenses  for its  first year  of
operation,  and should not be considered  a representation of future expenses or
returns. Actual expenses  and returns may  be greater or  less than those  shown
below.
   
<TABLE>
<S>                                                     <C>          <C>
Stockholder Transaction Expenses
  Sales load imposed on purchases                             None
  Sales load imposed on reinvested dividends                  None
  Deferred sales loads                                        None
  Redemption fees
    For shares held more than 12 months                       None
    For shares held 12 months or less*                         1.5%

Annual Fund Operating Expenses
  Investment management fees                                  1.00%
  Other expenses (after expense reduction**)                  0.75%
  Total Fund operating expenses
   (after expense reduction**)                                1.75%

<CAPTION>

            Example of Portfolio Expenses                 1 Year       3 Years
<S>                                                     <C>          <C>
You would pay the following total expenses on a $1,000
 investment, assuming (1) a 5% annual return and (2)
 redemption at the end of each time period
  Assuming redemption at end of period                   $   33.27    $   55.11
  Assuming no redemption                                 $   17.78    $   55.11

</TABLE>
    

In  accordance  with  applicable  regulations  of  the  Securities  and Exchange
Commission ("SEC"),  the Example  of  Portfolio Expenses  assumes that  (1)  the
percentage  amounts listed under Annual Fund  Operating Expenses remain the same
in each  of  the  one  and  three  year  periods;  and  (2)  all  dividends  and
distributions  are reinvested by  the stockholder. SEC  regulations require that
the example  be based  on  a $1,000  investment,  although the  minimum  initial
purchase of Fund shares may be different. (See HOW TO PURCHASE SHARES.)

For  more information concerning fees and expenses of the Fund, see ORGANIZATION
AND MANAGEMENT AND DIVIDENDS, DISTRIBUTIONS AND TAXES.

- ------------------------
*   Paid to the Fund, not the Investment Manager. See REDEMPTION OF SHARES.

**  The Investment Manager has voluntarily  agreed, until at least December  31,
    1996,  to pay  the Fund on  a quarterly basis  the amount, if  any, by which
    certain ordinary operating expenses  of the Fund exceed  the annual rate  of
    1.75%  of the average daily net assets of the Fund. In subsequent years, the
    Fund will reimburse  the Investment  Manager for  any such  payments to  the
    extent  that the Fund's operating expenses  are otherwise below this expense
    cap. (See  ORGANIZATION  AND  MANAGEMENT.) Other  expenses  and  total  Fund
    operating  expenses for  the first  year of  operation of  the Fund, without
    expense reduction, are estimated to be 2.36% and 3.36%, respectively, of the
    Fund's average daily net assets.

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                                     Page 5
<PAGE>
                        -------------------------------
                       INVESTMENT OBJECTIVE AND POLICIES
                          ----------------------------

WHAT IS THE FUND'S OBJECTIVE?

The Fund's investment objective  is to seek  appreciation of capital,  primarily
through  investment  in equity  and  equity-related securities  of  domestic and
foreign "technology companies."  Under normal market  conditions, the Fund  will
invest  at least 65%  of the value of  its total assets  in such securities. The
Fund's investments will be chosen primarily  with regard to their potential  for
capital  appreciation; current income from  the Fund's investment portfolio will
be considered  only as  a  part of  total investment  return,  and will  not  be
emphasized.  There can be no assurance that the Fund's investment objective will
be met.

HOW DOES THE FUND SELECT SECURITIES FOR ITS PORTFOLIO?

The Fund intends to invest primarily in the equity and equity-related securities
of high quality growth companies. In  most cases, these companies will have  one
or  more of the  following characteristics: superior  management; strong balance
sheets; differentiated or  superior products or  services; substantial  capacity
for  growth in revenue, through either  an expanding market or through expanding
market share; strong commitment to research and development; or a steady  stream
of new products and services.

The Investment Manager will seek to identify companies throughout the world that
are  expected to have  higher-than-average rates of  growth and strong potential
for  capital  appreciation  relative  to  the  potential  downside  risk  of  an
investment.  While the Fund will emphasize  investments in growth companies, the
Fund also  expects to  invest  in other  companies  that are  not  traditionally
considered  to  be  growth  companies, such  as  emerging  growth  companies and
cyclical and semi-cyclical  companies, if the  Investment Manager believes  that
such  companies  have  above-average growth  potential.  In  determining whether
securities of particular issuers are believed to have the potential for  capital
appreciation, the Investment Manager will evaluate the fundamental value of each
enterprise,  as well as its prospects for  growth. Because current income is not
the Fund's investment objective, the Fund  will not restrict its investments  in
equity securities to those issuers with a record of dividend payments.

   
There  is no limitation on  the market capitalization of  the companies in which
the Fund will invest. However, as of the date of this Prospectus, the Investment
Manager intends to invest primarily  in equity and equity-related securities  of
companies  with market capitalizations  in excess of $500  million, and does not
intend to  invest more  than 15%  of the  value of  the Fund's  total assets  in
securities  of companies with  market capitalizations below  $100 million at the
time of purchase.
    

WHAT ARE TECHNOLOGY COMPANIES?

Technology companies  are  issuers whose  revenues  are primarily  generated  by
technology  products,  including but  not  limited to  computers  and peripheral
products, software, electronic components and systems, communications  equipment
and  services, media and information  services, pharmaceuticals, hospital supply
and  medical  devices,  biotechnology,  environmental  services,  chemicals  and
synthetic   materials,  and   defense  and  aerospace   products  and  services.
Investments may also  include companies that  should significantly benefit  from
the  commercialization of technological  advances even if  they are not directly
involved in research and development. The  types of companies that the Fund  may
invest in will be broadly interpreted by the Investment Manager so that the Fund
will  be positioned to benefit  from holdings in all  companies that may benefit
from technological advances.

WHAT ARE EQUITY AND EQUITY-RELATED SECURITIES?

"Equity and equity-related securities"  in which the Fund  has the authority  to
invest  include  common  stock, preferred  stock,  convertible  preferred stock,
convertible debt obligations,  warrants or  other rights to  acquire stock,  and
options  on  stock and  stock indexes.  In  addition, equity  and equity-related
securities may include securities  sold in the form  of depository receipts  and
securities issued by

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                                     Page 6
<PAGE>
other  investment companies. The  Fund currently intends  to invest primarily in
common stock and depository receipts.

WHAT KINDS OF FOREIGN SECURITIES WILL THE FUND INVEST IN?

Under normal market conditions, as a fundamental policy which cannot be  changed
without  stockholder approval, the Fund's assets  will be invested in equity and
equity-related securities of  companies organized or  headquartered in at  least
three different countries (one of which will be the United States).

The  portion of the Fund's assets invested  in foreign securities will vary from
time-to-time, depending on the Investment  Manager's view of foreign  investment
opportunities  and risks,  but will not  exceed 50%  of the value  of the Fund's
total assets. For  purposes of this  restriction, "foreign securities"  includes
(i)  securities  of  companies that  are  organized or  headquartered,  or whose
operations principally are conducted, outside the United States; (ii) securities
that are principally traded outside the  United States, regardless of where  the
issuer  of such securities is organized or headquartered or where its operations
principally are conducted;  (iii) depository  receipts; and  (iv) securities  of
other investment companies investing primarily in such equity and equity-related
securities.

Under  normal market conditions, the  Fund will not invest  more than 25% of the
value of  its  total assets  in  securities of  issuers  that are  organized  or
headquartered  in  any  one foreign  country,  other than  Japan.  In evaluating
particular investment  opportunities, the  Investment Manager  may consider,  in
addition  to the factors described above,  the anticipated economic growth rate,
the political outlook, the anticipated inflation rate, the currency outlook, and
the interest  rate  environment  for the  country  and  the region  in  which  a
particular company is located, as well as other factors it deems relevant.

The  Fund expects that  its investments in foreign  securities will be comprised
primarily of  securities  that  are  traded  on  recognized  foreign  securities
exchanges.  However, the Fund also may invest in securities that are traded only
over-the-counter, either in the  United States or in  foreign markets, when  the
Investment  Manager  believes that  such securities  meet the  Fund's investment
criteria. Subject to the Fund's restrictions on investment in funded  securities
(see  WHAT OTHER INVESTMENT PRACTICES  SHOULD I KNOW ABOUT?),  the Fund also may
invest in securities  that are  not publicly  traded either  in the  U.S. or  in
foreign markets.

WILL THE FUND INVEST IN EMERGING MARKET COUNTRIES?

The  Fund may invest up to 20% of the value of its total assets in securities of
companies that  are organized  or headquartered  in emerging  market  countries.
However, the Fund will not invest more than 10% of the value of its total assets
in securities of issuers that are organized or headquartered in any one emerging
market  country. The term "emerging market  countries" includes any country that
is generally considered  to be an  emerging or developing  country by the  World
Bank,   the  International  Finance  Corporation,  the  United  Nations  or  its
authorities, or other reputable financial institutions.  As of the date of  this
Prospectus,  the term "emerging market countries" is deemed for purposes of this
Prospectus to  include  all foreign  countries  other than  Australia,  Austria,
Belgium,  Canada, Denmark, Finland, France,  Germany, Hong Kong, Ireland, Italy,
Japan, Luxembourg,  Malaysia, The  Netherlands, New  Zealand, Norway,  Portugal,
Singapore, Spain, Sweden, Switzerland, and the United Kingdom.

DOES THE FUND BUY AND SELL FOREIGN CURRENCY?

The  Fund presently  expects to purchase  or sell foreign  currency primarily to
settle foreign securities  transactions. However,  the Fund may  also engage  in
currency   management  transactions  to  hedge   currency  exposure  related  to
securities it owns or that it  anticipates purchasing. (See DOES THE FUND  HEDGE
ITS INVESTMENTS?)

For  purposes of the percentage limitations on the Fund's investments in foreign
securities, the  term "securities"  does not  include foreign  currencies.  This
means  that the Fund  could have more  than the percentages  of its total assets
indicated above  denominated in  foreign  currencies or  multinational  currency
units  such as  the European  Currency Unit  (a "basket"  comprised of specified
amounts of currencies of certain of the members of the European Community). As a
result, gains  in  a  particular  securities  market  may  be  affected,  either
positively or negatively, by changes in exchange rates.

- --------------------------------------------------------------------------------
                                     Page 7
<PAGE>
DOES THE FUND HEDGE ITS INVESTMENTS?

For  hedging purposes,  the Fund may  purchase covered "put"  and "call" options
with respect to securities which are eligible  for purchase by the Fund. If  the
Fund  purchases a put option, the Fund acquires the right to sell the underlying
security at a specified  price at any  time during the term  of the option  (for
"American-style" options) or on the option expiration date (for "European-style"
options). If the Fund purchases a call option, it acquires the right to purchase
the  underlying security at a specified price at any time during the term of the
option (or on the option expiration  date). Prior to exercise or expiration,  an
option  may be sold by  the Fund when it has  remaining value through a "closing
sale transaction," which is accomplished by selling an option of the same series
as the option previously purchased.

The Fund  may employ  certain currency  management techniques  to hedge  against
currency  exchange rate  fluctuations. These  include forward  currency exchange
contracts, currency options,  futures contracts, options  on futures  contracts,
and  currency swaps.  A forward currency  exchange contract is  an obligation to
purchase or sell a specific currency at a future date at a price set at the time
of the contract.  Currency options  are rights to  purchase or  sell a  specific
currency at a future date at a specified price. Futures contracts are agreements
to  take or make delivery  of an amount of cash  equal to the difference between
the value of the currency at the close  of the last trading day of the  contract
and the contract price. Currency swaps involve the exchange of rights to make or
receive payments in specified currencies.

The  Fund may also cross-hedge currencies,  which involves writing or purchasing
options or entering  into foreign exchange  contracts on one  currency to  hedge
against  changes in exchange rates for a  different currency, if in the judgment
of the Investment  Manager there  is a pattern  of correlation  between the  two
currencies.  In  addition,  the  Fund  may  hold  foreign  currency  received in
connection with investments in foreign securities  when, in the judgment of  the
Investment  Manager, it would  be beneficial to convert  such currency into U.S.
dollars at a later date, based  on anticipated changes in the relevant  exchange
rates.

WHAT OTHER INVESTMENT PRACTICES SHOULD I KNOW ABOUT?

DEPOSITORY  RECEIPTS.  The Fund may invest in securities of foreign companies in
the form of American Depository Receipts ("ADRs"), European Depository  Receipts
("EDRs"),  Global  Depository Receipts  ("GDRs"),  or other  similar instruments
representing securities of foreign companies.  ADRs are receipts that  typically
are  issued by  an American bank  or trust  company, and represent  the right to
receive securities of  foreign companies  deposited in  the domestic  bank or  a
correspondent  bank. EDRs and  GDRs are receipts issued  by a non-U.S. financial
institution evidencing a  similar arrangement.  Where it is  possible to  invest
either in an ADR, EDR, or GDR, or to invest directly in the underlying security,
the  Fund will  evaluate which  investment opportunity  is preferable,  based on
price differences, relative trading  volume, anticipated liquidity,  differences
in currency risk, and other factors.

Although  investment in ADRs involves less  currency risk than investment in the
underlying securities, depository receipts  may have risks  that are similar  to
those  of  foreign  equity securities.  Therefore,  for purposes  of  the Fund's
investment policies and  restrictions, depository  receipts will  be treated  as
foreign  equity securities, based on the  country in which the underlying issuer
is organized or  headquartered. See WHAT  KINDS OF FOREIGN  SECURITIES WILL  THE
FUND INVEST IN?

OTHER  INVESTMENT COMPANIES.   The  laws of some  foreign countries  may make it
difficult or impossible for the Fund to invest directly in issuers organized  or
headquartered  in those countries, or may place limitations on such investments.
In such cases, the only practical means of investment may be through  investment
in  other investment  companies that  in turn  are authorized  to invest  in the
securities  of  such   issuers.  In   such  cases  and   in  other   appropriate
circumstances,  and  subject to  the  restrictions referred  to  above regarding
investments in companies  organized or headquartered  in foreign countries  (see
WHAT  KINDS OF FOREIGN SECURITIES WILL THE FUND INVEST IN?), the Fund may invest
up to  10% of  the value  of its  total assets  in other  investment  companies.
However,  the Fund may not invest more than  5% of the value of its total assets
in the securities of any one investment  company or acquire more than 3% of  the
voting securities of any other investment company.

- --------------------------------------------------------------------------------
                                     Page 8
<PAGE>
To  the extent  that the  Fund invests in  other investment  companies, the Fund
would bear its proportionate share of any management or administration fees  and
other  expenses paid by  investment companies in  which it invests.  At the same
time, the Fund would continue to pay its own management fees and other expenses.

SHORT SELLING.  The Fund may make short sales of securities that it owns or  has
the  right to acquire at  no added cost through  conversion or exchange of other
securities it owns (referred to  as short sales "against  the box") and to  make
short sales of securities which it does not own or have the right to acquire. In
order  to deliver  a security  that is sold  short to  the buyer,  the Fund must
arrange through  a broker  to  borrow the  security,  and becomes  obligated  to
replace  the security borrowed at  its market price at  the time of replacement,
whatever that price may be.  When the Fund makes a  short sale, the proceeds  of
the  sale  are retained  by  the broker  until  the Fund  replaces  the borrowed
security.

The value  of securities  of any  issuer in  which the  Fund maintains  a  short
position  that is not "against the  box" may not exceed the  lesser of 2% of the
value of the  Fund's net assets  or 2% of  the securities of  such class of  the
issuer.  The Fund's ability to enter into short sales transactions is limited by
the requirements of the Investment Company Act of 1940 (the "1940 Act"), and  by
the  Internal  Revenue  Code  with  respect to  the  Fund's  qualification  as a
regulated investment company. See DIVIDENDS, DISTRIBUTIONS AND TAXES.

WHEN ISSUED, FIRM COMMITMENT AND DELAYED SETTLEMENT TRANSACTIONS.  The Fund  may
purchase  securities on a delayed delivery or  "when issued" basis and may enter
into firm commitment  agreements (transactions in  which the payment  obligation
and interest rate are fixed at the time of the transaction but the settlement is
delayed).  Delivery and  payment for these  securities typically occur  15 to 45
days after the commitment to purchase, but delivery and payment can be scheduled
for shorter or longer  periods, based upon  the agreement of  the buyer and  the
seller.  No interest accrues to the purchaser during the period before delivery.
The Fund normally  will not  enter into these  transactions for  the purpose  of
leverage,  but may sell the  right to receive delivery  of the securities before
the settlement date. The value  of the securities at  settlement may be more  or
less than the agreed upon price.

The  Fund will segregate cash, U.S.  Government securities or other liquid, high
quality debt securities in an amount sufficient to meet its payment  obligations
with  respect to any such transactions. To the extent that assets are segregated
for this purpose, the Fund's liquidity and the ability of the Investment Manager
to manage its portfolio may be adversely affected.

DEBT SECURITIES.   The  Fund may  invest in  short-term debt  obligations  (with
maturities of less than one year) of the U.S. Government and foreign governments
and   their  respective   agencies,  instrumentalities   and  authorities,  debt
obligations issued or guaranteed by international or supranational  governmental
entities,  and debt obligations of domestic  and foreign corporate issuers. Such
debt obligations  will be  rated, at  the time  of purchase,  BBB or  higher  by
Standard  & Poor's Corporation  ("Standard & Poor's"), Baa  or higher by Moody's
Investor Services,  Inc.  ("Moody's"), or  equivalent  ratings by  other  rating
organizations,  or if unrated will be determined by the Investment Manager to be
of comparable  investment quality.  These securities  are of  investment  grade,
which  means that their  issuers are believed  to have adequate  capacity to pay
interest and repay principal, although certain  of such securities in the  lower
grades  have speculative characteristics, and  changes in economic conditions or
other circumstances may be  more likely to  lead to a  weakened capacity to  pay
interest and principal than would be the case with higher-rated securities.

   
Under  normal market  conditions, no more  than 10%  of the value  of the Fund's
total assets will be  invested in such obligations.  However, during times  when
the  Investment  Manager believes  a temporary  defensive posture  is warranted,
including times involving international, political or economic uncertainty,  the
Fund  may  hold  all  or  a  substantial portion  of  its  assets  in  such debt
obligations. When  the  Fund  is  so  invested, it  may  not  be  achieving  its
investment objective.
    

BORROWING  MONEY.   From time-to-time,  it may be  advantageous for  the Fund to
borrow money rather  than sell  portfolio positions to  raise the  cash to  meet
redemption  requests.  Accordingly, to  meet  redemption requests  the  Fund may
borrow from banks or  through reverse repurchase agreements.  The Fund also  may
borrow  up to  5% of the  value of its  total assets for  temporary or emergency
purposes other than to meet redemptions. However,

- --------------------------------------------------------------------------------
                                     Page 9
<PAGE>
the Fund will not borrow money for leveraging purposes. The Fund may continue to
purchase securities while borrowings  are outstanding, but will  not do so  when
the Fund's borrowings (including reverse repurchase agreements) exceed 5% of the
value  of its total  assets. The 1940 Act  permits the Fund  to borrow only from
banks and  only to  the extent  that the  value of  its total  assets, less  its
liabilities  other than borrowings, is equal to  at least 300% of all borrowings
(including the proposed borrowing), and requires the Fund to take prompt  action
to  reduce its borrowings if this limit is exceeded. For the purpose of the 300%
borrowing limitation,  reverse  repurchase  transactions are  considered  to  be
borrowings.

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

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

ILLIQUID SECURITIES.   The Fund may  invest up to  15% of the  value of its  net
assets in illiquid securities. Securities may be considered illiquid if the Fund
cannot  reasonably expect to receive approximately  the amount at which the Fund
values such  securities  within  seven  days. The  Investment  Manager  has  the
authority  to  determine  whether  specific securities  are  liquid  or illiquid
subject to policies established by the Company's Board of Directors.

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

The  fact that there are contractual or  legal restrictions on resale of certain
securities to  the  general  public  or  to  certain  institutions  may  not  be
indicative  of the liquidity of such investments. If such securities are subject
to purchase  by institutional  buyers in  accordance with  Rule 144A  under  the
Securities  Act, the Company's  Board of Directors  may determine, in particular
cases, that  such securities  are not  illiquid securities  notwithstanding  the
legal  or  contractual  restrictions on  their  resale. Investing  in  Rule 144A
securities could have  the effect of  increasing the Fund's  illiquidity to  the
extent  that qualified institutional buyers become,  for a time, uninterested in
purchasing such securities.

CAN THE FUND'S OBJECTIVE AND POLICIES BE CHANGED?

   
The Fund's investment objective is a fundamental policy that may not be  changed
without  a vote of  its stockholders. However, except  as otherwise indicated in
this Prospectus or  the Statement  of Additional Information,  the Fund's  other
investment  policies and  restrictions are  not fundamental  and may  be changed
without a  vote  of  the stockholders.  If  there  is a  change  in  the  Fund's
investment  objective or policies, stockholders should consider whether the Fund
remains an  appropriate investment  in  light of  their then  current  financial
position and needs.
    

The  various  percentage  limitations  referred  to  in  this  Prospectus  apply
immediately after a purchase or  initial investment, and except as  specifically
indicated  to the contrary,  any subsequent change  in any applicable percentage
resulting from market fluctuations will not require elimination of any  security
from the Fund's portfolio.

WHAT IS THE FUND'S PORTFOLIO TURNOVER RATE?

The Fund may invest in securities on either a long-term or short-term basis. The
Investment  Manager anticipates that  the Fund's annual  portfolio turnover rate
should not exceed 150%, but the turnover

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                                    Page 10
<PAGE>
rate will not be a limiting  factor when the Investment Manager deems  portfolio
changes  appropriate. Securities in  the Fund's portfolio  will be sold whenever
the Investment Manager believes  it is appropriate to  do so, regardless of  the
length  of time that securities have been  held, and securities may be purchased
or sold for short-term  profits whenever the Investment  Manager believes it  is
appropriate  or  desirable  to  do  so. Turnover  will  be  influenced  by sound
investment practices, the Fund's investment objective and the need for funds for
the redemption of the Fund's shares.

Because the Investment Manager will purchase and sell securities for the  Fund's
portfolio  without  regard  to  the  length  of  the  holding  period  for  such
securities, it is possible that the Fund's portfolio will have a higher turnover
rate than might be expected  for investment companies that invest  substantially
all  of their funds for long-term  capital appreciation or generation of current
income. A  high  portfolio  turnover rate  would  increase  aggregate  brokerage
commission expenses and other transaction costs, which must be borne directly by
the  Fund  and ultimately  by  the Fund's  stockholders,  and may  under certain
circumstances make it  more difficult  for the Fund  to qualify  as a  regulated
investment company under the Internal Revenue Code. See Dividends, Distributions
and Taxes.

                        -------------------------------
                       INVESTMENT AND RISK CONSIDERATIONS
                          ----------------------------

Investment  in  the  Fund  is  subject to  a  variety  of  risks,  including the
following:

   
RISKS OF INVESTING IN TECHNOLOGY STOCKS.
    

   
Because the Fund will  focus its investments in  technology companies, the  Fund
will  be more  susceptible than other  investment companies to  market and other
conditions affecting technology companies.  Such conditions include  competitive
pressures  affecting  the  financial condition  of  technology  companies, rapid
product  obsolescence,  dependence  on   extensive  research  and   development,
aggressive pricing and greater sensitivity to changes in governmental regulation
and  policies. As a result  of the Fund's concentration  on a single sector, the
Fund's net asset value may be more volatile in price than the net asset value of
a company with a more broadly diversified portfolio.
    

   
RISKS OF INVESTING IN FOREIGN MARKETS GENERALLY.
    

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

Most foreign  securities  markets  have  substantially  less  volume  than  U.S.
securities  markets,  and the  securities of  many foreign  issuers may  be less
liquid and  more  volatile  than  securities  of  comparable  U.S.  issuers.  In
addition,  there is generally less  government regulation of securities markets,
securities exchanges, securities dealers, and  listed and unlisted companies  in
foreign countries than in the United States. Foreign markets also have different
clearance  and settlement  procedures, and  in certain  markets there  have been
times when  settlements  have  been unable  to  keep  pace with  the  volume  of
securities  transactions,  making  it  difficult to  conduct  and  complete such
transactions. In addition, the costs associated with transactions in  securities
traded  on foreign markets or of foreign issuers, and the expense of maintaining
custody of such securities  with foreign custodians,  generally are higher  than
the costs associated with transactions in U.S. securities on U.S. markets.

   
RISKS OF INVESTING IN SMALLER CAPITALIZATION COMPANIES.
    

Investing  in  securities  of  issuers with  market  capitalizations  below $100
million at or near the time of

- --------------------------------------------------------------------------------
                                    Page 11
<PAGE>
purchase  ("smaller  capitalization companies")  involves  greater risk  and the
possibility of  greater  portfolio price  volatility  than investing  in  larger
capitalization companies. For example, smaller capitalization companies may have
less  certain  growth  prospects, may  be  more sensitive  to  changing economic
conditions, may have more  limited financial and  management resources, and  may
have  less liquid  markets for their  securities, than  larger, more established
firms.

   
RISKS OF INVESTING IN EMERGING MARKET SECURITIES.
    

There are  special  additional risks  associated  with investments  in  emerging
market  securities.  The securities  markets  of emerging  market  countries are
substantially smaller, less developed, less  liquid, and more volatile than  the
securities   markets  of  the  United  States  and  developed  foreign  markets.
Disclosure and regulatory standards in many respects are less stringent than  in
the United States and developed foreign markets. There also may be a lower level
of  monitoring and regulation of securities markets in emerging market countries
and the activities  of investors in  such markets, and  enforcement of  existing
regulations has been extremely limited.

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

   
RISKS OF HEDGING TECHNIQUES.
    

There  are  a  number  of  risks  associated  with  transactions  in  options on
securities. Options  may  be  more volatile  than  the  underlying  instruments.
Differences  between  the  options and  securities  markets could  result  in an
imperfect correlation between these markets, causing a given transaction not  to
achieve  its objective.  In addition, a  liquid secondary  market for particular
options may be absent for a variety of reasons. When trading options on  foreign
exchanges, many of the protections afforded to participants in the United States
will not be available. Although the purchaser of an option cannot lose more than
the  amount of the premium  plus transaction costs, this  entire amount could be
lost.

The Fund's currency  management techniques  involve risks  different than  those
that  arise in connection with  investments in dollar-denominated securities. To
the  extent  that  the  Fund  is  invested  in  foreign  securities  while  also
maintaining  currency positions, it may be exposed to greater combined risk than
would otherwise be the  case. Transactions in futures  contracts and options  on
futures  contracts involve risks  similar to those of  options on securities. In
addition, the  potential loss  incurred  by the  Fund  in such  transactions  is
unlimited.

The use of hedging techniques is a highly specialized activity, and there can be
no  assurance as  to the success  of any  hedging operations which  the Fund may
implement. Gains  and losses  in such  transactions depend  upon the  Investment
Manager's  ability to predict correctly the  direction of stock prices, interest
rates, currency  exchange  rates,  and other  economic  factors.  Although  such
operations  could reduce the risk of  loss due to a decline  in the value of the
hedged security or currency,  they could also limit  the potential gain from  an
increase in the value of the security or currency.

   
RISKS OF SHORT SELLING.
    

Short sales by the Fund that are not made "against the box" create opportunities
to  increase  the Fund's  return but,  at  the same  time, involve  special risk
considerations and may  be considered  a speculative technique.  The Fund's  net
asset value per share will tend to be more volatile than would be the case if it
did  not engage in short sales. Short sales  that are not "against the box" also
theoretically  involve  unlimited  loss  potential,  as  the  market  price   of
securities  sold short may continuously increase, although the Fund may mitigate
such   losses   by   replacing   the   securities   sold   short   before    the

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                                    Page 12
<PAGE>
market  price has increased significantly.  Under adverse market conditions, the
Fund might have difficulty purchasing securities to meet its short sale delivery
obligations, might have to purchase such securities at higher prices than  would
otherwise  be the case, and might have to sell portfolio securities to raise the
capital necessary to meet its short sale obligations at a time when  fundamental
investment considerations would not favor such sales.

WHAT OTHER RISK FACTORS SHOULD I BE AWARE OF?

CONVERTIBLE  SECURITIES AND WARRANTS.  The value  of a convertible security is a
function of  both  its yield  in  comparison with  the  yields of  similar  non-
convertible  securities and  the value  of the  underlying stock.  A convertible
security held by  the Fund may  be subject to  redemption at the  option of  the
issuer  at a fixed price, in which event the Fund will be required to permit the
issuer to redeem the security, convert  it into the underlying common stock,  or
sell  it to a third  party. Investment in warrants  also involves certain risks,
including the  possible lack  of a  liquid market  for resale,  potential  price
fluctuations as a result of speculation or other factors, and the failure of the
price  of  the underlying  security  to reach  or  have reasonable  prospects of
reaching the exercise price, in which event the warrant may expire without being
exercised, resulting in a loss of the Fund's entire investment in the warrant.

CREDIT OF COUNTERPARTIES.  A number of transactions in which the Fund may engage
are subject to the risks of default by the other party to the transaction.  When
the  Fund  engages  in  repurchase,  reverse  repurchase,  when-issued,  forward
commitment, delayed settlement and securities lending transactions, it relies on
the other party to consummate the transaction. Failure of the other party to  do
so may result in the Fund's incurring a loss or missing an opportunity to obtain
a price believed to be advantageous.

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

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

                        -------------------------------
                          ORGANIZATION AND MANAGEMENT
                          ----------------------------

WHO MANAGES THE FUND?

   
The Company was incorporated in Maryland  in September 1995, and is an  open-end
management  investment company or mutual fund.  The Company's Board of Directors
has overall  responsibility for  the operation  of the  Fund. Pursuant  to  such
responsibility,   the  Board  has  approved   contracts  for  various  financial
organizations to  provide, among  other things,  day-to-day management  services
required by the Fund.
    

The  Company,  on behalf  of the  Fund,  has retained  as the  Fund's Investment
Manager RCM Capital

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                                    Page 13
<PAGE>
Management, A  California Limited  Partnership (the  "Investment Manager")  with
principal  offices  at  Four  Embarcadero  Center,  Suite  3000,  San Francisco,
California 94111.  Pursuant  to an  Investment  Management Agreement,  Power  of
Attorney  and Service Agreement  with the Company  (the "Management Agreement"),
the  Investment  Manager  manages  the  Fund's  investments,  provides   various
administrative  services,  and  supervises the  Fund's  daily  business affairs,
subject to the authority of the Company's Board of Directors.

WHO IS RCM CAPITAL MANAGEMENT?

The Investment Manager is actively  engaged in providing investment  supervisory
services  to  institutional  and individual  clients  and  registered investment
companies, and is  registered under  the Investment  Advisers Act  of 1940.  The
Investment  Manager  was  established in  July  1986,  as the  successor  to the
business and operations of Rosenberg  Capital Management (established in  1970).
The  general partner of  the Investment Manager, RCM  Limited L.P., a California
limited partnership,  is  controlled by  the  19 principals  of  the  Investment
Manager.  The sole limited partner  of the Investment Manager  is a wholly owned
indirect subsidiary of Travelers Group Inc.

The Investment Manager's  equity philosophy  is to  invest in  growth stocks  --
stocks  of companies that are expected  to have superior and predictable growth.
Through fundamental research and a  series of valuation screens, the  Investment
Manager seeks to purchase securities of those companies whose expected growth in
earnings  and dividends  will provide  a risk-adjusted  return in  excess of the
market.

The Investment Manager has a long history of investing in technology stocks. Its
technology analysts have been researching  technology companies for purchase  in
domestic  equity  portfolios for  more  than 20  years,  and have  been managing
technology portfolios  for more  than  10 years.  The technology  team  consults
regularly  with the senior members of  the Investment Manager's equity portfolio
management team concerning the prospects  for the technology industry  generally
as  well as  specific technology companies.  The equity  investment process also
incorporates the Investment Manager's own macroeconomic views of the economy.

   
In addition to traditional research activities, the Investment Manager  utilizes
research  produced  by  Grassroots  Research,  an  operating  group  within  the
Investment Manager. Grassroots Research prepares research reports based on field
interviews with customers, distributors, and  competitors of the companies  that
the  Investment Manager follows. In the technology area, Grassroots Research can
be a valuable adjunct to  the Investment Manager's traditional research  efforts
by  providing  a "second  look" at  technology  companies in  which the  Fund is
considering investing and by checking marketplace assumptions concerning  market
demand for particular technology products.
    

Walter  C.  Price, Jr.  and Huachen  Chen,  each a  Principal of  the Investment
Manager, are the  primary portfolio  managers for  the Fund.  They have  managed
equity portfolios on behalf of the Investment Manager since 1985.

   
In  December 1995, the Investment Manager  entered into an Agreement of Purchase
and Sale pursuant to which it will become an indirect wholly owned subsidiary of
Dresdner Bank A.G., a German bank. It is expected that the day-to-day operations
of the Investment Manager will not be affected and that the individuals who  are
primarily responsible for the management of the Fund's portfolio will remain the
same.  The closing of the  transaction is subject to  a number of contingencies,
including the  receipt  of  certain regulatory  approvals.  The  transaction  is
currently expected to close in mid-1996. Because the transaction will constitute
an  "assignment" of the Fund's Management  Agreement with the Investment Manager
under the 1940  Act, and thus  a termination of  such Management Agreement,  the
Fund  will  seek  approval of  a  new  management agreement  from  the  Board of
Directors and stockholders of the Fund prior to the closing of the  transaction.
The  terms of  the new  management agreement will  be substantially  the same as
those of the current Management Agreement, and the transaction will be described
in more detail in the proxy statement sent to stockholders.
    

WHAT ARE THE FUND'S MANAGEMENT FEES?

For the  services  rendered  by  the Investment  Manager  under  the  Management
Agreement,  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. This is higher than the fee  paid
by  most other  registered investment  companies. However,  the Company believes
that

- --------------------------------------------------------------------------------
                                    Page 14
<PAGE>
the Fund's total annual expenses will  be comparable to those currently paid  by
other international technology funds.

WHAT OTHER EXPENSES DOES THE FUND PAY?

The  Fund is  responsible for the  payment of its  operating expenses, including
brokerage and commission expenses; taxes levied on the Fund; interest charges on
borrowings (if any); charges  and expenses of  the Fund's custodian;  investment
management  fees due  to the  Investment Manager;  and all  of the  Fund's other
ordinary operating expenses (e.g., legal and audit fees, securities registration
expenses, and compensation of non-interested directors of the Company).

To limit the expenses of the Fund,  the Investment Manager has agreed, until  at
least  December 31, 1996,  to pay the Fund  on a quarterly  basis the amount, if
any, by which the ordinary operating expenses of the Company attributable to the
Fund for the quarter (except interest, taxes and extraordinary expenses)  exceed
the  annual rate of  1.75% of the value  of the average daily  net assets of the
Fund. The Fund will reimburse the Investment Manager for fees deferred or  other
expenses  paid by  the Investment  Manager pursuant  to this  agreement in later
years in which  operating expenses  for the Fund  are otherwise  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 fees deferred or other
expenses paid  by the  Investment Manager.  In addition,  the Fund  will not  be
required  to  repay  any unreimbursed  amounts  to the  Investment  Manager upon
termination of the Management Agreement.

HOW DOES THE FUND DECIDE WHICH BROKERS TO USE?

The Investment  Manager, subject  to the  overall supervision  of the  Company's
Board of Directors, makes the Fund's investment decisions and selects the broker
or  dealer to be used in each  specific transaction using its 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 each
transaction, the Investment Manager evaluates a wide range of criteria.  Subject
to  the  requirement  of  seeking  best  available  prices  and  execution,  the
Investment Manager may, in circumstances in which  two or more brokers are in  a
position  to offer comparable prices and  execution, give preference to a broker
that has provided investment information to the Investment Manager. In so doing,
the Investment Manager may effect  securities transactions which cause the  Fund
to  pay an amount  of commission in  excess of the  amount of commission another
broker would  have charged.  Subject  to the  requirement  of seeking  the  best
available  prices and  execution, the Investment  Manager may  also place orders
with brokerage firms that have sold shares of the Fund.

The Fund may in some instances invest in foreign and/or U.S. securities that are
not  listed  on  a   national  securities  exchange  but   are  traded  in   the
over-the-counter  market. The Fund  may also purchase  listed securities through
the third  market (over-the-counter  trades  of exchange-listed  securities)  or
fourth  market  (direct  trades of  securities  between  institutional investors
without the intermediation of a  broker-dealer). When transactions are  executed
in  the over-the-counter  market or the  third or fourth  market, the Investment
Manager will seek  to deal  with the  counterparty that  the Investment  Manager
believes  can  provide  the  best  price  and  execution,  whether  or  not that
counterparty is the primary  market maker for that  security. In all cases,  the
Investment  Manager  will  attempt  to  negotiate  the  best  market  price  and
execution.

When  appropriate  and  to  the  extent  consistent  with  applicable  laws  and
regulations,  the Fund may  execute brokerage transactions  through Smith Barney
Inc. and The Robinson-Humphrey Company, Inc., affiliates of the limited  partner
of the Investment Manager.

   
WHO ARE THE FUND'S CUSTODIAN AND TRANSFER AGENT?
    

   
State  Street Bank and  Trust Company (the "Custodian"),  P.O. Box 1713, Boston,
Massachusetts 02105, serves as  custodian of all securities  and funds owned  by
the  Fund in  accordance with  the terms of  the Custodian  Contract between the
Company and the Custodian. The Custodian also provides dividend paying  services
to  the Fund. The Company acts as its  own transfer and redemption agent for its
capital stock.
    

- --------------------------------------------------------------------------------
                                    Page 15
<PAGE>
                        -------------------------------
                             HOW TO PURCHASE SHARES
                          ----------------------------

HOW CAN I PURCHASE SHARES OF THE FUND?

   
Shares of the Fund are offered on a continuous basis at the net asset value  per
share  (next determined  after receipt of  subscriptions), without  any sales or
other charge. There is  no minimum initial  investment for investors  purchasing
shares  through a broker-dealer or other  financial institution having a service
agreement with the Investment  Manager and maintaining  an omnibus account  with
the  Fund, such as Charles  Schwab & Co., Inc.  For other investors, the initial
investment must  be  at  least  $25,000,  and there  is  a  $1,000  minimum  for
additional   investments  other  than  through  the  Fund's  automatic  dividend
reinvestment plan. (See STOCKHOLDER SERVICES.)
    

   
Investors or their duly authorized agents  may purchase shares from the  Company
by  sending  a  signed,  completed  subscription form  to  the  Company  at Four
Embarcadero Center, Suite 3000, San Francisco, California 94111 (telephone (415)
954-5400), and paying  for the  shares as described  below. Shares  may also  be
purchased  through  certain  broker  which  has  entered  into  a  selling group
agreement with  the Distributor.  Although  the Fund  does  not impose  a  sales
charge,  brokers may charge a fee for their  services at the time of purchase or
redemption. Subscription forms can be obtained from the Company.
    

Orders for shares received  by the Company  prior to the close  of the New  York
Stock  Exchange composite tape on  each day the New  York Stock Exchange is open
for trading, will be priced at the net asset value (see SHARE PRICE) computed as
of the close  of the New  York Stock Exchange  composite tape on  that day.  The
Company  reserves the right  to reject any subscription  at its sole discretion.
Orders received after the close of  the New York Stock Exchange composite  tape,
or on any day on which the New York Stock Exchange is not open for trading, will
be priced at the close of the New York Stock Exchange composite tape on the next
succeeding day on which the New York Stock Exchange is open for trading.

   
Upon  receipt of the  subscription form in  good order, the  Company will open a
stockholder account in accordance with the investor's registration instructions.
A confirmation statement reflecting the current transaction will be forwarded to
the investor.
    

WHERE SHOULD I SEND MY SUBSCRIPTION PAYMENT?

Payment for  shares purchased  should be  made  by check  or money  order,  made
payable to:
   
RCM Global Technology Fund
    

   
Investors  may  also wire  funds in  payment of  subscriptions to  the following
address.  Wired   funds  should   include  the   following:  the   stockholder's
registration name and account number with the Company and the name of the Fund.
    

   
WIRE TRANSFERS TO:
State Street Bank and Trust Co., Boston, MA
ABA #011-000028
BFN=RCM Global Technology Fund
AC-#5627-594-4
FBO="Name of Stockholder"
    

   
Investors  may be charged a fee if  they effect transactions through a broker or
agent. Your  dealer is  responsible  for forwarding  payment promptly  to  State
Street  Bank and  Trust Company.  The Company reserves  the right  to cancel any
purchase order for which payment has not been received by the third business day
following the investment.
    

The Company will issue share certificates of  the Fund only for full shares  and
only  upon  the specific  request  of the  stockholder.  Confirmation statements
showing transactions in the stockholder's account and a summary of the status of
the account serve as evidence of ownership of shares of the Fund.

CAN I PAY FOR SHARES WITH INVESTMENT SECURITIES?

In its discretion, the Company may  accept securities of equal value instead  of
cash  in payment of all or part of  the subscription price for the Fund's shares
offered by this Prospectus. Any such securities (i) will be valued at the  close
of the New York

- --------------------------------------------------------------------------------
                                    Page 16
<PAGE>
   
Stock  Exchange composite tape on  the day of acceptance  of the subscription in
accordance with the method of valuing  the Fund's portfolio described under  HOW
ARE  SHARES PRICED? below; (ii) will have a  tax basis to the Fund equal to such
value; (iii) must not be "restricted securities"; and (iv) must be permitted  to
be purchased in accordance with the Fund's investment objective and policies set
forth  in this Prospectus and must be  securities that the Fund would be willing
to purchase at that  time. Prospective stockholders  considering this method  of
payment  should  contact the  Company in  advance to  discuss the  securities in
question and the documentation necessary to complete the transaction.
    

HOW ARE SHARES PRICED?

The net asset  value of each  share of the  Fund on which  the subscription  and
redemption  prices are based is determined by the sum of the market value of the
securities and other assets owned by the Fund less its liabilities, computed  in
accordance  with the  Company's Articles  of Incorporation  and Bylaws.  The net
asset value of a share  is the quotient obtained by  dividing the net assets  of
the  Fund  (i.e., the  value of  the assets  of the  Fund less  its liabilities,
including expenses payable or accrued  but excluding capital stock and  surplus)
by  the total number of  shares of the Fund outstanding.  The net asset value of
the Fund's shares will be calculated as  of the close of regular trading on  the
New  York Stock Exchange, currently 4:00 p.m.  Eastern Time on each day that the
New York Stock Exchange is open for trading.

                        -------------------------------
                              STOCKHOLDER SERVICES
                          ----------------------------

WHAT SERVICES ARE PROVIDED TO STOCKHOLDERS?

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

ACCOUNT STATEMENTS.  Your account is opened in accordance with your registration
instruction. Transactions in  the account,  such as  additional investments  and
dividend  reinvestments, will  be reflected  on regular  confirmation statements
from the Company.

REPORTS TO STOCKHOLDERS.   The fiscal year  of the Fund ends  on December 31  of
each  year.  The Fund  will  issue to  its  stockholders semi-annual  and annual
reports; each annual  report will  contain a  schedule of  the Fund's  portfolio
securities,  audited  annual  financial  statements,  and  information regarding
purchases and sales  of securities during  the period covered  by the report  as
well  as information concerning the Fund's  performance in accordance with rules
promulgated by  the  SEC.  In  addition,  stockholders  will  receive  quarterly
statements  of the status  of their accounts  reflecting all transactions having
taken place within that quarter. The federal income tax status of  stockholders'
distributions will also be reported to stockholders after the end of each fiscal
year.

STOCKHOLDER INQUIRIES.  Stockholder inquiries should be addressed to the Company
at the address or telephone number on the front page of this Prospectus.

- --------------------------------------------------------------------------------
                                    Page 17
<PAGE>
                        -------------------------------
                              REDEMPTION OF SHARES
                          ----------------------------

HOW DO I REDEEM MY SHARES?

Subject  only to  the limitations described  below, the Company  will redeem the
shares of the Fund  tendered to it,  as described below,  at a redemption  price
equal to the net asset value per share as next computed following the receipt of
all  necessary redemption documents.  Because the net asset  value of the Fund's
shares will fluctuate as a result of  changes in the market value of  securities
owned,  the amount a  stockholder receives upon  redemption may be  more or less
than the amount paid for those shares.

Redemption payments will be  made wholly in cash  unless the Company's Board  of
Directors  believes  that  unusual  conditions exist  which  would  make  such a
practice  detrimental  to   the  best   interests  of  the   Fund.  Under   such
circumstances, payment of the redemption price could be made whole or in part in
portfolio securities.

WHAT IS THE REDEMPTION FEE?

   
The  Fund assesses a 1.5% redemption fee on redemptions of shares made within 12
months of their purchase (other than  shares acquired by reinvestment of  income
dividends  and  capital  gain  distributions).  The  fee  is  deducted  from the
redemption proceeds and  is paid  directly to the  Fund, not  to the  Investment
Manager.  It  is  not  a  contingent  deferred  sale  charge.  For  purposes  of
determining whether the fee is payable, redemptions are deemed to be made  first
from shares acquired by reinvestment of dividends and distributions, and then in
the order the shares were purchased by the stockholder.
    

The  purpose of the  redemption fee is to  allocate transaction costs associated
with redemptions to the stockholders  making those redemptions, thus  insulating
other stockholders from such costs. The fees represent the Company's estimate of
these  costs, which include brokerage costs, the decrease in market prices which
may result when the Fund  sells thinly traded stocks  in its portfolio, and  the
effect  of the  "bid-ask" spread  (which may  be wide  on many  foreign stocks).
Without the redemption fee,  the Fund would not  be reimbursed for these  costs,
which  it incurs directly,  resulting in reduced  investment performance for all
stockholders. With the fee,  the transaction costs of  selling stocks are  borne
not  by all existing  stockholders, but by  those short-term stockholders making
the redemption.

Stockholders may also  be charged a  fee if they  effect transactions through  a
broker or agent.

WHEN WILL I RECEIVE MY REDEMPTION PAYMENT?

PAYMENT  FOR SHARES.  Payment for shares redeemed will be made within seven days
after receipt by the Company of: (i) a written request for redemption, signed by
each registered owner or his or her duly authorized agent exactly as the  shares
are registered, which clearly identifies the exact names in which the account is
registered,  the account number and the number of shares or the dollar amount to
be redeemed; (ii)  stock certificates for  any shares to  be redeemed which  are
held  by  the  stockholder;  and (iii)  the  additional  documents  required for
redemptions by corporations, executors, administrators, trustees and  guardians.
Redemptions  will not become effective until  all documents in the form required
have been received by the Company. A  stockholder in doubt as to what  documents
are required should contact the Company.

If  the Company is requested to redeem shares  for which it has not yet received
payment, the  Company  will delay  or  cause to  be  delayed the  mailing  of  a
redemption  check until such time as it has assured itself that payment has been
collected, which may take  up to 15  days. Delays in  the receipt of  redemption
proceeds   may  be  avoided   if  shares  are  purchased   through  the  use  of
wire-transferred funds or other methods which do not entail a clearing delay  in
the Fund receiving "good funds" for its use.

Upon  execution  of  the  redemption order,  a  confirmation  statement  will be
forwarded to  the stockholder  indicating  the number  of  shares sold  and  the
proceeds  thereof. Proceeds of all redemptions will  be paid by check or federal
funds wire no later  than seven days subsequent  to execution of the  redemption
order except as may be provided below.

- --------------------------------------------------------------------------------
                                    Page 18
<PAGE>
   
SUSPENSION  OF REDEMPTIONS.  The right of redemption may not be suspended or the
date of payment upon redemption postponed for more than seven days after  shares
are  tendered for redemption,  except for any  period during which  the New York
Stock Exchange is closed  (other than customary weekend  or holiday closing)  or
during  which the SEC determines that trading  thereon is restricted, or for any
period during which an emergency (as determined  by the SEC) exists as a  result
of  which  disposal  by  the  Fund  of  securities  it  owns  is  not reasonably
practicable, or as a result of which it is not reasonably practical for the Fund
fairly to determine the value  of its net assets, or  for such other periods  as
the SEC may by order permit for the protection of stockholders.
    

                        -------------------------------
                               INVESTMENT RESULTS
                          ----------------------------

WILL THE FUND REPORT ITS PERFORMANCE?

The  Fund may, from time-to-time, include  information on its investment results
and/or comparisons of its investment results to various unmanaged indices (which
generally do not reflect deductions for administrative and management costs  and
expenses)  indexes prepared  by consultants,  mutual fund  ranking entities, and
financial publications, or  results of other  mutual funds or  groups of  mutual
funds,  in  advertisements or  in reports  furnished  to present  or prospective
investors. Investment results  will include  information calculated  on a  total
return basis. Such indexes and rankings may include the following, among others:

1.  The Standard & Poor's 500 Index.

2.  The Russell Midcap Index.

3.  The Lipper Science & Technology Fund Index.

4.  The Hambrecht & Quist Technology Index.

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

                        -------------------------------
                       DIVIDENDS, DISTRIBUTIONS AND TAXES
                          ----------------------------

WHAT DIVIDENDS DOES THE FUND PAY?

It  is the intention of  the Fund to distribute to  its stockholders all of each
fiscal year's net investment income and  net realized capital gains, if any,  on
the  Fund's investment portfolio.  The amount and time  of any such distribution
must necessarily depend upon the realization  by the Fund of income and  capital
gains  from investments. Any dividend or  distribution received by a stockholder
on shares  of  the  Fund shortly  after  the  purchase of  such  shares  by  the
stockholder  will have the effect of reducing the net asset value of such shares
by the amount of such dividend or distribution.

WHAT TAXES WILL I PAY ON FUND DIVIDENDS?

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

Federal law  requires the  Company to  withhold 31%  of income  from  dividends,
capital gains distributions and/or redemptions that occur in certain stockholder
accounts  if  the stockholder  has not  properly  furnished a  certified correct
Taxpayer Identification Number and has  not certified that withholding does  not
apply.  Amounts withheld are applied to the stockholder's federal tax liability,
and a refund may  be obtained from the  Internal Revenue Service if  withholding
results  in  an  overpayment of  taxes.  Under  the Code,  distributions  of net
investment income and net long-term capital  gains by the Fund to a  stockholder
who,  as to  the United States,  is a nonresident  alien individual, nonresident
alien  fiduciary  of  a  trust  or  estate,  foreign  corporation,  or   foreign
partnership may also be subject to U.S. withholding tax.

- --------------------------------------------------------------------------------
                                    Page 19
<PAGE>
WILL THE FUND ALSO PAY TAXES?

The  Company intends  to qualify  the Fund  as a  "regulated investment company"
under Subchapter M of the Code.  By complying with the applicable provisions  of
the  Code, the Fund will not be subject  to federal income taxes with respect to
net investment  income  and  net  realized  capital  gains  distributed  to  its
stockholders.

The  Fund may be required to pay  withholding and other taxes imposed by foreign
countries, generally at  rates from 10%  to 40%, which  would reduce the  Fund's
investment  income.  Tax conventions  between certain  countries and  the United
States may reduce or eliminate such taxes. The Fund may elect to "pass  through"
to its stockholders the amount of foreign income taxes paid by the Fund, if such
election is deemed to be in the best interests of stockholders. If this election
is  made, stockholders will be  required to include in  their gross income their
pro rata share of foreign taxes paid by the Fund, and will be able to treat such
taxes as either an  itemized deduction or a  foreign credit against U.S.  income
taxes  (but not  both) on  their tax  returns. If  the Fund  does not  make that
election, stockholders will not be able to  deduct their pro rata share of  such
taxes in computing their taxable income and will not be able to take their share
of such taxes as a credit against their U.S. income taxes.

WHEN WILL I RECEIVE TAX INFORMATION?

Each  stockholder will receive, at  the end of each  fiscal year of the Company,
full information on dividends, capital gains distributions and other  reportable
amounts  with  respect  to  shares  of  the  Fund  for  tax  purposes, including
information such as  the portion  taxable as capital  gains, and  the amount  of
dividends,  if any,  eligible for the  federal dividends  received deduction for
corporate taxpayers.

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

                        -------------------------------
                              GENERAL INFORMATION
                          ----------------------------

WHAT OTHER INFORMATION SHOULD I KNOW ABOUT
THE FUND?

The  Company was incorporated  in Maryland on September  7, 1995. The authorized
capital stock of the Company is 1,000,000,000 shares of capital stock (par value
$.0001 per share) of which 50,000,000  shares have been designated as shares  of
RCM Global Technology Fund. The Company's Board of Directors may, in the future,
authorize  the issuance of other series  of capital stock representing shares of
additional investment portfolios or funds.

   
All shares of  the Company have  equal voting rights  and will be  voted in  the
aggregate,  and not by series, except where  voting by series is required by law
or where the matter involved affects only one series. There are no conversion or
preemptive rights in connection  with any shares of  the Company. All shares  of
the  Fund when duly issued will be  fully paid and non-assessable. The rights of
the holders of  shares of the  Fund may not  be modified except  by vote of  the
majority  of the  outstanding shares  of the  Fund. Certificates  are not issued
unless requested and are never  issued for fractional shares. Fractional  shares
are  liquidated when an account  is closed. As of  December 19, 1995, there were
10,000 shares of the Fund outstanding,  which were beneficially owned by  Walter
C.  Price, Jr. and Huachen  Chen, principals of the  Investment Manager, who are
the primary portfolio managers of the Fund.
    

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

- --------------------------------------------------------------------------------
                                    Page 20
<PAGE>
The  Company is not  required to hold a  meeting of stockholders  in any year in
which the 1940 Act does not require  a stockholder vote on a particular  matter,
such  as  election  of  directors.  The  Company  will  hold  a  meeting  of its
stockholders for the purpose of voting on the question of removal of one or more
directors if  requested  in writing  by  the holders  of  at least  10%  of  the
Company's  outstanding voting securities, and  will assist in communicating with
its stockholders as required by Section 16(c) of the 1940 Act.

This Prospectus  does  not contain  all  of the  information  set forth  in  the
Company's  registration  statement  and related  forms  as filed  with  the SEC,
certain portions of which are omitted  in accordance with rules and  regulations
of  the  Commission.  The  registration  statements  and  related  forms  may be
inspected at the Public Reference Room of the Securities and Exchange Commission
at Room 1024, 450 5th Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and
copies thereof may be obtained from the SEC at prescribed rates.

- --------------------------------------------------------------------------------
                                    Page 21
<PAGE>
                             RCM EQUITY FUNDS, INC.

                           RCM GLOBAL TECHNOLOGY FUND

   
                      Four Embarcadero Center, Suite 3000
                        San Francisco, California 94111
                                 (800) 726-7240
    

                        -------------------------------
                      STATEMENT OF ADDITIONAL INFORMATION
                          ----------------------------

   
                               December   , 1995
    

   
RCM  Global Technology Fund (the "Fund") is a non-diversified, no-load series of
RCM Equity  Funds,  Inc.  (the "Company"),  an  open-end  management  investment
company.  The Fund's investment manager is  RCM Capital Management, a California
Limited Partnership (the "Investment Manager").
    

This Statement  of Additional  Information  is not  a prospectus,  but  contains
information  in addition to and more detailed  than that set forth in the Fund's
Prospectus (the  "Prospectus")  and should  be  read in  conjunction  with  such
Prospectus.  The Prospectus may be obtained without charge by calling or writing
the Company at the address and phone number above.

                        -------------------------------
                               TABLE OF CONTENTS
                          ----------------------------

   
<TABLE>
<CAPTION>
                                                                                         PAGE

<S>                                                                                    <C>
Investment Objective and Policies....................................................        B-2
Investment and Risk Considerations...................................................       B-10
Investment Restrictions..............................................................       B-15
Execution of Portfolio Transactions..................................................       B-17
Directors and Officers...............................................................       B-19
The Investment Manager...............................................................       B-21
How to Purchase Shares...............................................................       B-23
Net Asset Value......................................................................       B-23
Redemption of Shares.................................................................       B-24
Dividends, Distributions and Tax Status..............................................       B-24
Investment Results...................................................................       B-27
Description of Capital Stock.........................................................       B-28
Additional Information...............................................................       B-28
Statement of Assets and Liabilities..................................................       B-30
</TABLE>
    
<PAGE>
                        -------------------------------
                       INVESTMENT OBJECTIVE AND POLICIES
                          ----------------------------

INVESTMENT IN FOREIGN SECURITIES

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

INVESTMENT IN DEVELOPED FOREIGN  COUNTRIES.  The Fund  may invest a  substantial
portion  of  its  assets  in  securities  of  companies  that  are  organized or
headquartered in developed  foreign countries, including  the developed  foreign
countries listed in the Prospectus. At the discretion of the Investment Manager,
the  Fund  may also  invest in  securities  of companies  that are  organized or
headquartered in other developed foreign countries. The Fund may not be invested
in all developed foreign countries at one time, and may not invest in particular
developed foreign countries at any  time, depending on the Investment  Manager's
view of the investment opportunities available.

Although  these countries have developed economies, even developed countries are
subject to periods of economic or political instability. For example, efforts by
the member countries of the European Community to eliminate internal barriers to
the free  movement of  goods,  persons, services  and capital  have  encountered
opposition  arising  from  the  conflicting  economic,  political  and  cultural
interests and  traditions  of  the  member countries  and  their  citizens.  The
reunification  of the former German Democratic  Republic (East Germany) with the
Federal Republic of Germany (West Germany) and other political and social events
in Europe have caused considerable economic and social dislocations. Such events
can  materially  affect   securities  markets  and   have  also  disrupted   the
relationship  of  such currencies  with  each other  and  with the  U.S. dollar.
Similarly, events in  the Japanese  economy and social  developments may  affect
Japanese  securities and  currency markets, as  well as the  relationship of the
Japanese  Yen  to  the  U.S.  dollar.  Future  political,  economic  and  social
developments  can be  expected to produce  continuing effects  on securities and
currency markets.

   
The Japanese currency is the Yen (as  of September 30, 1995: Y99.72 = $1  U.S.).
Gross  domestic product ("GDP") was Y471  trillion ($4,651 billion) in 1994. The
current account balance in 1994 was a surplus of Y13.2 trillion ($129  billion),
which  was 2.8% of the GDP.  The annual rate of inflation  in 1994 was 0.7%. The
average rate of inflation for the three  years ending 1994 was 1.2%. Japan is  a
highly  industrialized nation with a population in excess of 120 million people.
At the end of 1993  and 1994, total market value  of shares listed on the  Tokyo
stock exchange was $2,881 billion and $3,553 billion, respectively, which was an
increase  of 23.3%. The Nikkei  stock average, which is  calculated on a formula
similar to  that used  for  the Dow  Jones average  in  the United  States,  was
16,924.95, 17,417.24 and 19,723 at year-end 1992, 1993 and 1994, respectively.
    

INVESTMENT  IN EMERGING MARKET  COUNTRIES.  As a  general matter, countries that
are not considered to be developed  foreign countries by the Investment  Manager
will  be deemed  to be emerging  market countries. (See  INVESTMENT IN DEVELOPED
FOREIGN COUNTRIES above.)  As their economies  grow and their  markets grow  and
mature,  some countries  that currently may  be characterized  by the Investment
Manager as emerging market countries may be deemed by the Investment Manager  to
be developed foreign countries. In the event that the Investment Manager deems a
particular  country  to  be  a  developed  foreign  country,  any  investment in
securities issued by that country's government  or by an issuer located in  that
country  would not be subject to the Fund's overall limitation on investments in
emerging market countries.

- --------------------------------------------------------------------------------
                                      B-2
<PAGE>
Securities of issuers  organized or headquartered  in emerging market  countries
may,  at times, offer excellent opportunities for capital appreciation. However,
prospective investors  should  be aware  that  the markets  of  emerging  market
countries  historically have been  more volatile than the  markets of the United
States and  developed foreign  countries, and  thus the  risks of  investing  in
securities  of issuers organized  or headquartered in  emerging market countries
may be far greater than the risks of investing in developed foreign markets. See
INVESTMENT AND  RISK CONSIDERATIONS  -- EMERGING  MARKET SECURITIES  for a  more
detailed  discussion of the risk factors associated with investments in emerging
market  securities.  In  addition,  movements  of  emerging  market   currencies
historically  have had  little correlation  with movements  of developed foreign
market currencies.  Prospective investors  should  consider these  risk  factors
carefully  before investing  in the  Fund. Some  emerging market  countries have
currencies whose value  is closely linked  to the U.S.  dollar. Emerging  market
countries also may issue debt denominated in U.S. dollars and other currencies.

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

INVESTMENT CRITERIA

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

CURRENCY MANAGEMENT

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

From time-to-time, the Fund may employ currency management techniques to enhance
its  total return, although it presently does not  intend to do so. The Fund may
not employ more than 30% of the value of its total assets in currency management
techniques for  the  purpose of  enhancing  returns.  To the  extent  that  such
techniques are used to enhance return, they are considered speculative.

The  Fund's ability  to engage  in currency transactions  may be  limited by the
requirements of  the  Internal Revenue  Code  of  1986 for  qualification  as  a
regulated  investment company and the Fund's intention to continue to qualify as
such. (See  DIVIDENDS, DISTRIBUTIONS  AND TAX  STATUS.) The  Fund's ability  and
decisions  to purchase or sell portfolio securities  also may be affected by the
laws or  regulations  in particular  countries  relating to  convertability  and
repatriation  of assets. Because the  shares of the Fund  are redeemable in U.S.
dollars each day the Fund determines its net asset value, the Fund must have the
ability at all  times to obtain  U.S. dollars  to the extent  necessary to  meet
redemptions.  Under present conditions, the  Investment Manager does not believe
that these  considerations  will have  any  significant adverse  effect  on  its
portfolio strategy, although there can be no assurances in this regard.

GENERAL   CURRENCY  CONSIDERATIONS.    Currency  exchange  rates  may  fluctuate
significantly over short periods of time causing, along with other factors,  the
Fund's  net asset value to fluctuate  as well. Currency exchange rates generally
are determined  by the  forces of  supply  and demand  in the  foreign  exchange
markets and the relative merits of investments in different countries, actual or
anticipated   changes   in   interest   rates   and   other   complex   factors,

- --------------------------------------------------------------------------------
                                      B-3
<PAGE>
as seen from an international perspective.  Currency exchange rates also can  be
affected  unpredictably by intervention, or failure to do so, by U.S. or foreign
governments or central banks or  by currency controls or political  developments
in  the United States or abroad. The market in forward foreign currency exchange
contracts, currency swaps  and other privately  negotiated currency  instruments
offers  less protection against defaults by  the other party to such instruments
than is available for currency instruments traded on an exchange. To the  extent
that  a substantial portion of the Fund's  total assets, adjusted to reflect the
Fund's net position after giving effect to currency transactions, is denominated
or quoted  in  the  currencies of  foreign  countries,  the Fund  will  be  more
susceptible  to the risk  of adverse economic  and political developments within
those countries.

FORWARD FOREIGN  CURRENCY EXCHANGE  CONTRACTS.  The Fund  may purchase  or  sell
forward  foreign currency exchange contracts for  hedging purposes or to seek to
increase total return when the  Investment Manager anticipates that the  foreign
currency  will appreciate or depreciate in  value, but securities denominated or
quoted in that currency do  not present attractive investment opportunities  and
are  not held in the Fund's portfolio.  When purchased or sold to increase total
return, forward foreign currency exchange contracts are considered  speculative.
In addition, the Fund may enter into forward foreign currency exchange contracts
in  order  to protect  against anticipated  changes  in future  foreign currency
exchange rates. The Fund may engage in cross-hedging by using forward  contracts
in a currency different from that in which the hedged security is denominated or
quoted  if  the  Investment  Manager  determines  that  there  is  a  pattern of
correlation between  the two  currencies.  The Fund  may  also engage  in  proxy
hedging,  by  using forward  contracts  in a  series  of foreign  currencies for
similar purposes.

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

If  the Fund enters  into a forward  foreign currency exchange  contract to sell
foreign currency  to increase  total  return, the  Fund  will place  cash,  U.S.
Government  securities,  or  other  liquid  high  grade  debt  obligations  in a
segregated account with the Fund's custodian in an amount equal to the value  of
the  Fund's total assets committed to  the consummation of the forward contract.
If the  value of  the  securities placed  in  the segregated  account  declines,
additional assets will be placed in the account so that the value of the account
will equal the amount of the Fund's commitment with respect to the contract.

Forward contracts are subject to the risk that the counterparty to such contract
will  default  on its  obligations. Since  a  forward foreign  currency exchange
contract is not  guaranteed by an  exchange or clearinghouse,  a default on  the
contract  would deprive the Fund of unrealized profits, transaction costs or the
benefits of a currency  hedge or force  the Fund to cover  its purchase or  sale
commitments,  if any, at the current market price. The Fund will enter into such
transactions only  with primary  dealers or  others deemed  creditworthy by  the
Investment Manager.

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

The  writer of a put  or call option receives a  premium and gives the purchaser
the right to sell (or  buy) the currency underlying  the option at the  exercise
price. The writer has the obligation upon exercise of the option to purchase (or
deliver) the currency during the option period. A writer of an option who wishes
to terminate the obligation may

- --------------------------------------------------------------------------------
                                      B-4
<PAGE>
effect  a "closing transaction"  by buying an  option of the  same series as the
option  previously  written.  A  writer  may  not  effect  a  closing   purchase
transaction after being notified of the exercise of an option. The writing of an
option  on foreign  currency will  constitute only  a partial  hedge, up  to the
amount of the premium received; the Fund  could be required to purchase or  sell
foreign  currencies at disadvantageous exchange rates, thereby incurring losses.
The purchase of an option on foreign currency may constitute an effective  hedge
against  exchange  rate fluctuations;  however, in  the  event of  exchange rate
movements adverse to the Fund's position, the Fund may forfeit the entire amount
of the premium plus related transaction costs.

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

When the Fund writes  a call option  on a foreign currency,  an amount of  cash,
U.S. Government securities, or other liquid high-grade debt obligations equal to
the  market value of its  obligations under the option  will be deposited by the
Fund in a  segregated account  with the  Fund's Custodian  to collateralize  the
position.

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

The  currency swap market has grown substantially  in recent years, with a large
number of  banks and  investment banking  firms acting  both as  principals  and
agents  utilizing standard  swap documentation,  and the  Investment Manager has
determined that the currency swap market has become relatively liquid.  However,
the  use  of currency  swaps  is a  highly  specialized activity  which involves
investment techniques and  risks different from  those associated with  ordinary
portfolio securities transactions. If the Investment Manager is incorrect in its
forecasts   of  market  values  and  currency  exchange  rates,  the  investment
performance of the Fund would be less favorable than it would have been if  this
investment technique were not used.

OPTIONS TRANSACTIONS

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

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

- --------------------------------------------------------------------------------
                                      B-5
<PAGE>
PUT OPTIONS.   Purchasing  put options  may be  used as  a portfolio  investment
strategy  when the Investment Manager  perceives significant short-term risk but
substantial long-term appreciation for the  underlying security. The put  option
acts  as an insurance policy, as  it protects against significant downward price
movement while it allows full participation in any upward movement. If the  Fund
is  holding a stock which the  Investment Manager feels has strong fundamentals,
but for some reason may be  weak in the near term,  the Fund may purchase a  put
option  on such security, thereby giving itself  the right to sell such security
at a certain strike price throughout  the term of the option. Consequently,  the
Fund  will exercise the put  only if the price of  such security falls below the
strike price of the put. The difference  between the put's strike price and  the
market  price of the underlying security on the date the Fund exercises the put,
less transaction costs, will  be the amount  by which the Fund  will be able  to
hedge  against a decline in the underlying security. If during the period of the
option the market  price for  the underlying security  remains at  or above  the
put's  strike price, the put  will expire worthless, representing  a loss of the
price the Fund paid  for the put,  plus transaction costs. If  the price of  the
underlying  security increases, the profit the Fund  realizes on the sale of the
security will be reduced by the premium paid for the put option less any  amount
for which the put may be sold.

CALL  OPTIONS.  The purchase of  a call option is a  type of insurance policy to
hedge against  losses that  could occur  if  the Fund  intends to  purchase  the
underlying  security and  the security thereafter  increases in  price. The Fund
will exercise a  call option only  if the  price of the  underlying security  is
above  the strike price at the time of exercise. If during the option period the
market price for the underlying security remains at or below the strike price of
the call option, the  option will expire worthless,  representing a loss of  the
price  paid  for  the  option,  plus transaction  costs.  If  the  price  of the
underlying security thereafter falls, the price  the Fund pays for the  security
will  in effect be  increased by the premium  paid for the  call option less any
amount for which such option may be sold.

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

SHORT SALES

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

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

If the Fund makes a short sale "against the box," the Fund would not immediately
deliver  the securities sold and  would not receive the  proceeds from the sale.
The seller is  said to have  a short position  in the securities  sold until  it
delivers  the securities  sold, at  which time it  receives the  proceeds of the
sale. The  Fund's decision  to make  a short  sale "against  the box"  may be  a
technique   to  hedge   against  market   risks  when   the  Investment  Manager

- --------------------------------------------------------------------------------
                                      B-6
<PAGE>
believes that the  price of a  security may  decline, causing a  decline in  the
value  of  a  security owned  by  the Fund  or  a security  convertible  into or
exchangeable for such security.  In such case, any  future losses in the  Fund's
long position would be reduced by a gain in the short position.

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

The Fund's ability  to enter  into short sales  transactions is  limited by  the
requirements   of  the  Internal  Revenue  Code   with  respect  to  the  Fund's
qualifications as a regulated investment company. (See DIVIDENDS,  DISTRIBUTIONS
AND TAX STATUS.)

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

FUTURES TRANSACTIONS

The Fund may purchase and sell  currency futures contracts and futures  options,
in  accordance with the  strategies more specifically  described below, to hedge
against currency exchange rate fluctuations or to enhance returns.

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

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

- --------------------------------------------------------------------------------
                                      B-7
<PAGE>
terminate the Fund's position in the futures contract. A final determination  of
variation  margin is  then made, additional  cash is  required to be  paid by or
released to the Fund, and the Fund realizes a loss or a gain.

CHARACTERISTICS OF FUTURES OPTIONS.  The Fund may also purchase call options and
put options on currency futures contracts ("futures options"). A futures  option
gives  the holder the  right, in return for  the premium paid,  to assume a long
position (in the case of a call) or short  position (in the case of a put) in  a
futures  contract at a specified  exercise price prior to  the expiration of the
option. Upon exercise of a call option,  the holder acquires a long position  in
the  futures contract and the writer is assigned the opposite short position. In
the case of a put option, the opposite  is true. A futures option may be  closed
out  (before exercise  or expiration)  by an  offsetting purchase  or sale  of a
futures option of the same series.

PURCHASE OF FUTURES.   The Investment  Manager may purchase  a currency  futures
contract  when it anticipates  the subsequent purchase  of particular securities
and has  the  necessary cash,  but  expects  the currency  exchange  rates  then
available  in the  applicable market  to be less  favorable than  rates that are
currently available, or to  attempt to enhance return  when it anticipates  that
future currency exchange rates will be more favorable than current rates.

SALE OF FUTURES.  The Investment Manager may sell a currency futures contract to
hedge  against  an  anticipated decline  in  foreign currency  rates  that would
adversely affect the dollar value of the Fund's portfolio securities denominated
in such currency, or  may sell a  currency futures contract  in one currency  to
hedge against fluctuations in the value of securities denominated in a different
currency  if there is  an established historical  pattern or correlation between
the two currencies.

PURCHASE OF PUT OPTIONS ON FUTURES.  The purchase of a put option on a  currency
futures  contract is analogous to the purchase  of a put on an individual stock,
where an absolute  level of protection  from price fluctuation  is sought  below
which no additional economic loss would be incurred by the Fund. The purchase of
a  put  option on  a  currency futures  contract can  be  used to  hedge against
unfavorable movements  in currency  exchange  rates, or  to attempt  to  enhance
returns in contemplation of movements in such rates.

PURCHASE  OF  CALL OPTIONS  ON FUTURES.   The  purchase  of a  call option  on a
currency futures contract represents a means of obtaining temporary exposure  to
favorable currency exchange rate movements with risk limited to the premium paid
for  the call option.  It is analogous  to the purchase  of a call  option on an
individual stock, which can be used as a substitute for a position in the  stock
itself.  Depending on the pricing  of the option compared  to either the futures
contract upon which  it is based,  or to  the price of  the underlying  currency
itself, it may be less risky, because losses are limited to the premium paid for
the call option, when compared to the ownership of the underlying currency. Like
the  purchase of  a currency  futures contract, the  Fund would  purchase a call
option on a currency futures contract  to hedge against an unfavorable  movement
in exchange rates.

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

TAX TREATMENT.  The extent to which  the Fund may engage in futures and  futures
option  transactions may be limited by  the requirements of the Internal Revenue
Code of 1986 for qualification as a regulated investment company and the  Fund's
intention  to  continue to  qualify as  such.  See DIVIDENDS,  DISTRIBUTIONS AND
TAXES.

REGULATORY MATTERS.  The Fund has  filed a claim of exemption from  registration
as  a commodity pool with the Commodity Futures Trading Commission (the "CFTC").
The Fund intends to conduct its futures trading activity in a manner  consistent
with that exemption. The Investment

- --------------------------------------------------------------------------------
                                      B-8
<PAGE>
Manager  is registered with the CFTC as both  a Commodity Pool Operator and as a
Commodity Trading Advisor.

DEBT SECURITIES

The timing of purchase and sale  transactions in debt obligations may result  in
capital  appreciation  or depreciation  because  the value  of  debt obligations
varies inversely with prevailing interest rates.

The debt obligations in which the Fund will invest will be rated, at the time of
purchase, BBB or higher by Standard  & Poor's Corporation ("Standard &  Poor's")
or  Baa or higher  by Moody's Investor Services,  Inc. ("Moody's") or equivalent
ratings by other rating organizations, or, if unrated, will be determined by the
investment Manager to be of comparable  investment quality. If the rating of  an
investment grade security held by the Fund is downgraded, the Investment Manager
will  determine whether it is  in the best interests of  the Fund to continue to
hold the security in its investment portfolio.

U.S. Government  obligations  include obligations  issued  or guaranteed  as  to
principal   and  interest   by  the  U.S.   Government  and   its  agencies  and
instrumentalities, by the right of the issuer to borrow from the U.S.  Treasury,
by  the  discretionary  authority of  the  U.S. Government  to  purchase certain
obligations of  the agency  or instrumentality,  or only  by the  credit of  the
agency or instrumentality.

INVESTMENT IN ILLIQUID SECURITIES

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

CASH-EQUIVALENT INVESTMENTS

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

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

PORTFOLIO TURNOVER

The Fund may invest in securities on either a long-term or short-term basis. The
Fund  may invest with the expectation  of short-term capital appreciation if the
Investment  Manager  believes   that  such  action   will  benefit  the   Fund's
stockholders.  The  Fund also  may  sell securities  that  have been  held  on a
short-term basis if the Investment Manager believes that circumstances make  the
sale  of such  securities advisable.  This may  result in  a taxable stockholder
paying higher income  taxes than  would be  the case  with investment  companies
emphasizing  the realization of long-term  capital gains. Because the Investment
Manager will  purchase and  sell  securities for  the Fund's  portfolio  without
regard  to the length of the holding  period for such securities, it is possible
that the  Fund's  portfolio will  have  a higher  turnover  rate than  might  be
expected  for investment companies that invest  substantially all of their funds
for long-term capital

- --------------------------------------------------------------------------------
                                      B-9
<PAGE>
appreciation or generation of current income. Securities in the Fund's portfolio
will be sold whenever  the Investment Manager believes  it is appropriate to  do
so,  regardless  of the  length  of time  that  securities have  been  held, and
securities may  be  purchased  or  sold  for  short-term  profits  whenever  the
Investment  Manager believes it  is appropriate or desirable  to do so. Turnover
will  be  influenced  by  sound  investment  practices,  the  Fund's  investment
objective, and the need for funds for the redemption of the Fund's shares.

A 150% portfolio turnover rate would occur if the value of purchases or sales of
portfolio securities (whichever is less) for a year (excluding purchases of U.S.
Treasury  issues and securities with a maturity  of one year or less) were equal
to 150% of the average monthly value  of the securities held by the Fund  during
such  year. As  a result  of the manner  in which  turnover is  measured, a high
turnover rate could  also occur during  the first year  of Fund operations,  and
during periods when the Fund's assets are growing or shrinking.

INVESTMENT RESTRICTIONS

In  making purchases within the foregoing  policies, the Fund and the Investment
Manager will be subject to all of the restrictions referred to under  INVESTMENT
RESTRICTIONS.  If a  percentage restriction on  an investment  or utilization of
assets set forth  above or under  INVESTMENT RESTRICTIONS is  adhered to at  the
time  the  investment  is made,  a  later  change in  percentage  resulting from
changing value or a similar type of event will not be considered a violation  of
the   Fund's  investment  policies  or   restrictions.  The  Fund  may  exchange
securities, exercise  conversions  or  subscription rights,  warrants  or  other
rights  to purchase common stock or other equity securities and may hold, except
to the extent limited by the 1940  Act, any such securities so acquired  without
regard to the Fund's investment policies and restrictions.

                        -------------------------------
                       INVESTMENT AND RISK CONSIDERATIONS
                          ----------------------------

INVESTMENTS IN FOREIGN SECURITIES
GENERALLY

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

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

In addition, information  about foreign  issuers may be  less readily  available
than  information  about domestic  issuers.  Foreign issuers  generally  are not
subject to accounting, auditing, and  financial reporting standards or to  other
regulatory  practices and  requirements comparable  to those  applicable to U.S.
issuers. Furthermore, with respect to certain foreign countries, the possibility
exists   of   expropriation,   nationalization,   revaluation   of   currencies,
confiscatory  taxation, and  limitations on  foreign investment  and the  use or
removal   of   funds   or   other   assets   of   the   Fund,   including    the

- --------------------------------------------------------------------------------
                                      B-10
<PAGE>
withholding  of dividends and limitations on  the repatriation of currencies. In
addition, the  Fund  may  experience  difficulties or  delays  in  obtaining  or
enforcing  judgments. Foreign  securities may  be subject  to foreign government
taxes that could reduce the yield on such securities.

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

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

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

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

DEPOSITORY RECEIPTS

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

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

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

EMERGING MARKET SECURITIES

There   are  special  risks  associated  with  investments  in  emerging  market
securities that are in addition to the usual risks of investing in securities of
issuers

- --------------------------------------------------------------------------------
                                      B-11
<PAGE>
located in  developed  foreign  markets  around the  world,  and  investors  are
strongly  advised to consider  those risks carefully.  The securities markets of
emerging market  countries  are  substantially  smaller,  less  developed,  less
liquid,  and more volatile than the securities  markets of the United States and
developed foreign markets. As a result, the prices of emerging market securities
may increase or decrease much more  rapidly and much more dramatically than  the
prices of securities of issuers located in developed foreign markets. Disclosure
and  regulatory standards in many respects are less stringent than in the United
States and  developed  foreign markets.  There  also may  be  a lower  level  of
monitoring and regulation of securities markets in emerging market countries and
the  activities  of  investors  in such  markets,  and  enforcement  of existing
regulations has been extremely limited.

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

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

INVESTMENTS IN SMALLER COMPANIES

Investing  in the securities  of companies with  market capitalizations below $1
billion involves greater  risk and  the possibility of  greater portfolio  price
volatility  than  investing  in larger  capitalization  companies.  For example,
smaller capitalization companies may have less certain growth prospects, and may
be more sensitive to changing economic conditions, than large, more  established
companies.  Moreover,  smaller capitalization  companies often  face competition
from larger  or  more established  companies  that have  greater  resources.  In
addition,  the smaller capitalization companies in which the Fund may invest may
have limited or unprofitable  operating histories, limited financial  resources,
and  inexperienced  management. Furthermore,  securities  of such  companies are
often less liquid  than securities of  larger companies, and  may be subject  to
erratic  or abrupt price movements. To dispose of these securities, the Fund may
have to sell them over  an extended period of  time below the original  purchase
price.  Investments  by  the Fund  in  smaller capitalization  companies  may be
regarded as speculative.

The Fund will  not invest  more than  5% of  the value  of its  total assets  in
securities  issued by companies (including  predecessors) that have operated for
less than  three  years. The  securities  of  such companies  may  have  limited
liquidity  which can result in their prices  being lower than might otherwise be
the case. In addition,  investments in such companies  are more speculative  and
entail  greater risk than do investments in companies with established operating
records.

- --------------------------------------------------------------------------------
                                      B-12
<PAGE>
CONVERTIBLE SECURITIES

Investment  in convertible  securities involves  certain risks.  The value  of a
convertible security is a function of its "investment value" (determined by  its
yield  in comparison with the yields  of other securities of comparable maturity
and quality that do not have a conversion privilege) and its "conversion  value"
(the security's worth, at market value, if converted into the underlying stock).
If  the conversion value is  low relative to the  investment value, the price of
the convertible security will be governed principally by its yield, and thus may
not decline in price to the same  extent as the underlying stock; to the  extent
the  market  price of  the  underlying common  stock  approaches or  exceeds the
conversion price,  the price  of  the convertible  security will  be  influenced
increasingly  by its conversion  value. A convertible security  held by the Fund
may be subject to redemption at the option of the issuer at a price  established
in  the instrument governing  the convertible security, in  which event the Fund
will be required to permit  the issuer to redeem  the security, convert it  into
the underlying common stock, or sell it to a third party.

DEBT OBLIGATIONS

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

OPTIONS

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

A decision as to whether, when and  how to use options involves the exercise  of
skill and judgment, and even a well-conceived transaction may be unsuccessful to
some degree because of market behavior or unexpected events. The extent to which
the  Fund may  enter into  options transactions may  be limited  by the Internal
Revenue Code requirements for qualification as a regulated investment company.

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

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

FUTURES TRANSACTIONS

There are several risks in connection with the  use of futures in the Fund as  a
hedging device. One risk

- --------------------------------------------------------------------------------
                                      B-13
<PAGE>
arises  because the correlation between movements in the price of the future and
movements in the price of the currencies  which are the subject of the hedge  is
not  always perfect. The price  of the future may move  more than, or less than,
the price of the currencies being hedged. If the price of the future moves  less
than  the price of the currencies which are  the subject of the hedge, the hedge
will not be fully effective but, if the price of the currencies being hedged has
moved in an unfavorable direction, the Fund  would be in a better position  than
if  it had not  hedged at all. If  the price of the  currencies being hedged has
moved in  a favorable  direction, this  advantage will  be partially  offset  by
movement  in the value of the future. If the price of the future moves more than
the price of the currencies, the Fund will experience either a loss or a gain on
the future which will not be completely offset by movements in the price of  the
currencies which are the subject of the hedge.

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

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

When futures are purchased to hedge against a possible unfavorable movement in a
currency exchange rate  before the  Fund is  able to  invest its  cash (or  cash
equivalents)  in stock in an  orderly fashion, it is  possible that the currency
exchange rate may move in a favorable manner instead; if the Fund then concludes
not to invest in stock  at that time because of  concern as to possible  further
market decline or for other reasons, the Fund will realize a loss on the futures
contract that is not offset by a reduction in the price of securities purchased.

In addition to the possibility that there may be an imperfect correlation, or no
correlation  at all, between  movements in the futures  and the currencies which
are the subject of the hedge, the  price of futures contracts may not  correlate
perfectly  with  movement in  the currency  due  to certain  market distortions.
First, all participants in the futures market are subject to margin deposit  and
maintenance   requirements.  Rather  than   meeting  additional  margin  deposit
requirements,  investors  may   close  futures   contracts  through   offsetting
transactions.  This practice could  distort the normal  relationship between the
currency and futures markets. Second, from the point of view of speculators, the
deposit requirements  in the  futures market  may be  less onerous  than  margin
requirements  in  the  currency market.  Therefore,  increased  participation by
speculators in the futures  market also may  cause temporary price  distortions.
Due  to the possibility of price distortion in the futures market and because of
the imperfect correlation between movements in the currency and movements in the
price of currency futures, a correct forecast of general currency trends by  the
Investment Manager still may not result in a successful hedging transaction over
a very short time frame.

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

Compared  to the use  of futures contracts,  the purchase of  options on futures
contracts involves less potential risk to the Fund because the maximum amount at
risk is the  premium paid  for the  options (plus  transaction costs).  However,
there may be circumstances when the use of an option on a futures contract would
result  in a loss to the Fund when the use of a futures contract would not, such
as when  there is  no movement  in the  level of  an index.  In addition,  daily
changes in the value of the option due to changes in the value of the underlying
futures contract are reflected in the net asset value of the Fund.

- --------------------------------------------------------------------------------
                                      B-14
<PAGE>
The Fund will only enter into futures contracts or purchase futures options that
are  standardized and traded on a U.S. or foreign exchange or board of trade, or
similar entity, or quoted on an automated quotation system. However, there is no
assurance that a liquid secondary market on  an exchange or board of trade  will
exist for any particular futures contract or futures option or at any particular
time. In such event, it may not be possible to close a futures position, and, in
the  event of adverse price movements, the Fund would continue to be required to
make daily cash  payments of variation  margin. In the  event futures  contracts
have  been used to hedge currencies, an increase in the price of the currencies,
if any,  may partially  or completely  offset losses  on the  futures  contract.
However,  as  described above,  there  is no  guarantee  that the  price  of the
currency will, in fact, correlate with the movements in the futures contract and
thus provide an offset to losses on a futures contract.

Successful use of futures by the Fund for hedging purposes or to enhance returns
is subject to the Investment Manager's ability to predict correctly movements in
the direction  of the  currency  markets. For  example,  if the  Fund  purchased
currency  futures contracts  with the  intention of  profiting from  a favorable
change in currency  exchange rates,  and the  change was  unfavorable, the  Fund
would  incur a loss, and  might have to sell  securities to meet daily variation
margin requirements at a  time when it  might be disadvantageous  to do so.  The
Investment  Manager  and  its  predecessor have  been  actively  engaged  in the
provision of investment  supervisory services for  institutional and  individual
accounts  since 1970, but the skills required  for the successful use of futures
and options  on futures  are different  from those  needed to  select  portfolio
securities,  and the Investment Manager has  limited prior experience in the use
of futures  or  options  techniques  in  the  management  of  assets  under  its
supervision.

OTHER RISK CONSIDERATIONS

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

A  number of transactions in which the Fund  may engage are subject to the risks
of default by the other  party to the transaction.  If the seller of  securities
pursuant  to a  repurchase agreement  defaults and  the value  of the collateral
securing the  repurchase agreement  declines,  the Fund  may  incur a  loss.  If
bankruptcy  proceedings are commenced with respect to the seller, realization on
the collateral by the Fund may be  delayed or limited. Similarly, when the  Fund
engages  in  when-issued,  reverse repurchase,  forward  commitment  and delayed
settlement transactions, it relies on the  other party to consummate the  trade;
failure  of the other party to do so may  result in the Fund incurring a loss or
missing an opportunity to obtain a  price the Investment Manager believed to  be
advantageous.   The  risks  in  lending  portfolio  securities,  as  with  other
extensions  of  secured  credit,  consist  of  a  possible  delay  in  receiving
additional  collateral  or in  recovery of  the securities  or possible  loss of
rights in the collateral should the borrower fail financially.

                        -------------------------------
                            INVESTMENT RESTRICTIONS
                          ----------------------------

FUNDAMENTAL POLICIES

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

1.  Invest  more than 25%  the value of  its total assets  in the securities  of
    companies  primarily  engaged in  any one  industry  (other than  the United
    States of America, its agencies and instrumentalities);

2.  Acquire more than 10% of the outstanding voting securities, or 10% of all of
    the securities, of any one issuer;

3.  Invest in companies for the purpose of exercising control or management;

- --------------------------------------------------------------------------------
                                      B-15
<PAGE>
4.  Borrow money, except from banks to meet redemption requests or for temporary
    or emergency purposes; provided that  borrowings for temporary or  emergency
    purposes  other than to meet redemption requests  shall not exceed 5% of the
    value of its total assets; and provided further that total borrowings  shall
    be  made only to the extent that the  value of the Fund's total assets, less
    its liabilities other  than borrowings,  is equal to  at least  300% of  all
    borrowings (including the proposed borrowing). For purposes of the foregoing
    limitations,  reverse repurchase agreements and other borrowing transactions
    covered by segregated  accounts are  considered to be  borrowings. The  Fund
    will  not mortgage, pledge, hypothecate, or  in any other manner transfer as
    security for an indebtedness any of its assets. This investment  restriction
    shall  not prohibit  the Fund  from engaging  in futures  contracts, futures
    options,  forward  foreign  currency  exchange  transactions,  and  currency
    options;

5.  Purchase securities on margin, but it may obtain such short-term credit from
    banks  as  may be  necessary for  the  clearance of  purchases and  sales of
    securities;

6.  Make loans of its  funds or assets to any  other person, which shall not  be
    considered  as  including: (i)  the purchase  of  a portion  of an  issue of
    publicly distributed debt securities, (ii) the purchase of bank  obligations
    such  as certificates of deposit,  bankers' acceptances and other short-term
    debt obligations, (iii) entering into repurchase agreements with respect  to
    commercial   paper,  certificates  of  deposit  and  obligations  issued  or
    guaranteed by the U. S.  Government, its agencies or instrumentalities,  and
    (iv)  the  loan  of  portfolio  securities  to  brokers,  dealers  and other
    financial institutions where such loan is  callable by the Fund at any  time
    on  reasonable notice and is fully secured by collateral in the form of cash
    or cash equivalents. The Fund will not enter into repurchase agreements with
    maturities in excess of seven days if  immediately after and as a result  of
    such  transaction  the  value  of the  Fund's  holdings  of  such repurchase
    agreements exceeds 10% of the value of the Fund's total assets;

7.  Act as an underwriter of securities issued by other persons, except  insofar
    as  it may  be deemed  an underwriter  under the  Securities Act  of 1933 in
    selling portfolio securities, or  invest more than 15%  of the value of  its
    net assets in securities that are illiquid;

8.  Purchase the securities of any other investment company or investment trust,
    except  by purchase in the open market where, to the best information of the
    Company, no commission  or profit  to a sponsor  or dealer  (other than  the
    customary  broker's commission) results from such purchase and such purchase
    does not result in such securities exceeding 10% of the value of the  Fund's
    total   assets,  or  except  when  such   purchase  is  part  of  a  merger,
    consolidation, acquisition of  assets, or other  reorganization approved  by
    the Fund's stockholders;

9.    Purchase portfolio  securities from  or sell  portfolio securities  to the
    officers, directors, or other "interested  persons" (as defined in the  1940
    Act) of the Company, other than otherwise unaffiliated broker-dealers;

10.  Purchase  commodities  or commodity  contracts,  except that  the  Fund may
    purchase securities of an  issuer which invests or  deals in commodities  or
    commodity  contracts, and  except that the  Fund may enter  into futures and
    options contracts in accordance with the  applicable rules of the CFTC.  The
    Fund  has no current intention of entering into commodities contracts except
    for currency futures and futures options;

11. Issue senior securities, except that the Fund may borrow money as  permitted
    by  restriction 4 above.  This restriction shall not  prohibit the Fund from
    engaging in short sales, options, futures and foreign currency transactions;
    and

12. Purchase or sell real estate; provided  that the Fund may invest in  readily
    marketable  securities secured by real estate or interests therein or issued
    by companies which invest in real estate or interests therein.

OPERATING POLICIES

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

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

- --------------------------------------------------------------------------------
                                      B-16
<PAGE>
2.   Invest more than 5%  of the value of its  total assets in the securities of
    any issuer  which  has a  record  of less  than  three years  of  continuous
    operation (including the operation of any predecessor);

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

4.    Purchase  or sell  futures  or  purchase related  options  if, immediately
    thereafter, the  sum  of the  amount  of  "margin" deposits  on  the  Fund's
    existing  futures positions  and premiums  paid for  related options entered
    into for the purpose of seeking to increase total return would exceed 5%  of
    the value of the Fund's net assets.

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

                        -------------------------------
                      EXECUTION OF PORTFOLIO TRANSACTIONS
                          ----------------------------

The  Investment Manager,  subject to  the overall  supervision of  the Company's
Board of Directors, makes the Fund's investment decisions and selects the broker
or dealer to be  used in each  specific transaction using  its best judgment  to
choose  the broker or dealer most capable of providing the services necessary to
obtain the best execution of that transaction. In seeking the best execution  of
a  transaction,  the  Investment  Manager evaluates  a  wide  range  of criteria
including any or all of the following: the broker's commission rate, promptness,
reliability and  quality  of  executions,  trading  expertise,  positioning  and
distribution  capabilities, back-office efficiency,  ability to handle difficult
trades, knowledge of other buyers and sellers, confidentiality, capital strength
and financial stability, and prior performance in serving the Investment Manager
and its clients and other factors  affecting the overall benefit to be  received
in  the  transaction.  When  circumstances relating  to  a  proposed transaction
indicate that a particular broker is in a position to obtain the best execution,
the order is placed with that broker. This  may or may not be a broker that  has
provided investment information and research services to the Investment Manager.
Such  investment information may include, among  other things, a wide variety of
written reports or other data on  the individual companies and industries;  data
and  reports on  general market  or economic  conditions; information concerning
pertinent federal and  state legislative and  regulatory developments and  other
developments  that could  affect the value  of actual  or potential investments;
companies  in  which  the  Investment  Manager  has  invested  or  may  consider
investing;  attendance at meetings with corporate management personnel, industry
experts,  economists,  government  personnel,  and  other  financial   analysts;
comparative   issuer  performance  and   evaluation  and  technical  measurement
services;  subscription   to   publications  that   provide   investment-related
information;  accounting and  tax law interpretations;  availability of economic
advice;  quotation  equipment  and  services;  execution  measurement  services;
market-related and survey data concerning the products and services of an issuer
and its competitors or concerning a particular industry that are used in reports
prepared by the Investment Manager to enhance its ability to analyze an issuer's
financial  condition and  prospects; and  other services  provided by recognized
experts on investment matters of particular interest to the Investment  Manager.
In  addition, the foregoing services  may include the use  of or be delivered by
computer systems whose hardware  and/or software components  may be provided  to
the Investment Manager as part of the services. In any case in which information
and  other services can be used for both research and non-research purposes, the
Investment Manager  makes  an appropriate  allocation  of those  uses  and  pays
directly for that portion of the services to be used for non-research purposes.

Subject  to the requirement of seeking  the best available prices and execution,
the Investment Manager may, in circumstances in which two or more brokers are in
a position to offer comparable prices and execution, give preference to a broker
or dealer that has provided investment information to

- --------------------------------------------------------------------------------
                                      B-17
<PAGE>
   
the  Investment  Manager.  In  so  doing,  the  Investment  Manager  may  effect
securities  transactions which cause the Fund to  pay an amount of commission in
excess of  the  amount of  commission  another  broker would  have  charged.  In
selecting  such broker or dealer, the Investment  Manager will make a good faith
determination that the  amount of commission  is reasonable in  relation to  the
value  of  the  brokerage  services  and  research  and  investment  information
received, viewed in terms of either  the specific transaction or the  Investment
Manager's  overall  responsibility  to  the accounts  for  which  the Investment
Manager exercises  investment  discretion. The  Investment  Manager  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 or dealers may
be used by the Investment Manager in servicing all of its clients (including the
Fund) and it is recognized that the Fund  may be charged a commission paid to  a
broker  or  dealer who  supplied  research services  not  utilized by  the Fund.
However, the Investment Manager  expects that the Fund  will benefit overall  by
such  practice because it is receiving the  benefit of research services and the
execution of  such  transactions  not  otherwise available  to  it  without  the
allocation of transactions based on the recognition of such research services.
    

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

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

As noted below, the limited partner of the Investment Manger is RCM Acquisition,
Inc., a wholly owned, indirect subsidiary of Travelers Group Inc. ("Travelers").
Smith  Barney Inc. ("Smith  Barney") is a wholly  owned subsidiary of Travelers,
and The Robinson-Humphrey Company Inc.  ("Robinson-Humphrey") is a wholly  owned
subsidiary  of Smith Barney.  Smith Barney and  Robinson-Humphrey are registered
broker-dealers. The Investment Manager believes that it is in the best interests
of the  Fund  to  have  the ability  to  execute  brokerage  transactions,  when
appropriate,  through  Smith  Barney  and  Robinson-Humphrey.  Accordingly,  the
Investment Manager intends to  execute brokerage transactions  on behalf of  the
Fund  through Smith  Barney and Robinson-Humphrey,  when appropriate  and to the
extent consistent with applicable laws and regulations.

In all such cases, Smith Barney or  Robinson-Humphrey will act as agent for  the
Fund,  and the Investment Manager will not  enter into any transaction on behalf
of the Fund in  which Smith Barney or  Robinson-Humphrey is acting as  principal
for  its own account. In connection  with such agency transactions, Smith Barney
or Robinson-Humphrey  will  receive compensation  in  the form  of  a  brokerage
commission  separate from  the Investment  Manager's management  fee. It  is the
Investment Manager'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 Smith Barney or Robinson-Humphrey, as the case may be, be no higher than
the commissions paid to that broker by any other similar customer of that broker
who  receives  brokerage and  research services  that are  similar in  scope and
quality to those received by the Fund.

The Investment Manager performs investment management and advisory services  for
various  clients, including other registered  investment companies, and pension,
profit-sharing and other  employee benefit  trusts, as well  as individuals.  In
many  cases, portfolio transactions may be executed in an aggregated transaction
as part of concurrent authorizations to  purchase or sell the same security  for
numerous accounts served by the Investment

- --------------------------------------------------------------------------------
                                      B-18
<PAGE>
Manager,  some of which accounts may have investment objectives similar to those
of the Fund.  The objective of  aggregated transactions is  to obtain  favorable
execution  and/or lower  brokerage commissions,  although there  is no certainty
that such objective will be achieved. Although executing portfolio  transactions
in  an  aggregated  transaction  potentially  could  be  either  advantageous or
disadvantageous to any one or more particular accounts, aggregated  transactions
will be effected only when the Investment Manager believes that to do so will be
in the best interest of the Fund, and the Investment Manager is not obligated to
aggregate  orders  into  larger  transactions. These  orders  generally  will be
averaged as to  price. When  such aggregated transactions  occur, the  objective
will  be  to  allocate the  executions  in a  manner  which is  deemed  fair and
equitable to each of the accounts involved over time. In making such  allocation
decisions,  the  Investment  Manager will  use  its business  judgment  and will
consider, among  other  things, any  or  all  of the  following:  each  client's
investment  objectives, guidelines, and restrictions,  the size of each client's
order, the amount of  investment funds available in  each client's account,  the
amount  already committed by each client to that or similar investments, and the
structure of each client's portfolio.  Although the Investment Manager will  use
its  best efforts to be  fair and equitable to  all clients, including the Fund,
there can be no assurance that any investment will be proportionately  allocated
among clients according to any particular or predetermined standard or criteria.
The  Investment Manager will not  include orders on behalf  of any affiliated or
related entity  in any  aggregated transaction  that includes  orders placed  on
behalf of the Fund.

                        -------------------------------
                             DIRECTORS AND OFFICERS
                          ----------------------------

The  names and addresses of the directors  and officers of the Company and their
principal occupations and certain other affiliations during the past five  years
are  given  below.  Unless  otherwise  specified, the  address  of  each  of the
following persons  is  Four  Embarcadero  Center,  Suite  3000,  San  Francisco,
California 94111.

   
WILLIAM  L.  PRICE,+  Director,  Chairman  of  the  Board,  President  and Chief
Executive Officer.  Mr.  Price is  a  Principal  of RCM  Capital  Management,  a
California  Limited Partnership ("RCM"), with which he has been associated since
1977.(1) (See  THE INVESTMENT  MANAGER.)  He is  also  a Principal  and  Limited
Partner  of RCM Limited L.P., a  California limited partnership ("RCM Limited"),
the sole general  partner of  RCM; a Director,  Executive Vice  President and  a
stockholder of RCM General Corporation ("RCM General"), the sole General Partner
of  RCM  Limited; Director  and Executive  Vice President  of RCM  Capital Trust
Company ("RCM Trust");  Director, Chairman  of the  Board and  President of  RCM
Capital Funds, Inc. ("Capital Funds"), an open-end management investment company
for which RCM acts as investment manager; a General Partner of RREEF Partners, a
California  general  partnership comprised  of certain  limited partners  of RCM
Limited (RREEF  Partners owns  an interest  in RREEF  America Partners,  a  real
estate  investment manager); and a stockholder  of The RREEF Corporation, a real
estate investment manager.
    

   
MICHAEL J. APATOFF,+  Director and  Chief Operating  Officer. Mr.  Apatoff is  a
Principal  and Chief Operating Officer of RCM, with which he has been associated
since 1991. He is also a Principal and Limited Partner of RCM Limited; Director,
Executive Vice  President  and a  stockholder  of RCM  General;  Director,  Vice
President  and Chief Operating  Officer of Capital Funds;  Vice President of RCM
Strategic  Global  Government  Fund,  Inc.  ("RCS"),  a  closed-end   management
investment  company for which  RCM acts as investment  manager; and Director and
Vice President  of  RCM Trust.  From  1986 to  1991  he was  an  Executive  Vice
President and Chief Operating Officer of the Chicago Mercantile Exchange.
    

WILLIAM  S. STACK,+  Director and  Vice President.  Mr. Stack  is a  Senior Vice
President, member  of  the  Equity  Portfolio  Management  Team  and  the  Chief
Investment  Officer of  International Equities  of RCM,  with which  he has been
associated since  1994. He  is also  a  Senior Vice  President of  RCM  Limited;
Director and Senior Vice President of RCM General; and Vice President of Capital
Funds. From October 1985 to August 1994, he was employed by Lexington Management
Corporation,

- --------------------------------------------------------------------------------
                                      B-19
<PAGE>
where he was a Managing Director and Chief Investment Officer and managed mutual
funds and investments in global, international and domestic securities.

   
DEWITT  F.  BOWMAN,* Director.  Mr. Bowman  is  Principal of  Pension Investment
Consulting, where he has been since February 1994. From February 1989 to January
1994 he was Chief Investment Officer for California Public Employees  Retirement
System,  a public  pension fund. He  is also  a director of  RREEF America REIT,
Inc., a Trustee of Brandes International Fund  and a Trustee of the Pacific  Gas
and Electric Nuclear Decommissioning Trust.
    

   
FRANK  P. GREENE,* Director.  Mr. Greene is  a partner and  portfolio manager of
Wood Island Associates, Inc., a registered investment adviser, with which he has
been associated since August 1991.  From November 1987 to  August 1991 he was  a
Senior  Vice President and Portfolio Manager of Siebel Capital Management, Inc.,
a registered investment adviser.
    

WALTER C. PRICE,  JR., Vice President.  Mr. Price  is a Principal  of RCM,  with
which  he has been  associated since 1974. He  is also a  Limited Partner of RCM
Limited; a stockholder of RCM General; a Vice President of Capital Funds; and  a
General Partner of RREEF Partners.

HUACHEN  CHEN, Vice President. Mr. Chen is a Principal of RCM, with which he has
been associated since 1984. He is also  a Limited Partner of RCM Limited, and  a
stockholder of RCM General.

SUSAN C. GAUSE, Treasurer and Chief Financial Officer. Ms. Gause is the Director
of  Finance at RCM, with  which she has been associated  since 1994. She is also
Director of Finance  of RCM  Limited; Treasurer  of RCM  General; Treasurer  and
Chief  Financial Officer of Capital Funds  and RCS; and Chief Financial Officer,
Treasurer and Trust Officer of RCM Trust.  From December 1990 to June 1994,  she
was  employed by Citicorp Bankers Leasing, where she was Chief Financial Officer
and  Controller.  From  December  1988  to  December  1990,  she  was  Assistant
Controller and Accounting Manager at Sierra Capital Realty Advisers.

ANTHONY  AIN, Vice President, Secretary and General Counsel. Mr. Ain is a Senior
Vice President, Secretary  and General Counsel  of RCM, with  which he has  been
associated since 1992. He is also a Senior Vice President, Secretary and General
Counsel  of RCM  Limited; Vice President,  Secretary and General  Counsel of RCM
General; Vice President, Secretary and General Counsel of Capital Funds and RCS;
and Vice President, Secretary and General  Counsel of RCM Trust. From  September
1988  to April 1992 he was employed by the United States Securities and Exchange
Commission, where he was senior special counsel and counsel to a Commissioner.

CAROLINE M. HIRST, Vice President and Principal Accounting Officer. Ms. Hirst is
Director of Investment  Operations of RCM,  with which she  has been  associated
since  1994.  She is  also Vice  President and  Principal Accounting  Officer of
Capital Funds and RCS  and Vice President  of RCM Trust.  From February 1980  to
April 1994 she was employed by Morgan Grenfell Asset Management, Ltd., where she
served as Head of International Administration.

   
It  is presently  anticipated that  regular meetings  of the  Company's Board of
Directors will be  held on  a quarterly  basis. The  Company's Audit  Committee,
whose  present members are DeWitt F. Bowman  and Frank P. Greene, meets with the
Company's independent  accountants  to exchange  views  and information  and  to
assist  the full Board in fulfilling  its responsibilities relating to corporate
accounting and reporting practices.  Each director of the  Company who is not  a
director,  officer,  principal  or employee  of  the Investment  Manager  or any
company affiliated with the Investment Manager (an "Outside Director")  receives
a  fee of $6,000  per year plus $1,000  for each Board  meeting attended, and is
reimbursed for travel and other  expenses incurred in connection with  attending
Board meetings.
    
- ------------------------
*   Member, Audit Committee of the Company.

+   Director who is an "interested person" of the
    Company, as defined in Section 2(a)(19) of the 1940 Act.

   
(1) RCM was established in July, 1986 as the
successor  to Rosenberg Capital Management (which  was established in 1970). Any
    historical references  herein  to RCM  prior  to  July, 1986  refer  to  the
    operations of Rosenberg Capital Management.
    

- --------------------------------------------------------------------------------
                                      B-20
<PAGE>
The following table sets forth the aggregate compensation expected to be paid by
the  Company  for the  fiscal  year ending  December  31, 1996,  to  the Outside
Directors and  the aggregate  compensation  paid to  the Outside  Directors  for
service  on  the Company's  Board and  that of  all other  funds in  the Company
complex (as defined in Schedule 14A under the Securities Exchange Act of 1934):

   
<TABLE>
<CAPTION>
                                          PENSION OR
                                          RETIREMENT                              TOTAL COMPENSATION
                                       BENEFITS ACCRUED                            FROM COMPANY AND
                         AGGREGATE        AS PART OF         ESTIMATED ANNUAL       COMPANY COMPLEX
                       COMPENSATION         COMPANY            BENEFITS UPON            PAID TO
        NAME           FROM COMPANY        EXPENSES             RETIREMENT           DIRECTOR(5*)
- ---------------------  -------------  -------------------  ---------------------  -------------------
<S>                    <C>            <C>                  <C>                    <C>
DeWitt F. Bowman         $  10,000              None                   N/A             $  10,000
Frank P. Greene          $  10,000              None                   N/A             $  10,000
</TABLE>
    

- -------------------------------
* Indicates total number of funds in Company Complex, including the Fund.

                        -------------------------------
                             THE INVESTMENT MANAGER
                          ----------------------------

The Company's Board of Directors has overall responsibility for the operation of
the Fund.  Pursuant  to such  responsibility,  the Board  has  approved  various
contracts  for various financial  organizations to provide,  among other things,
day to day management services required by  the Fund. The Company, on behalf  of
the  Fund, has retained as the Fund's Investment Manager RCM Capital Management,
a California Limited  Partnership, with  principal offices  at Four  Embarcadero
Center,  Suite 3000, San Francisco, California  94111. The Investment Manager is
actively engaged in providing  investment supervisory services to  institutional
and  individual clients, and is registered  under the Investment Advisers Act of
1940. The Investment Manager was established in July, 1986, as the successor  to
the  business  and operations  of Rosenberg  Capital Management  (established in
1970). The general partner and controlling  person of the Investment Manager  is
RCM  Limited L.P., a  California limited partnership, which  is the successor in
interest to RCM General, the former  general partner. RCM Limited is managed  by
its  general  partner, RCM  General Corporation,  a California  corporation. RCM
Limited has 19 limited partners,  all of whom are  principals of RCM: Claude  N.
Rosenberg,  Jr., Michael J. Apatoff, Huachen  Chen, Ellen M. Courtien, Edward C.
Derkum, Eamonn F.  Dolan, G. Nicholas  Farwell, Joanne L.  Howard, Stephen  Kim,
John  A. Kriewall, John D. Leland, Jr., Melody L. McDonald, Lee N. Price, Walter
C. Price, Jr., William L. Price,  Jeffrey S. Rudsten, Gary W. Schreyer,  Kenneth
B. Weeman, Jr., and Andrew C. Whitelaw.

The  sole limited partner of the Investment  Manager is RCM Acquisition, Inc., a
wholly owned subsidiary of Travelers Group Inc. ("Travelers"). Travelers,  whose
principal  executive offices are located at  388 Greenwich Street, New York, New
York 10013,  is  a  financial  services holding  company  engaged,  through  its
subsidiaries,  principally  in  the business  of  consumer  financing, insurance
services, and investment services.  The common stock of  Travelers is listed  on
the  New York  Stock Exchange. The  limited partner  does not have  the power to
control the management or operations of the Investment Manager. Pursuant to  the
agreement  between Primerica Corporation, the  predecessor of Travelers, and RCM
Limited, Travelers  has an  option  to acquire  the  remaining interest  of  the
Investment Manager from RCM Limited in the year 2000.

   
See  ORGANIZATION  AND MANAGEMENT  in the  Prospectus for  a description  of the
proposed relationship of the Investment Manager to Dresdner Bank A.G.
    

   
The Investment Manager  provides the Fund  with investment supervisory  services
pursuant  to an Investment  Management Agreement, Power  of Attorney and Service
Agreement (the "Management Agreement") dated  December 19, 1995. The  Investment
Manager   manages  the  Fund's   investments,  provides  various  administrative
services, and  supervises the  Fund's  daily business  affairs, subject  to  the
authority  of  the  Board  of Directors.  In  addition,  the  Investment Manager
provides persons satisfactory  to the  Company's Board  of Directors  to act  as
officers  and employees of the Company. Such  officers and employees, as well as
    

- --------------------------------------------------------------------------------
                                      B-21
<PAGE>
   
certain directors  of  the  Company,  may be  principals  or  employees  of  the
Investment  Manager. The Investment  Manager is also  the investment manager for
each series  of  RCM Capital  Funds,  Inc., an  open-end  management  investment
company  consisting of three  series, and RCM  Strategic Global Government Fund,
Inc., a closed-end  management investment company.  The Investment Manager  also
acts  as sub-adviser to  Bergstrom Capital Corporation,  a closed-end management
investment company.
    

   
The Management  Agreement was  approved by  the Fund's  initial stockholders  on
December 19, 1995, and by the unanimous vote of the Company's Board of Directors
on  December 19,  1995. The Management  Agreement will continue  in effect until
December 19, 1997. It may be renewed from year-to-year thereafter, provided that
any such renewals  have been specifically  approved at least  annually by (i)  a
majority  of  the Company's  Board  of Directors,  including  a majority  of the
Outside Directors who are not parties to the Management Agreement or  interested
persons  of any such person, cast in person  at a meeting called for the purpose
of voting on such approval,  or (ii) the vote of  a majority (as defined in  the
1940  Act) of the  outstanding voting securities of  the Fund and  the vote of a
majority of  the  Outside Directors  who  are not  parties  to the  contract  or
interested persons of any such party.
    

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

The Investment Manager has  voluntarily agreed to limit  Fund expenses until  at
least  December 31, 1996,  as described in the  Prospectus. In subsequent years,
the Fund has agreed to reimburse the Investment Manager for any such payments to
the extent that the Fund's operating  expenses are otherwise below this  expense
cap. This obligation will not be recorded on the books of the Fund to the extent
that  the total  operating expenses  of the Fund  are at  or above  1.75% of the
average daily net assets of the  Fund. However, if the total operating  expenses
of  the Fund fall below 1.75% of  average daily net assets, the reimbursement to
the Investment Manager will be accrued by the Fund as a liability. In  addition,
the  Fund  is  subject  to  certain limitations  on  expenses  imposed  by state
securities laws. At present, the only expense limitation known to the Company to
be in effect is in California. Under California law, the Fund will be subject to
an annual expense limitation equal to the  sum of 2.5% of the first $30  million
of  the Fund's average net  assets, 2.0% of the next  $70 million of average net
assets, and 1.5%  of the remaining  average net assets.  If the Fund's  expenses
(excluding interest, brokerage commissions litigation expenses and certain other
items), were to exceed such limit in any fiscal year, the Investment Manager has
agreed  to  bear  the amount  of  such excess  to  the extent  required  by such
limitations.

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

- --------------------------------------------------------------------------------
                                      B-22
<PAGE>
The Management  Agreement is  terminable  without penalty  on 60  days'  written
notice by a vote of the majority of the Fund's outstanding voting securities, by
a vote of the majority of the Company's Board of Directors, or by the Investment
Manager on 60 days' written notice and will automatically terminate in the event
of its assignment (as defined in the 1940 Act).

                        -------------------------------
   
                             HOW TO PURCHASE SHARES
    
                          ----------------------------

Shares  of the Fund are offered on a continuous basis at the net asset value per
share (next determined  after receipt  of subscriptions), without  any sales  or
other  charge. The Company has delegated to  the Investment Manager the right at
any time to waive, increase, or decrease the minimum requirements applicable  to
initial or subsequent investments.

   
The  Company will issue share certificates of  the Fund only for full shares and
only upon  the  specific request  of  the stockholder.  Confirmation  statements
reflecting  current transactions  in stockholder  accounts serve  as evidence of
ownership of shares of the Fund.
    

In its discretion, the Company may  accept securities of equal value instead  of
cash  in payment of all or part of  the subscription price for the Fund's shares
offered by the Prospectus. Any such securities  (a) will be valued at the  close
of  the New  York Stock  Exchange composite tape  on the  day of  receipt of the
subscription in  accordance with  the  method of  valuing the  Fund's  portfolio
described  under NET ASSET VALUE; (b) will have a tax basis to the Fund equal to
such value; (c) must not be  "restricted securities;" and (d) must be  permitted
to  be purchased in accordance with the Fund's investment objective and policies
and must be securities that the Fund would be willing to purchase at that  time.
Prospective  stockholders considering this method  of payment should contact the
Company in advance to discuss the  securities in question and the  documentation
necessary to complete the transaction.

                        -------------------------------
                                NET ASSET VALUE
                          ----------------------------

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

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

- --------------------------------------------------------------------------------
                                      B-23
<PAGE>
Trading  in  securities on  foreign exchanges  and  over-the counter  markets is
normally completed at  times other than  the close  of the business  day in  New
York. In addition, foreign securities and commodities trading may not take place
on  all business days in  New York, and may occur  in various foreign markets on
days which are not business days in New York and on which net asset value is not
calculated.  The   calculation  of   net  asset   value  may   not  take   place
contemporaneously  with the determination of  the prices of portfolio securities
used in such calculation.  Events affecting the  values of portfolio  securities
that occur between the time their prices are determined and the close of the New
York  Stock Exchange will not be reflected in the calculation of net asset value
unless  the  Board  of  Directors  determines  that  a  particular  event  would
materially affect net asset value, in which case an adjustment will be made.

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

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

                        -------------------------------
                              REDEMPTION OF SHARES
                          ----------------------------

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

                        -------------------------------
                    DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
                          ----------------------------

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

- --------------------------------------------------------------------------------
                                      B-24
<PAGE>
REGULATED  INVESTMENT COMPANY.   The  Company intends to  qualify the  Fund as a
"regulated investment company" under Subchapter  M of the Internal Revenue  Code
of  1986, as amended (the  "Code"). The Fund will be  treated as a separate fund
for tax purposes  and thus the  provisions of the  Code generally applicable  to
regulated  investment companies  will be applied  to the Fund.  In addition, net
capital gains, net investment income, and operating expenses will be  determined
separately  for the  Fund. By  complying with  the applicable  provisions of the
Code, the Fund will not be subject  to federal income taxes with respect to  net
investment   income  and   net  realized   capital  gains   distributed  to  its
stockholders.

To qualify under  Subchapter M, the  Fund must (i)  derive at least  90% of  its
gross  income  from dividends,  interest,  payments with  respect  to securities
loans, and gains  from the  sale or other  disposition of  stock, securities  or
currencies   and  certain  options,  futures,   forward  contracts  and  foreign
currencies; (ii) derive less than 30% of its gross income from the sale or other
disposition of  stock or  securities  held less  than  three months;  and  (iii)
diversify  its holdings so that, at the end of each fiscal quarter, (a) at least
50% of the market value of the Fund's assets is represented by cash, cash items,
U.S. Government securities and other securities, limited, in respect of any  one
issuer,  to an amount  not greater than 5%  of the Fund's assets  and 10% of the
outstanding voting securities of such issuer, and  (b) not more than 25% of  the
value of its total assets is invested in the securities of any one issuer (other
than  U.S. Government securities or the securities of other regulated investment
companies), or in  two or more  issuers which  the Fund controls  and which  are
engaged in the same or similar trades or businesses.

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

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

Stockholders  who are subject to federal or state income or franchise taxes will
be required  to pay  taxes on  dividends and  capital gains  distributions  they
receive  from the Fund whether paid in additional shares of the Fund or in cash.
To the extent  that dividends received  by the  Fund would qualify  for the  70%
dividends  received deduction available to corporations, the Fund must designate
in a written  notice to  stockholders the amount  of the  Fund's dividends  that
would  be eligible  for this  treatment. In order  to qualify  for the dividends
received deduction, a corporate stockholder must hold the Fund shares paying the
dividends upon which  a dividend  received deduction is  based for  at least  46
days.  Stockholders, such  as qualified employee  benefit plans,  who are exempt
from federal and state taxation  generally would not have  to pay income tax  on
dividend  or capital gain distributions. Prospective tax-exempt investors should
consult their  own tax  advisers with  respect  to the  tax consequences  of  an
investment in the Fund under federal, state, and local tax laws.

Investors  who purchase shares of  the Fund shortly before  the record date of a
dividend or  capital gain  distribution will  pay full  price for  those  shares
("buying  a dividend")  and then  receive some  portion of  the price  back as a
taxable dividend or capital gain distribution.

- --------------------------------------------------------------------------------
                                      B-25
<PAGE>
WITHHOLDING.  Under the Code, distributions of net investment income by the Fund
to a  stockholder  who, as  to  the U.S.,  is  a nonresident  alien  individual,
nonresident  alien  fiduciary  of a  trust  or estate,  foreign  corporation, or
foreign  partnership  (a  "foreign  stockholder")   will  be  subject  to   U.S.
withholding  tax (at a rate  of 30% or a lower  treaty rate, whichever is less).
Withholding will  not  apply  if a  dividend  paid  by the  Fund  to  a  foreign
stockholder  is "effectively connected" with a  U.S. trade or business, in which
case the reporting and withholding  requirements applicable to U.S. citizens  or
domestic  corporations will apply. Distributions  of net long-term capital gains
to foreign stockholders who  are neither U.S. resident  aliens nor engaged in  a
U.S.  trade or business are not subject to tax withholding, but in the case of a
foreign stockholder who  is a nonresident  alien individual, such  distributions
ordinarily will be subject to U.S. income tax at a rate of 30% if the individual
is  physically present  in the U.S.  for more  than 182 days  during the taxable
year.

SECTION 1256  CONTRACTS.   Many of  the options,  future contracts  and  forward
contracts  entered into by the  Fund are "Section 1256  contracts." Any gains or
losses on Section 1256 contracts are generally considered 60% long-term and  40%
short-term  capital gains or losses, although certain foreign currency gains and
losses from  such contracts  may be  treated as  ordinary income  in  character.
Section 1256 contracts held by the Fund at the end of each taxable year (and for
purposes  of 4% nondeductible  excise tax on  October 31 or  such other dates as
prescribed under  the  Code)  are  "marked to  market,"  with  the  result  that
unrealized gains or losses are treated as though they were realized.

STRADDLE  RULES.  Generally, the hedging  transactions and other transactions in
options, futures and  forward contracts  undertaken by  the Fund  may result  in
"straddles"  for U.S. federal income tax purposes. The straddle rules may affect
the character  of gains  or losses  realized by  the Fund.  In addition,  losses
realized  by the Fund on  positions that are part of  a straddle position may be
deferred under the straddle rules, rather than being taken into account for  the
taxable  year in which these losses are realized. Because only a few regulations
implementing the straddle rules have  been promulgated, the tax consequences  of
hedging  transactions and options, futures and forward contracts to the Fund are
not entirely clear.

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

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

FOREIGN  TAXES.   The Fund may  be required  to pay withholding  and other taxes
imposed by foreign countries  which would reduce  the Fund's investment  income,
generally  at rates from  10% to 40%. Tax  conventions between certain countries
and   the    United   States    may   reduce    or   eliminate    such    taxes.

- --------------------------------------------------------------------------------
                                      B-26
<PAGE>
If  more than 50% of  the value of the  Fund's total assets at  the close of its
taxable year consists of  securities of foreign corporations,  the Fund will  be
eligible  to elect  to "pass-through" to  the Fund's stockholders  the amount of
foreign income and similar  taxes paid by  the Fund. If  this election is  made,
stockholders  generally  subject to  tax will  be required  to include  in gross
income (in addition to taxable dividends actually received) their pro rata share
of the foreign  income taxes paid  by the Fund,  and may be  entitled either  to
deduct  (as an  itemized deduction)  their pro  rata share  of foreign  taxes in
computing their  taxable income  or to  use  it (subject  to limitations)  as  a
foreign tax credit against their U.S. federal income tax liability. No deduction
for  foreign  taxes  may  be  claimed by  a  stockholder  who  does  not itemize
deductions. Each stockholder will be notified within 60 days after the close  of
the  Fund's taxable  year whether  the foreign  taxes paid  by the  Fund will be
"pass-through" for that year.

Generally, a credit for foreign taxes is  subject to the limitation that it  may
not  exceed the stockholder's U.S. tax attributable  to his or her total foreign
source taxable income. For this purpose,  if the pass-through election is  made,
the  source of the Fund's income will  flow through to stockholders of the Fund.
With respect to such election, gains from the sale of securities will be treated
as derived from U.S. sources  and certain currency fluctuation gains,  including
fluctuation gains from foreign currency denominated debt securities, receivables
and  payables will be treated as ordinary  income derived from U.S. sources. The
limitation on the  foreign tax credit  is applied separately  to foreign  source
passive income, and to certain other types of income. Stockholders may be unable
to  claim  a credit  for the  full amount  of their  proportionate share  of the
foreign taxes paid by the Fund. The foreign tax credit is modified for  purposes
of the federal alternative minimum tax and can be used to offset only 90% of the
alternative  minimum  tax imposed  on corporations  and individuals  and foreign
taxes generally  are not  deductible in  computing alternative  minimum  taxable
income.

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

                        -------------------------------
                               INVESTMENT RESULTS
                          ----------------------------

Average  total  return  ("T")  will   be  calculated  as  follows:  an   initial
hypothetical  investment of $1000 ("P") is divided  by the net asset value as of
the first day of the period in  order to determine the initial number of  shares
purchased. Subsequent dividends and capital gain distributions are reinvested at
net  asset value on the reinvestment date  determined by the Board of Directors.
The sum of the initial shares purchased and shares acquired through reinvestment
is multiplied by the net asset value per share as of the end of the period ("n")
to determine ending redeemable  value ("ERV"). The ending  value divided by  the
initial  investment converted to  a percentage equals  total return. The formula
thus used, as required by the SEC, is:

                                P(1+T)(N) = ERV

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

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

In  addition, in  order more completely  to represent the  Fund's performance or
more accurately  to compare  such performance  to other  measures of  investment
return,  the Fund  also may  include in  advertisements and  stockholder reports
other total return performance data based on time-weighted, monthly-linked total
returns computed on the percentage  change of the month  end net asset value  of
the Fund after allowing for the effect of any cash

- --------------------------------------------------------------------------------
                                      B-27
<PAGE>
additions  and withdrawals recorded during the  month. Returns may be quoted for
the same or different periods as those for which average total return is quoted.
The Fund's investment results will vary from time-to-time depending upon  market
conditions,  the composition of the Fund's portfolio, and operating expenses, so
that any investment results reported should not be considered representative  of
what  an investment in the Fund may earn in any future period. These factors and
possible differences in calculation methods should be considered when  comparing
the  Fund's  investment  results  with  those  published  for  other  investment
companies, other investment vehicles and unmanaged indices. Results also  should
be  considered  relative  to the  risks  associated with  the  Fund's investment
objective and policies.

                        -------------------------------
                         DESCRIPTION OF CAPITAL SHARES
                          ----------------------------

   
All shares of  the Company have  equal voting rights  and will be  voted in  the
aggregate,  and not by series, except where  voting by series is required by law
or where the matter involved affects only one series. There are no conversion or
preemptive rights in connection  with any shares of  the Company. All shares  of
the  Fund when duly issued will be  fully paid and non-assessable. The rights of
the holders of  shares of the  Fund may not  be modified except  by vote of  the
majority  of the outstanding shares of the  Fund. As of December 19, 1995, there
were 10,000 shares of the Fund outstanding.
    

Shares of the Company  have non-cumulative voting rights,  which means that  the
holders  of more than 50%  of all series of the  Company's shares voting for the
election of directors can elect 100% of the directors if they wish to do so.  In
such  event, the holders of the remaining less that 50% of the shares voting for
the election of directors will not be able to elect any person or persons to the
Company's Board of  Directors. Stockholders are  entitled to one  vote for  each
full  share  held  and  fractional  votes  for  fractional  shares  held. Unless
otherwise provided by law  or Articles of Incorporation  or Bylaws, the  Company
may  take or authorize any action upon the favorable vote of the holders of more
than 50% of the outstanding shares of the Company.

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

                        -------------------------------
                             ADDITIONAL INFORMATION
                          ----------------------------

STOCKHOLDER REPORTS

The  fiscal year of  the Fund ends  on December 31  of each year.  The Fund will
issue to its  stockholders semi-annual  and annual reports;  each annual  report
will  contain  a schedule  of the  Fund's  portfolio securities,  audited annual
financial  statements,  and  information   regarding  purchases  and  sales   of
securities  during  the period  covered  by the  report  as well  as information
concerning the Fund's performance  in accordance with  rules promulgated by  the
Securities  and  Exchange  Commission. In  addition,  stockholders  will receive
quarterly statements of the status of their accounts reflecting all transactions
having taken  place  within that  quarter.  The  federal income  tax  status  of
stockholders'  distributions will also be reported to stockholders after the end
of each fiscal year.

COUNSEL

Certain legal matters  in connection  with the  capital shares  offered by  this
Prospectus  have been  passed upon  for the Fund  by Paul,  Hastings, Janofsky &
Walker, 555 South Flower Street, Los Angeles, California 90071. The validity  of
the   capital  stock  offered  by  the   Prospectus  has  been  passed  upon  by

- --------------------------------------------------------------------------------
                                      B-28
<PAGE>
   
Venable, Baetjer  and Howard,  LLP, 1800  Mercantile Bank  & Trust  Building,  2
Hopkins  Plaza, Baltimore, Maryland 21201. Paul, Hastings, Janofsky & Walker has
acted and will continue to act as  counsel to the Investment Manager in  various
matters.
    

INDEPENDENT ACCOUNTANTS

Coopers  & Lybrand L.L.P.,  333 Market Street,  San Francisco, California 94105,
have been appointed as independent auditors  for the Company. Coopers &  Lybrand
L.L.P.  will conduct an annual  audit of the Fund,  assist in the preparation of
the Fund's federal and state income tax returns, and consult with the Company as
to matters  of accounting,  regulatory  filings, and  federal and  state  income
taxation.

CUSTODIAN

   
State  Street Bank and  Trust Company (the "Custodian"),  P.O. Box 1713, Boston,
Massachusetts 02105, serves as  custodian of all securities  and funds owned  by
the  Fund in accordance with the terms  of the Custodian Contract. The Custodian
also provides dividend paying services to the Fund.
    

LICENSE AGREEMENT

   
Under the License Agreement dated December 19, 1995, the Investment Manager  has
granted  the Company the right to use the  "RCM" name and has reserved the right
to withdraw its consent to the use of  such name by the Company at any time,  or
to grant the use of such name to any other company. In addition, the Company has
granted  the Investment Manager, under certain  conditions, the use of any other
name it might assume in the future, with respect to any other investment company
sponsored by the Investment Manager.
    

FINANCIAL STATEMENTS

   
The Company's Statement  of Assets as  of December  22, 1995 and  the report  of
Coopers  &  Lybrand L.L.P.  thereon,  appear at  the  end of  this  Statement of
Additional Information. Such  financial statement  has been  included herein  in
reliance  upon such report  given upon their authority  as experts in accounting
and auditing.
    

REGISTRATION STATEMENT

The Fund's  Prospectus  and this  Statement  of Additional  Information  do  not
contain all of the information set forth in the Company's registration statement
and  related forms as filed with the  SEC, certain portions of which are omitted
in accordance with rules and regulations of the SEC. The registration  statement
and  related forms may be  inspected at the Public Reference  Room of the SEC at
Room 1024, 450 5th  Street, N.W., Judiciary Plaza,  Washington, D.C. 20549,  and
copies thereof may be obtained from the SEC at prescribed rates.

Statements   contained  in  the  Prospectus  or  this  Statement  of  Additional
Information as to  the contents of  any contract or  other document referred  to
herein or in the Prospectus are not necessarily complete, and, in each instance,
reference  is made to  the copy of such  contract or other  document filed as an
exhibit to  the  Company's Registration  Statement,  each such  statement  being
qualified in all respects by such reference.

- --------------------------------------------------------------------------------
                                      B-29
<PAGE>
   
                       REPORT OF INDEPENDENT ACCOUNTANTS
    

   
To the Board of Directors of
 RCM Equity Funds, Inc.:
    

   
    RCM Global Technology Fund
    

   
We  have audited  the accompanying  statement of  assets and  liabilities of RCM
Equity Funds, Inc. (RCM  Global Technology Fund) as  of December 22, 1995.  This
financial  statement  is  the  responsibility  of  the  Fund's  management.  Our
responsibility is to express an opinion on this financial statement based on our
audit.
    

   
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain  reasonable
assurance   about  whether   the  financial   statement  is   free  of  material
misstatement. An audit includes examining, on a test basis, evidence  supporting
the  amounts and disclosures in the financial statement. Our procedures included
confirmation of cash held  by the custodian  as of December  22, 1995. An  audit
also includes assessing the accounting principles used and significant estimates
made  by  management,  as well  as  evaluating the  overall  financial statement
presentation. We believe  that our  audit provides  a reasonable  basis for  our
opinion.
    

   
In  our  opinion, the  statement  of assets  and  liabilities referred  to above
present fairly, in all material respects,  the financial position of RCM  Equity
Funds,  Inc. (RCM Global Technology Fund) as of December 22, 1995, in conformity
with generally accepted accounting principles.
    

   
                                             COOPERS & LYBRAND L.L.P.
    

   
Boston, Massachusetts
December 22, 1995
    

- --------------------------------------------------------------------------------
                                      B-30
<PAGE>
   
                           RCM GLOBAL TECHNOLOGY FUND
                      STATEMENT OF ASSETS AND LIABILITIES
                               DECEMBER 22, 1995
    

   
<TABLE>
<CAPTION>
ASSETS:
<S>                                                                                 <C>
  Cash............................................................................  $ 100,000
  Deferred Organizational Cost....................................................     75,000
                                                                                    ---------
    Total Assets..................................................................    175,000
                                                                                    ---------
LIABILITIES:
  Payable for Deferred Organization Cost..........................................     75,000
                                                                                    ---------
    Total Liabilities.............................................................     75,000
                                                                                    ---------
NET ASSETS........................................................................  $ 100,000
                                                                                    ---------
                                                                                    ---------
NET ASSET VALUE PER SHARE
  (10,000 shares outstanding; 50,000,000 shares authorized).......................  $   10.00
                                                                                    ---------
                                                                                    ---------
NET ASSETS CONSIST OF:
  Paid in Capital.................................................................  $ 100,000
                                                                                    ---------
                                                                                    ---------
</TABLE>
    

   
                 NOTES TO STATEMENTS OF ASSETS AND LIABILITIES
                               DECEMBER 22, 1995
    

   
NOTE 1
    

   
RCM Global Technology Fund (the "Fund") is a non-diversified, no-load series  of
RCM  Equity Funds, Inc. (the "Company"). The  Company is organized as a Maryland
corporation and  is registered  under the  Investment Company  Act of  1940,  as
amended.
    

   
NOTE 2
    

   
Cost  incurred by  the Fund  in connection  with its  organization, estimated at
$75,000, will be deferred and amortized on a straight-line basis for a five-year
period beginning at the commencement of the Fund's operations. In the event that
any of  the initial  shares of  the Fund  are redeemed  during the  amortization
period,   the   redemption  proceeds   will  be   reduced  by   any  unamortized
organizational expense allocable to the shares redeemed.
    

   
NOTE 3
    

   
The Company,  on behalf  of the  Fund,  has retained  as the  Fund's  Investment
Manager   RCM  Capital   Management,  a  California   Limited  Partnership  (the
"Investment Manager"). The  Investment Manager manages  the Fund's  investments,
provides  various  administrative  services,  and  supervises  the  Fund's daily
business affairs. The  Fund pays  the Investment  Manager an  annualized fee  of
1.00% of the value of the Fund's average daily net assets.
    

   
To  limit the expenses of the Fund,  the Investment Manager has agreed, until at
least December 31, 1996,  to pay the  Fund on a quarterly  basis the amount,  if
any, by which the ordinary operating expenses of the Company attributable to the
Fund for the quarter (except interest, taxes, and extraordinary expenses) exceed
the  annual rate of  1.75% of the value  of the average daily  net assets of the
Fund. In subsequent years,  the Fund will reimburse  the Investment Manager  for
any such payments to the extent that the Fund's operating expenses are otherwise
below this expense cap.
    

- --------------------------------------------------------------------------------
                                      B-31
<PAGE>
                                     PART C
                               OTHER INFORMATION

ITEM 24.  FINANCIAL STATEMENTS AND EXHIBITS.

(A)  FINANCIAL STATEMENTS

   
    Registrant's  Statement of Assets and Liabilities as of December 22, 1995 is
included in Part B.
    

(B)  EXHIBITS

   
<TABLE>
<C>        <S>
       1.  Articles of Incorporation of Registrant -- filed as Exhibit 1 to the
            Registration Statement on September 29, 1995 and incorporated herein by
            reference.
       2.  Bylaws of Registrant.
       3.  None.
       4.  Specimen of certificate for capital stock ($0.0001 par value) of Registrant
            and excerpts from Articles of Incorporation and Bylaws.
       5.  Form of Investment Management Agreement, Power of Attorney and Services
            Agreement between Registrant and RCM Capital Management, a California Limited
            Partnership (the "Investment Manager").
       6.  None.
       7.  None.
       8.  Form of Custodian Contract and remuneration schedule between Registrant and
            State Street Bank and Trust Company.
       9.  License Agreement between the Investment Manager and Registrant related to the
            use by Registrant of the name "RCM."
     10.1  Opinion and Consent of Venable, Baetjer and Howard, LLP as to legality of
            securities being registered.
     10.2  Consent of Paul, Hastings, Janofsky & Walker.
      11.  Consent of Coopers & Lybrand L.L.P.
      12.  None.
      13.  Investment letter of initial investors in Registrant.
      14.  None.
      15.  None.
      16.  None.
</TABLE>
    

ITEM 25.  PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

    The Investment Manager of RCM Global Technology Fund (the "Fund"), a  series
of   Registrant,  RCM  Equity  Funds,  Inc.  (the  "Company"),  is  RCM  Capital
Management, a  California Limited  Partnership (the  "Investment Manager").  The
general  partner and controlling person of the Investment Manager is RCM Limited
L.P., a California limited partnership  ("RCM Limited"). RCM Limited is  managed
by  its general partner, RCM General Corporation, a California corporation ("RCM
General"). The limited partners  of RCM Limited  are set forth  in Part B  under
"The  Investment Manager." In addition, certain of the directors and officers of
the Company are officers  or employees of  the Investment Manager.  Accordingly,
the  Investment Manager, RCM Limited  and RCM General may  be deemed to be under
common control with the Company.

    The Investment Manager also serves as  investment manager of each series  of
RCM  Capital Funds,  Inc., an  open-end management  investment company ("Capital
Funds") and RCM Strategic Global Government

                                      C-1
<PAGE>
   
Fund, Inc., a closed-end management  investment company ("RCS"). Certain of  the
directors  and officers of Capital Funds and RCS are also directors, officers or
employees of the Investment Manager. Accordingly,  Capital Funds and RCS may  be
deemed to be under common control with the Company.
    

    The  sole limited partner of the Investment Manager is RCM Acquisition, Inc.
("RCM  Acquisition"),  a  wholly  owned  subsidiary  of  Travelers  Group   Inc.
("Travelers").  Travelers does not  have the power to  control the management or
operation of the Investment Manager. Pursuant to an agreement between  Travelers
and  RCM Limited, Travelers has  an option to acquire  RCM Limited's interest in
the Investment  Manager,  as discussed  in  more detail  in  Part B  under  "The
Investment  Manager." Accordingly,  Travelers may be  deemed to  be under common
control with the Company.

ITEM 26.  NUMBER OF HOLDERS OF SECURITIES.

   
    As of December 19, 1995
    

   
<TABLE>
<S>                          <C>
      TITLE OF CLASS         NUMBER OF RECORD HOLDERS
- ---------------------------  ------------------------

RCM Global Technology Fund              2
 Capital Stock
 ($0.0001 par value)
</TABLE>
    

ITEM 27.  INDEMNIFICATION.

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

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

    The  Company and its directors and  officers have obtained coverage under an
errors and  omissions  insurance policy.  The  terms and  conditions  of  policy
coverage  conform generally  to the  standard coverage  available throughout the
investment company industry. The coverage also applies to the Investment Manager
and its partners and employees.

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

                                      C-2
<PAGE>
ITEM 28.  BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

   
    Certain directors,  officers,  employees  or  shareholders  of  RCM  General
Corporation,  the  general partner  of RCM  Limited L.P.,  which is  the general
partner of the Company's Investment Manager, formerly were directors,  officers,
employees  or shareholders of The RREEF  Corporation. The RREEF Corporation is a
registered investment  adviser specializing  in the  management of  equity  real
estate  investments for institutional, tax-exempt clients. Currently, no officer
or employee of RCM is a director, officer, employee or shareholder of The  RREEF
Corporation.  However, certain of  such persons are  former directors, officers,
employees or shareholders of The RREEF Corporation and in that capacity  receive
certain  retirement benefits. Claude N. Rosenberg  Jr., John D. Leland, Jr., Lee
N. Price, Gary W. Schreyer, John A.  Kriewall, Walter C. Price, Jr., William  L.
Price,  Edward C. Derkum, Jeffrey S. Rudsten,  Kenneth B. Weeman, Jr., Andrew C.
Whitelaw, and G.  Nicholas Farwell  are General  Partners of  RREEF Partners  (a
California general partnership). RREEF Partners is the holder of 24.85% interest
in  RREEF  America Partners,  a general  partnership which  is registered  as an
investment adviser to group  trusts (the RREEF MidAmerica  Funds, the RREEF  USA
Funds  and the RREEF West  Funds) designed to afford  pension and profit sharing
plans and other investors exempt from federal income tax the opportunity to make
equity investments in real properties.
    

    The sole limited  partner of the  Investment Manager is  RCM Acquisition,  a
wholly  owned  indirect  subsidiary  of  Travelers.  Travelers,  whose principal
executive offices are located at 338 Greenwich Street, New York, New York 10013,
is a  financial  services holding  company  engaged, through  its  subsidiaries,
principally  in  the  business  of consumer  financial,  insurance  services and
investment services. Securities of Travelers are  listed for trading on the  New
York  Stock Exchange.  RCM Acquisition and  its predecessors have  been the sole
limited partner of the Investment Manager since July 1986.

ITEM 29.  PRINCIPAL UNDERWRITERS.

    (a)  None.

    (b)  None.

    (c)  None.

ITEM 30.  LOCATION OF ACCOUNTS AND RECORDS.

   
    Accounts, books and other  records required by Rules  31a-1 and 31a-2  under
the  1940 Act are maintained and held  in the offices of the Company's Custodian
at Mutual Funds Services Division,  P.O. Box 1713, Boston, Massachusetts  02105,
and  in  the offices  of the  Company  and its  investment manager,  RCM Capital
Management, Four  Embarcadero  Center,  Suite 3000,  San  Francisco,  California
94111.
    

    Records  covering portfolio transactions are also maintained and kept by the
Company's custodian,                         .

ITEM 31.  MANAGEMENT SERVICES.

    None.

ITEM 32.  UNDERTAKINGS.

    Registrant  undertakes  to  file  a  post-effective  amendment,   containing
reasonably   current  financial  statements  with  respect  to  the  RCM  Global
Technology Fund, which need not be certified, within four to six months from the
effective date of Registrant's 1933  Act Registration Statement with respect  to
such series.

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

                                      C-3
<PAGE>
                                   SIGNATURES

   
    Pursuant  to  the  requirements  of  the  Securities  Act  of  1933  and the
Investment Company Act  of 1940,  RCM Equity Funds,  Inc. has  duly caused  this
Amendment  No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the  City of San Francisco, State  of
California, on December 19, 1995.
    
                                          RCM EQUITY FUNDS, INC.

                                          By:       /s/ WILLIAM L. PRICE

                                          --------------------------------------
                                           CHAIRMAN OF THE BOARD, PRESIDENT AND
                                                 CHIEF EXECUTIVE OFFICER

   
    Each  person  whose signature  appears  below hereby  authorizes  William L.
Price, Michael J. Apatoff, Susan  C. Gause and Anthony Ain,  or any of them,  as
attorney-in-fact,  to sign on his/her behalf,  individually and in each capacity
stated  below,   any  amendment   to  the   Registration  Statement   (including
post-effective amendments) and to file the same, with all exhibits thereto, with
the Securities and Exchange Commission.
    

   
    Pursuant  to the requirements of the  Securities Act of 1933, this Amendment
No. 2  to the  Registration Statement  has been  signed below  by the  following
persons in the capacities and on the date indicated.
    

   
<TABLE>
<CAPTION>
                      SIGNATURE                                       TITLE                         DATE
- ------------------------------------------------------  ---------------------------------  ----------------------

<S>                                                     <C>                                <C>
(1) Principal Executive Officer

                 /s/ WILLIAM L. PRICE                   Chairman of the Board, President,
     -------------------------------------------         Chief Executive Officer and            December 19, 1995
                   William L. Price                      Director

(2) Principal Financial Officer

                 /s/ SUSAN C. GAUSE*
     -------------------------------------------        Treasurer                               December 19, 1995
                    Susan C. Gause

(3) Principal Accounting Officer

                /s/ CAROLINE M. HIRST*
     -------------------------------------------        Principal Accounting Officer            December 19, 1995
                  Caroline M. Hirst

(4) Directors

               /s/ MICHAEL J. APATOFF*
     -------------------------------------------                                                December 19, 1995
                  Michael J. Apatoff

                /s/ WILLIAM S. STACK*
     -------------------------------------------                                                December 19, 1995
                   William S. Stack

                 /s/ DEWITT F. BOWMAN
     -------------------------------------------                                                December 19, 1995
                   DeWitt F. Bowman

                 /s/ FRANK P. GREENE
     -------------------------------------------                                                December 19, 1995
                   Frank P. Greene

          *By          /s/ WILLIAM L. PRICE
     -------------------------------------------                                                December 19, 1995
                   William L. Price
                 AS ATTORNEY-IN-FACT
</TABLE>
    

*  By William L. Price, pursuant to  Power of Attorney filed with the Securities
and Exchange Commission  with Registrant's Registration  Statement on  September
29, 1995.
<PAGE>
                                 EXHIBIT INDEX
                             RCM EQUITY FUNDS, INC.
                        FORM N-1A REGISTRATION STATEMENT

   
<TABLE>
<C>        <S>
       1.  Articles of Incorporation of Registrant -- filed as Exhibit 1 to the Registration
            Statement on September 29, 1995 and incorporated herein by reference.
       2.  Bylaws of Registrant.
       3.  None.
       4.  Specimen of certificate for capital stock ($0.0001 par value) of Registrant and
            excerpts from Articles of Incorporation and Bylaws.
       5.  Form of Investment Management Agreement, Power of Attorney and Services Agreement
            between Registrant and RCM Capital Management, a California Limited Partnership (the
            "Investment Manager").
       6.  None.
       7.  None.
       8.  Form of Custodian Contract and remuneration schedule between Registrant and State
            Street Bank and Trust Company.
       9.  License Agreement between the Investment Manager and Registrant related to the use by
            Registrant of the name "RCM."
     10.1  Opinion and Consent of Venable, Baetjer and Howard, LLP as to legality of securities
            being registered.
     10.2  Consent of Paul, Hastings, Janofsky & Walker.
      11.  Consent of Coopers & Lybrand L.L.P.
      12.  None.
      13.  Investment letter of initial investors in Registrant.
      14.  None.
      15.  None.
      16.  None.
</TABLE>
    

<PAGE>

                            ARTICLES OF INCORPORATION
                                       OF
                             RCM EQUITY FUNDS, INC.

     THE UNDERSIGNED, Timothy B. Parker, whose address is Four Embarcadero
Center, Suite 3000, San Francisco, California 94111, being at least 18 years of
age and acting as incorporator, hereby forms a corporation under and by virtue
of the Maryland General Corporation Law.

                                    ARTICLE I

                                      NAME

     The name of the Corporation is RCM Equity Funds, Inc. (the "Corporation").

                                   ARTICLE II

                               PURPOSES AND POWERS

     The purposes for which the Corporation is formed are to act as an
investment company under the Federal Investment Company Act of 1940, as amended,
and the rules and regulations promulgated thereunder (the "1940 Act"), and to
exercise and enjoy all of the general powers, rights and privileges granted to,
or conferred upon, corporations by the Maryland General Corporation Law (the
"Maryland Law") now or hereafter in force.

                                   ARTICLE III

                       PRINCIPAL OFFICE AND RESIDENT AGENT

     The 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) The total number of shares of all classes of capital stock
     which the Corporation shall have the authority to issue is 1,000,000,000
     shares of capital stock, of the par value of $0.0001 per share. There shall
     initially be one series of shares, designated as the "RCM Global Technology
     Fund," consisting initially of 50,000,000 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
     950,000,000 unclassified shares of capital stock. The Board of Directors of
     the Corporation is hereby empowered to increase or decrease, from


                                        1
<PAGE>

     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.

     (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 share, 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 Articles of Incorporation
and the Bylaws of the Corporation (the "Bylaws").

     (4)  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. As used in these
Articles of Incorporation and subject to the prior sentence of this
Article IV(4), a "series" of shares represents interests in the same assets,
liabilities, income, earnings and profits of the Corporation. Subject to
applicable law, the power of the Board of Directors to classify or reclassify
any of the unissued shares of capital stock shall include, without limitation,
authority to classify or reclassify any such capital 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 shares
     of any series which have been redeemed, purchased or otherwise acquired by
     the Corporation shall remain part of the authorized capital stock and be
     subject to classification and reclassification as provided herein;

          (b)  Whether or not and, if so, the rates, amounts and times at which,
     and the conditions under which, dividends shall be payable on shares of
     such series;

          (c)  Whether or not shares of such series shall have voting rights in
     addition to any general voting rights provided by law and these Articles of
     Incorporation of the Corporation and, if so, the terms of such additional
     voting rights; and


                                        2
<PAGE>

          (d)  The rights of the holders of shares of such series (including any
     classes thereof) upon the liquidation, dissolution or winding up of the
     affairs of, or upon a distribution of the assets of, the Corporation.

     (5) (a)  Subject to the Board of Directors classification power under
Article IV(4), shares of capital stock of the Corporation shall have the
following preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption:

               (i)    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 such assets, payments or funds were received by the
     Corporation for all purposes, subject only to the rights of creditors, and
     shall be so handled upon the books of account of the Corporation. Such
     consideration, assets, income, earnings, profits and proceeds thereof,
     including any proceeds derived from the sale, exchange or liquidation
     thereof, and any assets derived from any reinvestment of such proceeds in
     whatever form, are herein referred to as "assets belonging to" such series.
     Any assets, income, earnings, profits, and proceeds thereof, and any funds
     or payments which are not readily attributable to any particular series,
     shall be allocable among any one or more of the series in such manner and
     on such basis as the Board of Directors, in its sole discretion, shall deem
     fair and equitable.

               (ii)   The assets belonging to any series of capital stock shall
     be charged with the liabilities in respect of such series and shall also be
     charged with such series' share of the general liabilities of the
     Corporation determined as hereinafter provided. The determination of the
     Board of Directors shall be conclusive as to the amount of such
     liabilities, including the amount of accrued expenses and reserves; as to
     any allocation of the same to a given series; and as to whether the same
     are allocable to one or more series. The liabilities so allocated to a
     series are herein referred to as "liabilities belonging to" such series.
     Any liabilities which are not readily attributable to any particular series
     shall be allocable among any one or more of the series in such manner and
     on such basis as the Board of Directors, in its sole discretion, shall deem
     fair and equitable.

               (iii)  Shares of each series of capital stock shall be entitled
     to such dividends and distributions, in capital 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).


                                        3
<PAGE>

               (iv)   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, subject to Article IV(5)(b), among
     such stockholders in proportion to the number of shares of such series held
     by them and recorded on the books of the Corporation or in such other
     manner as the Board of Directors may determine in accordance with law. 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 as determined by the Board of Directors,
     in its sole discretion.

          (b)  A class of shares may be invested with one or more other classes
     in a common investment portfolio comprising a series. Notwithstanding the
     provisions of paragraph 5(a) of this Article IV, 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 paragraph (5)(a) of this Article IV 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 values of each such class or as otherwise determined by the Board of
     Directors in accordance with law and the Corporation's current registration
     statement as filed with the Securities and Exchange Commission (the
     "Registration Statement").  The allocation of investment income, capital
     gains, expenses and liabilities of the Corporation or any series, among the
     series and any classes thereof shall be determined by the Board of
     Directors in a manner that is consistent with applicable law and the
     Registration Statement.

               (ii)   As more fully set forth in this Article IV(5)(b), 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
     these Articles of Incorporation, the classes comprising a series shall have
     the



                                        4
<PAGE>

     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.

          (c)  Each shareholder of each series or class of capital stock shall
     be entitled to one vote for each share of capital stock then standing in
     his 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 or class except that: (i) when expressly required by law, shares of
     capital stock shall be voted by individual series or class and (ii) only
     shares of capital stock of the respective series or class affected by a
     matter shall be entitled to vote on such matter. At all meetings of the
     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 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 Articles of Incorporation,  the
     Bylaws or law, until the holders of the requisite amount of shares of
     capital stock shall be present. At any such adjourned meeting at which a
     quorum may be present, any business may be transacted which might have been
     transacted at the meeting as originally called. The absence from any
     meeting, in person or by proxy, of holders of the number of shares of
     capital stock of the Corporation in excess of the quorum which may be


                                        5
<PAGE>

     required by the Maryland Law, the 1940 Act, other applicable statute, these
     Articles of Incorporation or the Bylaws, 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.

          (d)  To the extent the Corporation has funds or other property legally
     available therefor, each holder of shares of capital stock of the
     Corporation shall be entitled to require the Corporation to redeem all or
     any part of the shares standing in the name of such holder on the books of
     the Corporation, at the redemption price of such shares as in effect from
     time-to-time as may be determined by the Board of Directors of the
     Corporation in accordance with the provisions hereof, subject to the right
     of the Board of Directors of the Corporation to suspend the right of
     redemption of shares of capital stock of the Corporation 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 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 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)(d), 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 Registration Statement for that series. Payment of the
     redemption price shall be made in cash by the Corporation at such time and
     in such manner as may be determined from time-to-time by the Board of
     Directors of the Corporation unless, in the opinion of the Board of
     Directors, which shall be conclusive, conditions exist which make payment
     wholly in cash unwise or undesirable; in such event the Corporation may
     make payment wholly or partly by securities or other property included in
     the assets belonging or allocable to the series of the shares redemption of
     which is being sought, the value of which shall be determined as provided
     herein.

          (e)  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


                                        6
<PAGE>


     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
pursuant to the Bylaws, but shall never be less than permitted under the
Maryland Law and the 1940 Act. The number initially constituting the Board of
Directors is three (3), and the names of the persons who are to serve as
directors are:

                                William L. Price
                                William S. Stack
                               Michael J. Apatoff

     In no case shall a decrease in the number of directors shorten the term of
any incumbent director.

                                   ARTICLE VI

                  MANAGEMENT OF THE AFFAIRS OF THE CORPORATION

     (1)  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
Articles of Incorporation or by the Bylaws) shall be vested in and exercised by
the Board of Directors.

     (2)  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)  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 thereof.

     (4)  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 any 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.


                                        7
<PAGE>


     (5)  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 or a committee of the Board which
authorizes, approves or ratifies the contract or transaction; or the counting of
the vote of a director for the authorization, approval or ratification of the
contract or transaction. This Article VI(5) applies if:

          (a)  the fact of common directorship of interest is disclosed or known
     to: (i) the Board of Directors or the committee and the Board or the
     committee 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 capital 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 a committee of
the Board or at a meeting of the stockholders, as the case may be, at which the
contract or transaction is authorized, approved or ratified. If a contract or
transaction is not authorized, approved or ratified in one of the ways provided
for in clause (a) of the second sentence of this Article VI(5), the person
asserting the validity of the contract or transaction shall bear the burden of
proving that the contract or transaction was fair and reasonable to the
Corporation at the time it was authorized, approved or ratified. This
Article VI(5) does not apply to the fixing by the Board of Directors of
reasonable compensation for a director, whether as a director or in any other
capacity.

     (6)  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)  To the maximum extent permitted by the Maryland Law, as from time-to-
time amended, the Corporation: (a) shall indemnify and advance expenses to each
of its currently acting and its former directors against any and all liabilities
and expenses incurred in connection with their services in such capacities;
(b) shall indemnify and advance expenses to its currently acting and its former
officers to the full extent that indemnification shall be provided to directors;
and (c) may indemnify and advance


                                        8
<PAGE>


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
Bylaw, 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
or the Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages. No amendment of these Articles of
Incorporation or repeal of any of its provisions shall limit or eliminate any of
the benefits provided to any person who at any time is or was a director or
officer of the Corporation under this Section in respect of any act or omission
that occurred prior to such amendment or repeal.

     (8)  The Board of Directors of the Corporation shall have the authority to
make, alter or repeal from time-to-time any of the Bylaws except any particular
Bylaw which is specified as not subject to alteration or repeal by the Board of
Directors, subject to the requirements of the 1940 Act.

                                   ARTICLE VII

                                    DURATION

     The duration of the Corporation shall be perpetual.

                                  ARTICLE VIII

                                  MAJORITY VOTE

     Notwithstanding any provision of the Maryland Law requiring a greater
proportion than a majority of the votes of all classes or of any class of
capital stock entitled to be cast, to take or authorize any action, the
Corporation may, subject to other applicable provisions of law, these Articles
of Incorporation and the Bylaws, take or authorize such action upon the
concurrence of a majority of the aggregate number of the votes entitled to be
cast thereon; provided, that this provision shall not affect any requirement of
the 1940 Act or the Rules and Regulations of the Securities and Exchange
Commission thereunder, for any vote to be taken by the concurrence of a greater
proportion of the votes entitled to be cast or for any matter to be authorized
by the separate vote of a particular series or class of shares.

                                   ARTICLE IX

                               PRE-EMPTIVE RIGHTS

     No holder of the capital stock of the Corporation or of any other class of
capital 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


                                        9
<PAGE>


any new or additional issue of capital stock of any class, or of rights or
options to purchase any capital stock, or of securities convertible into, or
carrying rights or options to purchase, capital stock of any class, whether now
or 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 capital 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 capital stock by classification, reclassification or
otherwise, and all rights conferred upon stockholders of the Corporation by its
charter are granted subject to the provisions of this Article and the
reservation of the right to amend its charter herein contained.


                                       10
<PAGE>

     IN WITNESS WHEREOF, the undersigned incorporator of RCM EQUITY FUNDS, INC.
hereby executes these Articles of Incorporation and acknowledges the same to be
his act and deed.


Date:          August 7, 1995                /s/ Timothy B. Parker
       ------------------------------        ----------------------------------
                                             Timothy B. Parker, Incorporator

<PAGE>

                                     BYLAWS
                                       OF
                             RCM EQUITY FUNDS, INC.

                                TABLE OF CONTENTS
                                                                            PAGE
                                                                            ----


ARTICLE I  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

     Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

          Section 1. Principal Office. . . . . . . . . . . . . . . . . . . . .1
          Section 2. Principal Executive Office. . . . . . . . . . . . . . . .1
          Section 3. Other Offices . . . . . . . . . . . . . . . . . . . . . .1

ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

     Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . .1

          Section 1. Annual Meeting. . . . . . . . . . . . . . . . . . . . . .1
          Section 2. Special Meetings. . . . . . . . . . . . . . . . . . . . .1
          Section 3. Place of Meetings . . . . . . . . . . . . . . . . . . . .2
          Section 4. Notice of Meetings: Waiver of Notice. . . . . . . . . . .2
          Section 5. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . .2
          Section 6. Organization. . . . . . . . . . . . . . . . . . . . . . .3
          Section 7. Order of Business . . . . . . . . . . . . . . . . . . . .3
          Section 8. Fixing of Record Date . . . . . . . . . . . . . . . . . .3
          Section 9. Voting. . . . . . . . . . . . . . . . . . . . . . . . . .3
          Section 10. Proxies. . . . . . . . . . . . . . . . . . . . . . . . .3
          Section 11. Voting By Ballot . . . . . . . . . . . . . . . . . . . .3
          Section 12. Voting Of Shares By Certain Holders. . . . . . . . . . .4
          Section 13. Inspectors . . . . . . . . . . . . . . . . . . . . . . .4
          Section 14. Consent of Stockholders in Lieu of Meeting . . . . . . .4

ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

     Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . .5

          Section 1. General Powers. . . . . . . . . . . . . . . . . . . . . .5
          Section 2. Number of Directors . . . . . . . . . . . . . . . . . . .5
          Section 3. Term of Directors . . . . . . . . . . . . . . . . . . . .5
          Section 4. Resignation . . . . . . . . . . . . . . . . . . . . . . .5
          Section 5. Vacancies . . . . . . . . . . . . . . . . . . . . . . . .5
          Section 6. Place of Meetings . . . . . . . . . . . . . . . . . . . .5
          Section 7. Regular Meeting . . . . . . . . . . . . . . . . . . . . .5


                                      - i -
<PAGE>

                                                                            PAGE
                                                                            ----


          Section 8. Special Meetings. . . . . . . . . . . . . . . . . . . . .6
          Section 9. Telephone Meetings. . . . . . . . . . . . . . . . . . . .6
          Section 10. Notice of Meetings . . . . . . . . . . . . . . . . . . .6
          Section 11. Waiver of Notice of Meetings . . . . . . . . . . . . . .6
          Section 12. Quorum and Voting. . . . . . . . . . . . . . . . . . . .6
          Section 13. Organization . . . . . . . . . . . . . . . . . . . . . .6
          Section 14. Written Consent of Directors in Lieu of a Meeting. . . .7
          Section 15. Compensation . . . . . . . . . . . . . . . . . . . . . .7
          Section 16. Net Asset Value. . . . . . . . . . . . . . . . . . . . .7

ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

     Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

          Section 1. Committees of the Board of Directors. . . . . . . . . . .7
          Section 2. Meetings: Quorum. . . . . . . . . . . . . . . . . . . . .8

ARTICLE V  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

     Officers. Agents and Employees. . . . . . . . . . . . . . . . . . . . . .8

          Section 1. Election or Appointment of Officers . . . . . . . . . . .8
          Section 2. Effect of Election or Appointment of Officers Agents and
                         Employees . . . . . . . . . . . . . . . . . . . . . .9
          Section 3. Resignations. . . . . . . . . . . . . . . . . . . . . . .9
          Section 4. Removal of Officer, Agent or Employee . . . . . . . . . .9
          Section 5. Vacancies . . . . . . . . . . . . . . . . . . . . . . . .9
          Section 6. Compensation. . . . . . . . . . . . . . . . . . . . . . .9
          Section 7. Bonds or Other Security . . . . . . . . . . . . . . . . .9
          Section 8. President . . . . . . . . . . . . . . . . . . . . . . . .9
          Section 9. Vice President. . . . . . . . . . . . . . . . . . . . . 10
          Section 10. Treasurer. . . . . . . . . . . . . . . . . . . . . . . 10
          Section 11. Secretary. . . . . . . . . . . . . . . . . . . . . . . 10
          Section 12. Delegation of Duties . . . . . . . . . . . . . . . . . 11

ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

     Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
     Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

          Section 1. Stock Certificates. . . . . . . . . . . . . . . . . . . 12
          Section 2. Books of Accounts and Record of Stockholders. . . . . . 12
          Section 3. Transfers of Shares . . . . . . . . . . . . . . . . . . 12
          Section 4. Regulations . . . . . . . . . . . . . . . . . . . . . . 13


                                       ii
<PAGE>

                                                                           PAGE
                                                                           ----


          Section 5. Lost, Destroyed or Mutilated Certificates . . . . . . . 13
          Section 6. Fixing of a Record Date for Dividends and
                         Distributions . . . . . . . . . . . . . . . . . . . 13
          Section 7. Information to Stockholders and Others. . . . . . . . . 14

ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

     Depositories and Custodians . . . . . . . . . . . . . . . . . . . . . . 14

          Section 1. Depositories. . . . . . . . . . . . . . . . . . . . . . 14
          Section 2. Custodians. . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

     Contracts: Safekeeping and Transfer of Funds and Securities . . . . . . 14

          Section 1. Contracts . . . . . . . . . . . . . . . . . . . . . . . 14
          Section 2. Checks, Notes, Drafts, etc. . . . . . . . . . . . . . . 14
          Section 3. Sale or Transfer of Securities. . . . . . . . . . . . . 14

ARTICLE X  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

     Independent Public Accountants. . . . . . . . . . . . . . . . . . . . . 15

ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

     Annual Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE XII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

     Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15


                                      iii

<PAGE>

                                     BYLAWS
                                       OF
                             RCM EQUITY FUNDS, INC.


                                    ARTICLE I

                                     OFFICES

          Section 1. PRINCIPAL OFFICE. The principal office of the Corporation
shall be in the City of Baltimore, State of Maryland, or at any other place or
places, whether or not within the State of Maryland, as the Board of Directors
may designate.

          Section 2. PRINCIPAL EXECUTIVE OFFICE. The principal executive
offices of the Corporation shall be in the State of California, or at any other
place or places, whether or not within the State of California, as the Board of
Directors may designate.

          Section 3. OTHER OFFICES. The Corporation may have such other offices
in such places as the Board of Directors may from time-to-time determine or as
the business of the Corporation may require.


                                   ARTICLE II

                             MEETING OF STOCKHOLDERS

          Section 1. ANNUAL MEETING.  No annual meeting of the stockholders of
the Corporation shall be held in any year in which the election of directors is
not required to be acted upon under the Investment Company Act of 1940, as
amended (the "1940 Act"), unless otherwise determined by the Board of Directors.
An annual meeting may be held at any place within the United States as may be
determined by the Board of Directors and as shall be designated in the notice of
the meeting, at the time specified by the Board of Directors. Any business of
the Corporation may be transacted at an annual meeting without being
specifically designated in the notice unless otherwise provided by statute, the
Corporation's charter or these Bylaws.

          Section 2. SPECIAL MEETINGS.  Special meetings of the stockholders,
unless otherwise provided by law or by the Articles of Incorporation, may be
called for any purpose or purposes by a majority of the Board of Directors, by
the President, or on the written request of the holders of at least 25% of the
outstanding stock of the Corporation entitled to vote at such meeting. In
addition, special meetings of stockholders may be called on the written request
of the holders of at least 10% of the outstanding stock of the Corporation
entitled to vote at such meeting for the purposes of removing directors or to
assist in communicating with stockholders as required by the 1940 Act. Such
request shall state the purpose of such meeting and the matters proposed to be
acted on at such meeting. The Secretary shall inform the stockholders who make
the request of the reasonably estimated cost of preparing and mailing notice of
the meeting and, upon payment to the Corporation of such costs, the Secretary
shall give notice to each stockholder entitled to notice of the meeting. Unless
requested by stockholders entitled to cast a

<PAGE>

majority of all the votes entitled to be cast at such a meeting, a special
meeting need not be called to consider any matter that is substantially the same
as a matter voted on at any special meeting of the stockholders held during the
preceding 12 months. No business shall be transacted at any special meeting
except as provided in the notice of meeting.

          Section 3. PLACE OF MEETINGS. Annual and special meetings of the
stockholders shall be held at the principal executive office of the Corporation
or at such other place within the United States as the Board of Directors may
from time-to-time determine and as shall be stated in the notice of the meeting.

          Section 4. NOTICE OF MEETINGS: WAIVER OF NOTICE. Notice of the place,
date and time of the holding of each annual and special meeting of the
stockholders and the purpose or purposes of each special meeting shall be given
personally or by mail, not less than ten nor more than 90 days before the date
of such meeting, to each stockholder entitled to vote at such meeting and to
each other stockholder entitled to notice of the meeting. Notice by mail shall
be deemed to be duly given when deposited in the United States mail addressed to
the stockholder at his address as it appears on the records of the Corporation,
with postage thereon prepaid. Notice of any meeting of stockholders shall be
deemed waived by any stockholder who shall attend such meeting in person or by
proxy, or who shall, either before or after the meeting, submit a signed waiver
of notice which is filed with the records of the meeting.

          If any meeting of the stockholders shall be adjourned to another time
and place not more than 120 days after the original record date, and if the time
and place to which the meeting shall be adjourned were announced at the meeting
at which the adjournment is taken, no further notice of such meeting need be
given.

          Section 5. QUORUM. At all meetings of the stockholders, the holders
of one-third of the shares of 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, but this Section 5 shall not affect any requirement
under the laws of the State of Maryland ("Maryland Law"), the 1940 Act, or the
Articles of Incorporation for the vote necessary for the adoption of any
measure. In the absence of a quorum, no business may be transacted, except that
the holders of a majority of the shares of stock present in person or by proxy
and entitled to vote may adjourn the meeting from time-to-time, without notice
other than announcement thereat except as otherwise required by these Bylaws,
until the holders of the requisite amount of shares of stock shall be so
present. At any such adjourned meeting at which a quorum may be present, any
business may be transacted which might have been transacted at the meeting as
originally called. The absence from any meeting, in person or by proxy, of
holders of the number of shares of stock of the Corporation in excess of the
quorum which may be required by Maryland Law, the 1940 Act, any other applicable
statute, the Articles of Incorporation or these Bylaws, 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
thereat, in person or by proxy, holders of the number of shares of stock of the
Corporation required for action in respect of such other matter or matters.


                                        2
<PAGE>


          Section 6. ORGANIZATION. At each meeting of the stockholders, the
Chairman of the Board (if one has been designated by the Board of Directors), or
in the Chairman of the Board's absence or inability to act, the President, or in
the absence or inability of the Chairman of the Board and the President, a Vice
President, shall act as chairman of the meeting. The Secretary or the Assistant
Secretary, or in the Secretary's or the Assistant Secretary's absence or
inability to act, any person appointed by the chairman of the meeting, shall act
as secretary of the meeting and keep the minutes thereof.

          Section 7. ORDER OF BUSINESS. The order of business at all meetings
of the stockholders shall be as determined by the chairman of the meeting.

          Section 8. FIXING OF RECORD DATE. The Board of Directors may set a
record date for the purpose of determining stockholders entitled to notice of or
to vote at any meeting of the stockholders, or in order to make a determination
of stockholders for any other proper purpose. For purposes of determining the
record date for any meeting of stockholders, the record date may not be prior to
the close of business on the day the record date is fixed, and shall be not more
than 90 nor less than ten days before the date of the meeting of the
stockholders. Only those persons who were holders of record of shares at such
time shall be entitled to vote at such meeting and any adjournment thereof.

          Section 9. VOTING. Except as otherwise provided by Maryland Law, the
1940 Act or the Articles of Incorporation, each holder of record of shares of
stock of the Corporation having voting power shall be entitled at each meeting
of the stockholders to one vote for every share of such stock (regardless of
class) standing in such stockholder's name on the record of stockholders of the
Corporation as of the record date determined pursuant to Section 8 of this
Article or, if such record date shall not have been so fixed, then at the later
of (a) the close of business on the day on which notice of the meeting is mailed
or (b) the 30th day before the meeting. With respect to the election of
directors, each share of stock may be voted for as many individuals as there are
directors to be elected and for whose election the share is entitled to be
voted, and directors shall be elected by plurality vote. Except as otherwise
provided by Maryland Law, the 1940 Act, the Articles of Incorporation or these
Bylaws, any corporate action to be taken by vote of the stockholders shall be
authorized by a majority of the total votes cast at a meeting of stockholders by
the holders of shares present in person or represented by proxy and entitled to
vote on such action, provided that a quorum is present.

          Section 10. PROXIES. Each stockholder entitled to vote at any meeting
of stockholders may authorize another person or persons to act for him by a
proxy signed by such stockholder or his duly authorized attorney-in-fact. No
proxy shall be valid after the expiration of 11 months from the date thereof,
unless otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the stockholder executing it, except in those cases where such proxy
states that it is irrevocable and where an irrevocable proxy is permitted by
law.

          Section 11. VOTING BY BALLOT. On a vote by ballot, each ballot shall
be signed by the stockholder voting or by his proxy, if there be such proxy, and
shall state the number of shares voted.


                                        3
<PAGE>


          Section 12. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of its own
stock directly or indirectly owned by the Corporation shall not be voted at any
meeting and shall not be counted in determining the total number of outstanding
shares entitled to be voted at any given time, unless they are held by it in a
fiduciary capacity, in which case they may be voted and shall be counted in
determining the total number of shares outstanding at any given time.

          The Board of Directors may adopt by resolution a procedure whereby a
stockholder may certify in writing to the Corporation that any shares of stock
registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth the
class of stockholders who may make the certification, the purpose for which the
certification may be made, the form of certification, and the information to be
contained in it; if the certification is with respect to a record date or
closing of the stock transfer books, the time after the record date or closing
of the stock transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the procedure that the
Board of Directors considers necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the stockholder of record of
the specified stock in place of the stockholder who makes the certification.

          Section 13. INSPECTORS. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If the inspectors shall not be so appointed or if
any of them shall fail to appear or act, the chairman of the meeting may, and on
the request of any stockholder entitled to vote thereat shall, appoint
inspectors. The inspectors shall determine the number of shares outstanding and
the voting powers of each, the number of shares represented at the meeting, the
existence of a quorum, and the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the result, and perform such acts as are proper
to conduct the election or vote with fairness to all stockholders. On request of
the chairman of the meeting or any stockholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, request or matter
determined by them and shall execute a certificate of any fact found by them.
Any such report shall be signed by the inspector, if there is a single
inspector, or by a majority of the inspectors, if there is more than one
inspector. The report of the inspector or inspectors on the number of shares
represented at the meeting and the results of the voting shall be PRIMA FACIE
evidence thereof. No director or candidate for the office of director shall act
as inspector of an election of directors. Inspectors need not be stockholders.

          Section 14. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Except as
otherwise provided by Maryland Law, the 1940 Act or the Articles of
Incorporation, any action required or permitted to be taken at any annual or
special meeting of stockholders may be taken without a meeting, without prior
notice and without a vote, if the following are filed with the records of
stockholders meetings: (a) a unanimous written consent which sets forth the
action and is signed by each stockholder entitled to vote on the matter and
(b) a written waiver of any right to dissent signed by each stockholder entitled
to notice of the meeting but not entitled to vote thereat.



                                        4
<PAGE>

                                   ARTICLE III

                               BOARD OF DIRECTORS

          Section 1. GENERAL POWERS. Except as otherwise provided in the
Articles of Incorporation, the business and affairs of the Corporation shall be
managed under the direction of the Board of Directors. All powers of the
Corporation may be exercised by or under authority of the Board of Directors
except as conferred on or reserved to the stockholders by Maryland Law, the 1940
Act, the Articles of Incorporation or these Bylaws.

          Section 2. NUMBER OF DIRECTORS. Except as otherwise provided in the
Articles of Incorporation, the number of directors shall be fixed, and may be
increased or decreased from time-to-time, by resolution of the entire Board of
Directors then in office, provided, however, that the number of directors shall
in no event be less than the minimum number required by Maryland law nor more
than 12. Any vacancy created by an increase in number of directors may be filled
in accordance with Section 5 of this Article. No reduction in the number of
directors shall have the effect of removing any director from office prior to
the expiration of his term unless such director is specifically removed pursuant
to Maryland law. Directors need not be stockholders.

          Section 3. TERM OF DIRECTORS. The term of office of each director
shall be from the time of his election and qualification until his successor
shall have been elected and shall have been qualified unless sooner terminated
by his death, resignation or removal.

          Section 4. RESIGNATION. A director may resign at any time by giving
written notice of his resignation to the Board of Directors, the Chairman of the
Board, the President or the Secretary. Any such resignation shall take effect at
the time specified therein or, if the time when it shall become effective shall
not be specified therein, immediately upon its receipt; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.

          Section 5. VACANCIES. Subject to the provisions of Maryland Law and
the 1940 Act, any vacancies in the Board of Directors arising from death,
resignation, removal or any other cause other than an increase in the number of
directors, shall be filled by a vote of a majority of the remaining members of
the Board of Directors, whether or not sufficient to constitute a quorum. Any
vacancy on the Board of Directors by reason of an increase in the number of
directors may be filled by a majority vote of the entire Board of Directors in
office prior to the increase.

          Section 6. PLACE OF MEETINGS. Meetings of the Board of Directors may
be held at such place as the Board of Directors may from time-to-time determine
or as shall be specified in the notice of such meeting.

          Section 7. REGULAR MEETING. Regular meetings of the Board of
Directors may be held without notice at such time and place as may be determined
by the Board of Directors.


                                        5
<PAGE>

          Section 8. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by or at the request of two or more directors or by the
Chairman of the Board or the President.

          Section 9. TELEPHONE MEETINGS. Members of the Board of Directors or
of any committee thereof may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time. Subject to the provisions of
the 1940 Act, participation in a meeting by these means constitutes presence in
person at the meeting.

          Section 10. NOTICE OF MEETINGS. To the extent required by Maryland
Law or the 1940 Act, notice of each meeting of the Board of Directors shall be
given by the Secretary as hereinafter provided, in which notice shall be stated
the time and place of the meeting. Notice of each such meeting shall be
delivered to each director, either personally or by telephone or facsimile or by
any other standard form of telecommunication, at least 24 hours before the time
at which such meeting is to be held, or mailed by first-class mail, postage
prepaid, addressed to him at his residence or usual place of business, at least
three days before the day on which such meeting is to be held. If mailed, such
notice shall be deemed to be given when deposited in the United States mail
properly addressed, with postage thereon prepaid. Neither the business to be
transacted at, nor the purpose of, any annual, regular or special meeting of the
Board of Directors need be stated in the notice, unless specifically required by
Maryland Law, the 1940 Act, the Articles of Incorporation or these Bylaws.

          Section 11. WAIVER OF NOTICE OF MEETINGS. Notice of any meeting need
not be given to any director who shall, either before or after the meeting, sign
a written waiver of notice which is filed with the records of the meeting or who
shall attend such meeting.

          Section 12. QUORUM AND VOTING. One-third, but not less than two, of
the members of the entire Board of Directors shall be present in person at any
meeting of the Board of Directors in order to constitute a quorum for the
transaction of business at such meeting. Except as otherwise expressly required
by Maryland Law, the 1940 Act, the Articles of Incorporation or these Bylaws,
the act of a majority of the directors present at any meeting at which a quorum
is present shall be the act of the Board of Directors. In the absence of a
quorum at any meeting of the Board of Directors, a majority of the directors
present thereat may adjourn such meeting to another time and place until a
quorum shall be present thereat. Notice of the time and place of any such
adjourned meeting shall be given to the directors who were not present at the
time of the adjournment and, unless such time and place were announced at the
meeting at which the adjournment was taken, to the other directors. At any
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called.

          Section 13. ORGANIZATION. The Board of Directors may, by resolution
adopted by a majority of the entire Board of Directors, designate a Chairman of
the Board, who shall preside at each meeting of the Board of Directors. In the
absence or inability of the Chairman of the Board to preside at a meeting, the
President or, in the President's absence or inability to act, another


                                        6
<PAGE>


director chosen by a majority of the directors present, shall act as chairman of
the meeting and preside thereat. The Secretary or the Assistant Secretary (or,
in their absence or inability to act, any person appointed by the Chairman)
shall act as secretary of the meeting and keep the minutes thereof.

          Section 14. WRITTEN CONSENT OF DIRECTORS IN LIEU OF A MEETING.
Subject to the provisions of Maryland Law and the 1940 Act, any action required
or permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board of
Directors or committee, as the case may be, consent thereto in writing, and such
written consent or consents are filed with the minutes of the proceedings of the
Board of Directors or the committee.

          Section 15. COMPENSATION. Directors shall be entitled to receive, in
accordance with a resolution passed by the Board of Directors, compensation for
their services and for the cost of attendance at each annual, regular or special
meeting of the Board of Directors or any committee thereof. Nothing herein shall
be construed as precluding any director from serving the Corporation in any
other capacity and receiving compensation therefor.

          Section 16. NET ASSET VALUE. The Board of Directors shall determine
the times and method of calculation of the net asset value per share of the
Corporation subject to the requirements of the 1940 Act. The Board of Directors
may delegate its duties with respect to calculation of the net asset value per
share of the Corporation to one or more individuals or corporate management
companies and/or investment advisers pursuant to a written contract or contracts
which have obtained the requisite approvals, including any requisite approvals
of renewals thereof, of the Board of Directors and/or the stockholders in
accordance with the provisions of the 1940 Act.

                                   ARTICLE IV

                                   COMMITTEES

          Section 1. COMMITTEES OF THE BOARD OF DIRECTORS. The Board of
Directors may from time-to-time, by resolution adopted by a majority of the
members of the entire Board of Directors, designate one or more committees of
the Board of Directors, each such committee to consist of two or more directors
and to have such powers and duties, to the extent permitted by Maryland Law and
the 1940 Act, as the Board of Directors may, by resolution, prescribe. The Board
of Directors shall have the power to determine the size of each committee, to
name (or to change, from time-to-time) the members of each committee, to
designate alternate members to replace any absent or disqualified member or to
dissolve any such committee. Each member of any committee of the Board of
Directors shall serve at the pleasure of the Board of Directors, and may be
removed from such committee at any time by the vote of a majority of the members
present at any meeting of the Board of Directors. Nothing herein shall be deemed
to prevent the Board of Directors from appointing one or more committees
consisting in whole or in part of persons who are not directors; provided,
however, that no such committee shall have or may


                                        7
<PAGE>

exercise any authority or power of the Board of Directors in the management of
the business or affairs of the Corporation.

          Section 2. MEETINGS: QUORUM. One-third, but not less than two, of the
members of any committee shall be present in person at any meeting of such
committee in order to constitute a quorum for the transaction of business at
such meeting, and the act of a majority present shall be the act of such
committee. The Board of Directors may designate a chairman of any committee and
such chairman, or the Chairman of the Board or the President, may fix the time
and place of the committee's meetings unless the Board of Directors shall
otherwise provide. In the absence or disqualification of any member of any
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
(a) unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member, (b) determine
that, for purposes of that meeting, the member so appointed shall replace any
other member of the committee, and (c) determine that such member may serve in
such capacity until the next meeting of the Board of Directors. For purposes of
determining whether a quorum of the committee exists, any such member of the
Board of Directors appointed by the member or members of the committee present
shall be treated as a member of the committee, and any member so replaced shall
not be treated as a member of the committee.

                                    ARTICLE V

                         OFFICERS. AGENTS AND EMPLOYEES

          Section 1. ELECTION OR APPOINTMENT OF OFFICERS. The officers of the
Corporation shall include a President, who shall be a director, a Secretary and
a Treasurer, each of whom shall be elected or appointed by the Board of
Directors. The Board of Directors may elect or appoint one or more Vice
Presidents and may also elect or appoint such other officers, agents and
employees, and may give any officers so elected any title or titles, as it may
deem necessary or proper. Any two or more offices may be held by the same
person, except the offices of President and Vice President, but no officer shall
execute, acknowledge or verify any instrument as an officer in more than one
capacity. Such officers shall be elected or appointed by the Board of Directors.
Officers serve at the pleasure of the Board of Directors. Each officer shall
hold office until his successor shall have been duly elected or appointed and
shall have qualified, or until his death, or until he shall have resigned or
have been removed, as hereinafter provided in these Bylaws. In its discretion,
the Board of Directors may leave unfilled any office except those of President,
Treasurer and Secretary. The Board of Directors may from time-to-time elect or
appoint, or delegate to the President the power to appoint, such officers
(including one or more Assistant Vice Presidents, Assistant Treasurers and
Assistant Secretaries) and such agents, as may be necessary or desirable for the
business of the Corporation. Such officers and agents shall have such duties and
shall hold their offices for such terms as may be prescribed by the Board of
Directors or by the appointing authority.


                                        8
<PAGE>

          Section 2. EFFECT OF ELECTION OR APPOINTMENT OF OFFICERS AGENTS AND
EMPLOYEES. The election or appointment of any officer or agent of the
Corporation shall not, of itself, create any contract rights between the
Corporation and such officer, agent or employee.

          Section 3. RESIGNATIONS. Any officer of the Corporation may resign at
any time by giving written notice of resignation to the Board of Directors, the
Chairman of the Board, the President or the Secretary. Any such resignation
shall take effect at the time specified therein or, if the time when it shall
become effective shall not be specified therein, immediately upon its receipt;
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.

          Section 4. REMOVAL OF OFFICER, AGENT OR EMPLOYEE. Any officer, agent
or employee of the Corporation may be removed by the Board of Directors with or
without cause at any time in the sole discretion of the Board of Directors, and
the Board of Directors may delegate such power of removal to any officer in
respect of officers, agents or employees under his control. Such removal shall
be without prejudice to such person's contract rights, if any, but the
appointment of any person as an officer, agent or employee of the Corporation
shall not itself create contract rights.

          Section 5. VACANCIES. A vacancy in any office, either arising from
death, resignation, removal, creation of a new office, or any other cause, may
be filled by the Board of Directors for the unexpired portion of the term of the
office which shall be vacant.

          Section 6. COMPENSATION. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer in respect of other officers under his control.

          Section 7. BONDS OR OTHER SECURITY. If required by the Board of
Directors, any officer, agent or employee of the Corporation shall give a bond
or other security for the faithful performance of his duties, in such amount and
with such surety or sureties as the Board of Directors may require.

          Section 8. PRESIDENT. The President shall be the chief executive
officer. In the absence of the Chairman of the Board (or if there be none), he
shall preside at all meetings of the stockholders and of the Board of Directors.
To the extent permitted by Maryland Law and the 1940 Act, the President shall be
a member ex officio of each committee of the Board of Directors of which he is
not officially a member. The President shall have, subject to the control of the
Board of Directors, general supervision and control of the business and affairs
of the Corporation. The President may, to the extent permitted by Maryland Law
and the 1940 Act, execute any deed, mortgage, bond, contract or other instrument
to which the Corporation is a party except in cases where the execution thereof
shall be expressly delegated by the Board of Directors or by these Bylaws to
some other officer or agent of the Corporation or shall be required by law to be
otherwise executed. The President may employ and discharge employees and agents
of the Corporation, and in general shall perform all duties incident to the
Office of President, as well as such other duties as may be prescribed by the
Board of Directors from time-to-time. To the extent


                                        9
<PAGE>

consistent with Maryland Law and the 1940 Act, the President may delegate any or
all of the powers listed in this Section 8 of Article V to any other officer of
the Corporation.

          Section 9. VICE PRESIDENT. Each Vice President shall have such powers
and perform such duties as the Board of Directors or the President may from
time-to-time prescribe. The Board of Directors may designate one or more Vice
Presidents as Senior Vice President or as Vice President for a particular area
of responsibility. Unless and until the Board of Directors determines otherwise,
in the absence of the President or in the event of a vacancy in such office, the
most senior Senior Vice President, or, if none such exists, the most senior Vice
President (based on the order of election of all Vice Presidents currently in
office) shall perform the duties of the President and when so acting shall have
all the powers of, and shall be subject to the same restrictions as, the
President.

          Section 10. TREASURER. The Treasurer shall:

               (a)  have charge and custody of, and be responsible for, all the
funds and securities of the Corporation, except those which the Corporation has
placed in the custody of a bank or other entity permitted to act as custodian
for the Corporation under the 1940 Act pursuant to a written agreement
designating such bank or other entity as a custodian or sub-custodian of the
property of the Corporation;

               (b)  keep, or cause to be kept, full and accurate accounts of
receipts and disbursements in books belonging to the Corporation;

               (c)  cause all moneys and other valuables to be deposited to the
credit of the Corporation in such depositories as may be designated, from time-
to-time, by the Board of Directors;

               (d)  receive, and give receipts for, or cause to receive and give
receipts for, moneys due and payable, to the Corporation from any source
whatsoever;

               (e)  disburse, or cause to be disbursed, the funds of the
Corporation and supervise the investment of its funds as ordered or authorized
by the Board of Directors, taking proper vouchers therefor;

               (f)  render to the President and the Board of Directors, at the
regular meetings of the Board of Directors or whenever they may require it, an
account of all his transactions as Treasurer and of the financial condition of
the Corporation; and

               (g)  in general, perform all the duties incident to the office of
Treasurer and such other duties as from time-to-time may be assigned to him by
the Board of Directors or the President.

          Section 11. SECRETARY. The Secretary shall:


                                       10
<PAGE>

               (a)  keep or cause to be kept in one or more books provided for
the purpose, the minutes of all meetings of the Board of Directors, the
committees of the Board of Directors and the stockholders;

               (b)  see that all notices are duly given in accordance with the
provisions of these Bylaws and as required by law;

               (c)  be custodian of the corporate records and the seal of the
Corporation and affix and attest the seal to all other documents to be executed
on behalf of the Corporation under its seal;

               (d)  see that the books, reports, statements, certificates and
other documents and records required by law to be kept and filed are properly
kept and filed; and

               (e)  in general, perform all the duties incident to the office of
Secretary and such other duties as from time-to-time may be assigned to him by
the Board of Directors or the President.

     Section 12. DELEGATION OF DUTIES. In case of the absence of any officer of
the Corporation, or for any other reason that the Board of Directors may deem
sufficient, the Board of Directors may confer for the time being the powers or
duties, or any of them, of such officer upon any other officer or upon any
director.

                                   ARTICLE VI

                                 INDEMNIFICATION

To the maximum extent permitted by Maryland Law, as from time-to-time amended,
the Corporation: (a) shall indemnify, and may 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 may 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 may 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, the Board of Directors may make further provision for
indemnification of directors, officers, employees and agents. Neither the
amendment nor repeal of this Article, nor the adoption or amendment of any other
provision of these Bylaws, inconsistent with this Article, shall apply to or
affect in any respect the applicability of the preceding paragraph with respect
to any act or failure to act which occurred prior to such amendment, repeal or
adoption. The indemnification and other rights provided by this Article shall
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such person.



                                       11
<PAGE>

     The Corporation may purchase insurance on behalf of an officer or director
protecting such person to the maximum extent permitted under Maryland Law, from
liability arising from his activities as officer or director of the Corporation.
The Corporation may not purchase insurance, however, on behalf of any officer or
director of the Corporation that protects or purports to protect such person
from liability to the Corporation or to its stockholders to which such officer
or director would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.

     The Corporation may indemnify or purchase insurance to the extent provided
in this Article on behalf of an employee or agent who is not an officer or
director of the Corporation.

                                   ARTICLE VII

                                  CAPITAL STOCK

     Section 1. STOCK CERTIFICATES. Each holder of stock of the Corporation
shall be entitled upon request to have a certificate or certificates, in such
form as shall be approved by the Board of Directors, representing the number of
shares of the Corporation owned by him, provided, however, that certificates for
fractional shares will not be delivered in any case. The certificates
representing shares of stock shall be signed by or in the name of the
Corporation by the Chairman of the Board, the President or a Vice President and
by the Secretary, an Assistant Secretary, the Treasurer or an Assistant
Treasurer and sealed with the seal of the Corporation. Any or all of the
signatures or the seal on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate shall be issued, it may be
issued by the Corporation with the same effect as if such officer, transfer
agent or registrar were still in office at the date of issue. Certificates shall
be consecutively numbered; and if the Corporation shall, from time-to-time,
issue several classes of stock, each class may have its own number series. Each
certificate representing stock which is restricted as to its transferability or
voting powers, which is preferred or limited as to its dividends or as to its
share of the assets upon liquidation or which is redeemable at the option of the
Corporation, shall have a statement of such restriction, limitation, preference
or redemption provision, or a summary thereof, plainly stated on the
certificate. In lieu of such a statement or summary, the Corporation may set
forth upon the face or back of the certificate a statement that the Corporation
will furnish to any stockholder, upon request and without charge, a full
statement of such information.

     Section 2. BOOKS OF ACCOUNTS AND RECORD OF STOCKHOLDERS. There shall be
kept at the principal executive office of the Corporation or at the office of
its transfer agent correct and complete books and records containing the name
and address of each stockholder and the number of shares of stock of each class
held by such stockholder.

     Section 3. TRANSFERS OF SHARES. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent or
transfer clerk, and on surrender of the certificate or certificates, if


                                       12
<PAGE>

issued, for such shares properly endorsed or accompanied by a duly executed
stock transfer power and the payment of all taxes thereon. When such
requirements are satisfied and the transfer has been recorded on the books of
the Corporation, the Corporation shall cancel the old certificate and issue a
new certificate to the person entitled thereto. Except as otherwise provided by
law or these Bylaws, the Corporation shall be entitled to recognize the
exclusive rights of a person in whose name any share or shares stand on the
record of stockholders as the owner of such share or shares for all purposes,
including, without limitation, the rights to receive dividends or other
distributions, and to vote as such owner; and the Corporation shall not be bound
to recognize any equitable or legal claim to or interest in any such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof.

     Section 4. REGULATIONS. The Board of Directors may make such additional
rules and regulations, not inconsistent with these Bylaws, as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of stock of the Corporation. It may appoint, or authorize any officer or
officers to appoint, one or more transfer agents or one or more transfer clerks
and one or more registrars and may require all certificates for shares of stock
to bear the signature or signatures of any of them.

     Section 5. LOST, DESTROYED OR MUTILATED CERTIFICATES. The holder of any
certificates representing shares of stock of the Corporation shall immediately
notify the Corporation of any loss, theft, destruction or mutilation of such
certificate, and, upon request, shall provide to the Corporation an affidavit of
the rightful holder of such certificate stating that such certificate has been
lost, stolen, destroyed or mutilated, as the case may be. The Corporation may
issue a new certificate of stock in the place of any certificate theretofore
issued by it which the owner thereof shall allege to have been lost or destroyed
or which shall have been mutilated. Prior to issuing a new certificate to
replace any certificate alleged to have been lost, stolen, destroyed or
mutilated, the Board of Directors may, in its discretion, require such owner or
his legal representatives to give to the Corporation a bond in such sum, limited
or unlimited, and in such form and with such surety or sureties, as the Board of
Directors in its absolute discretion shall determine, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate, or issuance of a new
certificate. Anything herein to the contrary notwithstanding, the Board of
Directors, in its absolute discretion, may refuse to issue any such new
certificate, except pursuant to legal proceedings under Maryland Law.

     Section 6. FIXING OF A RECORD DATE FOR DIVIDENDS AND DISTRIBUTIONS. The
Board of Directors may fix, in advance, as a record date, a date not more than
90 days preceding the date fixed for the payment of any dividend or the making
of any distribution or the allotting of any other rights (except with respect to
voting which is provided for in Article II(8)). Once the Board of Directors
fixes such record date as the record date for the determination of the
stockholders entitled to receive any such dividend or distribution or the
allotment of such other rights, in such case only the stockholders of record at
the time so fixed shall be entitled to receive such dividend or distribution or
such other rights.


                                       13
<PAGE>


     Section 7. INFORMATION TO STOCKHOLDERS AND OTHERS. Any stockholder or his
agent may inspect and copy during usual business hours the Corporation's Bylaws,
minutes of the proceedings of its stockholders, annual statements of its
affairs, and voting trust agreements on file at its principal office.

                                  ARTICLE VIII

                           DEPOSITORIES AND CUSTODIANS

     Section 1. DEPOSITORIES. The funds of the Corporation shall be deposited
with such banks or other depositories as the Board of Directors may from time-
to-time determine.

     Section 2. CUSTODIANS. All securities and other investments may be
deposited in the safe keeping of such banks or other companies as the Board of
Directors may from time-to-time determine. Every arrangement entered into with
any bank or other company for the safe keeping of the securities and investments
of the Corporation shall contain provisions complying with the 1940 Act.

                                   ARTICLE IX

                           CONTRACTS: SAFEKEEPING AND
                        TRANSFER OF FUNDS AND SECURITIES

     Section 1. CONTRACTS. Subject to the requirements of the 1940 Act, the
Board of Directors may authorize any officer or agent to enter into any contract
or to execute and deliver any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances.

     Section 2. CHECKS, NOTES, DRAFTS, ETC.  Checks, notes, drafts, acceptances,
bills of exchange, and other orders or obligations for the payment of money
shall be signed by such officer or officers or person or persons as the Board of
Directors by resolution shall from time-to-time designate, and such authority
may be general or confined to specific instances.

     Section 3. SALE OR TRANSFER OF SECURITIES. Stock certificates, bonds or
other securities at any time owned by the Corporation may be held on behalf of
the Corporation or sold, transferred or otherwise disposed of subject to any
limits imposed by these Bylaws and pursuant to authorization by the Board of
Directors and, when so authorized to be held, sold, transferred or otherwise
disposed of, may be transferred from the name of the Corporation by the
signature of the President, a Vice President or the Treasurer or pursuant to any
procedure approved by the Board of Directors, subject to applicable law.


                                       14
<PAGE>

                                    ARTICLE X

                         INDEPENDENT PUBLIC ACCOUNTANTS

     The firm of independent public accountants which shall sign or certify the
financial statements of the Corporation which are filed with the Securities and
Exchange Commission shall, to the extent required by the 1940 Act, be selected
annually by the Board of Directors and ratified by the stockholders at their
next meeting in accordance with the provisions of the 1940 Act.

                                   ARTICLE XI

                                ANNUAL STATEMENT

     The books of account of the Corporation shall be examined by an independent
firm of public accountants at the close of each annual period of the Corporation
and at such other times as may be directed by the Board of Directors. A report
to the stockholders based upon each such examination shall be mailed to each
stockholder of record on such date with respect to each report as may be
determined by the Board of Directors, at his address as the same appears on the
books of the Corporation. Such annual statement shall be placed on file at the
Corporation's principal office within 120 days after the end of the
Corporation's fiscal year. Each such report shall show the assets and
liabilities of the Corporation as of the close of the annual or other period
covered by the report. Such report shall also show the Corporation's income and
expenses for the period from the end of the Corporation's preceding fiscal year
to the close of the annual or other period covered by the report and any other
information required by the 1940 Act, and shall set forth such other matters as
the Board of Directors or such firm of independent public accountants shall
determine.

                                   ARTICLE XII

                                   AMENDMENTS

     These Bylaws may be amended or repealed by the affirmative vote of a
majority of the Board of Directors at any regular or special meeting of the
Board of Directors, subject to the requirements of the 1940 Act.


                                       15


<PAGE>

                       INCORPORATED UNDER THE LAWS OF THE


                                STATE OF MARYLAND


          NUMBER                                             SHARES

                             RCM EQUITY FUNDS, INC.

                        RCM Global Technology Fund Series
                               (Par Value $.0001)


THIS CERTIFIED THAT _________________________________________ IS THE

REGISTERED HOLDER OF ________________________________________ SHARES

of the RCM Global Technology Fund Series Common Stock of RCM EQUITY FUNDS, INC.
TRANSFERABLE ONLY ON THE BOOKS OF THE CORPORATION BY THE HOLDER HEREOF IN
PERSON OF BY ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED.

     IN WITNESS WHEREOF, THE SAID CORPORATION HAS CAUSED THIS CERTIFICATE TO BE
     SIGNED BY ITS DULY AUTHORIZED OFFICERS AND ITS CORPORATE SEAL TO BE
     HEREUNTO AFFIXED
                THIS_________________ DAY OF _________________ AD. ______

          -------------------------------           --------------------------
                   Secretary                                 President


                    SHARES       Par Value           EACH
                                  $.0001


<PAGE>

                                   CERTIFICATE

                                       FOR

                                     SHARES



                              RCM Global Technology
                              Fund Series Common
                              Stock of RCM EQUITY
                              FUNDS, INC.




                                    ISSUED TO


                                      DATED


                              THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN
                              ONE CLASS OF CAPITAL STOCK AND THE BOARD OF
                              DIRECTORS MAY AUTHORIZE ADDITIONAL CLASSES OF
                              CAPITAL STOCK.  THE CORPORATION WILL FURNISH A
                              FULL STATEMENT OF THE BOARD OF DIRECTORS'
                              AUTHORITY AND OF THE DESIGNATIONS AND ANY
                              PREFERENCES, CONVERSION AND OTHER RIGHTS, VOTING
                              POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS,
                              QUALIFICATIONS AND TERMS AND CONDITIONS OF
                              REDEMPTION OF THE STOCK OF EACH CLASS WHICH THE
                              CORPORATION IS AUTHORIZED TO ISSUE TO ANY
                              STOCKHOLDER UPON REQUEST WITHOUT CHARGE.

     FOR VALUE RECEIVED, __________  HEREBY SELL, ASSIGN AND TRANSFER
UNTO _______________________________________________________________

______________________________________________________________ SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY
CONSTITUTE AND APPOINT

_____________________________________________________________ ATTORNEY
TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN NAMED CORPORATION
WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.

     DATED ________________   ______

          In presence of  __________________________________________

__________________________


                     NOTICE THE SIGNATURE OF THIS ASSIGNMENT
                MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE
              FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
               ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.



<PAGE>

                                  Ex-99.B4


                     EXCERPTS OF ARTICLES OF INCORPORATION
                                      OF
                            RCM EQUITY FUNDS, INC.


                                   ARTICLE IV
                                  CAPITAL STOCK

        (1)(a)  The total number of shares of all classes of capital stock
     which the Corporation shall have the authority to issue is 1,000,000,000
     shares of capital stock, of the par value of $0.0001 per share. There
     shall initially be one series of shares, designated as the "RCM Global
     Technology Fund," consisting initially of 50,000,000 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
     950,000,000 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.

   (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 share, 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 Articles of Incorporation
and the Bylaws of the Corporation (the "Bylaws").

   (4)  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. As used in these Articles of Incorporation
and subject to the prior sentence of this Article IV(4), a "series" of shares
represents interests in the same assets, liabilities, income, earnings and
profits of the Corporation. Subject to applicable law, the


<PAGE>

power of the Board of Directors to classify or reclassify any of the unissued
shares of capital stock shall include, without limitation, authority to
classify or reclassify any such capital 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 shares of any series which have been
     redeemed, purchased or otherwise acquired by the Corporation shall
     remain part of the authorized capital stock and be subject to
     classification and reclassification as provided herein;

        (b)     Whether or not and, if so, the rates, amounts and times at
     which, and the conditions under which, dividends shall be payable
     on shares of such series;

        (c)     Whether or not shares of such series shall have voting
     rights in addition to any general voting rights provided by law and
     these Articles of Incorporation of the Corporation and, if so, the
     terms of such additional voting rights; and

        (d)     The rights of the holders of shares of such series
     (including any classes thereof) upon the liquidation, dissolution
     or winding up of the affairs of, or upon a distribution of the
     assets of, the Corporation.

   (5)   (a)    Subject to the Board of Directors classification
power under Article IV(4), shares of capital stock of the
Corporation shall have the following preferences, conversion and
other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption:

             (i)        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 such assets, payments or funds were received
     by the Corporation for all purposes, subject only to the rights of
     creditors, and shall be so handled upon the books of account of the
     Corporation. Such consideration, assets, income, earnings, profits
     and proceeds thereof, including any proceeds derived from the sale,
     exchange or liquidation


<PAGE>

     thereof, and any assets derived from any reinvestment of such
     proceeds in whatever form, are herein referred to as "assets
     belonging to" such series. Any assets, income, earnings, profits,
     and proceeds thereof, and any funds or payments which are not
     readily attributable to any particular series, shall be allocable
     among any one or more of the series in such manner and on such
     basis as the Board of Directors, in its sole discretion, shall deem
     fair and equitable.

             (ii)       The assets belonging to any series of capital stock
     shall be charged with the liabilities in respect of such series and shall
     also be charged with such series' share of the general liabilities
     of the Corporation determined as hereinafter provided. The
     determination of the Board of Directors shall be conclusive as to
     the amount of such liabilities, including the amount of accrued
     expenses and reserves; as to any allocation of the same to a given
     series; and as to whether the same are allocable to one or more
     series. The liabilities so allocated to a series are herein
     referred to as "liabilities belonging to" such series. Any
     liabilities which are not readily attributable to any particular
     series shall be allocable among any one or more of the series in
     such manner and on such basis as the Board of Directors, in its
     sole discretion, shall deem fair and equitable.

             (iii)      Shares of each series of capital stock shall be entitled
     to such dividends and distributions, in capital 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).

             (iv)       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, subject to Article IV(5)(b), among such
     stockholders in proportion to the number of shares of such series
     held by them and recorded on the books of the Corporation or in
     such other manner as the Board of Directors may determine in
     accordance with law. 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 as determined by the Board of
     Directors, in its sole discretion.


<PAGE>

        (b)     A class of shares may be invested with one or more other
     classes in a common investment portfolio comprising a series.
     Notwithstanding the provisions of paragraph 5(a) of this Article
     IV, 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 paragraph (5)(a) of this Article IV
     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 values of each such class or as otherwise
     determined by the Board of Directors in accordance with law and the
     Corporation's current registration statement as filed with the
     Securities and Exchange Commission (the "Registration Statement").
     The allocation of investment income, capital gains, expenses and
     liabilities of the Corporation or any series, among the series and
     any classes thereof shall be determined by the Board of Directors
     in a manner that is consistent with applicable law and the
     Registration Statement.

             (ii)       As more fully set forth in this Article IV(5)(b), 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 these
     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.


<PAGE>

             (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.

        (c)     Each shareholder of each series or class of capital stock
     shall be entitled to one vote for each share of capital stock then
     standing in his 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 or class except that: (i)
     when expressly required by law, shares of capital stock shall be
     voted by individual series or class and (ii) only shares of capital
     stock of the respective series or class affected by a matter shall
     be entitled to vote on such matter. At all meetings of the
     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 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 Articles of Incorporation,
     the Bylaws or law, until the holders of the requisite amount of
     shares of capital stock shall be present. At any such adjourned
     meeting at which a quorum may be present, any business may be
     transacted which might have been transacted at the meeting as
     originally called. The absence from any meeting, in person or by
     proxy, of holders of the number of shares of capital stock of the
     Corporation in excess of the quorum which may be required by the
     Maryland Law, the 1940 Act, other applicable statute, these
     Articles of Incorporation or the Bylaws, 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.


<PAGE>

        (d)     To the extent the Corporation has funds or other property
     legally available therefor, each holder of shares of capital stock
     of the Corporation shall be entitled to require the Corporation to
     redeem all or any part of the shares standing in the name of such
     holder on the books of the Corporation, at the redemption price of
     such shares as in effect from time-to-time as may be determined by
     the Board of Directors of the Corporation in accordance with the
     provisions hereof, subject to the right of the Board of Directors
     of the Corporation to suspend the right of redemption of shares of
     capital stock of the Corporation 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 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 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)(d), 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 Registration Statement for that series.
     Payment of the redemption price shall be made in cash by the
     Corporation at such time and in such manner as may be determined
     from time-to-time by the Board of Directors of the Corporation
     unless, in the opinion of the Board of Directors, which shall be
     conclusive, conditions exist which make payment wholly in cash
     unwise or undesirable; in such event the Corporation may make
     payment wholly or partly by securities or other property included
     in the assets belonging or allocable to the series of the shares
     redemption of which is being sought, the value of which shall be
     determined as provided herein.

        (e)     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.


<PAGE>

                                 ARTICLE VIII
                                 MAJORITY VOTE

   Notwithstanding any provision of the Maryland Law requiring a greater
proportion than a majority of the votes of all classes or of any class of
capital stock entitled to be cast, to take or authorize any action, the
Corporation may, subject to other applicable provisions of law, these
Articles of Incorporation and the Bylaws, take or authorize such action upon
the concurrence of a majority of the aggregate number of the votes entitled
to be cast thereon; provided, that this provision shall not affect any
requirement of the 1940 Act or the Rules and Regulations of the Securities
and Exchange Commission thereunder, for any vote to be taken by the
concurrence of a greater proportion of the votes entitled to be cast or for
any matter to be authorized by the separate vote of a particular series or
class of shares.


                                  ARTICLE IX
                              PRE-EMPTIVE RIGHTS

No holder of the capital stock of the Corporation or of any other class of
capital 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 capital
stock of any class, or of rights or options to purchase any capital stock, or
of securities convertible into, or carrying rights or options to purchase,
capital stock of any class, whether now or 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 capital stock or securities of the
Corporation, whether now or hereafter authorized.



<PAGE>

                             EXCERPTS FROM BYLAWS
                                      OF
                            RCM EQUITY FUNDS, INC.


                            MEETING OF STOCKHOLDERS

   Section 1. ANNUAL MEETING.  No annual meeting of the stockholders of the
Corporation shall be held in any year in which the election of directors is
not required to be acted upon under the Investment Company Act of 1940, as
amended (the "1940 Act"), unless otherwise determined by the Board of
Directors. An annual meeting may be held at any place within the United
States as may be determined by the Board of Directors and as shall be
designated in the notice of the meeting, at the time specified by the Board
of Directors. Any business of the Corporation may be transacted at an annual
meeting without being specifically designated in the notice unless otherwise
provided by statute, the Corporation's charter or these Bylaws.

   Section 2. SPECIAL MEETINGS.  Special meetings of the stockholders, unless
otherwise provided by law or by the Articles of Incorporation, may be called
for any purpose or purposes by a majority of the Board of Directors, by the
President, or on the written request of the holders of at least 25% of the
outstanding stock of the Corporation entitled to vote at such meeting. In
addition, special meetings of stockholders may be called on the written
request of the holders of at least 10% of the outstanding stock of the
Corporation entitled to vote at such meeting for the purposes of removing
directors or to assist in communicating with stockholders as required by the
1940 Act. Such request shall state the purpose of such meeting and the
matters proposed to be acted on at such meeting. The Secretary shall inform
the stockholders who make the request of the reasonably estimated cost of
preparing and mailing notice of the meeting and, upon payment to the
Corporation of such costs, the Secretary shall give notice to each
stockholder entitled to notice of the meeting. Unless requested by
stockholders entitled to cast a majority of all the votes entitled to be cast
at such a meeting, a special meeting need not be called to consider any
matter that is substantially the same as a matter voted on at any special
meeting of the stockholders held during the preceding 12 months. No business
shall be transacted at any special meeting except as provided in the notice
of meeting.

   Section 3. PLACE OF MEETINGS. Annual and special meetings of the
stockholders shall be held at the principal executive office of the
Corporation or at such other place within the United States as the Board of
Directors may from time-to-time determine and as shall be stated in the
notice of the meeting.

   Section 4. NOTICE OF MEETINGS: WAIVER OF NOTICE. Notice of the place, date
and time of the holding of each annual and special meeting of the
stockholders and the purpose or purposes of each special meeting shall be
given personally or by mail, not less than ten nor more than 90 days before
the date of such meeting, to each stockholder entitled to vote at such
meeting and to each other stockholder entitled to notice of the meeting.
Notice by mail shall be deemed to be duly given when deposited in the United


<PAGE>

States mail addressed to the stockholder at his address as it appears on the
records of the Corporation, with postage thereon prepaid. Notice of any
meeting of stockholders shall be deemed waived by any stockholder who shall
attend such meeting in person or by proxy, or who shall, either before or
after the meeting, submit a signed waiver of notice which is filed with the
records of the meeting.

   If any meeting of the stockholders shall be adjourned to another time and
place not more than 120 days after the original record date, and if the time
and place to which the meeting shall be adjourned were announced at the
meeting at which the adjournment is taken, no further notice of such meeting
need be given.

   Section 5. QUORUM. At all meetings of the stockholders, the holders of
one-third of the shares of 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, but this Section 5 shall not affect any
requirement under the laws of the State of Maryland ("Maryland Law"), the
1940 Act, or the Articles of Incorporation for the vote necessary for the
adoption of any measure. In the absence of a quorum, no business may be
transacted, except that the holders of a majority of the shares of stock
present in person or by proxy and entitled to vote may adjourn the meeting
from time-to-time, without notice other than announcement thereat except as
otherwise required by these Bylaws, until the holders of the requisite amount
of shares of stock shall be so present. At any such adjourned meeting at
which a quorum may be present, any business may be transacted which might
have been transacted at the meeting as originally called. The absence from
any meeting, in person or by proxy, of holders of the number of shares of
stock of the Corporation in excess of the quorum which may be required by
Maryland Law, the 1940 Act, any other applicable statute, the Articles of
Incorporation or these Bylaws, 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 thereat, in
person or by proxy, holders of the number of shares of stock of the
Corporation required for action in respect of such other matter or matters.

   Section 6. ORGANIZATION. At each meeting of the stockholders, the Chairman
of the Board (if one has been designated by the Board of Directors), or in
the Chairman of the Board's absence or inability to act, the President, or in
the absence or inability of the Chairman of the Board and the President, a
Vice President, shall act as chairman of the meeting. The Secretary or the
Assistant Secretary, or in the Secretary's or the Assistant Secretary's
absence or inability to act, any person appointed by the chairman of the
meeting, shall act as secretary of the meeting and keep the minutes thereof.

   Section 7. ORDER OF BUSINESS. The order of business at all meetings of the
stockholders shall be as determined by the chairman of the meeting.

   Section 8. FIXING OF RECORD DATE. The Board of Directors may set a record
date for the purpose of determining stockholders entitled to notice of or to
vote at any meeting of the stockholders, or in order to make a determination
of stockholders for



<PAGE>

any other proper purpose. For purposes of determining the record date for any
meeting of stockholders, the record date may not be prior to the close of
business on the day the record date is fixed, and shall be not more than 90
nor less than ten days before the date of the meeting of the stockholders.
Only those persons who were holders of record of shares at such time shall be
entitled to vote at such meeting and any adjournment thereof.

   Section 9. VOTING. Except as otherwise provided by Maryland Law, the 1940
Act or the Articles of Incorporation, each holder of record of shares of
stock of the Corporation having voting power shall be entitled at each
meeting of the stockholders to one vote for every share of such stock
(regardless of class) standing in such stockholder's name on the record of
stockholders of the Corporation as of the record date determined pursuant to
Section 8 of this Article or, if such record date shall not have been so
fixed, then at the later of (a) the close of business on the day on which
notice of the meeting is mailed or (b) the 30th day before the meeting. With
respect to the election of directors, each share of stock may be voted for as
many individuals as there are directors to be elected and for whose election
the share is entitled to be voted, and directors shall be elected by
plurality vote. Except as otherwise provided by Maryland Law, the 1940 Act,
the Articles of Incorporation or these Bylaws, any corporate action to be
taken by vote of the stockholders shall be authorized by a majority of the
total votes cast at a meeting of stockholders by the holders of shares
present in person or represented by proxy and entitled to vote on such
action, provided that a quorum is present.

   Section 10. PROXIES. Each stockholder entitled to vote at any meeting of
stockholders may authorize another person or persons to act for him by a
proxy signed by such stockholder or his duly authorized attorney-in-fact. No
proxy shall be valid after the expiration of 11 months from the date thereof,
unless otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the stockholder executing it, except in those cases where such
proxy states that it is irrevocable and where an irrevocable proxy is
permitted by law.

   Section 11. VOTING BY BALLOT. On a vote by ballot, each ballot shall be
signed by the stockholder voting or by his proxy, if there be such proxy, and
shall state the number of shares voted.

   Section 12. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of its own stock
directly or indirectly owned by the Corporation shall not be voted at any
meeting and shall not be counted in determining the total number of
outstanding shares entitled to be voted at any given time, unless they are
held by it in a fiduciary capacity, in which case they may be voted and shall
be counted in determining the total number of shares outstanding at any given
time.

   The Board of Directors may adopt by resolution a procedure whereby a
stockholder may certify in writing to the Corporation that any shares of
stock registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth
the class of stockholders who may make the



<PAGE>

certification, the purpose for which the certification may be made, the form
of certification, and the information to be contained in it; if the
certification is with respect to a record date or closing of the stock
transfer books, the time after the record date or closing of the stock
transfer books within which the certification must be received by the
Corporation; and any other provisions with respect to the procedure that the
Board of Directors considers necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded
as, for the purposes set forth in the certification, the stockholder of
record of the specified stock in place of the stockholder who makes the
certification.

   Section 13. INSPECTORS. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such
meeting or any adjournment thereof. If the inspectors shall not be so
appointed or if any of them shall fail to appear or act, the chairman of the
meeting may, and on the request of any stockholder entitled to vote thereat
shall, appoint inspectors. The inspectors shall determine the number of
shares outstanding and the voting powers of each, the number of shares
represented at the meeting, the existence of a quorum, and the validity and
effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right
to vote, count and tabulate all votes, ballots or consents, determine the
result, and perform such acts as are proper to conduct the election or vote
with fairness to all stockholders. On request of the chairman of the meeting
or any stockholder entitled to vote thereat, the inspectors shall make a
report in writing of any challenge, request or matter determined by them and
shall execute a certificate of any fact found by them. Any such report shall
be signed by the inspector, if there is a single inspector, or by a majority
of the inspectors, if there is more than one inspector. The report of the
inspector or inspectors on the number of shares represented at the meeting
and the results of the voting shall be PRIMA FACIE evidence thereof. No
director or candidate for the office of director shall act as inspector of an
election of directors. Inspectors need not be stockholders.

   Section 14. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Except as
otherwise provided by Maryland Law, the 1940 Act or the Articles of
Incorporation, any action required or permitted to be taken at any annual or
special meeting of stockholders may be taken without a meeting, without prior
notice and without a vote, if the following are filed with the records of
stockholders meetings: (a) a unanimous written consent which sets forth the
action and is signed by each stockholder entitled to vote on the matter and
(b) a written waiver of any right to dissent signed by each stockholder
entitled to notice of the meeting but not entitled to vote thereat.



<PAGE>

                                  ARTICLE VII
                                 CAPITAL STOCK

   Section 1. STOCK CERTIFICATES. Each holder of stock of the Corporation
shall be entitled upon request to have a certificate or certificates, in such
form as shall be approved by the Board of Directors, representing the number
of shares of the Corporation owned by him, provided, however, that
certificates for fractional shares will not be delivered in any case. The
certificates representing shares of stock shall be signed by or in the name
of the Corporation by the Chairman of the Board, the President or a Vice
President and by the Secretary, an Assistant Secretary, the Treasurer or an
Assistant Treasurer and sealed with the seal of the Corporation. Any or all
of the signatures or the seal on the certificate may be a facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate shall be issued,
it may be issued by the Corporation with the same effect as if such officer,
transfer agent or registrar were still in office at the date of issue.
Certificates shall be consecutively numbered; and if the Corporation shall,
from time-to-time, issue several classes of stock, each class may have its
own number series. Each certificate representing stock which is restricted as
to its transferability or voting powers, which is preferred or limited as to
its dividends or as to its share of the assets upon liquidation or which is
redeemable at the option of the Corporation, shall have a statement of such
restriction, limitation, preference or redemption provision, or a summary
thereof, plainly stated on the certificate. In lieu of such a statement or
summary, the Corporation may set forth upon the face or back of the
certificate a statement that the Corporation will furnish to any stockholder,
upon request and without charge, a full statement of such information.

   Section 2. BOOKS OF ACCOUNTS AND RECORD OF STOCKHOLDERS. There shall be
kept at the principal executive office of the Corporation or at the office of
its transfer agent correct and complete books and records containing the name
and address of each stockholder and the number of shares of stock of each
class held by such stockholder.

   Section 3. TRANSFERS OF SHARES. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his attorney thereunto authorized by power
of attorney duly executed and filed with the Secretary or with a transfer
agent or transfer clerk, and on surrender of the certificate or certificates,
if issued, for such shares properly endorsed or accompanied by a duly
executed stock transfer power and the payment of all taxes thereon. When such
requirements are satisfied and the transfer has been recorded on the books of
the Corporation, the Corporation shall cancel the old certificate and issue a
new certificate to the person entitled thereto. Except as otherwise provided
by law or these Bylaws, the Corporation shall be entitled to recognize the
exclusive rights of a person in whose name any share or shares stand on the
record of stockholders as the owner of such share or shares for all purposes,
including, without limitation, the rights to receive dividends or other
distributions, and to vote as such owner; and the Corporation shall not be
bound to



<PAGE>

recognize any equitable or legal claim to or interest in any such share or
shares on the part of any other person, whether or not it shall have express
or other notice thereof.

   Section 4. REGULATIONS. The Board of Directors may make such additional
rules and regulations, not inconsistent with these Bylaws, as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of stock of the Corporation. It may appoint, or authorize any officer
or officers to appoint, one or more transfer agents or one or more transfer
clerks and one or more registrars and may require all certificates for shares
of stock to bear the signature or signatures of any of them.

   Section 5. LOST, DESTROYED OR MUTILATED CERTIFICATES. The holder of any
certificates representing shares of stock of the Corporation shall
immediately notify the Corporation of any loss, theft, destruction or
mutilation of such certificate, and, upon request, shall provide to the
Corporation an affidavit of the rightful holder of such certificate stating
that such certificate has been lost, stolen, destroyed or mutilated, as the
case may be. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it which the owner thereof
shall allege to have been lost or destroyed or which shall have been
mutilated. Prior to issuing a new certificate to replace any certificate
alleged to have been lost, stolen, destroyed or mutilated, the Board of
Directors may, in its discretion, require such owner or his legal
representatives to give to the Corporation a bond in such sum, limited or
unlimited, and in such form and with such surety or sureties, as the Board of
Directors in its absolute discretion shall determine, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate, or issuance of a
new certificate. Anything herein to the contrary notwithstanding, the Board
of Directors, in its absolute discretion, may refuse to issue any such new
certificate, except pursuant to legal proceedings under Maryland Law.

   Section 6. FIXING OF A RECORD DATE FOR DIVIDENDS AND DISTRIBUTIONS. The
Board of Directors may fix, in advance, as a record date, a date not more
than 90 days preceding the date fixed for the payment of any dividend or the
making of any distribution or the allotting of any other rights (except with
respect to voting which is provided for in Article II(8)). Once the Board of
Directors fixes such record date as the record date for the determination of
the stockholders entitled to receive any such dividend or distribution or the
allotment of such other rights, in such case only the stockholders of record
at the time so fixed shall be entitled to receive such dividend or
distribution or such other rights.

   Section 7. INFORMATION TO STOCKHOLDERS AND OTHERS. Any stockholder or his
agent may inspect and copy during usual business hours the Corporation's
Bylaws, minutes of the proceedings of its stockholders, annual statements of
its affairs, and voting trust agreements on file at its principal office.


<PAGE>

               INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY
                              AND SERVICE AGREEMENT

     THIS AGREEMENT is entered into this 19th day of December, 1995 by and
between RCM Capital Management, a California Limited Partnership (the
"Investment Manager"), and RCM Equity Funds, Inc. (the "Company"), on behalf of
RCM Global Technology Fund, a series of the Company (the "Fund").

1.   APPOINTMENT AND ACCEPTANCE OF APPOINTMENT OF THE INVESTMENT MANAGER

          (a)  Subject to express provisions and limitations set forth in the
     Company's Articles of Incorporation, Bylaws, Form N-lA 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")
     presently held by State Street Bank & Trust Company (the "Custodian"), 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

          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:

          (a)  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;

          (b)  to purchase and sell commodities or commodities contracts and
     investments in put, call, straddle, or spread options;

          (c)  to enter into forward, future, or swap contracts with respect to
     the purchase and sale of securities, currencies, commodities, and
     commodities contracts;

<PAGE>

          (d)  to lend its portfolio securities to brokers, dealers and other
     financial institutions;

          (e)  to buy, sell, or exercise options, rights and warrants to
     subscribe for stock or securities;

          (f)  to engage in any other types of investment transactions described
     in the Fund's Prospectus and Statement of Additional Information; and

          (g)  to take such other action, or to direct the Custodian to take
     such other action, as may be necessary or desirable to carry out the
     purpose and intent of the foregoing.

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


<PAGE>

     with respect to the Portfolio, so long as it is the Investment Manager's
     policy, to the extent practical, to allocate investment opportunities to
     the Portfolio over a period of time on a fair and equitable basis
     relative to other clients;

               (ii) the Investment Manager shall have no obligation to purchase
     or sell for the Portfolio any security which the Investment Manager, or its
     principals or employees, may purchase or sell for its or their own accounts
     or the account of any other client, if in the opinion of the Investment
     Manager such transaction or investment appears unsuitable, impractical or
     undesirable for the Portfolio;

               (iii)     on occasions when the Investment Manager deems the
     purchase or sale of a security to be in the best interests of the Fund as
     well as other clients of the Investment Manager, the Investment Manager, to
     the extent permitted by applicable laws and regulations, may aggregate the
     securities to be so sold or purchased when the Investment Manager believes
     that to do so will be in the best interests of the Fund. In such event,
     allocation of the securities so purchased or sold, as well as the expenses
     incurred in the transaction, shall be made by the Investment Manager in the
     manner the Investment Manager considers to be the most equitable and
     consistent with its fiduciary obligations to the Fund and to such other
     clients; and

               (iv) the Investment Manager does not prohibit any of its
     principals or employees from purchasing or selling for their own accounts
     securities that may be recommended to or held by the Investment Manager's
     clients, subject to the provisions of the Investment Manager's Code of
     Ethics and that of the Company.

4.        ALLOCATION OF EXPENSES OF THE COMPANY AND 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 subcustodians 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  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,


<PAGE>

     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; and SEC and state blue sky registration 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
     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 Articles of
     Incorporation and Bylaws of the Company and the Fund's prospectus as of the
     close of regular trading on the New York Stock Exchange on each business
     day  the New York Stock Exchange is open.

          (c)  The Fund hereby authorizes the Investment Manager to charge the
     Portfolio, subject to the provisions in Section 6 hereof, for the 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 Custodian and to the Company.

          (d)  The Investment Manager may from time to time voluntarily agree to
     limit the aggregate operating expenses of the Fund for one or more fiscal
     years of the Company, as set forth in Appendix A hereto or in any other
     written agreement with the Company.  If in any such fiscal year the
     aggregate operating expenses of the Fund (as defined in Appendix A or such
     other written agreement) exceed the applicable percentage of the average
     daily net assets of the Fund for such fiscal year, the Investment Manager
     shall reimburse the Fund for such excess operating expenses.  Such
     operating expense reimbursement, if any, shall be estimated, reconciled and
     paid on a quarterly basis, or such more frequent basis as the Investment
     Manager may agree in writing.  Any such reimbursement of the Fund shall be
     repaid to the Investment Manager by the Fund, without interest, at such
     later time or times as it may be repaid without causing the aggregating
     operating expenses of the Fund to exceed the applicable percentage of the
     average daily net assets of the Fund for the period in


<PAGE>

     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 businesses 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 in 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
     December 19, 1997. 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 Company, 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.


<PAGE>

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.       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.

11.       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 membership
     of the Investment Manager's partnership 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.

12.       AMENDMENT OF THIS AGREEMENT

          No provision of this Agreement may be changed, 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.


<PAGE>

     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.


RCM CAPITAL MANAGEMENT,                      RCM EQUITY FUNDS, INC. ON
A CALIFORNIA LIMITED PARTNERSHIP             BEHALF OF RCM GLOBAL
                                             TECHNOLOGY FUND


By: _______________________________          By: _____________________________
    Claude N. Rosenberg, Jr.                     William L. Price
    Chief Executive Officer of                   President
    RCM General Corporation, in its
    Capacity as General Partner of
    RCM Limited, L.P., in its
    capacity as the General Partner
    of RCM Capital Management


ATTEST:                                      ATTEST:


By: _______________________________          By: _____________________________
    Michael J. Apatoff                           Anthony Ain
    Chief Operating Officer of                   Secretary
    RCM General Corporation, in its
    Capacity as General Partner of
    RCM Limited, L.P., in its
    capacity as the General Partner
    of RCM Capital Management


<PAGE>

                                   APPENDIX A
               INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY,
                              AND SERVICE AGREEMENT
            BETWEEN RCM CAPITAL MANAGEMENT AND RCM EQUITY FUNDS, INC.
                                SCHEDULE OF FEES
                         FOR RCM GLOBAL TECHNOLOGY FUND
                       AVERAGED MONTH-END NET ASSET VALUE
                                     ARREARS

Effective Date:  December 19, 1995

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.


    VALUE OF SECURITIES AND CASH OF FUND                    FEE
    ------------------------------------               --------------
    On all sums                                        1.00% annually

For the fiscal year ended December 31, 1996, the Investment Manager shall
reimburse the Fund to the extent that the operating expenses of the Fund (as
hereinafter defined) exceed 1.75% 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:  December 19, 1995

RCM CAPITAL MANAGEMENT,                      RCM EQUITY FUNDS, INC.
A CALIFORNIA LIMITED PARTNERSHIP             ON BEHALF OF RCM GLOBAL
                                             TECHNOLOGY FUND


By: _______________________________          By: _____________________________
    Claude N. Rosenberg, Jr.                     William L. Price
    Chief Executive Officer of                   President
    RCM General Corporation, in its
    Capacity as General Partner of
    RCM Limited, L.P., in its
    capacity as the General Partner
    of RCM Capital Management



<PAGE>


ATTEST:                                      ATTEST:


By: _______________________________          By: _____________________________
    Michael J. Apatoff                           Anthony Ain
    Chief Operating Officer of                   Secretary
    RCM General Corporation, in its
    Capacity as General Partner of
    RCM Limited, L.P., in its
    capacity as the General Partner
    of RCM Capital Management



<PAGE>











                               CUSTODIAN CONTRACT
                                     Between
                             RCM EQUITY FUNDS, INC.
                                       and
                       STATE STREET BANK AND TRUST COMPANY














<PAGE>


                                TABLE OF CONTENTS












<PAGE>

                               CUSTODIAN CONTRACT

     This Contract between RCM Equity Funds, Inc., a corporation organized and
existing under the laws of Maryland and having its principal place of business
at Four Embarcadero Center, Suite 3000, San Francisco, California  94111 (the
"Fund"), and State Street Bank and Trust Company, a Massachusetts trust company
having its principal place of business at 225 Franklin Street, Boston,
Massachusetts  02110 (the "Custodian"),

                                   WITNESSETH:

     WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and

     WHEREAS, the Fund intends to initially offer shares in one series, RCM
Global Technology Fund (such series together with all other series subsequently
established by the Fund and made subject to this Contract in accordance with
Article 17, being herein referred to as the "Portfolio(s)");

     NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:


1.   EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT

     The Fund hereby employs the Custodian as the custodian of the assets of the
Portfolios of the Fund, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Fund's Articles
of Incorporation (the "Articles of Incorporation").  The Fund on behalf of the
Portfolio(s) agrees to deliver to the Custodian all securities and cash of the
Portfolios, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the
Portfolio(s) from time to time, and the cash consideration received by it for
such new or treasury shares of capital stock of the Fund representing interests
in the Portfolios, ("Shares") as may be issued or sold from time to time.  The
Custodian shall not be responsible for any property of a Portfolio held or
received by the Portfolio and not delivered to the Custodian.

     Upon receipt of "Proper Instructions" (as such term is defined in Article
5), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians, located in the United States, provided
that the Custodian shall have no more or less responsibility or liability to the
Fund on account of any actions or omissions of any sub-custodian so employed
than any such sub-custodian has to the Custodian.  The Custodian may employ as
sub-custodian for the Fund's foreign securities on behalf of the applicable
Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedule A hereto but only in accordance with the
provisions of Article 3.


<PAGE>

     2.   DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
          THE CUSTODIAN IN THE UNITED STATES

     2.1  HOLDING SECURITIES.  The Custodian shall hold and physically segregate
          for the account of each Portfolio all non-cash property, to be held by
          it in the United States including all domestic securities owned by
          such Portfolio, other than (a) securities which are maintained
          pursuant to Section 2.10 in a clearing agency which acts as a
          securities depository or in a book-entry system authorized by the U.S.
          Department of the Treasury (each, a "U.S. Securities System") and (b)
          commercial paper of an issuer for which State Street Bank and Trust
          Company acts as issuing and paying agent ("Direct Paper") which is
          deposited and/or maintained in the Direct Paper System of the
          Custodian (the "Direct Paper System") pursuant to Section 2.11.

     2.2  DELIVERY OF SECURITIES.  The Custodian shall release and deliver
          domestic securities owned by a Portfolio held by the Custodian or in a
          U.S. Securities System account of the Custodian or in the Custodian's
          Direct Paper System account ("Direct Paper System Account") only upon
          receipt of Proper Instructions from the Fund on behalf of the
          applicable Portfolio, which may be continuing instructions when deemed
          appropriate by the parties, and only in the following cases:

          1)   Upon sale of such securities for the account of the Portfolio and
               receipt of payment therefor;

          2)   Upon the receipt of payment in connection with any repurchase
               agreement related to such securities entered into by the
               Portfolio;

          3)   In the case of a sale effected through a U.S. Securities System,
               in accordance with the provisions of Section 2.10 hereof;

          4)   To the depository agent in connection with tender or other
               similar offers for securities of the Portfolio;

          5)   To the issuer thereof or its agent when such securities are
               called, redeemed, retired or otherwise become payable; provided
               that, in any such case, the cash or other consideration is to be
               delivered to the Custodian;

          6)   To the issuer thereof, or its agent, for transfer into the name
               of the Portfolio or into the name of any nominee or nominees of
               the Custodian or into the name or nominee



                                        2
<PAGE>

               name of any agent appointed pursuant to Section 2.9 or into the
               name or nominee name of any sub-custodian appointed pursuant to
               Article 1; or for exchange for a different number of bonds,
               certificates or other evidence representing the same aggregate
               face amount or number of units; PROVIDED that, in any such case,
               the new securities are to be delivered to the Custodian;

          7)   Upon the sale of such securities for the account of the
               Portfolio, to the broker or its clearing agent, against a
               receipt, for examination in accordance with "street delivery"
               custom; provided that in any such case, the Custodian shall have
               no responsibility or liability for any loss arising from the
               delivery of such securities prior to receiving payment for such
               securities except as may arise from the Custodian's own
               negligence or willful misconduct;

          8)   For exchange or conversion pursuant to any plan of merger,
               consolidation, recapitalization, reorganization or readjustment
               of the securities of the issuer of such securities, or pursuant
               to provisions for conversion contained in such securities, or
               pursuant to any deposit agreement; provided that, in any such
               case, the new securities and cash, if any, are to be delivered to
               the Custodian;

          9)   In the case of warrants, rights or similar securities, the
               surrender thereof in the exercise of such warrants, rights or
               similar securities or the surrender of interim receipts or
               temporary securities for definitive securities; provided that, in
               any such case, the new securities and cash, if any, are to be
               delivered to the Custodian;

          10)  For delivery in connection with any loans of securities made by
               the Portfolio, BUT ONLY against receipt of adequate collateral as
               agreed upon from time to time by the Custodian and the Fund on
               behalf of the Portfolio, which may be in the form of cash or
               obligations issued by the United States government, its agencies
               or instrumentalities, except that in connection with any loans
               for which collateral is to be credited to the Custodian's account
               in the book-entry system authorized by the U.S. Department of the
               Treasury, the Custodian will not be held liable or responsible
               for the delivery of securities owned by the Portfolio prior to
               the receipt of such collateral;

          11)  For delivery as security in connection with any borrowings by the
               Fund on behalf of the Portfolio requiring a pledge of assets by
               the Fund on behalf of the Portfolio, BUT ONLY against receipt of
               amounts borrowed;



                                        3
<PAGE>

          12)  For delivery in accordance with the provisions of any agreement
               among the Fund on behalf of the Portfolio, the Custodian and a
               broker-dealer registered under the Securities Exchange Act of
               1934 (the "Exchange Act") and a member of The National
               Association of Securities Dealers, Inc. ("NASD"), relating to
               compliance with the rules of The Options Clearing Corporation and
               of any registered national securities exchange, or of any similar
               organization or organizations, regarding escrow or other
               arrangements in connection with transactions by the Portfolio of
               the Fund;

          13)  For delivery in accordance with the provisions of any agreement
               among the Fund on behalf of the Portfolio, the Custodian, and a
               Futures Commission Merchant registered under the Commodity
               Exchange Act, relating to compliance with the rules of the
               Commodity Futures Trading Commission and/or any Contract Market,
               or any similar organization or organizations, regarding account
               deposits in connection with transactions by the Portfolio of the
               Fund;

          14)  Upon receipt of instructions from the transfer agent for the Fund
               (the "Transfer Agent"), for delivery to such Transfer Agent or to
               the holders of Shares in connection with distributions in kind,
               as may be described from time to time in the currently effective
               prospectus and statement of additional information of the Fund,
               related to the Portfolio (the "Prospectus"), in satisfaction of
               requests by holders of Shares for repurchase or redemption; and

          15)  For any other proper corporate purpose, BUT ONLY upon receipt of,
               in addition to Proper Instructions from the Fund on behalf of the
               applicable Portfolio, a certified copy of a resolution of the
               Board of Directors of the Fund or of the Executive Committee
               signed by an officer of the Fund and certified by the Secretary
               or an Assistant Secretary (a "Certified Resolution"), specifying
               the securities of the Portfolio to be delivered, setting forth
               the purpose for which such delivery is to be made, declaring such
               purpose to be a proper corporate purpose, and naming the person
               or persons to whom delivery of such securities shall be made.

     2.3  REGISTRATION OF SECURITIES.  Domestic securities held by the Custodian
     (other than bearer securities) shall be registered in the name of the
     Portfolio or in the name of any nominee of the Fund on behalf of the
     Portfolio or of any nominee of the Custodian which nominee shall be
     assigned exclusively to the Portfolio, UNLESS the Fund has authorized in
     writing the appointment of a nominee to be used in common with other
     registered investment companies having the same investment adviser as the
     Portfolio, or in the name or nominee name of any agent appointed pursuant
     to Section 2.9 or in the name or nominee name of



                                        4
<PAGE>

     any sub-custodian appointed pursuant to Article 1.  All securities accepted
     by the Custodian on behalf of the Portfolio under the terms of this
     Contract shall be in "street name" or other good delivery form.  If,
     however, the Fund directs the Custodian to maintain securities in "street
     name", the Custodian shall utilize its best efforts only to timely collect
     income due the Fund on such securities and to notify the Fund on a best
     efforts basis only of relevant corporate actions including, without
     limitation, pendency of calls, maturities, tender or exchange offers.

2.4  BANK ACCOUNTS.  The Custodian shall open and maintain a separate bank
     account or accounts in the United States in the name of each Portfolio of
     the Fund, subject only to draft or order by the Custodian acting pursuant
     to the terms of this Contract, and shall hold in such account or accounts,
     subject to the provisions hereof, all cash received by it from or for the
     account of the Portfolio, other than cash maintained by the Portfolio in a
     bank account established and used in accordance with Rule 17f-3 under the
     Investment Company Act of 1940, as amended (the "1940 Act").  Funds held by
     the Custodian for a Portfolio may be deposited by it to its credit as
     Custodian in the Banking Department of the Custodian or in such other banks
     or trust companies as it may in its discretion deem necessary or desirable;
     PROVIDED, however, that every such bank or trust company shall be qualified
     to act as a custodian under the 1940 Act and that each such bank or trust
     company and the funds to be deposited with each such bank or trust company
     shall on behalf of each applicable Portfolio be approved by vote of a
     majority of the Board of Directors of the Fund (the "Board").  Such funds
     shall be deposited by the Custodian in its capacity as Custodian and shall
     be withdrawable by the Custodian only in that capacity.

2.5  AVAILABILITY OF FEDERAL FUNDS.  Upon mutual agreement between the Fund on
     behalf of each applicable Portfolio and the Custodian, the Custodian shall,
     upon the receipt of Proper Instructions from the Fund on behalf of a
     Portfolio, make federal funds available to such Portfolio as of specified
     times agreed upon from time to time by the Fund and the Custodian in the
     amount of checks received in payment for Shares of such Portfolio which are
     deposited into the Portfolio's account.

2.6  COLLECTION OF INCOME.  Subject to the provisions of Section 2.3, the
     Custodian shall collect on a timely basis all income and other payments
     with respect to registered domestic securities held hereunder to which each
     Portfolio shall be entitled either by law or pursuant to custom in the
     securities business, and shall collect on a timely basis all income and
     other payments with respect to bearer domestic securities if, on the date
     of payment by the issuer, such securities are held by the Custodian or its
     agent thereof and shall credit such income, as collected, to such
     Portfolio's custodian account.  Without limiting the generality of the
     foregoing, the Custodian shall detach and present for payment all coupons
     and other income



                                        5
<PAGE>

     items requiring presentation as and when they become due and shall collect
     interest when due on securities held hereunder.  Income due each Portfolio
     on securities loaned pursuant to the provisions of Section 2.2 (10) shall
     be the responsibility of the Fund.  The Custodian will have no duty or
     responsibility in connection therewith, other than to provide the Fund with
     such information or data as may be necessary to assist the Fund in
     arranging for the timely delivery to the Custodian of the income to which
     the Portfolio is properly entitled.

2.7  PAYMENT OF FUND MONIES.  Upon receipt of Proper Instructions from the Fund
     on behalf of the applicable Portfolio, which may be continuing instructions
     when deemed appropriate by the parties, the Custodian shall pay out monies
     of a Portfolio in the following cases only:

     1)   Upon the purchase of domestic securities, options, futures contracts
          or options on futures contracts for the account of the Portfolio but
          only (a) against the delivery of such securities or evidence of title
          to such options, futures contracts or options on futures contracts to
          the Custodian (or any bank, banking firm or trust company doing
          business in the United States or abroad which is qualified under the
          1940 Act to act as a custodian and has been designated by the
          Custodian as its agent for this purpose) registered in the name of the
          Portfolio or in the name of a nominee of the Custodian referred to in
          Section 2.3 hereof or in proper form for transfer; (b) in the case of
          a purchase effected through a U.S. Securities System, in accordance
          with the conditions set forth in Section 2.10 hereof; (c) in the case
          of a purchase involving the Direct Paper System, in accordance with
          the conditions set forth in Section 2.11; (d) in the case of
          repurchase agreements entered into between the Fund on behalf of the
          Portfolio and the Custodian, or another bank, or a broker-dealer which
          is a member of NASD, (i) against delivery of the securities either in
          certificate form or through an entry crediting the Custodian's account
          at the Federal Reserve Bank with such securities or (ii) against
          delivery of the receipt evidencing purchase by the Portfolio of
          securities owned by the Custodian along with written evidence of the
          agreement by the Custodian to repurchase such securities from the
          Portfolio or (e) for transfer to a time deposit account of the Fund in
          any bank, whether domestic or foreign; such transfer may be effected
          prior to receipt of a confirmation from a broker and/or the applicable
          bank pursuant to Proper Instructions from the Fund as defined in
          Article 5;

     2)   In connection with conversion, exchange or surrender of securities
          owned by the Portfolio as set forth in Section 2.2 hereof;

     3)   For the redemption or repurchase of Shares as set forth in Article 4
          hereof;



                                        6
<PAGE>

     4)   For the payment of any expense or liability incurred by the Portfolio,
          including but not limited to the following payments for the account of
          the Portfolio:  interest, taxes, management, accounting, transfer
          agent and legal fees, and operating expenses of the Fund whether or
          not such expenses are to be in whole or part capitalized or treated as
          deferred expenses;

     5)   For the payment of any dividends on Shares declared pursuant to the
          governing documents of the Fund;

     6)   For payment of the amount of dividends received in respect of
          securities sold short;

     7)   For any other proper purpose, BUT ONLY upon receipt of, in addition to
          Proper Instructions from the Fund on behalf of the Portfolio, a
          Certified Resolution specifying the amount of such payment, setting
          forth the purpose for which such payment is to be made, declaring such
          purpose to be a proper purpose, and naming the person or persons to
          whom such payment is to be made.

2.8  LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
     Except as specifically stated otherwise in this Contract, in any and every
     case where payment for purchase of domestic securities for the account of a
     Portfolio is made by the Custodian in advance of receipt of the securities
     purchased in the absence of specific written instructions from the Fund on
     behalf of such Portfolio to so pay in advance, the Custodian shall be
     absolutely liable to the Fund for such securities to the same extent as if
     the securities had been received by the Custodian.

2.9  APPOINTMENT OF AGENTS.  The Custodian may at any time or times in its
     discretion appoint (and may at any time remove) any other bank or trust
     company which is itself qualified under the 1940 Act to act as a custodian,
     as its agent to carry out such of the provisions of this Article 2 as the
     Custodian may from time to time direct; PROVIDED, however, that the
     appointment of any agent shall not relieve the Custodian of its
     responsibilities or liabilities hereunder.

2.10 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS.  The Custodian may
     deposit and/or maintain securities owned by a Portfolio in a clearing
     agency registered with the Securities and Exchange Commission (the "SEC")
     under Section 17A of the Exchange Act, which acts as a securities
     depository, or in the book-entry system authorized by the U.S. Department
     of the Treasury and certain federal agencies, collectively referred to
     herein as "U.S. Securities System" in accordance with applicable Federal
     Reserve Board and SEC rules and regulations, if any, and subject to the
     following provisions:



                                        7
<PAGE>

     1)   The Custodian may keep securities of the Portfolio in a U.S.
          Securities System provided that such securities are represented in an
          account ("Account") of the Custodian in the U.S. Securities System
          which shall not include any assets of the Custodian other than assets
          held as a fiduciary, custodian or otherwise for customers;

     2)   The records of the Custodian with respect to securities of the
          Portfolio which are maintained in a U.S. Securities System shall
          identify by book-entry those securities belonging to the Portfolio;

     3)   The Custodian shall pay for securities purchased for the account of
          the Portfolio upon (i) receipt of advice from the U.S. Securities
          System that such securities have been transferred to the Account, and
          (ii) the making of an entry on the records of the Custodian to reflect
          such payment and transfer for the account of the Portfolio.  The
          Custodian shall transfer securities sold for the account of the
          Portfolio upon (i) receipt of advice from the U.S. Securities System
          that payment for such securities has been transferred to the Account,
          and (ii) the making of an entry on the records of the Custodian to
          reflect such transfer and payment for the account of the Portfolio.
          Copies of all advices from the U.S. Securities System of transfers of
          securities for the account of the Portfolio shall identify the
          Portfolio, be maintained for the Portfolio by the Custodian and be
          provided to the Fund at its request.  Upon request, the Custodian
          shall furnish the Fund on behalf of the Portfolio confirmation of each
          transfer to or from the account of the Portfolio in the form of a
          written advice or notice and shall furnish to the Fund on behalf of
          the Portfolio copies of daily transaction sheets reflecting each day's
          transactions in the U.S. Securities System for the account of the
          Portfolio.

     4)   The Custodian shall provide the Fund for the Portfolio with any report
          obtained by the Custodian on the U.S. Securities System's accounting
          system, internal accounting control and procedures for safeguarding
          securities deposited in the U.S. Securities System;

     5)   The Custodian shall have received from the Fund on behalf of the
          Portfolio the initial or annual certificate, as the case may be,
          required by Article 14 hereof;

     6)   Anything to the contrary in this Contract notwithstanding, the
          Custodian shall be liable to the Fund for the benefit of the Portfolio
          for any loss or damage to the Portfolio resulting from use of the U.S.
          Securities System by reason of any



                                        8
<PAGE>

          negligence, misfeasance or misconduct of the Custodian or any of its
          agents or of any of its or their employees or from failure of the
          Custodian or any such agent to enforce effectively such rights as it
          may have against the U.S. Securities System; at the election of the
          Fund, it shall be entitled to be subrogated to the rights of the
          Custodian with respect to any claim against the U.S. Securities System
          or any other person which the Custodian may have as a consequence of
          any such loss or damage if and to the extent that the Portfolio has
          not been made whole for any such loss or damage.

2.11 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM.  The Custodian may
     deposit and/or maintain securities owned by a Portfolio in the Direct Paper
     System of the Custodian subject to the following provisions:

     1)   No transaction relating to securities in the Direct Paper System will
          be effected in the absence of Proper Instructions from the Fund on
          behalf of the Portfolio;

     2)   The Custodian may keep securities of the Portfolio in the Direct Paper
          System only if such securities are represented in the Direct Paper
          System Account, which account shall not include any assets of the
          Custodian other than assets held as a fiduciary, custodian or
          otherwise for customers;

     3)   The records of the Custodian with respect to securities of the
          Portfolio which are maintained in the Direct Paper System shall
          identify by book-entry those securities belonging to the Portfolio;

     4)   The Custodian shall pay for securities purchased for the account of
          the Portfolio upon the making of an entry on the records of the
          Custodian to reflect such payment and transfer of securities to the
          account of the Portfolio.  The Custodian shall transfer securities
          sold for the account of the Portfolio upon the making of an entry on
          the records of the Custodian to reflect such transfer and receipt of
          payment for the account of the Portfolio;

     5)   The Custodian shall furnish the Fund on behalf of the Portfolio
          confirmation of each transfer to or from the account of the Portfolio,
          in the form of a written advice or notice, of Direct Paper on the next
          business day following such transfer and shall furnish to the Fund on
          behalf of the Portfolio copies of daily transaction sheets reflecting
          each day's transaction in the U.S. Securities System for the account
          of the Portfolio;



                                        9
<PAGE>

     6)   The Custodian shall provide the Fund on behalf of the Portfolio with
          any report on its system of internal accounting control as the Fund
          may reasonably request from time to time.

2.12 SEGREGATED ACCOUNT.  The Custodian shall upon receipt of Proper
     Instructions from the Fund on behalf of each applicable Portfolio establish
     and maintain a segregated account or accounts for and on behalf of each
     such Portfolio, into which account or accounts may be transferred cash
     and/or securities, including securities maintained in an account by the
     Custodian pursuant to Section 2.10 hereof, (i) in accordance with the
     provisions of any agreement among the Fund on behalf of the Portfolio, the
     Custodian and a broker-dealer registered under the Exchange Act and a
     member of the NASD (or any futures commission merchant registered under the
     Commodity Exchange Act), relating to compliance with the rules of The
     Options Clearing Corporation and of any registered national securities
     exchange (or the Commodity Futures Trading Commission or any registered
     contract market), or of any similar organization or organizations,
     regarding escrow or other arrangements in connection with transactions by
     the Portfolio, (ii) for purposes of segregating cash or government
     securities in connection with options purchased, sold or written by the
     Portfolio or commodity futures contracts or options thereon purchased or
     sold by the Portfolio, (iii) for the purposes of compliance by the
     Portfolio with the procedures required by Investment Company Act Release
     No. 10666, or any subsequent release or releases of the SEC relating to the
     maintenance of segregated accounts by registered investment companies and
     (iv) for other proper corporate purposes, BUT ONLY, in the case of clause
     (iv), upon receipt of, in addition to Proper Instructions from the Fund on
     behalf of the applicable Portfolio, a Certified Resolution setting forth
     the purpose or purposes of such segregated account and declaring such
     purposes to be proper corporate purposes.

2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES.  The Custodian shall execute
     ownership and other certificates and affidavits for all federal and state
     tax purposes in connection with receipt of income or other payments with
     respect to domestic securities of each Portfolio held by it and in
     connection with transfers of securities.

2.14 PROXIES.  The Custodian shall, with respect to the domestic securities held
     hereunder, cause to be promptly executed by the registered holder of such
     securities, if the securities are registered otherwise than in the name of
     the Portfolio or a nominee of the Portfolio, all proxies, without
     indication of the manner in which such proxies are to be voted, and shall
     promptly deliver to the Portfolio such proxies, all proxy soliciting
     materials and all notices relating to such securities.



                                       10
<PAGE>

2.15 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES.  Subject to the provisions
     of Section 2.3, the Custodian shall transmit promptly to the Fund for each
     Portfolio all written information (including, without limitation, pendency
     of calls and maturities of domestic securities and expirations of rights in
     connection therewith and notices of exercise of call and put options
     written by the Fund on behalf of the Portfolio and the maturity of futures
     contracts purchased or sold by the Portfolio) received by the Custodian
     from issuers of the securities being held for the Portfolio.  With respect
     to tender or exchange offers, the Custodian shall transmit promptly to the
     Portfolio all written information received by the Custodian from issuers of
     the securities whose tender or exchange is sought and from the party (or
     his agents) making the tender or exchange offer.  If the Portfolio desires
     to take action with respect to any tender offer, exchange offer or any
     other similar transaction, the Portfolio shall notify the Custodian at
     least three business days prior to the date on which the Custodian is to
     take such action.


3.   DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD OUTSIDE
     OF THE UNITED STATES

3.1  APPOINTMENT OF FOREIGN SUB-CUSTODIANS.  The Fund hereby authorizes and
     instructs the Custodian to employ as sub-custodians for the Portfolio's
     securities and other assets maintained outside the United States the
     foreign banking institutions and foreign securities depositories designated
     on Schedule A hereto ("foreign sub-custodians").  Upon receipt of "Proper
     Instructions", as defined in Article 5 hereof, together with a Certified
     Resolution, the Custodian and the Fund may agree to amend Schedule A hereto
     from time to time to designate additional foreign banking institutions and
     foreign securities depositories to act as sub-custodian.  Upon receipt of
     Proper Instructions, the Fund may instruct the Custodian to cease the
     employment of any one or more such sub-custodians for maintaining custody
     of the Portfolio's assets.

3.2  ASSETS TO BE HELD.  The Custodian shall limit the securities and other
     assets maintained in the custody of the foreign sub-custodians to:  (a)
     "foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
     the  1940 Act, and (b) cash and cash equivalents in such amounts as the
     Custodian or the Fund may determine to be reasonably necessary to effect
     the Portfolio's foreign securities transactions.  The Custodian shall
     identify on its books as belonging to the Fund, the foreign securities of
     the Fund held by each foreign sub-custodian.

3.3  FOREIGN SECURITIES SYSTEMS.  Except as may otherwise be agreed upon in
     writing by the Custodian and the Fund, assets of the Portfolios shall be
     maintained in a clearing agency



                                       11
<PAGE>

     which acts as a securities depository or in a book-entry system for the
     central handling of securities located outside of the United States (each a
     "Foreign Securities System") only through arrangements implemented by the
     foreign banking institutions serving as sub-custodians pursuant to the
     terms hereof (Foreign Securities Systems and U.S. Securities Systems are
     collectively referred to herein as the "Securities Systems").  Where
     possible, such arrangements shall include entry into agreements containing
     the provisions set forth in Section 3.5 hereof.

3.4  HOLDING SECURITIES.    The Custodian may hold securities and other non-cash
     property for all of its customers, including the Fund, with a Foreign Sub-
     custodian in a single account that is identified as belonging to the
     Custodian for the benefit of its customers, provided however, that (i) the
     records of the Custodian with respect to securities and other non-cash
     property of the Fund which are maintained in such account shall identify by
     book-entry those securities and other non-cash property belonging to the
     Fund and (ii) the Custodian shall require that securities and other non-
     cash property so held by the Foreign Sub-custodian be held separately from
     any assets of the Foreign Sub-custodian or of others.

3.5  AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS.  Each agreement with a
     foreign banking institution shall provide that:  (a) the assets of each
     Portfolio will not be subject to any right, charge, security interest, lien
     or claim of any kind in favor of the foreign banking institution or its
     creditors or agent, except a claim of payment for their safe custody or
     administration; (b) beneficial ownership for the assets of each Portfolio
     will be freely transferable without the payment of money or value other
     than for custody or administration; (c) adequate records will be maintained
     identifying the assets as belonging to each applicable Portfolio; (d)
     officers of or auditors employed by, or other representatives of the
     Custodian, including to the extent permitted under applicable law the
     independent public accountants for the Fund, will be given access to the
     books and records of the foreign banking institution relating to its
     actions under its agreement with the Custodian; and (e) assets of the
     Portfolios held by the foreign sub-custodian will be subject only to the
     instructions of the Custodian or its agents.

3.6  ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND.  Upon request of the Fund,
     the Custodian will use its best efforts to arrange for the independent
     accountants of the Fund to be afforded access to the books and records of
     any foreign banking institution employed as a foreign sub-custodian insofar
     as such books and records relate to the performance of such foreign banking
     institution under its agreement with the Custodian.

3.7  REPORTS BY CUSTODIAN.  The Custodian will supply to the Fund from time to
     time, as mutually agreed upon, statements in respect of the securities and
     other assets of the



                                       12
<PAGE>

     Portfolio(s) held by foreign sub-custodians, including but not limited to
     an identification of entities having possession of the Portfolio(s)
     securities and other assets and advices or notifications of any transfers
     of securities to or from each custodial account maintained by a foreign
     banking institution for the Custodian on behalf of each applicable
     Portfolio indicating, as to securities acquired for a Portfolio, the
     identity of the entity having physical possession of such securities.

3.8  TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.  (a) Except as otherwise provided
     in subsection (b) of this Section 3.8, the provision of Sections 2.2 and
     2.7 of this Contract shall apply, MUTATIS MUTANDIS to the foreign
     securities of the Fund held outside the United States by foreign
     sub-custodians.  (b) Notwithstanding any provision of this Contract to the
     contrary, settlement and payment for securities received for the account of
     each applicable Portfolio and delivery of securities maintained for the
     account of each applicable Portfolio may be effected in accordance with the
     customary established securities trading or securities processing practices
     and procedures in the jurisdiction or market in which the transaction
     occurs, including, without limitation, delivering securities to the
     purchaser thereof or to a dealer therefor (or an agent for such purchaser
     or dealer) against a receipt with the expectation of receiving later
     payment for such securities from such purchaser or dealer.  (c) Securities
     maintained in the custody of a foreign sub-custodian may be maintained in
     the name of such entity's nominee to the same extent as set forth in
     Section 2.3 of this Contract, and the Fund agrees to hold any such nominee
     harmless from any liability as a holder of record of such securities.

3.9  LIABILITY OF FOREIGN SUB-CUSTODIANS.  Each agreement pursuant to which the
     Custodian employs a foreign banking institution as a foreign sub-custodian
     shall require the institution to exercise reasonable care in the
     performance of its duties and to indemnify, and hold harmless, the
     Custodian and the Fund from and against any loss, damage, cost, expense,
     liability or claim arising out of or in connection with the institution's
     performance of such obligations.  At the election of the Fund, it shall be
     entitled to be subrogated to the rights of the Custodian with respect to
     any claims against a foreign banking institution as a consequence of any
     such loss, damage, cost, expense, liability or claim if and to the extent
     that the Fund has not been made whole for any such loss, damage, cost,
     expense, liability or claim.

3.10 LIABILITY OF CUSTODIAN.  The Custodian shall be liable for the acts or
     omissions of a foreign banking institution to the same extent as set forth
     with respect to sub-custodians generally in this Contract and, regardless
     of whether assets are maintained in the custody of a foreign banking
     institution, a foreign securities depository or a branch of a U.S. bank as
     contemplated by Section 3.13 hereof, the Custodian shall not be liable for
     any loss, damage,



                                       13
<PAGE>

     cost, expense, liability or claim resulting from nationalization,
     expropriation, currency restrictions, or acts of war or terrorism or any
     loss where the sub-custodian has otherwise exercised reasonable care.
     Notwithstanding the foregoing provisions of this Section 3.10, in
     delegating custody duties to State Street London Ltd., the Custodian shall
     not be relieved of any responsibility to the Fund for any loss due to such
     delegation, except such loss as may result from (a) political risk
     (including, but not limited to, exchange control restrictions,
     confiscation, expropriation, nationalization, insurrection, civil strife or
     armed hostilities) or (b) other losses (excluding a bankruptcy or
     insolvency of State Street London Ltd. not caused by political risk) due to
     Acts of God, nuclear incident or other losses under circumstances where the
     Custodian and State Street London Ltd. have exercised reasonable care.

3.11 REIMBURSEMENT FOR ADVANCES.  If the Fund requires the Custodian to advance
     cash or securities for any purpose for the benefit of a Portfolio including
     the purchase or sale of foreign exchange or of contracts for foreign
     exchange, or in the event that the Custodian or its nominee shall incur or
     be assessed any taxes, charges, expenses, assessments, claims or
     liabilities in connection with the performance of this Contract, except
     such as may arise from its or its nominee's own negligent action, negligent
     failure to act or willful misconduct, any property at any time held for the
     account of the applicable Portfolio shall be security therefor and should
     the Fund fail to repay the Custodian promptly, the Custodian shall be
     entitled to utilize available cash and to dispose of such Portfolio's
     assets to the extent necessary to obtain reimbursement.

3.12 MONITORING RESPONSIBILITIES.  The Custodian shall furnish annually to the
     Fund, during the month of June, information concerning the foreign
     sub-custodians employed by the Custodian.  Such information shall be
     similar in kind and scope to that furnished to the Fund in connection with
     the initial approval of this Contract.  In addition, the Custodian will
     promptly inform the Fund in the event that the Custodian learns of a
     material adverse change in the financial condition of a foreign
     sub-custodian or any material loss of the assets of the Fund or in the case
     of any foreign sub-custodian not the subject of an exemptive order from the
     SEC is notified by such foreign sub-custodian that there appears to be a
     substantial likelihood that its shareholders' equity will decline below
     $200 million (U.S. dollars or the equivalent thereof) or that its
     shareholders' equity has declined below $200 million (in each case computed
     in accordance with generally accepted U.S. accounting principles).

3.13 BRANCHES OF U.S. BANKS.  (a) Except as otherwise set forth in this
     Contract, the provisions hereof shall not apply where the custody of the
     Portfolios assets are maintained in a foreign branch of a banking
     institution which is a "bank" as defined by Section 2(a)(5) of the 1940



                                       14
<PAGE>

     Act meeting the qualification set forth in Section 26(a) of said Act.  The
     appointment of any such branch as a sub-custodian shall be governed by
     Article 1 hereof.

     (b)  Cash held for each Portfolio of the Fund in the United Kingdom shall
     be maintained in an interest bearing account established for the Fund with
     the Custodian's London branch, which account shall be subject to the
     direction of the Custodian, State Street London Ltd. or both.

3.14 TAX LAW.  The Custodian shall have no responsibility or liability for any
     obligations now or hereafter imposed on the Fund or the Custodian as
     custodian of the Fund by the tax law of the United States of America or any
     state or political subdivision thereof.  It shall be the responsibility of
     the Fund to notify the Custodian of the obligations imposed on the Fund or
     the Custodian as custodian of the Fund by the tax law of jurisdictions
     other than those mentioned in the above sentence, including responsibility
     for withholding and other taxes, assessments or other governmental charges,
     certifications and governmental reporting.  The sole responsibility of the
     Custodian with regard to such tax law shall be to use reasonable efforts to
     assist the Fund with respect to any claim for exemption or refund under the
     tax law of jurisdictions for which the Fund has provided such information.


4.   PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND

     The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent and deposit into the account of the appropriate Portfolio such
payments as are received for Shares of that Portfolio issued or sold from time
to time by the Fund.  The Custodian will provide timely notification to the Fund
on behalf of each such Portfolio and the Transfer Agent of any receipt by it of
payments for Shares of such Portfolio.

     From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board pursuant thereto, the Custodian shall, upon receipt of instructions from
the Transfer Agent, make funds available for payment to holders of Shares who
have delivered to the Transfer Agent a request for redemption or repurchase of
their Shares.  In connection with the redemption or repurchase of Shares, the
Custodian is authorized upon receipt of instructions from the Transfer Agent to
wire funds to or through a commercial bank designated by the redeeming
shareholders.  In connection with the redemption or repurchase of Shares, the
Custodian shall honor checks drawn on the Custodian by a holder of Shares, which
checks have been furnished by the Fund to the holder of Shares, when presented
to the Custodian in accordance with such procedures and controls as are mutually
agreed upon from time to time between the Fund and the Custodian.



                                       15
<PAGE>

5.   PROPER INSTRUCTIONS

     Proper Instructions as used throughout this Contract means a writing signed
or initialed by one or more person or persons as the Board shall have from time
to time authorized.  Each such writing shall set forth the specific transaction
or type of transaction involved, including a specific statement of the purpose
for which such action is requested.  Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved.  The Fund shall cause all oral instructions to be confirmed in
writing.  Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board accompanied by a detailed
description of procedures approved by the Board, Proper Instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board and the Custodian are satisfied that such
procedures afford adequate safeguards for the Portfolios' assets.  For purposes
of this Section, Proper Instructions shall include instructions received by the
Custodian pursuant to any three-party agreement which requires a segregated
asset account in accordance with Section 2.12.


6.   ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY

     The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:

     1)   make payments to itself or others for minor expenses of handling
          securities or other similar items relating to its duties under this
          Contract, PROVIDED that all such payments shall be accounted for to
          the Fund on behalf of the Portfolio;

     2)   surrender securities in temporary form for securities in definitive
          form;

     3)   endorse for collection, in the name of the Portfolio, checks, drafts
          and other negotiable instruments; and

     4)   in general, attend to all non-discretionary details in connection with
          the sale, exchange, substitution, purchase, transfer and other
          dealings with the securities and property of the Portfolio except as
          otherwise directed by the Board.



                                       16
<PAGE>

7.   EVIDENCE OF AUTHORITY

     The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund.  The
Custodian may receive and accept a certified copy of a vote of the Board as
conclusive evidence (a) of the authority of any person to act in accordance with
such vote or (b) of any determination or of any action by the Board pursuant to
the Articles of Incorporation as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of written
notice to the contrary.

8.   DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND CALCULATION OF
     NET ASSET VALUE AND NET INCOME

     The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board to keep the books of account of each
Portfolio and/or compute the net asset value per share of the outstanding Shares
or, if directed in writing to do so by the Fund on behalf of the Portfolio,
shall itself keep such books of account and/or compute such net asset value per
share.  If so directed, the Custodian shall also calculate daily the net income
of the Portfolio as described in the Prospectus and shall advise the Fund and
the Transfer Agent daily of the total amounts of such net income and, if
instructed in writing by an officer of the Fund to do so, shall advise the
Transfer Agent periodically of the division of such net income among its various
components.  The calculations of the net asset value per share and the daily
income of each Portfolio shall be made at the time or times described from time
to time in the Prospectus.

9.   RECORDS

     The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the SEC.  The Custodian shall, at the Fund's request, supply the Fund with a
tabulation of securities owned by each Portfolio and held by the Custodian and
shall, when requested to do so by the Fund and for such compensation as shall be
agreed upon between the Fund and the Custodian, include certificate numbers in
such tabulations.



                                       17
<PAGE>


10.  OPINION OF FUND'S INDEPENDENT ACCOUNTANT

     The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the SEC and with respect to any
other requirements of the SEC.


11.  REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS

     The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.


12.  COMPENSATION OF CUSTODIAN

     The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund on
behalf of each applicable Portfolio and the Custodian.


13.  RESPONSIBILITY OF CUSTODIAN

     So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement.  The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence.  It shall be entitled
to rely on and may act upon advice of counsel



                                       19
<PAGE>

(who may be counsel for the Fund) on all matters, and shall be without liability
for any action reasonably taken or omitted pursuant to such advice.

     Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, or computer viruses or communications disruptions;
(ii) errors by the Fund or the Investment Advisor in their instructions to the
Custodian provided such instructions have been in accordance with this Contract;
(iii) the insolvency of or acts or omissions by a Securities System; (iv) any
delay or failure of any broker, agent or intermediary, central bank or other
commercially prevalent payment or clearing system to deliver to the Custodian's
sub-custodian or agent securities purchased or in the remittance or payment made
in connection with securities sold; (v) any delay or failure of any company,
corporation, or other body in charge or registering or transferring securities
in the name of the Custodian, the Fund, the Custodian's sub-custodians, nominees
or agents or agents or any consequential losses arising out of such delay or
failure to transfer such securities including non-receipt of bonus, dividends
and rights and other accretions or benefits; (vi) delays or inability to perform
its duties due to any disorder in market infrastructure with respect to any
particular security or Securities System; and (vii) any provision of any present
or future law or regulation or order of the United States of America, or any
state thereof, or any other country, or political subdivision thereof or of any
court of competent jurisdiction.  Regardless of whether assets are maintained in
the custody of a foreign banking institution or a foreign securities depository,
the Custodian shall not be liable for "country risk", i.e. any loss, damage,
cost, expense, liability or claim resulting from, or caused by, the direction of
or authorization by the Fund to maintain custody of any securities or cash of
the Fund or of a Portfolio in a foreign country including, but not limited to,
losses resulting from nationalization, expropriation, imposition of currency
controls or restrictions, acts of war or terrorism, riots, revolutions, work
stoppages, natural disasters or other similar events or acts.

     If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.

     If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange



                                       19
<PAGE>

contracts and assumed settlement) or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time held
for the account of the Fund shall be security therefor and should the Fund fail
to repay the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of the Fund assets to the extent necessary to
obtain reimbursement.

     In no event shall the Custodian be liable for indirect, special or
consequential damages.


14.  EFFECTIVE PERIOD, TERMINATION AND AMENDMENT

     This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; PROVIDED, however that the
Custodian shall not with respect to a Portfolio act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board has approved the initial use of a particular
Securities System by such Portfolio, as required by Rule 17f-4 under the 1940
Act and that the Custodian shall not with respect to a Portfolio act under
Section 2.11 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board has approved the initial use
of the Direct Paper System by such Portfolio; PROVIDED FURTHER, however, that
the Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Articles of
Incorporation, and further provided, that the Fund on behalf of one or more of
the Portfolios may at any time by action of the Board (i) substitute another
bank or trust company for the Custodian by giving notice as described above to
the Custodian, or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the Comptroller of
the Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.

     Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.

15.  SUCCESSOR CUSTODIAN



                                       20
<PAGE>

     If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board, the Custodian shall, upon termination, deliver
to such successor custodian at the office of the Custodian, duly endorsed and in
the form for transfer, all securities of each applicable Portfolio then held by
it hereunder and shall transfer to an account of the successor custodian all of
the securities of each such Portfolio held in a Securities System.

     If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board, deliver at
the office of the Custodian and transfer such securities, funds and other
properties in accordance with such vote.

     In the event that no written order designating a successor custodian or
certified copy of a vote of the Board shall have been delivered to the Custodian
on or before the date when such termination shall become effective, then the
Custodian shall have the right to deliver to a bank or trust company, which is a
"bank" as defined the 1940 Act, doing business in Boston, Massachusetts, of its
own selection, having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian on behalf of each
applicable Portfolio and all instruments held by the Custodian relative thereto
and all other property held by it under this Contract on behalf of each
applicable Portfolio and to transfer to an account of such successor custodian
all of the securities of each such Portfolio held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Contract.

     In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board to appoint a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian retains
possession of such securities, funds and other properties and the provisions of
this Contract relating to the duties and obligations of the Custodian shall
remain in full force and effect.


16.  INTERPRETIVE AND ADDITIONAL PROVISIONS

     In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract.  Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, PROVIDED that no such
interpretive or additional provisions shall



                                       21
<PAGE>

contravene any applicable federal or state regulations or any provision of the
Articles of Incorporation of the Fund.  No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.

17.  ADDITIONAL FUNDS

     In the event that the Fund establishes one or more series of Shares in
addition to RCM Global Technology Fund with respect to which it desires to have
the Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.

18.  MASSACHUSETTS LAW TO APPLY

     This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.

19.  PRIOR CONTRACTS

     This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.

20.  SHAREHOLDER COMMUNICATIONS ELECTION

     SEC Rule 14b-2 requires banks which hold securities for the account of
customers to respond to requests by issuers of securities for the names,
addresses and holdings of beneficial owners of securities of that issuer held by
the bank unless the beneficial owner has expressly objected to disclosure of
this information.  In order to comply with the rule, the Custodian needs the
Fund to indicate whether it authorizes the Custodian to provide the Fund's name,
address, and share position to requesting companies whose securities the Fund
owns.  If the Fund tells the Custodian "no", the Custodian will not provide this
information to requesting companies.  If the Fund tells the Custodian "yes" or
does not check either "yes" or "no" below, the Custodian is required by the rule
to treat the Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by the Fund.
For the Fund's protection, the Rule prohibits the requesting company from using
the Fund's name and address for any purpose other than corporate



                                       22
<PAGE>

communications.  Please indicate below whether the Fund consents or objects by
checking one of the alternatives below.


     YES [  ]  The Custodian is authorized to release the Fund's name, address,
               and share positions.

     NO  [  ]  The Custodian is not authorized to release the Fund's name,
               address, and share positions.



             THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK


                                       23

<PAGE>

     IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of
*[ DATE ].


                              STATE STREET BANK AND TRUST COMPANY


                              By:
                                   -----------------------------------------

                              Name:   RONALD E. LOGUE
                                   -----------------------------------------

                              Title:  EXECUTIVE VICE PRESIDENT
                                    ----------------------------------------




                              RCM EQUITY FUNDS, INC.


                              By:
                                   -----------------------------------------

                              Name:
                                   -----------------------------------------

                              Title:
                                     ---------------------------------------


                                       24


<PAGE>

                     STATE STREET BANK AND TRUST COMPANY

                      CUSTODY & ACCOUNTING FEE PROPOSAL

                           RCM EQUITY FUNDS, INC.
                         RCM GLOBAL TECHNOLOGY FUND


- -------------------------------------------------------------------------------
I.  Accounting
- -------------------------------------------------------------------------------

                                                      Annual Fee
                                         Expressed in Basis Points: 1/100 of 1%
                                         --------------------------------------

                                         **Year 1                   Year 2
                                         --------                   -------
 First $50 million/fund                          7                        7
*Next $50 million/fund                          1                         3
 Thereafter                                      1                        1
 Minimum/fund                               36,000                   48,000

- -------------------------------------------------------------------------------
II.  Custody
- -------------------------------------------------------------------------------

                                                      Annual Fee
                                         Expressed in Basis Points: 1/100 of 1%
                                         --------------------------------------

                                          Year 1                    Year 2
                                         --------                   -------

A. Holdings
      U.S.                                      1                         1
     *Foreign                                   9                        11

B. Trades
      U.S.                                 $12.00                    $12.00
      Foreign                              $35.00                    $35.00

- -------------------------------------------------------------------------------
III.  Out-of-Pocket Expenses
- -------------------------------------------------------------------------------

     Billing for the recovery of applicable out-of-pocket expenses will be
     made as of the end of each quarter. These are pass through expenses and
     include such items as postage, duplicating, telephone, courier service,
     Price Waterhouse Audit Letters, 17F-5 materials, foreign registrations
     and stamp duties.

* First year waivers.

- -------------------------------------------------------------------------------
RCM Capital Funds, Inc.                    State Street Bank & Trust Company
- -------------------------------------------------------------------------------

By:     _______________________              By:     _______________________

Title:  _______________________              Title:  _______________________

Date:   _______________________              Date:   _______________________

** Account fees will be waived for up to one year if assets remain under 50
   million. If assets exceed 50 million then the year one fees will apply
   thereafter until year two.


<PAGE>

                                LICENSE AGREEMENT



     AGREEMENT made as of the 19th day of December, 1995 by and between RCM
Capital Management, a California Limited Partnership ("RCM"), and RCM Equity
Funds, Inc., a Maryland corporation (the "Company").

                                    RECITALS:

     A.   Rosenberg Capital Management, the predecessor of RCM, was established
in 1970 and has used the phrase "Rosenberg" in its name and its business since
that time.

     B.   RCM was established in 1986 under the laws of the State of California,
as the successor to the business and operations of Rosenberg Capital Management,
and has used the name RCM Capital Management at all times thereafter.

     C.   The Company, which is registered with the Securities and Exchange
Commission as an open-end management investment company, desires to use "RCM" in
its name and business operations (including in the name of each of its series).

     D.   On the terms set forth herein, RCM is willing to grant the Company a
license to use "RCM" in its name and operations as an investment company
(including in the name of each of its series).

     E.   RCM Capital Funds, Inc. formerly RCM Growth Equity Fund ("RCM Capital
Funds"), a registered investment company, has entered into a license agreement
with RCM pursuant to which RCM has granted it a non-exclusive license (including
in the name of each of its series) to use "RCM" in its name and business.  In
addition, RCM Strategic Global Government Fund, Inc., a registered investment
company, has entered into a license agreement with RCM pursuant to which RCM has
granted it a non-exclusive license to use "RCM" in its name and business.

     NOW, THEREFORE, in consideration of the premises and of the covenants
hereinafter contained, RCM and the Company do hereby agree as follows:

                                   AGREEMENT:

     1.   RCM hereby grants the Company a revocable, non-exclusive and non-
transferable license to use the phrase "RCM" in its corporate name and in its
operations as an investment company (including in the name of each of its
series), subject to the terms and conditions set forth herein (the "License").
The Company shall at all times use such phrase in a manner which is designed to
enhance the reputation and goodwill  associated with the phrase, and shall
comply with all laws, rules, regulations, ordinances and orders of all local,
state and national authorities.  The Company agrees that it shall do nothing

                                      - 1 -

<PAGE>

inconsistent with RCM's ownership of such phrase, and shall not apply for
registration or seek to obtain ownership of the phrase, or any similar mark, in
any state or nation.  The provisions of the forgoing sentence of this Section 1
shall survive the termination of this Agreement, irrespective of the reason
therefor.

     2.   The Company acknowledges that the phrase "RCM" has incalculable value
to RCM and that RCM may, therefore, revoke its License at any time upon 60 days'
notice to the Company.  As soon as practicable after any revocation, the Company
shall (i) change its corporate name so that such name will not thereafter
include the phrase "RCM," "Rosenberg Capital Management" or any variation or
derivative of such names, (ii) discontinue all use by it of the phrase "RCM" or
any variation or derivative thereof as part of its trade name or otherwise, and
(iii) cease using, and shall cause its agents to cease using, all letterhead
advertising materials and other materials (printed or otherwise) that include
the phrase "RCM" or any variation or derivative thereof.   Without limiting the
foregoing, if the Investment Management Agreement between the Company and RCM
should be terminated for any reason, RCM may, without notice, revoke the
License.

     3.   The Company acknowledges that RCM has previously granted a license to
use the phrase "RCM" to RCM Capital Funds in its name and its operations and
that RCM Capital Funds may establish additional series in the future using the
RCM name.  The Company further acknowledges that RCM has previously granted a
license to use the phrase "RCM" to RCM Strategic Global Government Fund, Inc. in
its name and its operations.

     4.   RCM reserves and shall have the right to grant to any other company,
including without limitation, any other investment company, the right to use
"RCM" or Rosenberg Capital Management or any variations or derivatives of such
names in its name and no consent or permission of the Company shall be necessary
in connection with such grant; but, if required by any applicable laws of any
state or other jurisdiction, the Company will forthwith grant any consent, give
any permission and execute any certificate or instrument as may be requested by
RCM.

     5.   The Company shall not, without the express written permission of RCM,
grant consent or give permission to any other company or entity the right, to
use "RCM," "Rosenberg Capital Management" or any name similar to that of the
Company.

     6.   In the event that the Company should hereafter change its name and
eliminate the phrase RCM or any variation thereof from its name, the Company
hereby grants to RCM the right to cause the incorporation of other corporations
or the organization of other voluntary associations that may operate as
investment companies and that may have names similar to that to which the
Company may change its name and to own all or any portion of the shares of such
other corporations or associations and to enter into contractual relationships
with such other corporations or associations.

     7.   This Agreement may be amended at any time by written agreement
executed by each of the parties.

                                      - 2 -

<PAGE>

     8.   This Agreement shall be governed by and shall be construed in
accordance with the internal, substantive laws of the State of California.

     9.   If any term or provision of this Agreement is held to be void or
unenforceable by any court of competent jurisdiction, only that objectionable
term or provision shall be deleted herefrom while the remainder of the term,
provision and agreement shall be enforceable.

     10.  No party's failure to enforce any provision or provisions of this
Agreement shall be deemed or in any way construed as a waiver of any such
provision or provisions, nor prevent that party thereafter from enforcing each
and every provision of this Agreement.  The rights granted the parties herein
are cumulative and shall not constitute a waiver of any party's right to assert
all other legal remedies available to it under the circumstances.

     11.  The Company acknowledges that money damages alone are not adequate
remedy for any breach by the Company of any provision of this Agreement.
Therefore, in the event of a breach or threatened breach of any provision of
this Agreement by the Company, the Company agrees and consents that RCM, in
addition to all other remedies, shall have the right to immediately seek, obtain
and enforce injunctive relief prohibiting the breach or compelling specific
performance, without the need to post any bond.  Unless expressly set forth
herein to the contrary, all remedies set forth herein are cumulative and are in
addition to any and all remedies provided either party at law or in equity.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

                                        RCM EQUITY FUNDS, INC.




                                        By:  /s/ William L. Price
                                             ---------------------------
                                             William L. Price, President



                                        RCM CAPITAL MANAGEMENT
                                        By:  RCM LIMITED L.P.
                                             General Partner
                                        By:  RCM GENERAL CORP.
                                             General Partner

                                        By:   /s/ Michael J. Apatoff
                                             ---------------------------
                                             Michael J. Apatoff
                                             Executive Vice President

                                      - 3 -


<PAGE>

                                                        EXHIBIT 99.B10.1

                 [VENABLE, BAETJER AND HOWARD LETTERHEAD]


                                December 22, 1995


RCM Equity Funds, Inc.
Four Embarcadero Center
San Francisco, California 94111-4189

             Re:  RCM Equity Funds, Inc.
                  -----------------------


Ladies and Gentlemen:

     We have acted as special Maryland counsel for RCM Equity Funds, Inc., a
Maryland corporation (the "Company") in connection with the organization of
the Company and the issuance of shares of its RCM Global Technology Fund
series capital stock, par value $.0001 per share (the "Shares").

     As special Maryland counsel for the Company, we are familiar with its
Charter and Bylaws. We have examined the prospectus and statement of
additional information included in its Registration Statement on Form N-1A,
Securities Act File No. 33-97572 and Investment Company Act File No. 811-9100
(the "Registration Statement"), substantially in the form in which they are
to become effective (collectively, the "Prospectus"). We have further
examined and relied upon a certificate of the Maryland State Department of
Assessments and Taxation to the effect that the Company is duly incorporated
and existing under the laws of the State of Maryland and is in good standing
and duly authorized to transact business in the State of Maryland.

     We have also examined and relied upon such corporate records of the
Company and other documents and certificates with respect to factual matters
as we have deemed necessary to render the opinion expressed herein. We have
assumed, without independent verification, the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity with originals of all documents submitted to us as copies.

     Based on such examination, we are of the opinion and so advise you that:

     1.    The Company is duly organized and validly existing as a
corporation in good standing under the laws of the State of Maryland.


<PAGE>

RCM Equity Funds, Inc.
December 22, 1995
Page 2


     2.    The 10,000 presently issued and outstanding Shares have been
validly and legally issued and are fully paid and nonassessable.

     3.    The Shares to be offered for sale pursuant to the Prospectus are,
to the extent of the number of Shares authorized to be issued by the Company
in its Charter, duly authorized and, when sold, issued and paid for as
contemplated by the Prospectus, will have been validly and legally issued
and will be fully paid and nonassessable.

     This letter expresses our opinion with respect to the Maryland General
Corporation Law governing matters such as due organization and the
authorization and issuance of stock. It does not extend to the securities or
"blue sky" laws of Maryland, to federal securities laws or to other laws.

     We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the statement of
additional information supplementing the Prospectus under the caption
"Counsel." We do not thereby admit that we are experts" within the meaning of
the Securities Act of 1933 and the regulations thereunder.


                                               Very truly yours,




<PAGE>

                 [PAUL, HASTINGS, JANOFSKY & WALKER LETTERHEAD]

                                       December 22, 1995

RCM Equity Funds, Inc.
Four Embarcadero Center
San Francisco, California 94111

Ladies and Gentlemen:

    We have acted as counsel to RCM Equity Funds, Inc., a Maryland corporation
(the "Company") in connection with the organization of the Company and the
preparation of its Registration Statement on Form N-1A under the Securities Act
of 1933 and the Investment Company Act of 1940 (File Nos. 33-97572, 811-9100)
(the "Registration Statement"). We hereby consent to the reference to us under
the heading "Additional Information -- Counsel" in the statement of additional
information comprising Part B of the Registration Statement.

                                       Very truly yours,

                                       PAUL, HASTINGS, JANOFSKY & WALKER


<PAGE>

                       CONSENT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors of
 RCM Equity Funds, Inc.:

   RCM Global Technology Fund

We consent to the inclusion in the Registration Statement on Form N-1A (File No.
33-97572) of our report dated December 22, 1995 on our audit of the statement of
assets and liabilities of RCM Equity Funds, Inc. (RCM Global Technology Fund).




                                                  COOPERS & LYBRAND L.L.P.

Boston, Massachusetts
December 22, 1995

<PAGE>

                                                                 EXHIBIT 99.B13

                              SUBSCRIPTION AGREEMENT
                                       FOR
                               INITIAL STOCKHOLDER



   This agreement (the "Subscription Agreement"), dated as of ________________,
is between RCM Equity Funds, Inc. (the "Company") and the ____________________
(the "Stockholder").

   WHEREAS, Stockholder is a _________________________________________________;

   WHEREAS, the Company is an open-end management investment company registered
under the Investment Company Act of 1940, as amended, and the rules and
regulations promulgated thereunder (the "1940 Act");

   WHEREAS, Article IV(1)(a) of the Articles of Incorporation provides that
there shall initially be one series of shares, designated as the "RCM Global
Technology Fund" (the "Fund") consisting initially of 50,000,000 shares of
capital stock ("Fund Shares");

   WHEREAS, the Fund is duly authorized to sell its shares;

   WHEREAS, the Stockholder has agreed to purchase from the Fund, ___________
shares of capital stock of the Fund (the "Shares") at a price of $10.00 per
share;

   WHEREAS, the Board of Directors has received and reviewed the form of the
Subscription Agreement with respect to the proposed sale of capital stock of
the  Fund to the Stockholder;

   NOW, THEREFORE, the parties to this Agreement hereby agree as follows:

   1. The Fund hereby agrees to issue and sell to the Stockholder, and
the Stockholder has agreed to purchase from the Fund, __________ Shares of
the Fund (the "Shares") at a price of $_____ per share.

   2. The Stockholder represents and warrants that it is acquiring the
Shares for investment for its own account as the sole beneficial owner
thereof, and that the Shares are not being acquired with a view to or in
connection with any resale, distribution, subdivision, or fractionalization
of any or all of the Shares or any interest therein.  The Stockholder further
represents and warrants that it has not entered into any contract,
undertaking, agreement, or arrangement with any person to sell, assign,
transfer, pledge, hypothecate, or exchange all or any part of the Shares to
any other person.

   3. The Stockholder hereby agrees that it will  not sell, assign,
transfer, pledge, hypothecate, or exchange all or any part of the Shares or
any interest therein except upon repurchase or redemption by the Fund, unless
and until (i) the Stockholder reasonably

                                        1
<PAGE>

believes that such sale, assignment, transfer, pledge, hypothecation or
exchange will not violate the provisions of the Securities act of 1933 (the
"1933 Act") or any of the rules or regulation thereunder, and the Fund receives
adequate notice of the Stockholder's intentions and does not object to such
sale, assignment, transfer, pledge, hypothecation or exchange, or (ii) the
Stockholder receives an opinion of counsel that such sale, assignment,
transfer, pledge, hypothecation or exchange will not violated the provisions
of the 1933 Act or any of the rules or regulations thereunder.

   4. The undersigned represents and warrants that he is __________ of the
Stockholder and that he has all necessary owner and authority to execute this
Subscription Agreement on behalf of the Stockholder and thereby to bind the
Stockholder.

   IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
___ day of ___________________.



                                         RCM EQUITY FUNDS, INC.


                                         By: _____________________________

                                             Name:________________________

                                             Title:_______________________


                                         [name of stockholder]



                                         By: _____________________________

                                             Name:________________________

                                             Title:_______________________






                                        2



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