<PAGE>
RCM GLOBAL TECHNOLOGY FUND
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The Fund had an interesting six months. The Fund returned 13.35%, compared
to 10.10% for the S&P 500 Stock Index and 3.36% for the Lipper Science &
Technology Index. In January, RCM Capital Management, predecessor to the
Fund's current investment manager, RCM Capital Management, L.L.C. ("RCM"),
had expected a period of consolidation in the technology sector before the
market enters another period of outstanding performance. But the volatile
environment of the first half was truly a challenging time. The U.S. economy
at first seemed to slow, but then re-accelerated; then European economies
began to slow. The intense shortage of semiconductors turned into a glut, and
the inventory correction for some of the specialty companies, which RCM
thought would be short-lived, was extended by the weaknesses noted above. A
huge number of IPO's distracted investors from existing companies; the number
of negative surprises increased throughout the period. Weaknesses were
exaggerated by the strength of the dollar and the lack of a summer slowdown
last year. The IPO mania caused a buyers' stampede into increasingly higher
risk, lower quality or more fragile companies. This "party" ended with an
indiscriminate disgorgement of these stocks in early July, after the close of
the six-month period. The momentum buyers narrowed their focus on an
increasingly smaller list of companies without regard to what their
businesses were or how durable their advantages or how high their valuations
- - investors had not seen so many triple digit multiples since the "growth
stock" phenomena of the early 1970's! This culminated in some well-publicized
booms and busts in such stocks as Presstek and Iomega. Eventually, this bust
spread to most of the high-multiple companies, again in early July.
"Challenging" is an understatement of what the Fund experienced!
From the attached graph, you can see that the Fund met these challenges
and navigated through a difficult six-month period relatively unscathed.
After the difficult period, RCM indeed feels better about the environment
than it did as the Fund commenced operations six months ago. The excesses are
largely gone and buyers are more wary. The most difficult earnings
comparisons are happening in the second and third calendar quarters of 1996,
which should be followed by a period of gradual improvement. The inventory
liquidation cycles should be ending soon. RCM believes that the product
cycles it has been anticipating are now within sight - new wireless
infrastructure, new client-server software, and a continued period of
innovation and infrastructure construction associated with the emerging
communications paradigm broadly known as the Internet. More importantly, RCM
feels that the market will return to a more rational environment, where RCM's
research and valuation skills will enhance shareholder value.
Specifically, RCM has continued to diversify the Fund's portfolio across
many segments and to focus on high quality companies that are leaders of
their industries or are participating in high growth
<PAGE>
industries. The Fund continues to own several stocks that have compelling
valuations where RCM believes the reality is better than the perception.
RCM continues to believe that the communications and networking areas will
benefit the Fund. One of the Fund's holdings, Stratacom, was acquired by
another, Cisco Systems, a consolidation that RCM supports because the
upgrading of telecommunications infrastructure is a global phenomenon that
should continue for many years.
The Fund continues to have large investments in the business and technical
software sectors. These areas continue to rank at the top of priority lists
of corporate spending, and the barriers to entry are formidable. These
companies supply the databases, the operating systems, the training systems
and the utilities to run these environments. RCM believes these companies
will prosper in most environments and will appreciate in value.
The systems integration and processing sector is well-represented in the
Fund. These companies are characterized by consistent growth, a high
percentage of recurring revenue and, therefore, a predictable earnings
stream. This sector performed well in the first six months of this year
because of the increasing uncertainty about the outlook for the economy and
interest rates.
RCM underestimated the severity of the inventory correction for our
specialty semiconductor holdings, and has responded by concentrating the
Fund's holdings in those companies in which RCM believes the cycle is ending
and in which there are strong new product cycles unfolding. RCM sees many of
these companies benefiting from the spread of semiconductors into consumer,
industrial, and communications products, so RCM has diversified the Fund's
holdings across these three industries.
The Fund continues to have modest investments in the computer hardware
industry, with concentrations in companies that have more than a strong
industry position. The companies RCM selected tend to have gone through major
restructuring, have improving margins and are selling at low price to
earnings ratios. Just as the U.S. demand has lagged the economic recovery for
these companies, RCM believes that world-wide demand is lagging its recovery,
especially in Japan and parts of Europe, which may be turning the corner.
Thus, the disappointments of the first half could turn into recoveries.
RCM has also continued to add to the Fund's positions in some of the
wireless and consumer software areas. These stocks have not performed well in
the first half, but RCM believes that their prospects will improve.
Page 2
<PAGE>
The Fund has good representation from the commercial aerospace sector. The
industry is at the start of a long commercial aircraft cycle and leading
companies should do quite well.
Finally, RCM has shifted the Fund's holdings in the healthcare industry,
focusing on those companies with strong product cycles in the next year. The
defensive characteristics of this group proved less than expected because the
rising interest rates in the first half depressed some of the multiples, so
RCM sought companies that could help offset this effect. RCM increased the
Fund's exposure to biotechnology after that group's recent correction.
RCM believes it has positioned the Fund to do well in the popular
scenarios, which are equally likely. If the world economies begin or continue
their recoveries, and interest rates gradually increase, the Fund has
companies with strong growth and elasticities that can compensate for lower
multiples. If recoveries stall and the economies weaken, the Fund owns
companies that have strong new product cycles and good returns that will
distinguish their performance and help their stocks. It is this "win-win"
potential that should once again draw investors to technology. Furthermore,
RCM continues to believe that technology will be a major driving force of the
global economy for the next ten years.
Page 3
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
PERFORMANCE SUMMARY
______________________________________________________________________________
$30,000
$29,000
$28,450
$28,000
$27,587
$27,000
$26,000
$25,783
$25,000
$24,000
-----------------------------------------------------------------------
12/27/95 1/31/96 2/29/96 3/31/96 4/30/96 5/31/96 6/30/96
___ Fund --- Upper Science & Technology Fund Index ==== S&P 500 Stock Index
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The chart above shows the performance of the RCM Global Technology Fund since
the Fund's inception versus the Standard & Poor's 500 Stock Index+ and the
Lipper Science & Technology Fund Index++. The chart represents a cumulative
return+* of 13.80%, without a redemption fee, for the Fund. The Fund's
cumulative return+* with a redemption fee** would have been 12.09%. The
chart assumes a hypothetical $25,000++ initial investment in the Fund and
reflects all Fund expenses.
JUNE 30, 1996 TOTAL RETURNS+
- ----------------------------------------------
Without Redemption Fee With Redemption Fee**
- ----------------------------------------------
LIFE OF LIFE OF
YTD FUND* YTD FUND*
- ----------------------------------------------
13.35% 13.80% 11.65% 12.09%
- ----------------------------------------------
The data above represents past performance of the Fund, and may not be
indicative of future results. The investment return and principal value of
an investment in the Fund will fluctuate, so that shares, when redeemed, may
be worth more or less than their original cost.
- --------------
+ The Standard & Poor's 500 Index is a capitalization-weighted index of
500 stocks designed to measure performance of the broad domestic economy
through changes in the aggregate market value of 500 stocks representing
all major industries.
++ The Lipper Science & Technology Fund Index is an equally weighted index
of the 10 largest science and technology mutual funds.
+ Returns assume reinvestment of all dividends and capital gains
distributions at net asset value.
* The Fund commenced operations on December 27, 1995.
** Performance reflects the effects of the 1.5% redemption fee charged on
redemptions of shares made within 12 months of purchase.
++ The Fund's minimum initial investment.
Page 4
<PAGE>
RCM EQUITY FUNDS, INC.
STOCKHOLDER MEETING RESULTS
A Special Meeting of Stockholders of the RCM Equity Funds, Inc. (the
"Company") was held on Tuesday, May 28, 1996. The number of shares issued,
outstanding and eligible to vote as of April 18, 1996 (the "Record Date") was
239,094. Present were 157,436 shares in person or represented by proxy or
65.85% of the shares outstanding on the Record Date. The matters voted upon
by stockholders and the resulting votes for each matter are presented below:
1. The new Investment Management Agreement between the Company, on behalf
of the Fund and RCM Capital Management, L.L.C. was approved. For:
157,435, Against: 0, Abstain: 0.
2. Each person nominated as a director was selected as set forth below:
For Withhold
------------- ------------
DeWitt F. Bowman 157,401 34
Frank P. Greene 157,401 34
Pamela A. Farr 157,401 34
Thomas S. Foley 136,351 21,075
George G.C. Parker 157,401 34
3. The selection by the Board of Directors of Coopers & Lybrand L.L.P. as
independent public accountants for the fiscal year ending December 31,
1996 was approved. For: 157,436, Against: 0, Abstain: 0.
Page 5
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
% of
Shares Country Equity Investments Net Assets Market Value
- ------ ------ ----------------------------- ---------- ------------
<S> <C> <C> <C> <C>
AEROSPACE AND DEFENSE 6.0%
2,000 SWDN Celsius AB * $ 26,284
2,390 US Rohr Industries Inc. * 49,891
1,140 US Sundstrand Corp. 41,753
230 US United Technologies Corp. 26,450
1,000 US Wyman-Gordon Co. * 17,838
----------
162,216
----------
BIOTECH AND BIOPHARMACEUTICAL
3.5%
1,160 US Centocor Inc. * 34,655
7,800 US CIMA Labs Inc. * 58,500
----------
93,155
----------
BUSINESS EQUIPMENT
1.3%
330 JPN Canon Inc. (ADR) 34,402
BUSINESS SOFTWARE
14.2%
1,180 IRE CBT Group PLC (Sponsored ADR) * 54,575
620 US Computer Associates International Inc. 44,175
400 US FileNet Corp. * 14,600
2,550 US Information Resources Inc. * 31,237
2,320 US Informix Corp. * 52,241
420 US Microsoft Corp. * 50,452
525 US Netscape Communications Corp. * 32,681
1,440 US Oracle Systems Corp. * 56,790
620 US Sterling Software Inc. * 47,740
----------
384,491
----------
COMPONENTS
10.9%
1,140 US Altera Corp. * 43,320
1,500 US Analog Devices Inc. * 38,365
2,100 TWN ASE Test Limited * 24,413
2,100 US CP Clare Corp. * 54,075
910 US Intel Corp. 66,828
900 US Molex Inc. Class A 26,437
1,120 FR SGS Thomson Microelectronics N.V. * 40,180
----------
293,618
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 6
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
% of
Shares Country Equity Investments Net Assets Market Value
- ------ ------ ----------------------------- ---------- ------------
<S> <C> <C> <C> <C>
COMPUTERS 1.7%
1,000 US Digital Equipment Corp. * $ 45,000
CONSUMER SOFTWARE 2.2%
2,210 US Electronics Arts Inc. * 59,117
DATA PROCESSING AND SERVICES 13.6%
970 US Ceridian Corp. * 48,985
590 US Computer Sciences Corp. * 44,102
1,200 US Computrac Inc. * 3,150
2,000 SWDN Enator AB * 46,072
610 US First Data Corp. * 48,571
1,250 US Gemstar International Group Ltd. * 37,500
2,220 US PMT Services Inc. * 63,548
960 US Sierra On-Line Inc. * 42,120
500 SWDN WM-Data AB Series B 31,722
----------
365,770
----------
ELECTRICAL EQUIPMENT 2.3%
650 US Cooper Industries Inc. 26,975
2,000 JPN Yamatake-Honeywell 36,392
----------
63,367
----------
HEALTH CARE SERVICES 3.4%
2,390 US Curative Technologies Inc. * 62,737
700 US Total Renal Care Holdings Inc. * 29,575
----------
92,312
----------
INDUSTRIAL EQUIPMENT 1.6%
5,000 JPN Mitsubishi Heavy Industries Ltd. 43,570
LOCAL ACCESS TELEPHONE 1.1%
780 US MFS Communications Inc. * 29,347
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 7
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
% of
Shares Country Equity Investments Net Assets Market Value
- ------ ------ ----------------------------- ---------- ------------
<S> <C> <C> <C> <C>
LOCAL AREA COMMUNICATIONS 6.7%
600 US 3Com Corp. * $ 27,225
200 US Cabletron Systems Inc. * 13,725
770 US Cisco Systems Inc. * 43,601
1,590 US StrataCom Inc. * 95,063
----------
179,614
----------
MEDICAL PRODUCTS AND TECHNOLOGY 1.3%
1,250 US Sofamor/Danek Group Inc. * 34,688
PERIPHERAL EQUIPMENT 1.1%
900 US Radisys Corp. * 30,600
PHYSICIAN MANAGEMENT 1.6%
1,980 US American Oncology Resources Inc. * 43,065
SPECIALTY COST CONTAINMENT 2.5%
1,680 US Medaphis Corp. * 66,780
TECHNICAL SOFTWARE 1.4%
1,940 US Wonderware Corp. * 36,618
WIDE AREA COMMUNICATIONS 9.6%
340 US Glenayre Technologies Inc. * 17,000
1,430 US NETCOM On-line Communications Services Inc. * 38,610
1,400 US Network Equipment Technologies Inc. * 29,750
620 US Newbridge Networks Corp. * 40,610
2,030 FIN Nokia Corp. (Sponsored ADR A) 75,110
500 US QUALCOMM Inc. * 26,563
900 US Uniphase Corp. * 31,950
----------
259,593
----------
WIRELESS COMMUNICATIONS 3.2%
1,490 US Airtouch Communications Inc. * 42,092
1,400 US American Mobile Satellite Corp. * 21,700
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 8
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
% of
Shares Country Equity Investments Net Assets Market Value
- ------ ------ ----------------------------- ---------- ------------
<S> <C> <C> <C> <C>
WIRELESS COMMUNICATIONS (CONTINUED)
910 US Comsat Corp. $ 23,660
----------
87,452
----------
TOTAL EQUITY INVESTMENTS (COST $2,240,679) 89.2% 2,404,775
----------
SHORT-TERM INVESTMENTS
100,000 US Seven Seas Series U.S. Government Money Market Fund 100,000
100,000 US Seven Seas Series Money Market Fund 100,000
----------
TOTAL SHORT-TERM INVESTMENTS (COST $200,000) 7.4% 200,000
----------
TOTAL INVESTMENTS (COST $2,440,679) ** 2,604,775
OTHER ASSETS LESS LIABILITIES 3.4% 90,698
----------
NET ASSETS 100.0% $2,695,473
==========
</TABLE>
____________________
* Non-income producing security.
** For Federal income tax purposes, cost is $2,440,679 and unrealized
appreciation (depreciation) of equity securities is as follows:
Unrealized appreciation $ 272,553
Unrealized depreciation (108,457)
------------
Net unrealized appreciation $ 164,096
============
==============================================================================
The Fund's investments in securities at June 30,1996 categorized by country:
% of
Country Net Assets
------- ----------
Finland 2.8%
France 1.5%
Ireland 2.0%
Japan 4.2%
Sweden 3.9%
Taiwan 0.9%
United States 84.7%
------------
100.0%
============
The accompanying notes are an integral part of the financial statements.
Page 9
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value (cost $2,440,679) (Note 1) $ 2,604,775
Cash 119,968
Deferred organizational costs (Note 5) 67,315
Receivable from investment manager (Note 6) 41,953
Receivable for investments sold 27,425
Prepaid assets 11,003
Dividends receivable 1,602
-----------
Total Assets 2,874,041
-----------
LIABILITIES:
Payable for investments purchased 104,464
Payable for deferred organizational costs 26,099
Payable for printing expenses 10,718
Payable for transfer agent fees 8,935
Payable for legal fees 8,502
Payable for insurance expenses 5,359
Payable for Directors' fees and expenses 5,000
Payable for audit fees 4,710
Payable for custodian fees 1,679
Payable for registration and filing fees 587
Payable for miscellaneous expenses 2,515
-----------
Total Liabilities 178,568
-----------
NET ASSETS $ 2,695,473
===========
NET ASSET VALUE PER SHARE
($2,695,473 divided by 236,806 shares outstanding) $ 11.38
NET ASSETS CONSIST OF:
Paid in capital $ 2,426,731
Accumulated net investment loss (11,114)
Accumulated net realized gain on investments and foreign
currency transactions 115,760
Net unrealized appreciation on investments 164,096
-----------
NET ASSETS $ 2,695,473
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 10
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Income:
Dividends (net of foreign withholding tax of $76) $ 5,314
Expenses:
Legal fees 22,377
Registration and filing fees 16,253
Printing expenses 11,189
Transfer agent fees 13,593
Directors' fees and expenses 10,000
Amortization of organizational costs (Note 5) 7,644
Audit fees 7,210
Custodian fees 6,345
Investment management fees (Note 6) 9,531
Insurance expenses 5,383
Miscellaneous expenses 2,485
-----------
Total expenses before reimbursements 112,010
Expenses reimbursed by investment manager (Note 6) (95,731)
-----------
Total net expenses 16,279
-----------
Net investment loss (10,965)
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain from investments 114,680
Net realized gain from foreign currency transactions 1,080
-----------
Net realized gain 115,760
-----------
Net unrealized appreciation on investments 160,243
-----------
Net realized and unrealized gain during the period 276,003
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 265,038
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 11
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
December 27, 1995
Six months ended (commencement
June 30, 1996 of operations) to
(Unaudited) December 31, 1995
----------------- -------------------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (10,965) $ (149)
Net realized gain on investments and foreign
currency transactions 115,760 -
Net unrealized appreciation on investments 160,243 3,853
----------- ---------
Net increase in net assets resulting from
operations 265,038 3,704
NET INCREASE FROM CAPITAL SHARES TRANSACTIONS
(NOTE 3) 1,476,731 850,000
----------- ---------
NET INCREASE IN NET ASSETS 1,741,769 853,704
NET ASSETS:
Beginning of period 953,704 100,000
----------- ---------
End of period $ 2,695,473 $ 953,704
=========== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 12
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
FINANCIAL HIGHLIGHTS
Selected data for each share of capital stock outstanding are as follows:
<TABLE>
<CAPTION>
December 27, 1995
Six months ended (commencement
June 30, 1996 of operations) to
(Unaudited)++ December 31, 1995
----------------- -------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.04 $ 10.00
--------- ---------
Net investment loss (0.05)+ -
Net realized and unrealized gain
on investments 1.39 0.04
--------- ---------
Net increase in net asset value
resulting from investment operations 1.34 0.04
--------- ---------
NET ASSET VALUE, END OF PERIOD $ 11.38 $ 10.04
========= =========
TOTAL RETURN * 13.35% 0.40%
========= =========
RATIOS AND SUPPLEMENTAL DATA:
Average commission rate paid per share $ 0.05630 $ 0.05013
========= =========
Net assets, end of period (in 000's) $ 2,695 $ 954
========= =========
Ratio of expenses to average net assets 1.70%**+ 0.00%+
Ratio of net investment loss to average
net assets (1.15%)**+ (0.02%)+
========= =========
Portfolio turnover 85.78%++ 0.00%+
========= =========
</TABLE>
_____________________
++ On June 14, 1996, RCM Capital Management, L.L.C. became the investment
manager (see Note 6).
+ Includes reimbursement by the Fund's investment manager of certain
ordinary operating expenses equal to $0.40 per share. Without such
reimbursement, the ratio of expenses to average net assets would
have been 11.73%** and the ratio of net investment loss to average
net assets would have been (11.17%)** (see Note 6).
* Total return measures the change in value of an investment over the
period indicated.
** Annualized.
+ Not annualized. Fund was in operations for five days, ratios are not
meaningful.
++ Not annualized.
The accompanying notes are an integral part of the financial statements.
Page 13
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
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, as an open-end management investment company.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles
which require management to make estimates and assumptions that affect the
reported amount of assets and liabilities.
a. SECURITIES VALUATIONS:
Investment securities are stated at fair market value. 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. If there has been no sale on such day, then
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 the Board of Directors of the Company in good faith deems
appropriate to reflect its fair market value. Readily marketable
securities traded only in the over-the-counter market that are not listed
on the National Association of Securities Dealers, Inc. Automated
Quotation System or similar foreign reporting service will be valued at
the mean bid price, or such other comparable sources as the Board of
Directors of the Company 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 the Board of
Directors of the Company in good faith deems appropriate to reflect their
fair market value.
Short-term investments with a maturity of 60 days or less are valued at
amortized cost, which approximates market value.
b. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME:
Security transactions are recorded as of the date of purchase or sale.
Realized gains and losses on security transactions are determined on an
identified cost basis for both financial statement and federal income tax
purposes. Interest income, foreign taxes and expenses are accrued daily.
c. FOREIGN CURRENCY TRANSLATIONS:
The records of the Fund are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated
into U.S. dollars at current exchange rates. Purchases and sales of
foreign securities and income and withholding taxes are translated on the
respective dates of such transactions. Net realized currency gains and
losses include foreign currency gains and losses between trade date and
settlement date, sales, forward foreign currency contracts and foreign
currency transactions. The Fund does not isolate that portion of foreign
currency exchange fluctuation
Page 14
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
on investments from unrealized appreciation and depreciation which arises
from changes in market prices. Such fluctuations are included with the net
unrealized appreciation or depreciation on investments.
d. FEDERAL INCOME TAXES:
It is the policy of the Fund to comply with the requirements for
qualification as a "regulated investment company" under the Internal
Revenue Code of 1986, as amended (the "Code"). It is also the intention of
the Fund to make distributions sufficient to avoid imposition of any
excise tax under Section 4982 of the Code. Therefore, no provision has
been made for Federal or excise taxes on income and capital gains.
e. DISTRIBUTIONS:
Distributions to shareholders are recorded by the Fund on the ex-dividend
date. Income and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments of income and gains on various investment securities
held by the Fund and timing differences.
2. INVESTMENT IN FOREIGN SECURITY AND CURRENCY
Investing in foreign equity securities and currency transactions involves
significant risks, some of which are not typically associated with
investments of domestic origin. The Fund's investments in foreign and
emerging markets will subject the Fund to the risk of foreign currency
exchange rate fluctuations, perceived credit risk and adverse economic and
political developments.
3. CAPITAL SHARES
At June 30, 1996, there were 1,000,000,000 shares of the Company's capital
stock authorized, at $0.0001 par value. Of this amount, 50,000,000 were
classified as shares of the Fund and 950,000,000 remain unclassified.
There were 84,980 shares sold for a total of $850,000 from December 27,
1995 (commencement of operations) to December 31, 1995 and transactions in
capital shares for the six months ended June 30, 1996 were as follows:
CAPITAL SHARE TRANSACTIONS
Six months ended June 30, 1996
------------------------------------
Shares Amount
------------ -------------
Shares sold 144,114 $ 1,503,357
Shares repurchased (2,288) (26,626)
------------ -------------
Net increase 141,826 $ 1,476,731
============ =============
Page 15
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
3. CAPITAL SHARES (CONTINUED)
At June 30, 1996, two affiliated shareholders individually held greater
than 5%, and in aggregate held approximately 54%, of the outstanding
shares of the Fund.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales proceeds of investment securities by the Fund,
excluding short-term securities, aggregated $2,874,897 and $1,469,337,
respectively, for the six months ended June 30, 1996.
5. DEFERRED ORGANIZATIONAL COSTS
Costs incurred by the Fund in connection with its organization aggregated
$75,000. These costs are being amortized on a straight-line basis over 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.
6. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
On June 14, 1996, all of the outstanding general and limited partnership
interests in the Fund's investment manager, RCM Capital Management, a
California Limited Partnership ("Old RCM"), were acquired by RCM Capital
Management, L.L.C., ("RCM"), a wholly owned subsidiary of Dresdner Bank
AG, an international banking organization headquartered in Frankfurt,
Germany. Because the transaction may have constituted an "assignment" of
the Fund's management agreement with Old RCM under the Investment Company
Act of 1940, and thus a termination of such management agreement, the Fund
sought and obtained approval of a new management agreement from the
Company's Board of Directors and from the Fund's stockholders at a special
meeting held on May 28, 1996. The terms of the new management agreement
are substantially the same as those of the previous management agreement.
RCM manages the Fund's investments and provides various administrative
services, subject to the authority of the Board of Directors. The Fund
pays investment management fees monthly to RCM at an annualized rate of
1.00% of the Fund's average daily net assets. For the six months ended
June 30, 1996, the Fund recorded investment management fees of $9,531.
RCM has voluntarily 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 annualized
rate of 1.75% of the value of the average daily net assets of the Fund. In
subsequent years, the Fund will reimburse RCM for any such payments to the
extent that the Fund's operating expenses are otherwise below this expense
cap. RCM reimbursed Fund operating expenses totaling $95,731 for the six
months ended June 30, 1996.
The RCM Capital Management Profit Sharing Plan, participation in which is
limited to employees of RCM, owned 88,532 shares of the Fund on June 30,
1996.
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