<PAGE>
RCM GLOBAL TECHNOLOGY FUND
SEMI-ANNUAL REPORT
JUNE 30, 1997
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The RCM Global Technology Fund (the "Fund") returned 9.21% for the first half of
1997, which exceeded the 6.94% turned in by the Lipper Science & Technology Fund
Index (this index is an equally weighted index of the 10 largest U.S. science
and technology mutual funds). The S&P 500 returned 20.61% for the same period.
In the first half of 1997, the stock market continued to favor the largest
stocks. To illustrate, the largest 20 stocks of the S&P 500 returned 28.1%, the
overall S&P 500 returned 20.61%, the Russell Midcap Index returned 12.63%, and
the Russell 2000 Index, which is an index of smaller capitalization stocks,
returned 10.20%. The S&P 500 has been a very difficult benchmark to beat for
most money managers who run diversified portfolios. RCM Capital Management,
L.L.C. ("RCM"), the Fund's investment manager, regards the Fund as a diversified
fund that can invest in companies that have both large and smaller
capitalizations. Within the universe of stocks that the Fund invests in, RCM
regards the high growth portion of mid capitalization companies as the most
attractive in the long run. These companies are usually established enough to be
leaders in their specialty, but not so large as to suffer from low growth rates.
In addition, these companies are usually not yet fully discovered by mainstream
investors. Although the stock market in general and the technology portion of
the market, specifically, were dominated by the very large stocks, there has
been improved stock performance for smaller stocks over the last two months.
This is a healthy sign to us and bodes well for the Fund's performance in the
second half of 1997.
When we last wrote to the Fund's shareholders six months ago, we cautioned about
greater risk in the coming months. Late January turned out to be the end of a
bullish phase for technology stocks that started in the summer of 1996. The
subsequent correction was even more severe than we had anticipated! But as
April drew to a close, despair soon turned to relief as interest rates started
to decline once again. The stock market followed interest rates and set record
after record. Like many money managers, RCM is concerned that the overall market
is highly valued by historical standards. RCM also recognizes that the favorable
economic and savings environment is likely to continue. Relative to the overall
market, RCM sees reasonable valuations for most technology stocks, and
attractive valuations for many mid and small capitalization stocks.
In the first half of 1997, the Fund's Nordic wireless communications equipment
stocks continued to appreciate nicely. The Fund performed less well in the data
communications sector, which underwent a severe correction due to increasing
competition and slower growth rates. RCM is hopeful that this correction has run
its course and is focused on several leaders of this industry.
<PAGE>
In the computer hardware area, the Fund did particularly well with the storage
sector, where the Fund was heavily invested in the beginning of the year, but
sold most of its holdings before the earnings disappointments of the second
quarter 1997 were announced. The Fund's small exposure to the PC industry hurt
performance for a period of time, since this sector produced very strong stock
performance. RCM believes the leaders of this industry will continue to gain
market share and has increased the Fund's exposure, particularly to the computer
server area.
The Fund's semiconductor stocks did very well, particularly the equipment
stocks. RCM believes that another multi-year semiconductor upcycle may have
begun and is maintaining the Fund's holdings in this area.
The Fund benefited from its investments in several software stocks in addition
to Microsoft. RCM believes many of these companies continue to offer very high
growth rates and reasonable valuations. The Fund's healthcare holdings produced
mixed results. The large medical device companies produced lucrative returns,
while the biotech stocks languished. RCM believes that the Fund's biotech
companies are nearing product approval announcements and that revenues will soon
follow.
With many exciting high growth companies to invest in, RCM has decreased the
moderate growth portion of the Fund's portfolio, including aerospace/defense,
large Japanese technology, and business service companies.
RCM continues to believe that technology is a major driving force of the global
economy and that this broad sector contains numerous compelling investment
opportunities. RCM also continues to believe that it possesses the experience,
resources, and the energy to perform well for the Fund's investors. We thank you
for your continuing confidence in the Fund and RCM.
Page 2
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
RCM GLOBAL TECHNOLOGY FUND
[Graph]
Lipper Science &
RCM Global Tech. S&P 500 Technology Fund Index
---------------- ------ ---------------------
12/27/95 25,000 25,000 25,000
1/31/96 25,925 25,910 24,741
2/29/96 26,650 26,151 25,784
3/31/96 26,550 26,402 24,643
4/30/96 28,950 26,792 27,099
5/31/96 29,825 27,483 27,745
6/30/96 28,450 27,587 25,830
7/31/96 25,675 26,369 23,913
8/31/96 26,925 26,925 25,138
9/30/96 29,675 28,440 27,467
10/31/96 29,250 29,224 27,056
11/30/96 31,925 31,433 29,592
12/31/96 31,730 30,811 29,066
1/31/97 34,223 32,736 31,357
2/28/97 30,899 32,992 28,523
3/31/97 28,909 31,636 26,376
4/30/97 29,287 33,524 27,522
5/31/97 33,618 35,566 30,797
6/30/97 34,651 37,159 31,082
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(a) and the
Lipper Science & Technology Fund Index.(b) The chart represents a cumulative
return(c)(d) of 38.60% for the Fund. The average annual return(c)(d) from the
Fund's inception was 24.14%. The chart assumes a hypothetical $25,000 initial
investment in the Fund and reflects all Fund expenses.
AVERAGE ANNUAL TOTAL RETURNS(c)
JUNE 30, 1997
- ------------------
LIFE OF
1 YEAR FUND(d)
- ------------------
21.80% 24.14%
- ------------------
The data above represent past performance of the Fund and may not be indicative
of future performance. 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.
________________
(a) The Standard & Poor's 500 Stock 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.
(b) The Lipper Science & Technology Fund Index is an equally weighted index of
the 10 largest U.S. science and technology mutual funds.
(c) Returns assume reinvestment of all dividends and capital gains
distributions at net asset value.
(d) The Fund commenced operations on December 27, 1995.
Page 3
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1997
(UNAUDITED)
% OF
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS MARKET VALUE
- -------- ------- --------------------------------- ---------- ------------
BIOTECH AND BIOPHARMACEUTICAL 1.5%
1,300 US Algos Pharmaceutical Corp.* $ 23,725
8,600 US NaPro BioTherapeutics Inc.* 62,350
------------
86,075
------------
BUSINESS SERVICES 3.5%
3,500 US Healthcare Recoveries Inc.* 67,813
4,770 US TeleTech Holdings Inc.* 125,213
------------
193,026
------------
BUSINESS SOFTWARE 17.4%
2,000 IE CBT Group PLC (Sponsored ADR)* 126,250
1,420 US Computer Associates International Inc. 79,076
1,700 US McAfee Associates Inc.* 107,313
1,150 US Microsoft Corp.* 145,331
3,010 US PeopleSoft Inc.* 158,778
1,900 US Vantive Corp.* 53,675
4,000 US Veritas Software Co.* 201,000
2,697 US Wind River Systems Inc.* 103,160
------------
974,583
------------
CAPITAL EQUIPMENT 6.8%
3,000 NL ASM Lithography Holdings N.V.* 175,500
2,710 US Cymer Inc.* 132,113
1,500 US KLA Instruments Corp.* 73,125
------------
380,738
------------
COMMERCIAL/SPECIALTY 1.4%
1,450 US Sundstrand Corp. 80,928
COMPONENTS 6.0%
2,966 US Analog Devices Inc.* 78,784
600 TW ASE Test Ltd.* 25,350
410 US Intel Corp. 58,143
1,735 US Maxim Integrated Products Inc.* 98,678
2,570 US Microchip Technology Inc.* 76,458
------------
337,413
------------
The accompanying notes are an integral part of the financial statements.
Page 4
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1997
(UNAUDITED)
% OF
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS MARKET VALUE
- -------- ------- --------------------------------- ---------- ------------
COMPUTERS 1.0%
555 US Compaq Computer Corp.* $ 55,084
COMPUTERS/OFFICE EQUIPMENT 0.9%
930 IE Saville Systems PLC (Sponsored ADR)* 48,360
CONGLOMERATES 1.4%
920 US United Technologies Corp. 76,360
CONSUMER SOFTWARE 2.7%
2,210 US Electronics Arts Inc.* 74,311
2,000 JP NAMCO 77,252
------------
151,563
------------
DATA PROCESSING AND SERVICES 9.9%
3,300 US America Online Inc.* 183,563
3,700 US Ceridian Corp.* 156,325
1,480 US Computer Sciences Corp.* 106,745
4,000 NO Merkantildata ASA 79,226
300 FI TT Tieto OY 25,990
------------
551,849
------------
DEFENSE-RELATED ELECTRONICS 1.0%
3,900 US Loral Space & Communications Ltd.* 58,500
ELECTRONICS/NEW TECHNOLOGY 3.4%
1,600 JP Advantest Corp. 123,045
5,000 JP NEC Corp. 69,912
------------
192,957
------------
ETHICAL PHARMACEUTICALS 1.4%
3,400 US SangStat Medical Corp.* 78,625
The accompanying notes are an integral part of the financial statements.
Page 5
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1997
(UNAUDITED)
% OF
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS MARKET VALUE
- -------- ------- --------------------------------- ---------- ------------
HOSPITAL MANAGEMENT 1.4%
1,950 US Columbia/HCA Healthcare Corp. $ 76,659
INFORMATION SERVICES 2.9%
2,200 JP Shinko Electric Industries 80,556
2,560 US Sterling Commerce Inc.* 84,160
------------
164,716
------------
INTERNATIONAL MEDIA 2.3%
3,850 US CKS Group Inc.* 129,938
LOCAL AREA COMMUNICATIONS 3.3%
2,770 US Cisco Systems Inc.* 185,936
LONG DISTANCE TELEPHONE 1.3%
2,200 US WorldCom Inc. 70,400
MEDICAL PRODUCTS AND TECHNOLOGY 2.2%
720 US Guidant Corp. 61,200
1,340 US Sofamor/Danek Group Inc.* 61,305
------------
122,505
------------
PERIPHERAL EQUIPMENT 2.9%
4,100 US EMC Corp.* 159,900
SPECIALTY COST CONTAINMENT 1.7%
9,590 US Medaphis Corp.* 96,499
SPECIALTY DRUGS 0.6%
7,500 US CIMA Labs Inc.* 30,937
TECHNICAL SOFTWARE 1.2%
4,750 US Peerless Systems Corp.* 65,312
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, 1997
(UNAUDITED)
% OF
SHARES COUNTRY EQUITY INVESTMENTS NET ASSETS MARKET VALUE
- -------- ------- --------------------------------- ---------- ------------
WIDE AREA COMMUNICATIONS 9.4%
1,900 FR Alcatel Alsthom (Sponsored ADR) $ 47,975
1,400 US Applied Materials Inc.* 99,137
610 US Ascend Communications Inc.* 24,019
1,890 CA Newbridge Networks Corp.* 82,215
3,400 US Octel Communications Corp.* 79,688
3,280 US Uniphase Corp.* 191,060
------------
524,094
------------
WIRELESS COMMUNICATIONS 6.0%
2,250 US Airtouch Communications Inc.* 61,594
1,900 SE Ericsson LM Telephone Co. (Sponsored ADR) 74,812
2,755 FI Nokia Corp. (Sponsored ADR A) 203,181
------------
339,587
------------
TOTAL EQUITY INVESTMENTS (COST $4,269,633) 93.5%
5,232,544
------------
SHORT-TERM INVESTMENTS
177,457 US SSgA Money Market Fund 177,457
177,457 US SSgA U.S. Government Money Market Fund 177,457
------------
TOTAL SHORT-TERM INVESTMENTS (COST $354,914) 6.3%
354,914
------------
TOTAL INVESTMENTS (COST $4,624,547)** 5,587,458
PAYABLE FOR SHORT SALES (a) (0.7%) (40,000)
OTHER ASSETS LESS LIABILITIES 0.9% 51,032
------------
NET ASSETS 100.0% $ 5,598,490
------------
------------
(a) The Fund has the following short sale position (Note 1):
% of
Shares Country Security Sold Short Net Assets Market Value
- -------- ------- --------------------------------- ---------- ------------
(500) FR SGS Thomson Microelectronics N.V. (0.7%) $ (40,000)
(Proceeds $38,844)
* Non-income producing security.
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, 1997
(UNAUDITED)
TAX INFORMATION:
** For Federal income tax purposes, cost is $4,644,215 and unrealized
appreciation (depreciation) of equity securities is as follows:
Unrealized appreciation $ 1,045,586
Unrealized depreciation (102,343)
-------------
Net unrealized appreciation $ 943,243
-------------
-------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's investments in securities and net assets at June 30, 1997,
categorized by country:
Country % of
Country Code Net Assets
--------------- ------- ----------
Canada CA 1.5%
Finland FI 4.1%
France FR 0.1%
Ireland IE 3.1%
Japan JP 6.3%
Norway NO 1.4%
Sweden SE 1.3%
Taiwan TW 0.5%
The Netherlands NL 3.1%
United States US 78.6%
----------
100.0%
----------
----------
The accompanying notes are an integral part of the financial statements.
Page 8
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
(UNAUDITED)
ASSETS:
Investments in securities, at value (cost $4,624,547) (Note 1) $5,587,458
Restricted cash on securities sold short (Note 1) 45,151
Receivable for investments sold 152,862
Deferred organizational costs (Note 5) 52,314
Dividends receivable 3,599
Prepaid assets 1,687
----------
Total Assets 5,843,071
----------
LIABILITIES:
Payable for investments purchased 135,077
Payable for short sales (Proceeds $38,844) (Note 1) 40,000
Payable for professional fees 30,413
Payable for printing expenses 16,486
Payable for investment management fees (Note 6) 6,845
Payable for Directors' fees (Note 7) 6,125
Payable for miscellaneous expenses 9,635
----------
Total Liabilities 244,581
----------
NET ASSETS $5,598,490
----------
----------
NET ASSETS CONSIST OF:
Paid-in capital (Note 3) $4,399,267
Accumulated net investment loss (29,171)
Accumulated net realized gain on investments and foreign
currency transactions 266,584
Net unrealized appreciation on investments and translation
of other assets and liabilities in foreign currencies 961,810
----------
NET ASSETS $5,598,490
----------
----------
NET ASSET VALUE PER SHARE
($5,598,490 DIVIDED BY 406,820 shares outstanding) $ 13.76
----------
----------
The accompanying notes are an integral part of the financial statements.
Page 9
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding tax of $1,165) $ 17,414
Expenses:
Investment management fees (Note 6) 26,620
Transfer agent fees 12,873
Registration and filing fees 12,130
Directors' fees (Note 7) 11,125
Amortization of organizational costs (Note 5) 7,438
Custodian fees 4,424
Professional Fees 3,748
Insurance expenses 2,712
----------
Total expenses before reimbursements 81,070
Expenses reimbursed by investment manager (Note 6) (34,485)
----------
Total net expenses 46,585
----------
Net investment loss (29,171)
----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain from investments 134,817
Net realized gain from foreign currency transactions 5,188
----------
Net realized gain 140,005
----------
Net change in unrealized appreciation on investments 226,595
----------
Net realized and unrealized gain during the period 366,600
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$ 337,429
----------
----------
The accompanying notes are an integral part of the financial statements.
Page 10
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six months ended
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
---------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (29,171) $ (41,219)
Net realized gain on investments and foreign
currency transactions 140,005 203,942
Net change in unrealized appreciation on
investments and translation of other assets
and liabilities in foreign currencies 226,595 731,362
---------- ----------
Net increase in net assets resulting from
operations 337,429 894,085
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments (Note 1) (36,142)
NET INCREASE FROM CAPITAL SHARES TRANSACTIONS
(Note 3) 144,222 3,305,192
---------- ----------
TOTAL INCREASE IN NET ASSETS 481,651 4,163,135
NET ASSETS:
Beginning of period 5,116,839 953,704
---------- ----------
End of period * $5,598,490 $5,116,839
---------- ----------
---------- ----------
- --------------------
* Includes accumulated net investment loss of: $ (29,171) $ -
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 11
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Selected data for each share of capital stock outstanding are as follows:
December 27, 1995
Six months ended (commencement
June 30, 1997 Year Ended of operations) to
(Unaudited) December 31, 1996 (a) December 31, 1995
---------------- --------------------- -----------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.60 $ 10.04 $ 10.00
-------- --------- --------
Net investment loss (b) (c) (0.07) (0.15) -
Net realized and unrealized gain
on investments (b) 1.23 2.80 0.04
-------- --------- --------
Net increase in net asset value
resulting from investment operations (b) 1.16 2.65 0.04
-------- --------- --------
Distributions from net realized gains on
investments - (0.09) -
-------- --------- --------
NET ASSET VALUE, END OF PERIOD $ 13.76 $ 12.60 $ 10.04
-------- --------- --------
-------- --------- --------
TOTAL RETURN (d) 9.21% 26.41% 0.40%
-------- --------- --------
-------- --------- --------
RATIOS AND SUPPLEMENTAL DATA:
Average commission rate paid per share (e) $ 0.0685 $ 0.0599 $ -
-------- --------- --------
-------- --------- --------
Net assets, end of period (in 000's) $ 5,598 $ 5,117 $ 954
-------- --------- --------
-------- --------- --------
Ratio of expenses to average net assets (c) 1.75% (f) 1.73% 0.00% (g)
-------- --------- --------
-------- --------- --------
Ratio of net investment loss to average
net assets (c) (1.10%)(f) (1.34%) (0.02%)(g)
-------- --------- --------
-------- --------- --------
Portfolio turnover 117.98% (h) 155.58% 0.00% (g)
-------- --------- --------
-------- --------- --------
</TABLE>
- ----------------------
(a) On June 14, 1996, RCM Capital Management, L.L.C. became the investment
manager.
(b) Calculated using the average share method.
(c) Includes reimbursement by the Fund's investment manager of certain ordinary
operating expenses equal to $0.08 and $0.70 per share (calculated using the
average share method) for the six months ended 6/30/97 and for the year
ended 12/31/96, respectively. Without such reimbursement, the ratio of
expenses to average net assets would have been 3.04% and 7.75% for the six
months ended 6/30/97 and for the year ended 12/31/96, respectively. In
addition, the ratio of net investment loss to average net assets would have
been (2.39%) and (7.36%) for the six months ended 6/30/97 and the year
ended 12/31/97, respectively (see Note 6).
(d) Total return measures the change in value of an investment over the period
indicated.
(e) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for security
trades on which commissions are charged. This amount may vary from period
to period and fund to fund depending on the mix of trades executed in
various markets where trading practices and commission structures may
differ.
(f) Annualized.
(g) Not annualized. Fund was in operations for five days.
(h) Not annualized.
Page 12
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
RCM Global Technology Fund (the "Fund") is a non-diversified 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. Actual results may differ from
these estimates.
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 using 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 the
identified cost basis for both financial statement and federal income tax
purposes. Interest income, foreign taxes and expenses are accrued daily.
Dividends are recorded on the ex-dividend date.
c. FOREIGN CURRENCY TRANSACTIONS:
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 and foreign currency transactions. The Fund does not
isolate that portion of foreign currency exchange fluctuation 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.
Page 13
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d. PURCHASED OPTIONS:
The Fund may purchase listed 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. In exchange for a premium paid,
a put gives the holder the right to require the writer of the put to
purchase from the holder a security at a specified price, and a call gives
the holder the right to require the writer of the call to sell a security
to the holder at a specified price.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current
market value of the options. If an option which the Fund has purchased
expires on the stipulated expiration date, the Fund realizes a loss in the
amount of the cost of the option. If the Fund enters into a closing sale
transaction, the Fund realizes a gain or loss, depending on whether
proceeds from the closing sale transaction are greater or less than the
cost of the option. If the Fund exercises a call option, the cost of the
securities acquired by exercising the call is increased by the premium paid
to buy the call. If the Fund exercises a put option, the proceeds from
such sale are decreased by the premium originally paid.
e. SHORT SALES NOT AGAINST THE BOX:
A short sale "not 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.
In order to deliver the security to the buyer, the Fund must arrange
through a broker to borrow the security and, in so doing, the Fund becomes
obligated to replace the security borrowed at its market price at the time
of replacement, whatever that price may be. The Fund is required to
establish a margin account with the broker lending the security sold short.
While the short sale is outstanding, the broker retains the proceeds of the
short sale and the Fund instructs the custodian to maintain in a separate
account securities, or cash, having a value at least equal to the amount of
the securities sold short.
The Fund records in its "Statement of Assets and Liabilities" a payable to
reflect the current cost to deliver the security sold short and a
receivable to reflect the proceeds of the sale. When the Fund closes out
the short sale, the Fund realizes a gain or loss equal to the difference
between the proceeds received and the cost of the security delivered.
f. 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.
Page 14
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
g. 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 for foreign currency transactions and losses due to
wash sales.
2. INVESTMENT IN FOREIGN SECURITIES
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 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, 1997, 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; 50,000,000 were classified as shares of
RCM Global Health Care Fund; 50,000,000 were classified as shares of RCM
Global Small Cap Fund; 50,000,000 were classified as shares of RCM Large
Cap Growth Fund; 50,000,000 were classified as shares of Dresdner RCM
Emerging Markets Fund; and 750,000,000 shares remain unclassified.
Transactions in capital shares were as follows:
CAPITAL SHARE TRANSACTIONS
Six months ended June 30, 1997
(Unaudited)
------------------------------
Shares Amount
------------- ---------------
Shares sold 84,124 $ 1,109,760
Shares repurchased (83,544) (965,538)
------------- ---------------
Net increase 580 $ 144,222
------------- ---------------
------------- ---------------
Year ended December 31, 1996
------------------------------
Shares Amount
------------- ---------------
Shares sold 314,233 $ 3,338,002
Shares issued in connection with reinvestment
of distributions 2,926 36,110
Shares repurchased (5,899) (68,920)
------------- ---------------
Net increase 311,260 $ 3,305,192
------------- ---------------
------------- ---------------
At June 30, 1997, two affiliated shareholders held more than 5% of the
outstanding shares of the Fund individually and 59% in aggregate.
Page 15
<PAGE>
RCM GLOBAL TECHNOLOGY FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
4. PURCHASES AND SALES OF SECURITIES
For the year ended June 30, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and
short-term securities, aggregated $5,911,557 and $5,972,794, respectively.
There were no purchases or sales of U.S. government obligations by the Fund
during the period.
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.
6. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
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, 1997, the Fund recorded investment management fees of $26,620.
RCM has voluntarily agreed, until at least December 31, 1997, 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 the Fund for operating expenses totaling $34,485 for
the six months ended June 30, 1997.
The RCM Capital Management Profit Sharing Plan, participation in which is
limited to employees of RCM, owned 151,529 shares of the Fund on June 30,
1997.
7. DIRECTORS' FEES
Each Director who is not an interested person of the Company receives from
the Company an annual retainer of $1,000 (the retainer is evenly prorated
among each series of the Company), plus $500 for each meeting of the Board
attended and $250 for each committee meeting attended.
Page 16
<PAGE>
INVESTMENT MANAGER
RCM Capital Management, L.L.C.
Four Embarcadero Center
San Francisco, California 94111
TRANSFER AND REDEMPTION AGENT
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
DISTRIBUTOR
Funds Distributor, Inc.
60 State Street, Suite 1300
Boston, Massachusetts 02109
CUSTODIAN
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
Page 17
