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<PAGE>
[LOGO]
GROWTH EQUITY FUND
SEMI-ANNUAL REPORT
JUNE 30, 1996
<PAGE>
RCM GROWTH EQUITY FUND
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The value of an investment in the RCM Growth Equity Fund (the "Fund")
appreciated 10.08% over the six months ended June 30, 1996. In addition to
registering strong absolute performance for the period, the Fund finished ahead
of the 9.01% return posted by its primary benchmark, the Russell Midcap Index.
U.S. equities posted strong positive returns in the first half of 1996,
extending the extraordinary gains of the prior year, and surprising many
observers. Consensus expectations going into the year called for a slowing
economic environment including low inflation and continued declines in interest
rates. By early in the second quarter, however, signs of economic re-
acceleration appeared, and inflation fears began to surface. Despite the
shifting consensus macroeconomic outlook, equity mutual fund cash flows reached
record levels in the first half of 1996, and the market for initial public
offerings exploded. Stocks of all capitalizations participated in the advance,
although mid cap issues got off to a weak start in the month of January. The
relative strength of the mid cap sector bottomed in February, however, and the
Russell Midcap Index outperformed the broader large cap market (as measured by
the S&P 500 Stock Index) by 65 basis points in the first quarter. Mid cap
stocks also registered strong gains early in the second quarter, but the
relative strength of the secondary cap sector versus large cap equities
deteriorated markedly by the end of the first half. The Russell Midcap Index
lagged the S&P 500 for the year-to-date through June 30, 1996 by 109 basis
points. The Fund's performance for the period essentially matched the S&P 500's
and was advantaged by the growth stock focus of RCM Capital Management, L.L.C.
("RCM"), investment manager of the Fund. Growth investment styles significantly
outperformed value styles in the first half of 1996.
Industry strategies that were positive contributors to the Fund's relative
performance in the first half included meaningful overweightings in the strong
communications services industry (7% versus 2% in the Russell Midcap Index) and
in the leisure time products and services group (5% versus 4% in the benchmark).
These overweightings contributed approximately 80 basis points in relative
performance for the period. Utilities and basic materials were lagging industry
groups which were underweighted in the Fund, thereby adding to relative
performance.
On the negative side, overweighting the poorly performing drugs/hospital
supplies and technology services groups hurt the Fund's relative performance in
the first six months of 1996. The Fund's underweighted positioning in energy
and in general finance also had a negative impact on relative
<PAGE>
performance for the period. Due to RCM's growth stock orientation, it is
typical for the Fund to have only modest exposure in these sectors. Although
the Fund's average cash position of about 3% during the first half of 1996 was
at the lower end of its "normal" range, cash had a small negative impact on
relative performance given the rising market environment.
Stock selection was positive in the technology services area, where the
Fund's holdings were up an aggregate of 18% versus a gain of approximately 2%
for the Russell Midcap Index stocks in this group. During the first half of
1996, the Fund's major holdings in this industry included CBT Group (+205% total
return during the period), American Management Systems (+80%), Sterling Software
(+54%), and Ceridian (+26%). Stock selection in the business services group
also made a positive contribution to relative performance, owing to the Fund's
meaningful positions in stocks such as Robert Half (+84%), USA Waste Services
(+92%), G&K Services (+31%), and Reynolds and Reynolds (+72%).
Although the Fund benefited from overweighting the communications services
group, the contribution from individual stock selection in this group was not
positive, as the aggregate performance of RCM's holdings did not match the
average gain of approximately 22% posted by the Russell Midcap Index stocks in
this industry. The Fund also experienced modestly negative impacts on relative
performance from issue selection in the electronics/new technology group and the
aerospace industry.
Going into the second half of 1996, the equity investment environment
turned quite treacherous. A series of stronger-than-expected economic
releases generated fears that the Federal Reserve would be forced into a
series of rate hikes to keep growth and inflation in tow. U.S. stocks
suffered a violent correction in the first few weeks of July. As is typical,
the mid and small cap sectors of the market have exhibited more volatility on
the downside than have the larger cap universes during this corrective phase.
RCM acknowledges that volatility in both directions may remain high in the
near term, but believes that significant longer-term investment opportunities
continue to exist in quality medium capitalization growth stocks.
Page 2
<PAGE>
RCM GROWTH EQUITY FUND
PERFORMANCE SUMMARY
<TABLE>
_________________________________________________________________________________________________
<S> <S>
$250,000
$206,821
$200,000
$150,000
$132,522
$100,000
$50,000
0
-----------------------------------------------------------------------------------------
1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
_____ RCM Growth Equity Fund ===== Russell Midcap Index
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The chart above shows the performance of the RCM Growth Equity Fund since the
Fund's inception versus the Russell Midcap Index.# The chart represents a
cumulative return of 1,968.21%+ for the Fund. The average annual total return
from the Fund's inception was 19.94%*+. The chart assumes a hypothetical $10,000
initial investment in the Fund and reflects all Fund expenses.
AVERAGE ANNUAL TOTAL RETURNS+
JUNE 30, 1996
LIFE OF
1 YEAR 5 YEAR 10 YEAR FUND*
- ------ ------ ------- ------
27.03% 16.37% 14.90% 19.94%
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 Russell Midcap Index is composed of the smallest 800 companies in the
Russell 1000 Index. The Russell 1000 Index is made up of the 1,000 largest
companies in the Russell 3000 Index, which is composed of 3,000 large U.S.
companies by market capitalization and represents approximately 98% of the
U.S. equity market.
+ Returns assume reinvestment of all dividends and capital gains
distributions at net asset value.
* The Fund began operations on November 6, 1979.
Page 3
<PAGE>
RCM CAPITAL FUNDS, INC.
STOCKHOLDER MEETING RESULTS
A Special Meeting of Stockholders of the RCM Capital 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 7,110,217.
Present were 5,477,386 shares in person or represented by proxy, or 77.04% 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. Each person nominated as a director was elected as set forth below:
For Withhold
--------- --------
Kenneth E. Scott 5,109,781 332,162
DeWitt F. Bowman 5,245,037 196,905
Thomas S. Foley 4,910,846 531,097
Frank P. Greene 5,109,781 332,162
Pamela A. Farr 5,109,781 332,162
George G.C. Parker 5,109,781 332,162
2. An Amendment to the Articles of Incorporation of the Company to reduce the
par value of the shares of the Company was approved: For: 4,849,864;
Against: 517,895; Abstain 74,184.
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: 5,367,761; Against: 0; Abstain: 74,182.
In addition, certain matters were presented to the stockholders of the RCM
Growth Equity Fund (the "Fund") for approval or ratification. As of the Record
Date, there were 3,852,312 shares of the Fund outstanding and eligible to vote.
At the Special Meeting 2,864,752 shares were present in person or by proxy, or
74.36% of the shares outstanding on the Record Date. The matters voted upon by
stockholders of the Fund 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: 2,828,176;
Against: 0; Abstain: 30,389.
2. Certain revisions to the investment objectives of the Fund were approved:
For: 2,459,253; Against: 368,909; Abstain: 30,389.
3. A revision to the fundamental investment policies of the Fund regarding
investment in companies without a three-year operating history was
approved. For: 2,459,253; Against: 368,909; Abstain: 30,389.
4. A revision to the fundamental investment policies of the Fund regarding
investment in warrants was approved: For: 2,459,253; Against: 368,909;
Abstain: 30,389.
Page 4
<PAGE>
RCM GROWTH EQUITY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
% OF
SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE
- -------------- --------------------------------------------------------- ---------- ------------
<S> <C> <C> <C>
CONSUMER DURABLES SECTOR 1.60%
OTHER CONSUMER DURABLES 1.60%
365,000 Bemis Co. Inc. $ 12,775,000
56,500 Newell Co. 1,730,313
-------------
14,505,313
-------------
CONSUMER NON-DURABLES SECTOR 14.58%
BEVERAGE AND TOBACCO 0.08%
20,500 Coca Cola Enterprises Inc. 709,813
FOOD AND FOOD PROCESSING 0.12%
35,100 Dreyer's Grand Ice Cream Inc. 1,105,650
GENERAL RETAIL 4.99%
130,300 AutoZone Inc. * 4,527,925
20,400 Circuit City Stores Inc. 736,950
60,000 Consolidated Stores Corp. * 2,205,000
43,925 Dollar General Corp. 1,284,806
125,000 Eckerd Corp. * 2,828,125
45,000 General Nutrition Cos. Inc. * 787,500
91,200 Global DirectMail Corp. * 3,602,400
47,000 Gucci Group N.V. 3,031,500
92,300 Hannaford Bros. Co. 3,011,288
16,000 Nine West Group Inc. * 818,000
127,500 Nordstrom Inc. 5,673,750
330,000 OfficeMax Inc. * 7,878,750
21,300 PETsMART Inc. * 1,017,075
65,000 Proffitt's Inc. * 2,307,500
158,800 Saks Holdings Inc. * 5,419,050
-------------
45,129,619
-------------
HOUSEHOLD/RELATED NON-DURABLES 1.24%
619,100 Armor All Products Corp. 9,209,113
32,500 Revlon Inc. Class A * 946,563
9,828 Salton/Maxim Housewares Inc. * 46,683
35,700 Sola International Inc. * 1,026,375
-------------
11,228,734
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 5
<PAGE>
RCM GROWTH EQUITY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
% OF
SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE
- -------------- --------------------------------------------------------- ---------- ------------
<S> <C> <C> <C>
LEISURE TIME PRODUCTS/SERVICES 8.15%
353,800 Apple South Inc. $ 9,464,150
308,400 Doubletree Corp. * 10,948,200
316,500 Harrahs Entertainment * 8,941,125
168,500 Hasbro Inc. 6,023,875
1,508,000 Host Marriott Corp. * 19,792,500
107,500 Interstate Hotels Co. * 2,391,875
175,000 Marriott International Inc. 9,406,250
13,000 Performance Food Group Inc. * 338,000
237,400 Planet Hollywood International Inc. * 6,409,800
-------------
73,715,775
-------------
CYCLICAL/CAPITAL GOODS SECTOR 13.13%
AEROSPACE/DEFENSE 3.41%
733,200 Sundstrand Corp. 26,853,450
225,000 Wyman-Gordon Co. * 3,993,750
-------------
30,847,200
-------------
BUILDING AND CONSTRUCTION 1.79%
220,000 Michael Baker Corp. * 1,196,250
146,700 Foster Wheeler Corp. 6,583,163
239,000 Jacobs Engineering Group Inc. * 6,303,625
40,000 York International Corp. 2,070,000
-------------
16,153,038
-------------
CHEMICALS AND TEXTILES 0.50%
25,000 Cytec Industries Inc. * 2,137,500
35,000 Geon Co. 787,500
25,000 Rohm & Haas Co. 1,568,750
-------------
4,493,750
-------------
ELECTRICAL EQUIPMENT 0.41%
31,000 Hubbell Inc. Class B 2,053,750
23,500 Raychem Corp. 1,689,063
-------------
3,742,813
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 6
<PAGE>
RCM GROWTH EQUITY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
% OF
SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE
- -------------- --------------------------------------------------------- ---------- ------------
<S> <C> <C> <C>
INDUSTRIAL EQUIPMENT 2.59%
150,000 Applied Power Inc. Class A $ 4,200,000
439,500 Duriron Co. Inc. 10,548,000
48,700 Kennametal Inc. 1,655,800
171,000 Tyco International Ltd. 6,968,250
-------------
23,372,050
-------------
RAW AND BASIC MATERIALS 2.41%
362,000 Commercial Metals Co. 12,036,500
233,500 UCAR International Inc. * 9,719,438
-------------
21,755,938
-------------
TRANSPORTATION SERVICES 2.02%
260,000 Expeditors International of Washington Inc. 8,060,000
193,000 Southwest Airlines Co. 5,621,125
82,500 Swift Transportation Co. Inc. * 1,577,813
60,000 USFreightways Corp. 1,170,000
70,000 Werner Enterprises Inc. 1,820,000
-------------
18,248,938
-------------
ENERGY SECTOR 3.07%
OIL AND RELATED SERVICES 3.07%
298,700 BJ Services Co. * 10,491,838
140,000 Barrett Resources Corp. * 4,165,000
137,500 Camco International Inc. 4,657,813
212,000 Forcenergy Gas Exploration Inc. * 4,001,500
117,500 Noble Affiliates Inc. 4,435,625
-------------
27,751,776
-------------
HEALTHCARE SECTOR 14.70%
DRUGS & HOSPITAL SERVICES 6.31%
29,000 Amgen Inc. * 1,566,000
53,000 Anesta Corp. * 649,250
206,000 Arrow International Inc. 5,562,000
76,900 Autoimmune Inc. * 720,938
17,000 Biogen Inc. * 922,250
69,100 Boston Scientific Corp. * 3,109,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 7
<PAGE>
RCM GROWTH EQUITY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
% OF
SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE
- -------------- --------------------------------------------------------- ---------- ------------
<S> <C> <C> <C>
DRUGS & HOSPITAL SERVICES
(CONTINUED)
289,000 Centocor Inc. * $ 8,633,875
125,000 Cyberonics Inc. * 750,000
29,500 Forest Laboratories Inc. * 1,139,438
173,514 Guidant Corp. 8,545,565
29,400 ImmuLogic Pharmaceutical Corp. * 268,275
22,900 Synthelabo 1,936,679
68,200 Nellcor Puritan Bennett Inc. * 3,307,700
100,000 Physio-Control International Corp. * 1,762,500
96,000 Respironics Inc. * 1,776,000
51,900 Sepracor Inc. * 778,500
81,000 Sofamor/Danek Group Inc. * 2,247,750
94,900 Thermolase Corp. * 2,586,025
7,000 Thermedics Inc. * 175,000
312,000 VISX Inc. * 10,647,000
-------------
57,084,245
-------------
HEALTH CARE SERVICES 8.39%
15,000 Aetna Life & Casualty Co. 1,072,500
105,000 American Medical Response Inc. * 3,701,250
62,100 AmeriSource Health Corp. * 2,064,825
327,000 Apria Healthcare Group Inc. * 10,259,625
107,000 Arbor Health Care Co. * 2,915,750
109,100 CIMA Labs Inc. * 818,250
37,400 Community Health Systems Inc. * 1,935,450
120,000 Genesis Health Ventures Inc. * 3,765,000
444,200 Health Care & Retirement Corp. * 10,549,750
47,700 Health Systems International Inc. Class A * 1,293,863
52,000 Healthsource Inc. * 910,000
357,500 Maxicare Health Plans Inc. * 6,747,813
24,700 Orthodontic Centers of America Inc. * 654,550
30,100 Oxford Health Plans Inc. * 1,237,863
23,100 Pacificare Health Systems Inc. Class A * 1,524,600
18,000 PhyCor Inc. * 684,000
113,800 Renal Treatment Centers Inc. * 3,271,750
166,400 RoTech Medical Corp. * 3,244,800
27,900 Service Corp International 1,604,250
55,000 Sunquest Information Systems Inc. * 825,000
5,000 Total Renal Care Holdings Inc. * 211,250
32,000 Universal Health Services Inc., Class B * 836,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 8
<PAGE>
RCM GROWTH EQUITY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
% OF
SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE
- -------------- --------------------------------------------------------- ---------- ------------
<S> <C> <C> <C>
HEALTH CARE SERVICES
(CONTINUED)
477,700 Vivra Inc. * $ 15,704,388
-------------
75,832,527
-------------
INTEREST SENSITIVE SECTOR 6.39%
BANKING 2.73%
264,000 Community First Bankshares Inc. 6,204,000
45,500 Compass Bancshares Inc. 1,490,125
34,000 First American Corp. of Tennessee 1,432,250
59,100 First Security Corp. 1,418,400
31,900 Firstar Corp. 1,471,388
63,900 North Fork Bancorporation Inc. 1,669,388
145,600 WestAmerica Bancorporation 7,316,400
50,000 Zions Bancorp 3,637,500
-------------
24,639,451
-------------
GENERAL FINANCE 1.91%
64,500 AMRESCO Inc. * 1,104,563
47,950 Charter One Financial Inc. 1,672,256
190,000 Credit Acceptance Corp. * 3,990,000
17,500 First Financial Corp. 393,750
18,000 First USA Inc. 990,000
2,500 Household Int'l Inc. 190,000
210,000 The Money Store Inc. 4,646,250
129,850 TCF Financial Corp. 4,317,513
-------------
17,304,332
-------------
INSURANCE 1.75%
20,600 Ace Ltd. 968,200
35,800 Allied Group Inc 1,557,300
55,950 Executive Risk Inc. 2,140,088
36,500 MMI Companies Inc. 1,126,938
24,100 PMI Group Inc. 1,024,250
107,600 Transatlantic Holdings Inc. 7,545,450
29,200 Trenwick Group Inc. 1,460,000
-------------
15,822,226
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 9
<PAGE>
RCM GROWTH EQUITY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
% OF
SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE
- -------------- --------------------------------------------------------- ---------- ------------
<S> <C> <C> <C>
SERVICES/MEDIA SECTOR 17.67%
BUSINESS AND FOOD SERVICES 9.66%
84,000 AccuStaff Inc. * $ 2,289,000
68,200 Alco Standard Corp. 3,086,050
332,500 Avery Dennison Corp. 18,245,938
75,000 CUC International Inc. * 2,662,500
194,100 Danka Business Systems PLC (Sponsored ADR) 5,677,425
383,000 G & K Services Inc. Class A 10,915,500
45,500 Manpower Inc. 1,785,875
291,000 Olsten Corp. 8,548,125
105,700 Reynolds & Reynolds Co. Class A 5,628,525
98,700 Robert Half International Inc. * 2,751,263
222,500 Tetra Tech Inc. * 4,450,000
77,500 USA Waste Services Inc. * 2,295,938
90,200 United Waste Systems Inc. * 2,908,950
130,000 Unitog Co. 3,672,500
207,000 Wallace Computer Services Inc. 12,368,250
-------------
87,285,839
-------------
COMMUNICATION SERVICES 5.96%
283,500 American Mobile Satellite Corp. * 4,394,250
107,000 CommNet Cellular Inc. * 3,210,000
227,800 Frontier Corp. 6,976,375
119,000 LCI International Inc. * 3,733,625
368,300 MFS Communications Inc. * 13,857,288
15,000 MFS Communications Inc. DECS 952,500
(representing Series A 8% convertible preferred stock)
40,000 McLeod Inc. * 960,000
92,000 Orbital Sciences Corp. * 1,495,000
217,100 Tel-Save Holdings Inc. * 4,613,375
61,000 Teleport Communications Group Inc. * 1,166,625
105,000 Vanguard Cellular Systems Inc. Class A * 2,283,750
185,500 WorldCom Inc. * 10,272,063
-------------
53,914,851
-------------
MEDIA SERVICES 2.05%
62,500 A. H. Belo Corp. Series A 2,328,125
40,000 CableVision Systems Corp. Class A * 1,850,000
17,500 Central European Media Entertainment Ltd. Class A * 437,500
100,000 Comcast UK Cable Partners Ltd. * 1,275,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 10
<PAGE>
RCM GROWTH EQUITY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
% OF
SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE
- -------------- --------------------------------------------------------- ---------- ------------
<S> <C> <C> <C>
MEDIA SERVICES (CONTINUED)
83,000 Comcast Corp Special Class A $ 1,535,500
35,000 Gartner Group Inc. Class A * 1,281,875
52,000 Harcourt General Inc. 2,600,000
55,000 Heritage Media Corp. Class A * 2,193,125
260,000 Metromedia Int'l Group Inc. * 2,919,005
65,000 Renaissance Communications Corp. * 2,096,250
-------------
18,516,380
-------------
TECHNOLOGY SECTOR 24.69%
COMPUTERS AND OFFICE EQUIPMENT 2.00%
419,500 Black Box Corp. * 9,963,125
39,000 CompUSA Inc. * 1,330,875
20,000 Comverse Technology Inc. * 610,000
52,500 Digital Equipment Corp. * 2,362,500
39,000 E M C Corp. * 726,375
212,000 Quantum Corp. * 3,100,500
-------------
18,093,375
-------------
ELECTRONICS AND NEW TECHNOLOGY 12.79%
84,700 ASE Test Limited * 984,638
3,500 Allen Group Inc. * 76,125
106,000 Altera Corp. * 4,028,000
160,000 Altron Inc. * 3,240,000
448,300 Analog Devices Inc. * 11,431,650
128,500 Cabletron Systems Inc. * 8,818,337
24,900 Ericsson LM Telephone Co. (Sponsored ADR) 535,350
87,800 Glenayre Technologies Inc. * 4,390,000
265,000 Kent Electronics Corp. * 8,281,250
6,000 LSI Logic Corp. * 156,000
228,000 Maxim Integrated Products Inc. * 6,227,250
75,000 Microchip Technology Inc. * 1,856,250
209,000 Molex Inc. Class A 6,139,375
292,300 Network Equipment Technologies Inc. * 6,211,375
760,400 Network General Corp. * 16,348,600
55,900 Newbridge Networks Corp. * 3,661,450
78,000 Nokia Corp. (Sponsored ADR A) 2,886,000
34,000 QUALCOMM Inc. * 1,806,250
18,000 SGS Thomson Microelectronics N.V. (ADR) * 645,750
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 11
<PAGE>
RCM GROWTH EQUITY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
% OF
SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE
- -------------- --------------------------------------------------------- ---------- ------------
<S> <C> <C> <C>
ELECTRONICS AND NEW TECHNOLOGY (CONTINUED)
234,500 Sanmina Corp. * $ 6,331,500
90,000 StrataCom Inc. * 5,062,500
126,000 Thermo Electron Corp. 5,244,750
72,000 3Com Corp. * 3,294,000
44,000 Uniphase Corp. * 1,562,000
202,900 Xilink Inc. * 6,442,075
-------------
115,660,475
-------------
TECHNOLOGY SERVICES 9.90%
12,000 America Online Inc. * 525,000
157,000 American Management Systems Inc. * 4,592,250
10,100 Aspen Technologies Inc. * 555,500
187,000 BISYS Group Inc. * 7,059,250
47,400 CBT Group PLC (Sponsored ADR) * 2,192,250
182,000 Ceridian Corp. * 9,191,000
44,000 Citrix Systems Inc. * 1,672,000
43,400 Computer Sciences Corp. * 3,244,150
108,000 Electronics Arts Inc. * 2,889,000
148,300 FileNet Corp. * 5,412,950
52,500 Gemstar International Group Ltd. * 1,575,000
465,400 Informix Corp. * 10,471,500
13,000 Integrated Systems Inc. * 520,813
271,500 Medaphis Corp. * 10,792,125
64,100 National Data Corp. 2,195,425
69,000 NETCOM On-line Communications Services Inc. * 1,863,000
20,000 Netscape Communications Corp. * 1,245,000
151,500 PMT Services Inc. * 4,336,688
23,100 Siebel Systems Inc. * 561,146
31,240 Sierra On-Line Inc. * 1,370,655
136,900 Sterling Software Inc. * 10,541,300
12,500 Wind River Systems Inc. * 431,250
331,000 Wonderware Corp. * 6,247,625
-------------
89,484,877
-------------
TOTAL EQUITY INVESTMENTS
(COST $730,018,400) 95.83% 866,398,985
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 12
<PAGE>
RCM GROWTH EQUITY FUND
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
% OF
SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE
- -------------- --------------------------------------------------------- ---------- ------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
MONEY MARKET FUNDS 1.76%
15,931,503 Seven Seas Series Money Market Fund $ 15,931,503
PRINCIPAL COMMERCIAL PAPER 2.76%
---------
15,000,000 Ford Motor Credit Company
5.34% maturing 7/15/96 14,968,850
10,000,000 General Electric Capital Corp.
5.32% maturing 7/8/96 9,989,656
-------------
24,958,506
-------------
TOTAL SHORT-TERM INVESTMENTS
(COST $40,890,009) 4.52% 40,890,009
-------------
TOTAL INVESTMENTS (COST $770,908,409)** 100.35% 907,288,994
OTHER ASSETS LESS LIABILITIES -0.35% (3,167,790)
-------------
NET ASSETS 100.00% $ 904,121,204
-------------
-------------
</TABLE>
- -----------------
* Non income-producing security.
** For Federal income tax purposes, cost is $772,645,023 and unrealized
appreciation (depreciation) of equity securities is as follows:
Unrealized appreciation $164,423,363
Unrealized depreciation (29,779,392)
------------
Net unrealized appreciation $134,643,971
------------
------------
The accompanying notes are an integral part of the financial statements.
Page 13
<PAGE>
RCM GROWTH EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $770,908,409) (Note 1) $ 907,288,994
Foreign currency, at value (cost $276) 271
Receivable for securities sold 28,609,373
Receivable for Fund shares sold 3,915,536
Dividends receivable 215,196
Interest receivable 123,900
Other receivables 54,377
--------------
Total Assets 940,207,647
--------------
LIABILITIES:
Payable for securities purchased 33,933,020
Payable for investment management fees (Note 4) 2,101,699
Payable for custodian fees 27,524
Payable for Fund shares repurchased 24,200
--------------
Total Liabilities 36,086,443
--------------
NET ASSETS $ 904,121,204
--------------
--------------
NET ASSET VALUE PER SHARE
($904,121,204 DIVIDED BY 89,997,291 shares outstanding) $ 10.05
--------------
--------------
NET ASSETS CONSIST OF:
Paid in capital $ 457,470,785
Accumulated net investment loss (730,144)
Accumulated net realized gain on investments and foreign
currency transactions 310,988,419
Net unrealized appreciation on foreign currency transactions 11,559
Net unrealized appreciation on investments 136,380,585
--------------
NET ASSETS $ 904,121,204
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 14
<PAGE>
RCM GROWTH EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding tax of $6,063) $ 2,898,284
Interest 1,235,811
---------------
Total income 4,134,095
---------------
Expenses:
Investment management fees (Note 4) 4,848,270
Custodian fees 65,042
Miscellaneous expenses 800
---------------
Total expenses 4,914,112
---------------
Net investment loss (780,017)
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investments 244,234,197
Net realized loss on foreign currency transactions (90,904)
---------------
Net realized gain during the period 244,143,293
---------------
Net unrealized appreciation on foreign currency transactions 58,323
Net unrealized depreciation on investments (129,109,738)
---------------
Net unrealized depreciation during the period (129,051,415)
---------------
Net realized and unrealized gain 115,091,878
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 114,311,861
---------------
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 15
<PAGE>
RCM GROWTH EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six months ended
June 30, 1996 Year ended
(Unaudited) December 31, 1995
---------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (780,017) $ 3,246,152
Net realized gain on investments and
foreign currency transactions 244,143,293 280,992,471
Net unrealized appreciation (depreciation) on
investments and foreign currency transactions (129,051,415) 152,170,790
------------- -------------
Net increase in net assets resulting from
operations 114,311,861 436,409,413
DISTRIBUTIONS TO SHAREHOLDERS FROM: (NOTE 1)
Net investment income - (3,221,602)
Net realized gain on investments - (203,938,943)
NET DECREASE FROM CAPITAL SHARES
TRANSACTIONS (NOTE 2) (535,481,143) (269,044,478)
------------- -------------
NET DECREASE IN NET ASSETS (421,169,282) (39,795,610)
NET ASSETS:
Beginning of period 1,325,290,486 1,365,086,096
------------- -------------
End of period $ 904,121,204 $1,325,290,486
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 16
<PAGE>
RCM GROWTH EQUITY FUND
FINANCIAL HIGHLIGHTS
Selected data for each share of capital stock outstanding for the ten years
ended December 31, 1995 and the six months ended June 30, 1996 are as follows:
<TABLE>
<CAPTION>
Six months ended Year Ended December 31,
June 30, 1996 ----------------------------------------------------------------------------
(Unaudited)(a) 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986(b)
--------------- ------ ----- ----- ----- ----- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE: (c)
Net asset value, beginning of
period $9.13 $7.89 $10.42 $10.97 $11.54 $8.49 $9.12 $8.00 $7.09 $8.30 $8.47
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
Net investment income (loss) (0.01) 0.02 0.03 0.04 0.07 0.09 0.15 0.16 0.11 0.07 0.06
Net realized and unrealized gain
(loss) on investments 0.93 2.66 0.01 1.08 0.71 3.93 (0.53) 1.98 1.36 0.82 0.72
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
Net increase (decrease) in net
asset value resulting from
investment operations 0.92 2.68 0.04 1.12 0.78 4.02 (0.38) 2.14 1.47 0.89 0.78
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
Distributions:
Net investment income (0.00) (0.02) (0.03) (0.04) (0.07) (0.09) (0.17) (0.16) (0.12) (0.16) (0.16)
Net realized gain on investments (0.00) (1.42) (2.54) (1.63) (1.28) (0.88) (0.08) (0.86) (0.44) (1.94) (0.79)
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
Total distributions (0.00) (1.44) (2.57) (1.67) (1.35) (0.97) (0.25) (1.02) (0.56) (2.10) (0.95)
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $10.05 $9.13 $7.89 $10.42 $10.97 $11.54 $8.49 $9.12 $8.00 $7.09 $8.30
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
TOTAL RETURN (d) 10.08% 34.53% 0.76% 10.72% 7.03% 48.23% (4.12%) 26.87% 20.86% 10.97% 9.33%
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
RATIOS AND SUPPLEMENTAL DATA:
Average commission rate paid
per share $0.05747 $0.05801 - - - - - - - - -
-------- --------
-------- --------
Net assets, end of period
(in millions) $904 $1,325 $1,365 $2,049 $2,122 $2,138 $1,300 $1,284 $964 $553 $461
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
Ratio of expenses to average net
assets 0.9%(e) 0.8% 0.8% 0.8% 0.8% 0.7% 0.8% 0.7% 0.7% 0.8% 0.7%
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
Ratio of net investment income to
average net assets (0.1)%(e) 0.2% 0.2% 0.3% 0.6% 0.9% 1.8% 1.8% 1.8% 0.9% 1.3%
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
Portfolio turnover 50.3%(f) 96.5% 111.1% 67.0% 56.8% 62.7% 50.0% 70.8% 64.7% 79.9% 78.2%
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
-------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
</TABLE>
- -----------------
(a) On June 14, 1996, RCM Capital Management, L.L.C. became the investment
manager (see Note 4).
(b) On July 9, 1986, RCM Capital Management, the successor to the business
and operations of Rosenberg Capital Management, became the investment
manager.
(c) Stock split 25:1 at the close of business on June 17, 1996 (see Note 2).
All prior period per share amounts were restated to reflect the stock
split.
(d) Total return measures the change in value of an investment over the
period indicated.
(e) Annualized.
(f) Not annualized.
The accompanying notes are an integral part of the financial statements.
Page 17
<PAGE>
RCM GROWTH EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
RCM Growth Equity Fund (the "Fund") is a diversified series of RCM Capital
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
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 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 18
<PAGE>
RCM GROWTH EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. CAPITAL SHARES
At June 30, 1996, there were 1,000,000,000 shares of the Company's common
stock authorized, at $0.0001 par value. Of this amount, 300,000,000 were
classified as shares of the Fund; 100,000,000 were classified as shares of
RCM Small Cap Fund; 100,000,000 were classified as shares of RCM
International Growth Equity Fund A; and 500,000,000 shares remain
unclassified. As of the close of business on June 17, 1996, each
outstanding share of capital stock of the Fund was split into 25 shares of
capital stock, resulting in 91,056,470 outstanding shares of capital stock
of the Fund. Transactions in capital shares for the Fund shown below were
retroactively restated to reflect the stock split:
CAPITAL SHARE TRANSACTIONS
Six months ended June 30, 1996
(Unaudited)
---------------------------------
Shares Amount
-------------- ---------------
Shares sold 1,439,775 $ 13,899,937
Shares repurchased (56,613,102) (549,381,080)
----------- --------------
Net decrease (55,173,327) $ (535,481,143)
----------- --------------
----------- --------------
Year ended December 31, 1995
--------------------------------
Shares Amount
-------------- ---------------
Shares sold 9,295,000 $ 87,032,923
Shares issued in connection with
reinvestment of distributions 23,031,575 203,424,163
Shares repurchased (60,117,757) (559,501,564)
----------- ---------------
Net decrease (27,791,182) $ (269,044,478)
-------------- ---------------
-------------- ---------------
Page 19
<PAGE>
RCM GROWTH EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
2. CAPITAL SHARES (CONTINUED)
At June 30, 1996, four shareholders held more than 5% of the outstanding
shares of the Fund individually and 43% in aggregate.
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales proceeds of investment securities by the Fund,
excluding short-term securities, aggregated $522,722,759 and
$1,057,654,799, respectively, for the six months ended June 30, 1996.
4. 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 prior approval of a new management agreement from the Company's
Board of Directors and from the Fund's stockholders at a special meeting of
stockholders of the Company 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
paid investment management fees quarterly to RCM at a rate of 3/16 of 1%
(approximately 3/4 of 1% on an annual basis) of the average net assets of
the Fund during the preceding quarter. For the six months ended June 30,
1996, the Fund paid investment management fees aggregated $4,848,270. As
discussed above, the stockholders approved a new investment management
agreement between the Company, on behalf of the Fund, and RCM. Pursuant to
this new investment management agreement, the Fund pays investment
management fees monthly at an annualized rate of 0.75% of the Fund's
average daily net assets beginning July 1, 1996.
The RCM Capital Management Profit Sharing Plan, participation in which is
limited to employees of RCM, owned 328,672 shares of the Fund on June 30,
1996.
Page 20
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