<PAGE>
[LOGO]
INTERNATIONAL GROWTH EQUITY FUND A
SEMI-ANNUAL REPORT
JUNE 30, 1996
<PAGE>
RCM INTERNATIONAL GROWTH EQUITY FUND A
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The first half of 1996 has continued the positive trend in returns of non-
U.S. equities. The Morgan Stanley Capital International EAFE Index (Europe,
Australia, Far East) returned 4.7%, which included gains of 6.6% from Europe,
1.2% from Japan, and 9.5% from the Pacific region ex-Japan. A custom index
comprised of 90% Morgan Stanley Capital International EAFE Index and 10% Morgan
Stanley Capital International Emerging Markets Free Index, which most accurately
reflects the approach of the RCM International Growth Equity Fund A ("Fund"),
returned 6.1% for the period. The Fund did substantially better than these
indices, with a 13.2% return. RCM Capital Management, L.L.C., the Fund's
investment manager ("RCM"), has now managed to add over 1,600 basis points to
EAFE's returns since the Fund began operations in December 1994.
In the first half of 1996, the Fund's outperformance was aided by an
overweighting in the best performing region, non-Japan Asia, (a 12% weighting
versus the custom index's 9%), a zero weighting in the poorly performing
Japanese bank sector, and a decrease (from 13% to 9%) in a hedge against the
Fund's yen exposure. In addition, RCM's individual stock selection added
substantially to the returns of the Fund, as it continues to benefit from an
environment that has strongly favored high-quality growth companies. This has
been especially true in Europe, where positive liquidity conditions, but a weak
economic environment, has led investors to put a substantial premium on visible
growth.
RCM's outlook for the balance of 1996 remains positive, as it expects
favorable liquidity conditions to continue to prevail in most parts of the
world. RCM looks for a pick-up in growth in Europe, and a continuation of at
least modest growth in Japan. It does not see growth on a worldwide basis
accelerating to a point of touching off fears of inflation, nor any reason for a
significant drop in overall economic activity around the world. Thus, RCM's
outlook is a benign one for financial assets. RCM believes that interest rates
have bottomed in Europe and will begin to rise, as evidence of recovery in
Germany continues to accumulate. However, RCM expects that the positive side of
improving earnings outlook will offset the negative pressure of interest rates.
For this reason, RCM expects the Fund to make a gradual shift to more cyclically
sensitive issues over the balance of the year. In addition, RCM is intensifying
its review of valuation parameters for the Fund's high-quality growth stocks,
and has already begun the process of reducing weightings in some issues that are
approaching our price targets.
In Japan, RCM continues to emphasize visible growth companies, and is, in
fact, reducing some cyclical exposure in the Fund. Until Japan's structural
problems are addressed by the government and the populous in general, RCM does
not expect a surge in economic activity. However, RCM does see
<PAGE>
opportunities for companies that have good growth strategies, directed either to
the domestic Japanese environment or to overseas markets. This bottom-up
approach is increasingly yielding good quality companies that fit this
description, thereby allowing us to add value in Japan and raise our weighting
there to 32% of net assets at June 30, 1996, from 26% at the beginning of the
year. RCM continues to believe that the Japanese currency can depreciate
against the U.S. dollar, although it has reduced the hedged position during the
period from 13% to 9% in order to capture some of the good gains that have been
achieved thus far this year.
In Asia ex-Japan, where the Fund has a weighting of approximately 12% of
its net assets, RCM has seen this region's normal condition of restraining its
rapid growth. GDP growth rates in Southeast Asia remain in the 6% to 8% range,
and all governments in these well-controlled economies have to keep these growth
rates in check from time-to-time. Some economies, such as that of the
Philippines, have a great deal more room before capacity shortages restrain
growth. On the other hand, economies, such as that of Malaysia, are
experiencing labor and capacity shortages, which are leading to a higher
inflation rate. Since many of these economies have high current account
deficits, the balance between growth and restraint is a constant tug-of-war.
RCM currently favors the Philippines, Indonesia, and Thailand, the last of which
is approaching the advanced stages of its own efforts to slow down its economy,
and has the potential for re-acceleration over the next 12 months.
The above situation is in contrast to Latin America, where recessionary
conditions existed in 1995, and 1996 has proven to be a strong recovery year in
many economies. RCM does not see an immediate blockage to the continuation of
these recoveries, and therefore has allowed the Fund a higher-than-normal
weighting of over 5% of its net assets in Mexico, Brazil, and Chile.
In summary, RCM continues to have a positive outlook for financial markets
outside the U.S., and has full confidence that its growth stock strategy can
continue to provide added value.
Page 2
<PAGE>
RCM International Growth Equity Fund A
Performance Summary
- -----------------------------------------------------------------------------
PERFORMANCE FROM COMMENCEMENT OF OPERATIONS
$70,000
$68,785
65,000
60,000
$58,370
$58,310
55,000
50,000
45,000
-----------------------------------------------------------------------
12/28/94 3/31/95 6/30/95 9/30/95 12/31/95 3/31/96 6/30/96
_____ Fund ====== EAFE ------ 90% EAFE/10% EMF
- -----------------------------------------------------------------------------
PERFORMANCE FROM FIRST PUBLIC OFFERING
$70,000
65,000
$64,875
60,000
$56,720
$55,580
55,000
50,000
45,000
-----------------------------------------------------------------------
5/22/95 6/30/95 9/30/95 12/31/95 3/31/96 6/30/96
_____ Fund ====== EAFE ------ 90% EAFE/10% EMF
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The charts above show the performance of the RCM International Growth Equity
Fund A versus the Morgan Stanley Capital International Europe, Australia, Far
East Index (MSCI-EAFE)+ and a custom index including 90% of MSCI-EAFE and 10%
Morgan Stanley Capital International Emerging Markets Free Index (MSCI-EMF)++.
The charts represent cumulative returns of 33.53%+ and 29.35%+ for the Fund from
December 28, 1994* to June 30, 1996 and from May 22, 1995** to June 30, 1996,
respectively. The charts assume a hypothetical $50,000 +++ initial investment
in the Fund and reflect all Fund expenses.
AVERAGE ANNUAL TOTAL RETURNS+
JUNE 30,1996
LIFE OF FUND
ANNUALIZED SINCE
------------------------
1 Year 12/28/94* 5/22/95**
- ------------------------------------
23.10% 21.25% 26.16%
- ------------------------------------
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.
- -----------------
+ Returns assume reinvestment of all dividends and capital gains
distributions at net asset value.
* The Fund commenced operations on December 28, 1994.
** The Fund's shares were first offered to the public on May 22, 1995.
+ The MSCI-EAFE Index is an arithmetic, market value-weighted average of the
performance of over 900 securities listed on the stock exchanges of
countries in Europe, Australia, and the Far East. The index is calculated
on a total return basis, which includes reinvestment of gross dividends
before deduction of withholding taxes.
++ The MSCI-EMF Index includes only those countries open to non-local
investors. The index is currently calculated on a price-only basis without
dividends reinvested.
+++ The Fund's mimimum initial investment.
Page 3
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(This page intentionally left blank)
Page 4
<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
International Growth Equity Fund A (the "Fund") for approval or ratification.
As of the Record Date, there were 307,063 shares of the Fund outstanding and
eligible to vote. At the Special Meeting 306,241 shares were present in person
or by proxy, or 99.73% of the shares of outstanding on the Record Date. The
matter voted upon by stockholders of the Fund and the resulting votes for the
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:
289,790; Against: 0; Abstain: 101.
Page 5
<PAGE>
RCM INTERNATIONAL GROWTH EQUITY FUND A
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
% of
Shares Country Equity Investments Net Assets Market Value
- -------- ------- ----------------- ---------- ------------
CONSUMER DURABLES SECTOR 2.7%
AUTOMOTIVE RELATED 2.7%
17,800 SWDN Autoliv AB $ 543,134
13,500 ITLY Brembo Spa 159,576
17,000 JPN Honda Motor Co., Ltd. 441,457
------------
1,144,167
------------
CONSUMER NON-DURABLES SECTOR 25.6%
BEVERAGE AND TOBACCO 6.2%
18,800 NETH Grolsch N.V. 771,621
54,000 INDO P.T. Hanjaya Mandala Sampoerna 614,823
9,000 MEX Pan American Beverages Inc.
Class A (ADR) 402,750
10,700 FR Seita 490,940
116,000 SWDN Swedish Match AB * 360,962
------------
2,641,096
------------
FOOD AND FOOD PROCESSING 2.3%
80,050 MEX Gruma S.A. de C.V. * 370,436
6,500 JPN Hokuto Corporation 312,623
184,000 INDO P.T. Mayora Indah 102,771
675,000 HK Tingyi Holding Co. * 185,300
------------
971,130
------------
GENERAL RETAIL 7.8%
650 FR Carrefour Supermarche SA 364,453
23,000 JPN Credit Saison Co., Ltd. 557,308
2,000 NETH Gucci Group N.V. 129,000
68,100 UK Next PLC 595,439
25,900 BRZL Pao de Acucar (GDR) + 428,142
5,600 JPN Ryohin Keikaku 505,902
8,000 CHLE Santa Isabel S.A. (Sponsored ADR) 222,000
11,000 JPN Shimamura Co. Ltd. 484,798
------------
3,287,042
------------
HOUSEHOLD/RELATED NON-DURABLES 2.9%
5,400 GER Adidas AG 454,232
22,000 MEX Kimberly Clark de Mexico, S.A. de C.V. 401,714
800 FR LVMH Moet Hennessy Louis Vuitton 189,750
250 SWTZ SMH Swiss Corp. for Microelectronics
and Watchmaking Industrie 173,973
------------
1,219,669
------------
The accompanying notes are an integral part of the financial statements.
Page 6
<PAGE>
RCM INTERNATIONAL GROWTH EQUITY FUND A
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
% of
Shares Country Equity Investments Net Assets Market Value
- -------- ------- ----------------- ---------- ------------
LEISURE TIME PRODUCTS/SERVICES 6.4%
16,000 JPN NAMCO $ 531,066
10,800 JPN Nintendo Corp. Ltd. 805,815
900 FR Salomon SA * 823,256
25,000 JPN Skylark Co. 528,048
------------
2,688,185
------------
CYCLICAL/CAPITAL GOODS SECTOR 24.2%
AEROSPACE/DEFENSE 1.0%
54,000 JPN Mitsubishi Heavy Industries Ltd. 470,553
BUILDING AND CONSTRUCTION 4.9%
497,900 PHIL C & P Homes Inc. 432,337
56,000 HK Cheung Kong Holdings Ltd. 403,317
10,000 JPN Chodai Co Ltd. 347,460
77,000 HK HongKong Land Holdings Ltd. 173,250
3,164 NETH Hunter Douglas N.V. 216,128
55,000 JPN Obayashi Corp. 498,377
------------
2,070,869
------------
CHEMICALS AND TEXTILES 2.0%
12,000 GER Hoechst AG 407,234
8,000 CHLE Sociedad Quimica y Minera de Chile S.A.
(Sponsored ADR) 434,000
------------
841,234
------------
ELECTRICAL EQUIPMENT 5.4%
26,000 JPN Alpine Electronics, Inc 487,359
8,100 JPN Hirose Electric Co., Ltd. 501,413
9,000 NETH Philips Electronics N.V. 292,876
5,000 JPN Riso Kagaku 402,322
34,000 JPN Yamatake-Honeywell 618,662
------------
2,302,632
------------
INDUSTRIAL EQUIPMENT 5.6%
47,000 JPN Komatsu, Ltd. 464,134
74,000 JPN NTN Corp. 524,391
15,000 GER Siemans AG 802,039
44,000 NOR Tomra Systems A/S 447,520
6,000 NETH Toolex Alpha N.V. (ADR) * 143,999
------------
2,382,083
------------
The accompanying notes are an integral part of the financial statements.
Page 7
<PAGE>
RCM INTERNATIONAL GROWTH EQUITY FUND A
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
% of
Shares Country Equity Investments Net Assets Market Value
- -------- ------- ----------------- ---------- ------------
RAW AND BASIC MATERIALS 3.4%
128,000 JPN NKK Corp. * $ 388,570
3,800 GER SGL Carbon AG + 444,854
37,000 JPN Yamato Kogyo Co., Ltd. 443,195
21,000 JPN Yodogawa Steel Works 160,719
------------
1,437,338
------------
TRANSPORTATION SERVICES 1.9%
37,156 UK BAA PLC 269,192
10,200 CHN Guangshen Railway (Sponsored ADR) * 195,075
472,800 PHIL International Container Terminal
Services, Inc. * 320,313
------------
784,580
------------
ENERGY SECTOR 2.9%
OIL AND RELATED SERVICES 2.9%
43,119 UK British Petroleum Co., PLC 378,354
17,100 NOR Petroleum Geo-Services A/S * 490,145
9,900 SPN Repsol, SA 344,553
------------
1,213,052
------------
HEALTHCARE SECTOR 13.6%
HEALTHCARE SERVICES 1.1%
8,800 JPN Nichii Gakken Co. 458,648
DRUGS & HOSPITAL SUPPLIES 12.5%
17,400 SWDN AB Astra 770,109
6,000 CAN Biochem Pharma Inc. * 225,000
720 SWTZ CIBA-GEIGY Ltd. 878,259
25,500 UK Glaxo Wellcome PLC 343,353
21,000 US Pharmacia & Upjohn Inc. 931,875
50 SWTZ Roche Holdings Ltd. 381,739
15,600 UK Smithkline Beecham PLC (ADR) 848,250
10,800 FR Synthelabo 913,369
------------
5,291,954
------------
INTEREST SENSITIVE SECTOR 11.4%
BANKING 6.7%
19,000 ITLY Banca Popolare Di Bergamo 289,731
3,600 PAN Banco Latinamericano de Exportaciones 202,500
The accompanying notes are an integral part of the financial statements.
Page 8
<PAGE>
RCM INTERNATIONAL GROWTH EQUITY FUND A
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
% of
Shares Country Equity Investments Net Assets Market Value
-------- ------- ------------------ ---------- -------------
BANKING (CONTINUED)
23,000 IRE Bank of Ireland $ 157,435
68,800 HK Dah Sing Financial Holdings, Ltd. 208,423
97,500 THAI First Bangkok City Bank Public Co. Ltd. 161,316
600,000 HK FPB Bank Holding Co., Ltd. 213,156
22,800 HK HSBC Holdings PLC 344,616
7,000 KOR Korea Housing Bank * 194,895
33,800 UK Lloyds TSB Group PLC 165,352
7,440 KOR Shinhan Bank 170,353
25,800 THAI Siam Commerical Bank Public Co., Ltd. 374,016
28,000 SWDN Sparbanken Sverige AB 363,740
------------
2,845,533
------------
GENERAL FINANCE 2.0%
73,000 THAI Finance One Public Co., Ltd. 471,617
8,000 JPN Promise Co Ltd. 395,008
------------
866,625
------------
INSURANCE 1.3%
121,000 INDO Lippo Life Insurance Co. 155,961
27,000 JPN Tokio Marine and Fire Insurance 360,444
2,800 SWDN Tornet Fastighets AB * 22,840
------------
539,245
------------
UTILITIES 1.4%
6,200 SPN Empresa Nacional de Electridad S.A. 387,001
3,800 GER Veba AG 202,108
------------
589,109
------------
TELEMEDIA/SERVICES SECTOR 7.5%
BUSINESS AND FOOD SERVICES 0.9%
48,000 CAN Philip Environmental Inc. * 378,000
COMMUNICATION SERVICES 5.3%
7,700 HK Asia Satellite Telecom Holdings
(Sponsored ADR) * 229,075
92 JPN DDI Corp. 804,206
3,300 KOR Korea Mobile Telecommunications Corp.
(GDR) + 169,538
5,500 NOR Nera AS (Sponsored ADR) 173,938
41,000 JPN Nippon Denwa Shisetsu 442,372
24,250 UK Orange PLC (ADR) * 424,374
------------
2,243,503
------------
The accompanying notes are an integral part of the financial statements.
Page 9
<PAGE>
RCM INTERNATIONAL GROWTH EQUITY FUND A
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
% of
Shares Country Equity Investments Net Assets Market Value
-------- ------- ------------------ ---------- -------------
MEDIA SERVICES 1.3%
32,900 UK Reed International PLC $ 550,037
TECHNOLOGY SECTOR 8.5%
COMPUTERS AND OFFICE EQUIPMENT 1.1%
17,000 JPN Canon Sales Co., Inc. 474,100
ELECTRONICS AND NEW TECHNOLOGY 5.4%
14,000 TWN ASE Test Limited * 162,750
21,230 SWDN Ericsson LM Telephone Co. 458,587
6,000 JPN Kyocera Corp. 425,182
12,000 FIN Nokia Corp. AB Preferred 443,043
7,100 FR SGS Thomson Microelectronics N.V. * 254,713
8,000 JPN Sony Corp. 527,408
------------
2,271,683
------------
TECHNOLOGY SERVICES 2.0%
11,000 FR Dassault Sys S.A. (ADR) * 253,000
17,396 NETH Getronics N.V. 385,558
3,400 JPN Square Co Ltd. 199,899
------------
838,457
------------
TOTAL EQUITY INVESTMENTS (COST $35,506,614) 96.4% 40,800,524
------------
SHORT-TERM INVESTMENTS 5.2%
1,186,959 US Seven Seas Series U.S. Government
Money Market Fund 1,186,959
Principal
- -----------
1,000,000 US General Electric Capital Corp., 5.37%,
maturing 7/3/96 999,702
------------
TOTAL SHORT TERM INVESTMENTS (COST $2,186,661) 2,186,661
------------
TOTAL INVESTMENTS (COST $37,693,275) ** 101.6% 42,987,185
OTHER ASSETS LESS LIABILITIES -1.6% (677,284)
------------
NET ASSETS 100.0% $ 42,309,901
------------
The accompanying notes are an integral part of the financial statements.
Page 10
<PAGE>
RCM INTERNATIONAL GROWTH EQUITY FUND A
INVESTMENTS IN SECURITIES AND NET ASSETS
JUNE 30, 1996
(UNAUDITED)
* Non-income producing security.
** For Federal income tax purposes, cost is $37,802,241 and unrealized
appreciation (depreciation) of equity securities is as follows:
Unrealized appreciation $5,984,432
Unrealized depreciation (799,488)
----------
Net unrealized appreciation $5,184,944
----------
+ Security is registered pursuant to Rule 144A and may be deemed to be
restricted for resale.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's investments in securities at June 30, 1996 categorized by country:
% of Net Assets
---------------------------------------
Short Term
Country Equities and Other Total
----------------- ---------- -----
Brazil 1.0% 1.0%
Canada 1.4% 1.4%
Chile 1.6% 1.6%
China 0.4% 0.4%
Finland 1.0% 1.0%
France 7.8% 7.8%
Germany 5.4% 5.4%
Hong Kong 4.2% 4.2%
Indonesia 2.1% 2.1%
Ireland 0.4% 0.4%
Italy 1.1% 1.1%
Japan 32.1% 32.1%
Korea 1.3% 1.3%
Mexico 2.8% 2.8%
Netherlands 4.6% 4.6%
Norway 2.6% 2.6%
Panama 0.4% 0.4%
Philippines 1.8% 1.8%
Spain 1.7% 1.7%
Sweden 6.0% 6.0%
Switzerland 3.4% 3.4%
Taiwan 0.4% 0.4%
Thailand 2.4% 2.4%
United Kingdom 8.3% 8.3%
United States 2.2% 3.6% 5.8%
------ ----- ------
Total 96.4% 3.6% 100.0%
------ ----- ------
------ ----- ------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
JUNE 30, 1996
Unrealized
Delivery Appreciation
Face Value Date Contract Price (Depreciation)
----------- -------- -------------- --------------
Purchases:
Japanese Yen 189,726,666 8/20/96 107.5700 $ (15,552)
Sales:
Japanese Yen 569,180,000 8/20/96 103.0200 280,350
---------
Total open forward foreign currency contracts, net (Note 1) 264,798
---------
---------
The accompanying notes are an integral part of the financial statements.
Page 11
<PAGE>
RCM INTERNATIONAL GROWTH EQUITY FUND A
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(UNAUDITED)
ASSETS:
Investments in securities, at value (cost $37,693,275)
(Note 1) $42,987,185
Cash 300,550
Receivable for investments sold 887,647
Receivable for open forward foreign currency contracts,
net (Note 1) 264,798
Dividends and dividend reclaims receivable 83,730
Prepaid assets 2,700
Interest receivable 842
-----------
Total Assets 44,527,452
-----------
LIABILITIES:
Payable for investments purchased 2,076,078
Payable for investment management fees (Note 5) 41,435
Payable for legal fees 20,634
Payable for audit fees 18,750
Payable for custodian fees 14,505
Payable for Directors' fees and expenses 12,667
Payable for accounting fees 12,000
Payable for registration and filing fees 9,252
Payable for printing expenses 7,810
Payable for miscellaneous expenses 4,420
-----------
Total Liabilities 2,217,551
-----------
NET ASSETS $42,309,901
-----------
-----------
NET ASSET VALUE PER SHARE
($42,309,901 DIVIDED BY 3,234,837 shares outstanding) $ 13.08
-----------
-----------
NET ASSETS CONSIST OF:
Paid in capital $33,696,467
Accumulated net investment income 96,719
Accumulated net realized gain on investments and foreign
currency transactions 2,958,747
Net unrealized appreciation on forward foreign
currency contracts and foreign currency transactions 264,058
Net unrealized appreciation on investments 5,293,910
-----------
NET ASSETS $42,309,901
-----------
-----------
The accompanying notes are an integral part of the financial statements.
Page 12
<PAGE>
RCM INTERNATIONAL GROWTH EQUITY FUND A
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding tax of
$44,834) $ 343,843
Interest 3,528
----------
Total income 347,371
----------
Expenses:
Investment management fees (Note 5) 143,868
Custodian fees 28,013
Accounting fees 24,000
Directors' fees and expenses 22,167
Audit fees 13,750
Insurance expenses 6,000
Printing expenses 6,000
Registration and filing fees 2,500
Miscellaneous expenses 2,667
----------
Total expenses before reimbursements 248,965
Expenses reimbursed by investment manager (Note 5) (62,449)
----------
Total net expenses 186,516
----------
Net investment income 160,855
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investments 3,084,433
Net realized loss on foreign currency transactions (402,600)
----------
Net realized gain during the period 2,681,833
----------
Net unrealized appreciation on forward foreign currency
contracts and foreign currency transactions 107,775
Net unrealized appreciation on investments 1,660,993
----------
Net unrealized appreciation during the period 1,768,768
----------
Net realized and unrealized gain 4,450,601
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,611,456
----------
----------
The accompanying notes are an integral part of the financial statements.
Page 13
<PAGE>
RCM INTERNATIONAL GROWTH EQUITY FUND A
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 $ 160,855 $ 342,790
Net realized gain on investments
and foreign currency transactions 2,681,833 547,893
Net unrealized appreciation on
investments, forward foreign
currency contracts and foreign
currency transactions 1,768,768 3,796,450
------------ ------------
Net increase in net assets
resulting from operations 4,611,456 4,687,133
DISTRIBUTIONS TO SHAREHOLDERS FROM: (NOTE 1)
Net investment income - (320,285)
Net realized gain on investments - (369,783)
NET INCREASE FROM CAPITAL SHARES
TRANSACTIONS (NOTE 3) 3,351,637 5,346,067
------------ ------------
NET INCREASE IN NET ASSETS 7,963,093 9,343,132
NET ASSETS:
Beginning of period 34,346,808 25,003,676
------------ ------------
End of period $ 42,309,901 $ 34,346,808
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 14
<PAGE>
RCM INTERNATIONAL GROWTH EQUITY FUND A
FINANCIAL HIGHLIGHTS
Selected data for each share of capital stock outstanding are as follows:
<TABLE>
<CAPTION>
December 28, 1994
Six months ended (commencement
June 30, 1996 Year ended of operations) to
(Unaudited) +++ December 31, 1995 December 31, 1994
---------------- ----------------- ------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE: ++
Net asset value, beginning of period $ 11.56 $ 10.00 $ 10.00
-------- -------- --------
Net investment income 0.05+ 0.12+ 0.00
Net realized and unrealized gain (loss)
on investments 1.47 1.68 (0.00)
-------- -------- --------
Net increase in net asset value
resulting from investment operations 1.52 1.80 0.00
-------- -------- --------
Distributions:
Net investment income (0.00) (0.11) (0.00)
Net realized gain on investments (0.00) (0.13) (0.00)
-------- -------- --------
Total distributions (0.00) (0.24) (0.00)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 13.08 $ 11.56 $ 10.00
-------- -------- --------
-------- -------- --------
TOTAL RETURN * 13.17% 17.98% 0.01%
-------- -------- --------
-------- -------- --------
RATIOS AND SUPPLEMENTAL DATA:
Average commission rate paid per share $0.01908 $0.03456 -
-------- -------- --------
-------- -------- --------
Net assets, end of period (in 000's) $ 42,310 $ 34,347 $ 25,004
-------- -------- --------
-------- -------- --------
Ratio of expenses to average net assets 1.00%+** 0.75%+ 0.00%++
-------- -------- --------
-------- -------- --------
Ratio of net investment income to
average net assets 0.86%+** 1.19%+ 0.01%++
-------- -------- --------
-------- -------- --------
Portfolio turnover 67.4%*** 87.4% 0.00%++
-------- -------- --------
-------- -------- --------
</TABLE>
- ---------------
+++ On June 14, 1996, RCM Capital Management, L.L.C. became the investment
manager (see Note 5).
++ Stock split 10:1 at the close of business on June 17, 1996 (see Note 3).
All prior period per share amounts were restated to reflect the stock
split.
+ Includes reimbursement by the Fund's investment manager of investment
management fees and other expenses equal to $0.02++ and $0.04++ per share
for the six months ended June 30, 1996 and the year ended December 31,
1995, respectively. Without such reimbursement, the ratio of expenses
would have been 1.33%** and 1.11%, respectively, and the ratio of
net investment income to average net assets would have been 0.52%**
and 0.83%, respectively.
* Total return measures the change in value of an investment over the
period indicated.
** Annualized.
*** Not annualized.
++ Not annualized. Fund was in operation for four days, ratios are not
meaningful.
The accompanying notes are an integral part of the financial statements.
Page 15
<PAGE>
RCM INTERNATIONAL GROWTH EQUITY FUND A
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
RCM International Growth Equity Fund A (the "Fund") is a non-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, forward foreign currency contracts 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 16
<PAGE>
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d. FORWARD FOREIGN CURRENCY CONTRACTS:
A forward foreign currency contract ("Forward") is an agreement between
two parties to buy and sell a currency at a set price on a future date.
The Fund may enter into Forwards in order to hedge foreign currency risk
associated with its portfolio securities or for other risk management or
investment purposes. The net U.S. dollar value of foreign currency
underlying all contractual commitments held by the Fund on each day and
the resulting net unrealized appreciation (depreciation) and related net
receivable (payable) amount is determined by using the appropriate
current or forward exchange rate. Realized gain (loss) on foreign
currency includes net gains or losses realized by the Fund on contracts
which have matured or which the Fund has terminated by entering into an
offsetting closing transaction. Unrealized gains and losses are
included in the Statement of Assets and Liabilities and are carried on a
net basis. The portfolio could be exposed to risk of loss if the
counterparty is unable to meet the terms of the contract or if the value
of the currency changes unfavorably.
e. 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.
f. 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. INVESTMENTS IN FOREIGN SECURITIES AND CURRENCY
Investing in foreign equity securities and currency transactions involve
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
common stock authorized, at $0.0001 par value. Of this amount,
100,000,000 were classified as shares of the Fund; 300,000,000 were
classified as shares of RCM Growth Equity Fund; 100,000,000 were
classified as shares of RCM Small Cap Fund; 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 10 shares
of capital stock, resulting in a total of 3,080,990 outstanding shares
of the capital stock of the Fund. Transactions in capital shares of 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 271,727 $3,457,399
Shares repurchased (8,660) (105,762)
-------- ----------
Net increase 263,067 $3,351,637
-------- ----------
-------- ----------
Page 17
<PAGE>
3. CAPITAL SHARES (CONTINUED)
CAPITAL SHARE TRANSACTIONS
Year ended December 31, 1995
------------------------------------
Shares Amount
--------- -----------
Shares sold 414,880 $4,700,579
Shares issued in connection with
reinvestment of distributions 60,800 690,068
Shares repurchased (3,910) (44,580)
-------- ----------
Net increase 471,770 $5,346,067
-------- ----------
-------- ----------
At June 30, 1996, two affiliated shareholders held 79% and 8%,
respectively, 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 $28,389,506 and $24,287,223,
respectively, for the six months ended June 30, 1996.
5. 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 1/4 of
0.75% (approximately 0.75% on an annual basis) of the average net assets
of the Fund during the current quarter. For the six months ended June
30, 1996, the Fund recorded investment management fees aggregating
$143,868. RCM has voluntarily agreed to pay the Fund on a quarterly
basis the amount, if any, by which certain ordinary operating expenses
of the Fund exceed the annual rate of 1% of the Fund's average net
assets. For the six months ended June 30, 1996, RCM reimbursed Fund
operating expenses totaling $62,449. 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 to RCM 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 251,502 shares of the Fund on June
30, 1996.
Page 18
<PAGE>
NOTES
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<PAGE>
NOTES
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