-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OvwMUeWsbvTeNkEoh3mKPW/aw+3u3sA5T+I1Ac3SeKLpj/CKRl3uhXEw9PC10lLK 2nJwH00xIyzdMnZ4AaAayg== 0000912057-96-019160.txt : 19960830 0000912057-96-019160.hdr.sgml : 19960830 ACCESSION NUMBER: 0000912057-96-019160 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960829 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RCM CAPITAL FUNDS INC CENTRAL INDEX KEY: 0000310619 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 942564439 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02913 FILM NUMBER: 96622892 BUSINESS ADDRESS: STREET 1: FOUR EMBARCADERO CTR STREET 2: STE 2900 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4159545474 FORMER COMPANY: FORMER CONFORMED NAME: RCM GROWTH EQUITY FUND INC DATE OF NAME CHANGE: 19920126 N-30D 1 N-30D [LOGO] GROWTH EQUITY FUND SEMI-ANNUAL REPORT JUNE 30, 1996 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 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 RCM GROWTH EQUITY FUND PERFORMANCE SUMMARY _________________________________________________________________________________________________ $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
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 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 RCM GROWTH EQUITY FUND INVESTMENTS IN SECURITIES AND NET ASSETS JUNE 30, 1996 (UNAUDITED)
% OF SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE - -------------- --------------------------------------------------------- ---------- ------------ 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 -------------
The accompanying notes are an integral part of the financial statements. Page 5 RCM GROWTH EQUITY FUND INVESTMENTS IN SECURITIES AND NET ASSETS JUNE 30, 1996 (UNAUDITED)
% OF SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE - -------------- --------------------------------------------------------- ---------- ------------ 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 -------------
The accompanying notes are an integral part of the financial statements. Page 6 RCM GROWTH EQUITY FUND INVESTMENTS IN SECURITIES AND NET ASSETS JUNE 30, 1996 (UNAUDITED)
% OF SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE - -------------- --------------------------------------------------------- ---------- ------------ 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
The accompanying notes are an integral part of the financial statements. Page 7 RCM GROWTH EQUITY FUND INVESTMENTS IN SECURITIES AND NET ASSETS JUNE 30, 1996 (UNAUDITED)
% OF SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE - -------------- --------------------------------------------------------- ---------- ------------ 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
The accompanying notes are an integral part of the financial statements. Page 8 RCM GROWTH EQUITY FUND INVESTMENTS IN SECURITIES AND NET ASSETS JUNE 30, 1996 (UNAUDITED)
% OF SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE - -------------- --------------------------------------------------------- ---------- ------------ 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 -------------
The accompanying notes are an integral part of the financial statements. Page 9 RCM GROWTH EQUITY FUND INVESTMENTS IN SECURITIES AND NET ASSETS JUNE 30, 1996 (UNAUDITED)
% OF SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE - -------------- --------------------------------------------------------- ---------- ------------ 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
The accompanying notes are an integral part of the financial statements. Page 10 RCM GROWTH EQUITY FUND INVESTMENTS IN SECURITIES AND NET ASSETS JUNE 30, 1996 (UNAUDITED)
% OF SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE - -------------- --------------------------------------------------------- ---------- ------------ 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
The accompanying notes are an integral part of the financial statements. Page 11 RCM GROWTH EQUITY FUND INVESTMENTS IN SECURITIES AND NET ASSETS JUNE 30, 1996 (UNAUDITED)
% OF SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE - -------------- --------------------------------------------------------- ---------- ------------ 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 -------------
The accompanying notes are an integral part of the financial statements. Page 12 RCM GROWTH EQUITY FUND INVESTMENTS IN SECURITIES AND NET ASSETS JUNE 30, 1996 (UNAUDITED)
% OF SHARES EQUITY INVESTMENTS NET ASSETS MARKET VALUE - -------------- --------------------------------------------------------- ---------- ------------ 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 ------------- -------------
- ----------------- * 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 RCM GROWTH EQUITY FUND STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1996 (UNAUDITED) 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 -------------- --------------
The accompanying notes are an integral part of the financial statements. Page 14 RCM GROWTH EQUITY FUND STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) 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 --------------- ---------------
The accompanying notes are an integral part of the financial statements. Page 15 RCM GROWTH EQUITY FUND STATEMENTS OF CHANGES IN NET ASSETS
Six months ended June 30, 1996 Year ended (Unaudited) December 31, 1995 ---------------- ----------------- 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 ------------- ------------- ------------- -------------
The accompanying notes are an integral part of the financial statements. Page 16 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:
Six months ended Year Ended December 31, June 30, 1996 ---------------------------------------------------------------------------- (Unaudited)(a) 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986(b) --------------- ------ ----- ----- ----- ----- ----- ----- ----- ----- ------ 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% -------- ------ ------ ------ ------ ------ ----- ----- ----- ----- ----- -------- ------ ------ ------ ------ ------ ----- ----- ----- ----- -----
- ----------------- (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 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 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 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 -----END PRIVACY-ENHANCED MESSAGE-----