-----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, IjPOZogMlIA/ht1B5ys1mQuTOTQaPu097jplQruUwTt85/KxYtFlr+Jdvuy7a98q tXI4VWEiETeJWAoOPdJ+Zw== 0000912057-96-019162.txt : 19960830 0000912057-96-019162.hdr.sgml : 19960830 ACCESSION NUMBER: 0000912057-96-019162 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: 96623289 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] INTERNATIONAL GROWTH EQUITY FUND A SEMI-ANNUAL REPORT JUNE 30, 1996 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 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 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 (This page intentionally left blank) Page 4 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 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 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 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 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 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 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 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 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 RCM INTERNATIONAL GROWTH EQUITY FUND A STATEMENTS OF CHANGES IN NET ASSETS
Six months ended June 30, 1996 Year ended (Unaudited) December 31, 1995 ---------------- ------------------ 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 ------------ ------------ ------------ ------------
The accompanying notes are an integral part of the financial statements. Page 14 RCM INTERNATIONAL GROWTH EQUITY FUND A FINANCIAL HIGHLIGHTS Selected data for each share of capital stock outstanding are as follows:
December 28, 1994 Six months ended (commencement June 30, 1996 Year ended of operations) to (Unaudited) +++ December 31, 1995 December 31, 1994 ---------------- ----------------- ------------------ 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%++ -------- -------- -------- -------- -------- --------
- --------------- +++ 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 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 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 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 NOTES - ------------------------------------------------------------------------------ NOTES - ------------------------------------------------------------------------------ -----END PRIVACY-ENHANCED MESSAGE-----